This is the Colombo Port City?
Yesterday, I was invited to go on a (guided) tour of the much-discussed Colombo Port City. I, along with a small crowd of twitterati, were taken to look at what’s already built, ask questions, take photos and cross-examine the management of CHEC Port City Colombo Private Limited, the people doing the actual construction. When I told my friends that I’d be at the Port City in the morning, the first thing everyone said was “Don’t get shot”.
Indeed, I expected people with guns and boards saying “no photography”. It was something of a disappointment: I wasn’t shot at, was never told to put my camera down. We were taken in vans to the actual site, and I did not see a single soldier: instead, my group had David (Li Yue), a very cordial fellow who told me he’d been here for a year and a half and lived near the Beira Lake, towards the temple. He mentioned using Yamu.lk to explore the city and said that liked to get his coffee from Whight and Co on Marine Drive.
David was worried; he referred multiple times to “this pressure”. We were escorted around by the chief engineer of the project (a Sri Lankan, though I did not catch his name). He’s the man on the left in white shirtsleeves in the photo below.
I expected the tour to lead us away from the actual building of the land, and in that I was correct. We started at an engineer’s barracks, headed a brief distance to the edge of the marina being constructed, and then were whisked inland to the top of the Pagoda for “a bird’s eye view”. After that, it was off to a boardroom discussion with higher-ranking officials from the project. In short, we didn’t get to set foot on the significant portion of the work. Thankfully, my camera, while not very fancy, can still read numberplates at that distance.
I don’t tweet often, but those who were tweeting that day were taking a phenomenal amount of flak on Twitter, so let’s start off with a disclaimer:
- I do not represent any government.
- I was there in my capacity as a blogger, and not representing any person, organization or group of persons that I work for or have affiliations with. I went on the condition that I would get to ask questions and expect some straight answers.
- I was not involved in the selection of those who attended, nor am I affiliated with those who presumably did the selecting.
- I was not paid for this. We were given lunch, a notebook (paper, not electronic) and a pen drive. I can easily afford all three (and I believe this is true for all who were there that day), so I do not take this is a bribe, but rather, a courtesy.
- All images used in this post are mine, unless otherwise mentioned. Feel free to use them.
The tour began from Galle Face Green and into a visual overview of the Colombo Port City. But before I project my opinion, here are the numbers. They’ll make it easier to understand (or visualize) the photos:
- The Port City will be 223 hectares in area (2.23 square km, or 541 acres). It’s a huge curving shape that’ll stretch from the tip of the Colombo Port parallel to the Pagoda, curving towards an end in front of the Old Parliament building, and will be protected by a massive breakwater following the curve of the newly-built land. To be crude, we’re not giving land to the Chinese: the Chinese are making land.
- The Port City Project is done by CHEC Port City Colombo, a company integrated under Sri Lankan law. It is a local front fully owned and operated by China Communications Construction Company Limited (CCCC).
- CCCC is owned by the Chinese government; 10,324.9 million shares, 63.84% of the total capital, is held by the China Communications Construction Group, controlled by State-owned Assets Supervision and Administration Commission of the State Council (SASC). They’re listed on the stock exchanges of both Singapore and China ( SEHK: 1800, SSE: 601800 ). They’re also on Forbes Global 2000 (# 306), with assets worth $85.6 billion. Here are the reports from Reuters and Bloomberg.
- As far as I can make out, they’re the third largest port construction company in the world. They built the Macau International Airport (the entire island, not just the airport), the Hong Kong International Airport (which also involved building the land it’s on) and the Gawadar Deepwater Port in Pakistan. In 2009 the World Bank debarred it for fraud in a Philippines road construction project, preventing it from working on any World Bank sanctioned road or bridge projects until January 12, 2017. You can Google these guys; skip past the wave of press releases and find newspaper articles from different countries for the best reading experience.
