New Zealand seeks investment in Colombo Port City following warnings from US Ambassador

 30 July 2021

New Zealand’s High Commissioner to Sri Lanka, Michael Appleton, met with Sri Lanka’s State Minister of Regional Cooperation, Tharaka Balasuriya, to discuss strengthening economic ties between the two countries and attracting investment in Sri Lanka’s economic zones and the Colombo Port City.

The meeting comes despite increased alarm of the deterioration of human rights in Sri Lanka with the European Union passing a resolution condemning Sri Lanka’s crackdown on civil society actors and continuation of the draconian Prevention of Terrorism Act. The resolution further called on the European Union’s Council to repeal its favourable trading agreements with Sri Lanka granted under the GSP+.

The discussions further follow a damning report by the US State Department which highlighted the threats that investors face in Sri Lanka. Commenting on the Port City project, US Ambassador Alaina Teplitz stated:

“I continue to be concerned about some aspects of that (Port City) legislation. Because there appears to be openings for either corrupt influences or potential of illicit financing, money laundering and things like that. US companies are going to be wary of that,” Teplitz stated.

The US State Department further highlights the risks for investors noting that the island is “a challenging place to do business, with high transaction costs aggravated by an unpredictable economic policy environment, inefficient delivery of government services, and opaque government procurement practices.”

The State Department further notes investors “concerns over the potential for contract repudiation, cronyism, and de facto or de jure expropriation”.

The report comes as Sri Lanka faces a financial crisis with Bloomberg reporting that Sri Lanka’s default probability was the highest in Asia with the organisation estimating a 27.9% chance of one-year default. The Moody Rating’s agency has further placed Sri Lanka under review for a downgrade.

Read more here.

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