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Sri Lanka suspends Japan-funded rail project

  • September 26, 2020
  • , Nikkei , p. 9
  • JMH Translation

By Akira Hayakawa

 

Sri Lanka, an island nation in the Indian Ocean, showed its intent to suspend a Japan-funded rail project. With a total cost of 250 billion yen, the rail project was Sri Lanka’s biggest single foreign-funded project. The project was viewed as part of Sri Lanka’s move to decrease its economic reliance on China. There is concern that Sri Lanka may again lean towards reliance on China if the project is terminated.

 

The planned project targets a section of the railway that runs through Colombo, Sri Lanka’s largest city. The project includes the construction of 15.7 kilometers of elevated railway line and the construction of 16 stations as well as procurement of railway cars. Sri Lanka signed an agreement for a 30-billion-yen loan from the Japan International Cooperation Agency (JICA) in March 2019 toward the first phase of the project. A ground-breaking ceremony took place in July 2019 with the attendance of then-prime minister Ranil Wickremesinghe.

 

President Gotabaya Rajapaksa, however, ordered the termination of the project. The president’s secretary noted in a Sept. 21 letter to the transportation ministry that the project “costs are very high” and the project is not a “cost effective solution for Columbo’s transportation infrastructure. The letter explained that the “President ordered the termination of the project and closure of the project office.”

 

Japan and Sri Lanka agreed on the project during former President Maithripala Sirisena’s administration. The Sirisena administration had a goal of reviewing the country’s excessive reliance on China, and aimed for balanced diplomatic relations with other countries such as Japan and India. There are concerns that President Rajapaksa, who took office in November 2019, will again turn towards China. This is because his brother, former President Mahinda Rajapaksa, was seen as “pro-China” and proceeded with infrastructure projects that rely on Chinese funds.

 

The southern port of Hambantota, developed with Chinese aid, was leased to China for 99 years in 2017 during former President Mahinda Rajapaksa’s administration due to Sri Lanka’s problems in debt payment. This is a typical example of China’s “debt trap.” Mahinda Rajapaksa serves as prime minister alongside his brother, President Gotabaya Rajapaksa, since the 2019 presidential election.

 

It is still unknown whether the rail project will be terminated. Reuters reported on Sept. 24 that a transportation ministry official said the project “was temporarily suspended due to “foreign exchange difficulties” and that “other projects are also suspended.” The JICA Sri Lanka Office only responded that it “acknowledges the media reports [of the project cancellation] but will reserve from commenting” on the matter.

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