- Why is CCCC important? Because CCCC is not an investor of the Port City, but the investor: the entirety of spending for this project is from their coffers (they told us the fund for the Colombo Port City roughly 30% from equity and 70% from loans they’ve obtained, but I have no way of verifying this.) CHECH Port City Colombo simply seems to be the legal intermediary. GoSL spends nothing.
- Once the Port City is built, the Government of Sri Lanka, according to the contract, gets 125 hectares (308.882 acres) on a freehold basis (meaning you own it forever, and have the right to do what you want with it). CCCC gets 108 hectares (266.874 acres). Of these, 88 hectares are on a 99-year lease: at the end of 99 years, ownership is to be transferred to the GoSl. 20 hectares will be owned by CCCC on a freehold basis.I have not seen this contract, so make of this what you will. When I asked to see a copy of the document, or whether it will be released to the public at any point, I was told that the contract is private and confidential.
MY GOD, IT’S FULL OF SAND
We trudged out to an outpost of sand and rock, but it was only at the Pagoda that I managed to get a clear view of the proceedings:
This is the Port City. Those blue-roofed buildings are where the tour started. That stretch of rubble past the lighthouse (left) were where we were taken to. In its current state, it looks like someone just stumbled across a beach; it would be cute if it weren’t for the scale of the city: this is just 10% of the full thing. The rest of the land reclamation will take another 2 1/2 years.
(Land reclamation, for those not in the know, is the process of excavating sand from the sea and by dumping massive amounts of it directly onto the seabed. Here it’s done by a process called rainbow dredging: a ship called the dredger collects slurry – sand mixed with water – which then stored on the ship and transported to the site. A dredger can eject the slurry in massive arcs to where it needs to go, like a torrential vomit of several tons of sand and water).
Where we stood, it was about 8 metres to the seabed. Out towards the Port City’s planned edges, nearer to the lighthouse, it was around 22 metres. A breakwater, 5.5 km in length, will run around all of the city. I was told it would take between 60 and 70 million cubic meters of sand for Phase I and about 4 million cubic meters of rubble, with the rubble being supplied by 10 local suppliers. The engineers told me that if the suspension was lifted tomorrow, they could have it done in about 30 months. None of this, they insisted, was on schedule any more. Everything that was shown to the public – those high-rise buildings, images of parks and so on – is still far away. Here’s a rough timeline of how all this came to be:
- 1998: First proposal by a Singaporean Company called CESMA (now Suburna)
- 2004: Western Megapolis plan submitted by the UNP, with Pettah to be a leisure center with a harbour front (http://www.sundaytimes.lk/110918/News/nws_19.html). The project went nowhere.
- 2011: Beginning of discussions between CCCC and the GoSL Bid submitted to SLFP (they were very adamant that it was submitted to the part and not the government as a whole). Standing cabinet reviews the bid.
- 2012: Detailed proposal submitted to SLFP
- 2013: EIA done by Moratuwa University.
- 2014: Cabinet approves key terms (January); Approval given to sign the contract (September)
Phase II, where investors buy land, move in, and turn the whole thing into the new Colombo, is supposed to be 15 years in the future. We were later shown a map, which we were asked not to photograph because it was not yet finalized. It had residential units marked along the piers and towards the middle, making up about half of the total area.
Towards Colombo were banks of commercial buildings; near the pagoda were areas allocated for a hospital. There were areas for educational institutes, for a convention center, for watersport parks, 3.5 km of beaches, and a marina in front of the Old Parliament where yachts are supposed to be parked. There’s a body of water down the middle. Buildings will be built (by anyone) under both structural and aesthetic guidelines from a massive development control regulations document. One of my notes from that meeting reads “It looks like it could be pretty, also pretty self-sufficient.”
I did not see any submarines or docking stations. If they are coming, they certainly aren’t here yet. The master plan for the City, I was told, was done by Sweco (of Sweden) and audited by Atkins of UK. AECOM (of the US of A) mapped out infrastructure while CBRE mapped out project feasibility. All of these are massive, international companies, so if anyone can cross-check and verify, that would be excellent.
WHO OWNS US NOW?
