Hambantota: Haven for projects

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By Namini Wijedasa in Hambantota-Sunday, November 30, 2014

Rs. 600 billion pours into Hambantota development with

more to comeDecisions made in Colombo, while few know the whole pictureGovt. not
providing sufficient info to local businessmen

Miles of
gleaming asphalt and mega infrastructure looming up from the sparsely populated
terrain make Hambantota different to any other district in Sri Lanka. Ever since the
Government started building it upbeginning, as it were, from scratchbillions of
rupees have been poured into the district, and more is yet to come.
The Sunday Times endeavoured to compile a list of major completed and ongoing

infrastructure projects in Hambantota. Each figure was checked, to the extent

possible, with the relevant Government agency. Some statistics or project details could
not be obtained. The list needs supplementing. For instance, it does not include the
money expended on village roads or on irrigation and water schemes. An addition of
available numbers showed that an amount of Rs. 676.353 billion has already been
spent or is in the process of being spent on the district. The actual figure is much
bigger.
The Urban Development Authoritys (UDA) plan for Hambantota even includes a
financial square and a diplomatic enclave. At present, only the Indian High
Commission maintains an office there on rented property. Local officials said the
consulate has requested two acres of land on which to set up its own mission but has
been offered one instead. Agreement is still pending.
It is not typical for things to move slowly in Hambantota. Within a few years, a string of
costly projects have been completed or are ongoing. Much of these are decided upon
in Colombo, with little local participation. People here are yet to feel the benefits, said
a local private sector employee, who did not wish to be named. They fear that, with
more development, there will be more displacement.
Potential investors also have reservations, predominantly tied to the time it would take
to reap returns. Any money put into Hambantota is unlikely to deliver benefits in the
short term, they say. And a common complaint was that the Government did not
provide sufficient or updated information to local businessmen about the opportunities
available in Hambantota.
There was no transparent method by which a venture could be set up and no single
office at district level coordinating the process. The Board of Investment, one
complained, was too Colombo-centric. One or two might know the whole picture,
said Azmi Thassim, Past President of the Hambantota District Chamber of Commerce
(HDCC). Others know bits and pieces.
Hambantota, however, is being heavily promoted to foreignersthose with the really

big bucks. Last week, a delegation was escorted there by the BOI and given a tour of
the growing township. On December 9, another high-profile seminar will be held in
Colombo to encourage foreign currency inflows. Former Malaysian Prime Minister
Mahathir Mohamad is tipped to attend.
A Memorandum of Understanding is likely to be signed on this day with a Malaysian
master developer for a transit hotel with entertainment, spa and meeting facilities on
land annexed to the Mattala Rajapaksa International Airport (MRIA). The area will be a
visa free zone, enabling visitors to enter and leave without immigration clearance.
This would also mean there would be no limitations on the amount of money brought
in or taken out. Officials became cagey when asked for further details or denied
knowing anything.
On the ground, Hambantota continues to change at a rapid pace. Activity was highest
this month at the Magampura Mahinda Rajapaksa Port with construction of the second
phase in full swing. Men and machines from the China Harbour Engineering Company
move like clockwork throughout the day, excavating the basin and transferring earth to
form a manmade island a short distance away.

A car carrier from Hyundai Glovis, a Korean

logistics company, was berthed at the port. The next day, another Glovis carrier was
seen making its way there. A vast array of vehicles, for the local market and for
transshipment, moves through every month. This, along with fuelling services offered
to passing vessels, is helping to edge up the ports income and its prospects are
looking up.
Not far away, roads inside the Mirijjawila export processing zone (EPZ) are being
redone but investors have been slow coming in. Work is yet to start at the second EPZ
in Sooriyawewa for which land has been demarcated. The new general hospital, a Rs.

70 billion project, is rising slowly. In Siribopura, the 42-office administrative building

now contains many Government offices. Some sections are still being painted a pale
orange. The UDA has a sprawling space there, its walls dressed with posters
showcasing Hambantotas incredible, choreographed transformation.
The exhibition and convention centre had nothing going on but a local official bragged
that it had hosted many events. The cricket stadium stood empty. Land has been
sectioned off for a safari park that will house lions, rhinos and other exotic animals.
One woman said the park had the tallest, thickest wall I have seen anywhere in Sri
Lanka. A total of Rs. 1.65 billion has been allocated for preliminary work. While it has
not been opened yet, there are a few animals inside, said an official from the
Department of National Zoological Gardens.
There are probably more outside. From the windows of the SriLankan Airlines flight
that landed on Wednesday morning at MRIA, passengers saw acres and acres of
jungle. As the Government continues to expand the township, a lot of this wilderness
will have to go. Elephants are a big problem, the biggest problem, said a
Government official in the administrative complex.
None of the passengers, nearly all of them Chinese, on the Beijing-bound flight
disembarked. But the MRIA transit lounge was playing host to another group of
Chinese tourists who had been unloaded from a SriLankan Airlines aircraft that had
arrived from the Maldives. They soon left on the Beijing-bound flight. That would be
the only action MRIA staff saw that day.
Hambantota is filling up with infrastructure in anticipation that it will soon be used.
Because of the ruling Rajapaksa familys connections to the district, Government
officials and even private sector businessmen were reluctant to express an opinion, or
to provide a cost-benefit analysis, on the record.
But on the basis of anonymity, many of them offered similar views. A manager of an
investment bank who attended a recent forum organised by the Hambantota District
Chamber of Commerce (HDCC) said that high-net-worth individuals did not show an

