Colombo complex can benefit all parties using Indian Ocean shipping lanes

By Hu Weijia Source:Global Times Published: 2018/1/4 22:28:41

While many have been focusing on the Chinese "label" on a $1 billion project near Sri Lanka's main port of Colombo, less attention has been paid to the economic logic behind this investment.

China plans to put $1 billion into the construction of three 60-story buildings as part of a proposed financial city located next to Sri Lanka's main harbor, media reports said recently. To take advantage of its strategic location, Sri Lanka is overhauling its transport, logistics and financial sectors, trying to realize its ambition of becoming a financial center in the Indian Ocean comparable with Singapore.

The project will bring new momentum to the South Asian nation, where the economy remains sluggish. Due to the severity of the drought Sri Lanka experienced last summer, large-scale investment is urgently needed to make sure any economic recovery takes hold.

Sri Lanka will not be the only beneficiary of the megaproject. The country's strategic location in the Indian Ocean has been noted by traders who use some of the world's busiest shipping lanes connecting Europe with East Asia.

In 2017, the Port of Colombo reportedly handled more than 6 million 20-foot equivalent units of containers and served as a transshipment hub for cargo from countries like India. Improved financing, logistics and consulting networks in Colombo can cut logistics costs and improve trade efficiency, benefiting all the countries along the shipping lanes.

As the costs of improving its infrastructure have increased, however, Sri Lanka has felt an increasing financial strain. In response, it has sought to attract foreign investment.

That's where China comes in. Chinese companies are in the midst of a boom in outbound investment, and their investment in Sri Lanka should be seen as normal commercial activity.

It doesn't really matter where the money comes from. If the megaproject can benefit both Sri Lanka and countries along the shipping lanes, it shouldn't be criticized just because the project was financed by companies from China, instead of the US or India.

Some observers have claimed that China seeks to boost its influence in the Indian Ocean by building the huge complex. But exaggerating the impact of the project just serves to fuel the "China threat" theory.

If India or other countries feel uneasy about the Chinese investment, they can perhaps comfort themselves by persuading their companies to open offices in these buildings.

The author is a reporter with the Global Times.


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