Sri Lanka, as a whole, never saw this contract, and were never told the terms. That, eventually led to the most pressing question for all of us: what law will be applied here? Whose land is this? Is this Sri Lankan or is it Chinese?
I asked this question from the Sri Lankan engineers, from David, and later, from Lian Thow Ming, Chief Sales and Marketing Officer of CHEC Port City Colombo. They were adamant that it was Sri Lankan law. Any business setting up shop here would have to comply with the laws and edicts of the government of Sri Lanka. And, just as importantly, jurisdiction of the sea area belongs beyond and around the harbour to Sri Lanka. I assume this means that Sri Lankan police will patrol the streets, preventing crime and creating traffic.
Ming was polite, but irritated. At every stage there was an undercurrent of frustration with the government. I’ll type here what he said:
“Under the laws of this country, anyone who buys a plot of land owns it. We are not only spending 13 billion dollars for land, but also giving more than half of it to your government to keep for free. […] But we are not even buying land, we are making land. […]We own part of this land. We will sell it to investors to come build here, and we will make a profit. Do you think if we were not doing this under the laws of your country, we would suspend this project? No, we would not. If we were doing this illegally we would not stop building. But your government asks us to stop, so we stop and wait for their word. We are not doing this because we are charitable people, or because we want to occupy part of the country. No company is going to spend 13 billion dollars for nothing. We come for business and profit.
Some people were arguing that there were tax breaks. Of course. To make this project commercially viable there must be some incentive. If you don’t do the project, nobody generates profit, nobody makes anything. If you do the project, people set up businesses here, businesses make profit and that means more tax money.”
That actually makes sense if you look at CCCC as a purely commercial entity rather than an extension of China’s government (a very big if, mind you). Because honestly, there’s enough and more people bitching about how Sri Lanka should hurry up and turn into Singapore already, but pride and culture doesn’t buy development: money and trade does.
The next part, though, doesn’t make sense: with regard to the actual plots (of the city) CCCC / CHEC apparently has “no idea” what parts they’ll be owning. They are getting 108 acres, but which pieces? There is a process with the government, they say. The government hasn’t yet told them what parts it wants. I have no experience in building port cities, nor do I deal with billions of dollars, but I have a great deal of trouble believing that anyone would invest such a huge amount of money and effort and then say “oh, we have no idea what exactly we’re getting.”
WILL THEY MAKE A RACETRACK?
Throughout the whole thing, I asked people what they would do if the project was shut down by the government. What the contingency plans were. Almost everybody said they believed that would not happen, but yes, it turns out the contract apparently has means of reclaiming their investment. What these, and how they could be enforced, they were reluctant to discuss: Lien’s legal aide broke in with mention of a Sri Lanka – China bilateral agreement signed somewhere in the 1970’s that protect them in some form. China’s had a pretty long history with Sri Lanka: quite a lot of military gear and telecom infrastructure are from Chinese companies. I have no idea what this agreement is, though: if it exists, it doesn’t seem to show up on the web. If anyone knows what it is, do link below.
The environment is the next most frequent question. I was told that according to the terms of the contract, the EIA (Environmental Impact Assessment) report was the responsibility of the government of Sri Lanka. It was done by the Moratuwa University and was commissioned by the Ports Authority. And that was apparently as far as they were willing to go.
There is a whole lot of controversy surrounding this report, some of politically generated (see http://www.thesundayleader.lk/2015/02/15/controversy-surrounds-colombo-port-city/) some of it from actual environment activists and lawyers (see http://www.dailynews.lk/?q=business/port-city-has-not-undergone-cea-s-eia-report). There’s also the question of waste: something this large means, quite literally, a lot of shit. And heat. And all manner of other substances. On that, Ming had no answer: they said they were still figuring it out. “We’re still not going to dump it in the sea – that’s what you do now,” he said.
That makes no sense. If anything, it casts more doubt onto that EIA. How do you assess environmental impact if you have no idea where metric tons of waste will go?
