With Sri Lanka still emerging from the ruins of a 26 year civil war that ended in 2009, the government in Colombo is once again turning to China as the only option at its disposal to modernize the economy by introducing sweeping infrastructural development projects.
The story of the Sri Lankan capital’s hopes to transform itself into an “international financial outpost” in the Indian Ocean—and the ups and downs this the country has faced – confirm to a great extent that while China’s role is not necessarily viewed as completely beneficial, the absence of alternate sources of foreign direct investment makes China an inevitable. It is a scenario that is playing itself out in other countries, not least Pakistan, where China is funding vast projects in what amounts of an investment vacuum.
Sri Lanka’s current president, Maithripala Sirisena, was a vocal critic of the policies of the previous president, Mahinda Rajapaksa, and his strategy of using Chinese capital to attempt to modernize the economy while reportedly enriching himself in the process. Sirisena now himself appears to have joined the pro-China bandwagon due to what many in Sri Lanka believe his inability to attract enough foreign investment from other countries as well as to shore up the central bank’s depleting foreign reserves.
In May, Sri Lanka’s reserves fell further to US$5.6 billion from US$6 billion in April, the lowest since February 2012. According to Shiran Fernando, leading economist at Frontier Research, Sri Lanka as a post-conflict nation has not attracted as much as it could in terms of foreign investments. Full story...
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The story of the Sri Lankan capital’s hopes to transform itself into an “international financial outpost” in the Indian Ocean—and the ups and downs this the country has faced – confirm to a great extent that while China’s role is not necessarily viewed as completely beneficial, the absence of alternate sources of foreign direct investment makes China an inevitable. It is a scenario that is playing itself out in other countries, not least Pakistan, where China is funding vast projects in what amounts of an investment vacuum.
Sri Lanka’s current president, Maithripala Sirisena, was a vocal critic of the policies of the previous president, Mahinda Rajapaksa, and his strategy of using Chinese capital to attempt to modernize the economy while reportedly enriching himself in the process. Sirisena now himself appears to have joined the pro-China bandwagon due to what many in Sri Lanka believe his inability to attract enough foreign investment from other countries as well as to shore up the central bank’s depleting foreign reserves.
In May, Sri Lanka’s reserves fell further to US$5.6 billion from US$6 billion in April, the lowest since February 2012. According to Shiran Fernando, leading economist at Frontier Research, Sri Lanka as a post-conflict nation has not attracted as much as it could in terms of foreign investments. Full story...
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