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“Pressure must be applied on the Chinese” – PB on Port City
The idea that the China-built Port City will channel billions of dollars into the economy from the outset is a “misunderstood concept by many” but the project is expected to catalyze construction, employment and the capital’s property in its first phase, said P B Jayasundera, Secretary to the President.
P. B. Jayasundera
“If anybody thinks a US$ 20b investment will come front-loaded, that won’t happen,” he told the Sunday Times. “You have to phase it out.”
“Land investment was only what Chinese were supposed to do,” he elaborated. “For that, they were paid in kind. That is seven blocks. From our point of view, that they have now recovered and now, the whole area, including their seven blocks, comes under the purview of the Colombo Port City Commission. It’s an economic zone now.”
Within that zone, the Chinese must achieve two things, the President’s Secretary, and former Treasury Secretary, said. “One, they have to recover their US$ 1.4bn investment on the land and related infrastructure,” he explained. “For that, they have to earn by selling their land. At the same time, the purchaser won’t hold the land for an unknown period, he will build.”
To attract investment, the Chinese have “on their own” started to concentrate on the financial sector, which is just one of the zones the Port City has been segmented into, Dr Jayasundera said. “They propose to start financial sector construction on their own lands,” he pointed out. “In September, they are planning to have a property developer build three out of five towers for this purpose.”
It is anticipated that this will activate the local construction industry. “They will have to procure various materials, carpenters and technicians, etc,” he pointed out. “They use some people from here. And in the initial two-three year phase of construction, they have to rent apartments or other housing, project offices, etc, and that is a kind of cash flow.”
The Government expects t his catalyst to generate US$ 300-400mn annual inflows per year in incomes such as food, rents, and so on. In the meantime, the marina – which is now nearly ready – can start operations, along with parking spaces and some of the shopping centres.
“Everything need not be fancy and extravagant in the first phase,” Dr Jayasundera stressed. “That is how it has been sequenced. My assessment is that, in the first phase, there will be US$ 300-400mn annual cash flow because of the heavy construction work that has to happen.”
“If not for the pandemic, we would have now seen a cash flow,” he said. “”There is no point in delaying these things. And pressure must be applied on the Chinese. The environment has been created for them to deliver because we are not allowing them to borrow from local banks. They have to repay their loans, whoever the bankers were that funded them. These are registered, listed companies. This (Port City) might be a small fraction for them but they have to make sure their portfolio is credible. “