28 October, 2021

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From One Sided Concessions To Mutual Benefit In Port City 

By Jehan Perera

Jehan Perera

The debate over Colombo Port City will not end with the passage of the law in parliament that will govern the new territory claimed from the sea through Chinese investment, technology and negotiations skills. The dream holds out billions of dollars of foreign investment that will be pumped into the national economy and a fast track to development. The bill was passed last week into law even as the country prepared for emergency lockdown in the face of rampaging Covid that has now even infected the Leader of the Opposition and his wife and compelled several parliamentarians to go into quarantine. The vote was 149 in favour with just 58 against, a large majority, but still less than the 2/3 majority needed to permit the enactment of laws that are inconsistent with the constitution.

In an unexpected turn of events the government is now claiming that the count in parliament does not represent the true numbers and in fact more votes were cast in favour of the bill. It appears that the government wants to show that the Port City bill was passed with a 2/3 majority. This may be to reinforce in the public mind the overwhelming strength of the government and its ability to pass any law that it deems necessary even if it means that the constitution will have to be changed in one way or the other. In this time of crisis, with Covid and economic pressures on the one hand, and international pressures on the other, the government may feel it needs to impress upon the public mind that its political strength remains undiminished.

However, it may also be the case that the government’s concern about the number who voted in favour of the bill is to have an insurance policy against future legal challenges to the Port City law as enacted. The Port City bill was a controversial one for several reasons. Social media posts which are spreading like wildfire are rife with racism and hate speech that claim that China got the better of the deal and Sri Lanka will end up as a Chinese vassal. The more serious reason is that 25 of the 74 clauses of the bill were judged by the Supreme Court to be in violation of the country’s constitution. The Supreme Court judgement meant that these 25 clauses needed to be approved by a 2/3 majority in parliament and 9 of them also needed to be approved by the people at a referendum.

Advisers fail 

The Supreme Court used strong words on occasion in its judgement, such as the word “obnoxious” to describe a competitive advantage to be given to companies within the Port City over those outside. There was indeed a serious problem in how the bill had been formulated. It could have resulted in huge infrastructure development taking place in the Port City but with all raw material and expertise being sourced from China through internal arrangements in Chinese currency between Chinese companies and the Chinese mainland. Such a situation would be of little gain to the Sri Lankan economy which is currently suffering from a deficit of foreign exchange.

The lack of feed-in to the national economy would have been made worse by the tax concessions given to those investing in the Port City. The Supreme Court judgment mitigates these one-sided concessions. The judgement of the court also includes a step by step commentary on how the offending clauses that violated the constitution could be amended to fall within the supreme law of the land. This has been a salutary contribution of the court as there have been instances where governments have previously gone on frolics of their own once the Supreme Court made its observations. In this instance, as the court has specified how the changes should be made, and the government did not secure a 2/3 majority in parliament, there is less scope for deviation from the spirit of the court’s judgement. The question arises regarding the legal advice that the government received to submit a bill so greatly flawed that it violated the constitution in 25 of its 74 clauses.

In its judgement the Supreme Court suggested, among many others, amendments to the Bill to ensure the power of parliament over the Port City and that Sri Lankans are not discriminated against by the operation of law for the Port City and that their freedom of movement is not curtailed within the area. It also held that the authorities in Colombo Port City should always obtain the concurrence of the respective regulatory authorities and the powers of such regulatory authorities within the Area of Authority of the Colombo Port City should continue unimpeded. These include the Monetary Board of the Central Bank of Sri Lanka, the Registrar General of Companies, the Director General of the Central Environmental Authority, the Controller of Immigration and Emigration and the Director General of Customs who had been given no role in regulating the affairs of Port City in terms of the bill.

National Minded 

The continuing strength of Sri Lanka’s democracy and its system of checks and balances has enabled the Supreme Court to compensate for the failure of the government’s advisers to correctly guide the government leadership in terms of the law. However, the extent to which the court’s strictures will be followed in practice remains to be seen. The court observed ‘a clear distinction must be borne in mind between the law and the administration of the law. A law cannot be struck down as discriminatory because of the fear that it may be administered in a discriminatory manner. Mere possibility of an abuse of power is not sufficient to hold that a law offends the fundamental right of equality.’ The law which was finally passed by parliament with the relevant amendments needs to be further analysed once it is available in the public domain.

There is no doubt that government leaders will endeavor to protect the national interest on issues brought to their notice. The leadership of the government, especially President Gotabaya Rajapaksa, are greatly trusted by the masses of people as being national minded. Their pledges to protect the national interest, and their demonstrated actions in the past, induced the national electorate to vote for them in record numbers. The sense of nationalism runs deep in the Sri Lankan ethos. The strength of national and religious identity has stood the test of millennia, and withstood invasions from India in the ancient past to Europe in the medieval period up to the modern era. There was also defiance of China whose naval fleet took away a king in 1411 but returned him a year later in a gesture of magnanimity.

This redoubtable Sri Lankan nationalism was seen most recently at the last election when the two issues pertaining to the UN Human Rights Council in Geneva and the US offer of its Millennium Challenge Fund were depicted as betrayal of the country’s sovereignty. With 25 of the 74 clauses of the envisaged Port City bill now modified to protect Sri Lanka’s national interests what exists now in terms of the Port City law will be very different from what was envisaged. It is to be hoped that the amiable and constructive relations that Sri Lanka has enjoyed with China since it signed the Rubber-Rice Pact in 1952 on mutually beneficial grounds when China was isolated as a communist country will continue to be a cornerstone of Sri Lanka-China relations even though China is now a superpower.

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Latest comments

  • 1
    0

    Jehan Perera,

    We should not forget that Colombo port City is a financial center, not a manufacturing Center.

    All Foreign direct Investment within the Colombo Port City will be in the service sector,

    Any investment in the manufacturing sector will be within the scope of Board of Investment BOI and in the mainland.

    • 1
      0

      Even in a financial sector, there is input in human and IT software and hardware resources. There is no guarantee that Sri Lankans will be employed, as this City, having the apartments within it, complete with all human needs like food etc., all foreign employees can be housed free inside (no immigration law to be applied) and all transactions taxfree and other concessions to boot as well. All material for IT can be sourced free of tax for direct settlement outside with no recourse to the SL banking system, while the persons can be paid in their country.
      So JP is correct to say :
      …..with all raw material and expertise being sourced from China through internal arrangements in Chinese currency between Chinese companies and the Chinese mainland. Such a situation would be of little gain to the Sri Lankan economy which is currently suffering from a deficit of foreign exchange……
      Fortunately the SC blocked some of that.

    • 3
      0

      Who said it will not be a manufacturing center. There will factories to turn out chips to be used in gambling shops, to make condoms to be used in brothels (massage parlours). to produce narcotics to be used in cabaret clubs and to print fake dollars for money laundering.

  • 2
    0

    I find it strange that with electronic voting, errors can result. Unless like in 2010 Prez Election, they are trying a “jilmart”.

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