One of the last questions put to me before I went off was what effect all of this would have on the price of commodities – namely, sand and rubble. This question eventually evolved into a discussion on the suppliers. Right now, the Colombo Port City project employs 10 suppliers bringing them rubble. They didn’t disclose the names of the suppliers, but the Lankan engineers were quick to say that they employ ten out of hundreds in the country, so there’s no risk of the market running out, and that they needed that number mostly because logistics of running 500 trucks a day deemed it necessary. The sand they deemed irrelevant to the market: building construction needed river sand, they pointed out, not sea sand. They were fantastically proud of the Port City, they said, and of their part in it.
As for the land value increasing of Colombo increasing? That’s actually inevitable, but it works out well for CCCC: higher land values in Colombo also mean more people will be inclined to buy land on the Port City. Cue higher profits.
And the racetrack? “We have no plans as of yet to build an F1 racetrack,” said Ming cautiously. “I come from Singapore, where we turn the Marina Bay roads into a street circuit for night races (note to self: aha, now we know where that idea comes from). The quality of tar required is different. Our roads will be good, but maybe we will not have an F1 here just yet.”
WHAT BUGS ME ABOUT THE WHOLE THING
- The politicians and the String of Pearls
The Colombo Port City is as much a symbol of political and cultural power as anything else. Politicians use it as ammunition for their causes; conservatives roar about casinos and brothels and the slow death of Lankan culture; Ceylon Today is using it to generate lots of web traffic; India seems to fear it; the US is wriggling. The former two are idiots, but look up the String of Pearls hypothesis and you’ll see why the superpowers are getting their underwear in a twist.
- The mystique
“Is this piece of land Sri Lankan or Chinese?” is not a question any citizen should have to ask inside Sri Lanka. The government should have made these things clear. Instead of actual data, one sees the “sovereignty” tossed around by every Tom, Dick and Kotalawala. Why the draconian security? If this was such a simple, commercial deal, why all the mystique? When I asked, Ming stated that they were aware that they should have “tried to reach out more to the public, and done it better, which is why you are here.”Even so, why a random collection of twitter personages? As fascinating as the Sri Lankan twitter community is, a bunch of people taking selfies left, right and center and a blogger (me) is hardly a replacement for having actual journalists from the mainstream Sri Lankan media attending.
- The plans “not being finalized”
I don’t believe that.
- Environmental impact was definitely not sorted out.
If it’s the government’s responsibility to look into it, it should be looked into immediately. Right now it’s the equivalent of buying a commode without knowing where the bathroom is.
- The contract.
At every turn, this contract is referenced, but as far as I know the government has not made a single statement about it. At the very least, a list of the key points should be published. We are, as a nation, engaged in a giant political tug of war between China, India and the US. One of which has helped us massively in the past (China), one of which has funded terrorists and poached our fish (India) and one of which has a history of colossal arrogance and international war at the drop of a drop of oil.
I personally have no doubt that economically, this is going to be a huge thing. People will live here. There’ll be 3.5 kilometers of public beaches. Actual malls will set up shop, and not just micromalls like Majestic City and Crescat. International companies will set up offices here – retail spaces are enough; it’s the offices that will really drive change. Sri Lanka has a skilled IT / BPO industry; that will probably blossom. Sri Lanka badly needs this kind of investment if it’s to become anything like the massively important hub of the world every full-blooded Sri Lankan seems to think it is. We don’t have the money ourselves, and nobody is willing to give it to us.
I was honestly reassured by how utterly profit-oriented the CHEC people seemed to be: between businessmen and politicians, it’s the latter that have problems with honesty. However, make no mistake: China is building this port. They’re say they’re not here to settle, but they have the right to; there’s plenty of space in there for everyone. And I don’t know what’s in that contract, but I don’t think Sri Lanka pulling out will be a painless process. I also don’t think that everyone is playing with a straight bat.
For better or the worse, Chinese influence is coming. Whether we end up turning into Singapore or into Hong Kong remains to be seen.