interest in the area yet. It would be too expensive to set up an operation from scratch
and there was no possibility of making short-term returns.
He suggested that the Government provides incentives to offset the expenses. Still,
the market was so underdeveloped that the private sector would struggle to do sales.
The manufacturing and energy sectors might benefit from Hambantota. Another
businessman said political uncertainty was a concern of investors. Hambantota
development is so closely associated with one political family, he reflected. What
happens if they lose?
A shipping industry representative who attended the forum was upbeat about the
Magampura port. It might not be a hit in the near future but, in future, an alternative
port will only help the sector. I already see car carriers coming in, he said. There
would be serious congestion in Colombo if those carriers were handled there, he said.
The Government was concentrating on infrastructure development, not people, said a
banker who lives in Hambantota. There is no housing for anyone who moves there,
he said. What is available is very expensive. I pay Rs. 40,000 a month for the house I
live in.
If the Government wanted investors to shift to Hambantota, the schools and other
education institutions must be improved. Water shortages could be dire during the dry
season. Three supply schemes are being constructed but will take time and plenty
more money. These are the Uma Oya diversion project, Menik Ganga (Weheragala)
development project and the Ruhunupura water supply project.
Business was slow because the population was thin. There was no initiative to develop
the low-level private sector. The proposed night bazaar was a positive step. But the
roads were so good now that people visited Kataragama for the day. An hotelier felt
that once the expressway was extended to MRIA, a lot will fall into place. These
things take a long time to mature, he said. All in all, it will be a good area in five to
ten years.
The UDA calls for patience. Infrastructure development, with showpiece projects, is

only one component of development. The others are also being addressed. Ananda
Samarasinghe, the Director UDA for the Southern Province, says much has been
done to resettle displaced populations in an orderly manner, to provide them with
facilities and to set up at least one good school. It takes time, he pointed out. Its a
gradual development.
A uniform complaint was that the Government was not making its plans public. People
dont know a lot of things, the hotelier said. There are investment opportunities
there. The manager of an exhibition and conferences company said his Chinese
contacts were interested in Hambantota because of the hype it is creating overseas.
But they dont know whats on offer, he asserted. There has to be one document
telling potential investors what is available and showing off the benefits of investing in
Hambantota. Foreigners are interested. The information has to be quick and easy so
they dont have to waste time going behind many people. Nobody likes that.
An information technology sector manager said there was no information flow to
Colombo. He advocated regular field visits, grouping investors according to their
interests. We get some information through the chamber and print media, but often
its too late, he said. It could be, however, that the local business community is left out
of the race because the Government needs much bigger funds than they can afford to
make its mega investment on Hambantota viable.
Wide smooth roads at tremendous cost
The first thing you notice about Hambantota is those roads. They are wide, smooth
and mostly empty. They also do not come cheap. The cost of the main expressways
(completed as well as proposed) and the two flyovers are published with this article.
Three projects alone have cost nearly Rs. 59 billion: The Siribopura flyover, at Rs. 2.6
billion; the Mattala airport road flyover, at Rs. 3 billion; and the 32km expressway
between Hambantota Port and Mattala Airport, at Rs. 53 billion (Rs. 54 billion at the
current exchange rate). The last amounts to Rs. 1.6 billion rupees per kilometre.
But a massive outlay of funds has also been allocated for the construction, widening

and rehabilitation of many of the smaller roads, as evident from the 2014 Development
Performance Report of the Ministry of Finance and Plannings Department of Project
Management and Monitoring.
The report gives a breakdown of many B roads along with progress up to June 2014. It
also reveals the allocation of respective technical evaluation committees for the
project. It shows that to rehabilitate 5km of the Sandungama-Beralihena road in the
Hambantota District, a sum of Rs. 86.46 million has been set aside. Another 4.8km
section has been allocated Rs. 93.28 million and a third 5km stretch, Rs. 98.98 million.
The report discloses that 3.5km of Rubber Watta road in Tissamaharama has been
allocated Rs. 83.46 million; 5km on Bodagama-Angunukolawewa road, Rs. 306.66
million (Rs. 61 million per km); and Rs. 69.2 million for 2km on the MalberigodaThiruwangodalla road.
The widening of a 3km stretch of Welipoththewela-Andaragasyaya road has been
allocated Rs. 80.57 million and improvement of a 5km section of AmbakolawewaMorayaya road, Rs. 106.61 million. Many of these projects are being carried out by the
Maga Neguma Road Construction Equipment Company set up under the Ministry of
Ports and Highways, a portfolio held by President Mahinda Rajapaksa. The companys
website provides details. There has been no open competitive bidding process to
determine whether the prices being paid are reasonable.
A large amount of funds has also been set aside for internal roads in the industrial
village of Mirijjawila, although Government officials said they would not be carpeted
until investors move in. We are putting in gravel roads or we might have to redo them
once investors come and there is a lot of construction and related vehicular movement
going on, one explained.
Transport experts, speaking on condition of anonymity, argue that road construction or
rehabilitation is a positive growth feature. They question, however, whether the roads
earmarked for costly development were selected on the basis of economic studies and
on how much traffic uses them. They also ask how road construction costs have risen

at a much higher rate than inflation.

Posted by Thavam