India and Japan to develop container terminal in Sri Lanka

Move aimed to counter Chinese influence in Indian Ocean

India, Japan and Sri Lanka will develop a new container terminal at the Port of Colombo to counter the increasing Chinese influence in the Indian ocean. Government of China is spending massively in the Colombo under its Belt and Road initiative.

Reportedly, the three nations are set to sign a memorandum of understanding (MoU) of which a date is yet to be finalised. The container terminal will be developed at the newly expanded south region of the Port of Colombo. The new facility will allow the understanding nations to dock large container ships.

To fund the development, India and Japan will seek private sector investment. Host country Sri Lanka will control 51 per cent of the project with India and Japan controlling the remaining 49 per cent. An official statement is yet to be released from the government of concerned nations. Japan has agreed to be a player under its Free and Open Indo-Pacific strategy.

For Sri Lanka too, diplomatic and political relations with neighbouring countries as its prior partnership with China has not been much of its help. In 2013, Chinese President Xi Jinping had announced $1 trillion Belt and Road plan of infrastructure development by China to support its trade and economic ties with countries around the globe.

Sri Lanka has been one of the countries attracted to China’s Belt and Road initiative. The controversial China owned Hambantota Port turned out to be a commercial failure, and as the Sri Lanka government could pay the Chinese back, the port was leased to China for 99 years.

Livemint reported, “The nine-year-old Hambantota port in southern Sri Lanka, with almost no container traffic and trampled fences that elephants traverse with ease, has become a prime example of what can go wrong for countries involved in Belt and Road. Sri Lanka borrowed heavily to build the port, could not repay the loans, and then gave China a 99-year lease for debt relief.”

Another project in the country includes Port City Colombo being built by China Communications Construction Co. or CCCC. The plan envisions a financial district pitched as a new hub between Singapore and Dubai with a marina, a hospital, shopping malls and 21,000 apartments and homes.

China-owned CCCC is one of the world’s largest companies with annual revenue greater than Procter & Gamble Co or FedEx Corp, says its portfolio of 700 projects in more than 100 countries outside China has a value of more than $100 billion. CCCC and its subsidiaries have left a trail of controversy in many of the countries where they operate, with many of its projects criticized as debt traps.

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