The United States continues to be concerned about some aspects of the Port City legislation that passed in Parliament. There appear to be openings for corrupt influences and the potential for illicit financing, money laundering, and/or other activities by nefarious actors who want to take advantage of what they perceive to be a permissive environment for illegal activity. U.S. companies are going to be wary of that.
US ambassador Alaina B Teplitz in a recent interview with the Centre for Strategic studies said U.S. companies considering investing in Sri Lanka want predictability and a clear understanding of the investment environment.
They’re going to need to know that if they’re investing, they’re not going to be confronted with risks that could present problems for them, either from regulatory bodies, their own shareholders, or their boards of directors.
Ambassador Teplitz was answering the question
There has been widespread criticism of China’s investment project in Sri Lanka. But the Chinese Ambassador described the Colombo Port City project and the Hambantota Port project as dual engines of Sri Lanka’s economic growth. But you warned that the Port City could be creating a haven for money launderers and other nefarious actors to take advantage. On the other hand, the government also seems to see the Port City project as an economic saviour. Are there opportunities for western countries, mainly US investors, to invest in the port city in this situation?
Under the Foreign Corrupt Practices Act (FCPA), it is unlawful for a U.S. company or individual to offer, pay, or promise to pay money?or anything of value to any foreign official for the purpose of obtaining or retaining business. A U.S. company considering investing in Sri Lanka must be confident that they’re not going to be exposed to – or collaborating with – entities that could have economic measures levied against them by the U.S. Treasury or Commerce Department.
We recognize that the government in Sri Lanka wants to take advantage of the investment already made in the Port City project, and that’s understandable. Our simple caution is that for such a large infrastructure / development project, it is incredibly important to get the legislation and regulations right – and ensure the door is not left open to illegal activity and unfair competition. As a general principle, bad money – for example, if the legislation does not close loopholes that might permit money-laundering – drives away good money.
You mentioned “dual engines of Sri Lanka’s economic growth.” I think a more important question is “where will these engines take Sri Lanka?” The Hambantota port project incurred a tremendous amount of debt for the country, and ultimately Sri Lanka needed to lease out the port for the next century as a result. The Colombo Port City could possibly open Sri Lanka to a host of suspect economic practices and corruption. Who would benefit from that? Although some bad actors would likely benefit, the larger Sri Lankan economy would suffer. A country’s investments need to generate a positive return in order to benefit the people; investments that yield a negative return – either in terms of jobs, revenue, or reputational risk – are a millstone around the neck of future economic growth.
An economically strong and prosperous Sri Lanka is in the interest of both our countries. The private sector plays a key role in driving the global economy. Ensuring the right conditions prevail in order to attract high quality, U.S. private sector investment and to help Sri Lanka stake its claim as an attractive and reliable economic partner in the region should be a priority policy goal for the government.
