Construction workers bore a hole in the harbour bed at the site of the Hambantota port project, about 160km south of Colombo. Most of China's massive funding is meant for the port and a power plant.
Construction workers bore a hole in the harbour bed at the site of the Hambantota port project, about 160km south of Colombo. Most of China's massive funding is meant for the port and a power plant.

Sri Lanka looks east to China for funding and support



COLOMBO // The Sri Lankan president's decision to shift foreign policy "eastward" after persistent and damaging human-rights abuse allegations from the West was confirmed last week when China emerged as the island's biggest financial donor in 2009. Europe, Japan and the United States have been the biggest donors until a few years back when the president, Mahinda Rajapaksa, was compelled to rely on China, India, Iran, Saudi Arabia and Libya for support after intensive battles between government troops and Tamil rebels triggered civilian deaths and strong protests from the West.

Since then Mr Rajapaksa has chosen to reject western concerns on human rights and instead build new alliances with other countries. "I have little doubt that there is a shift in foreign policy and an-anti West attitude since the last stages of the war," said a veteran Sri Lankan economist, who declined to be named. He said the government believes the West is not of much significance as long as Sri Lanka has "other friends, most notably India and China".

Rohan Gunaratna, a specialist on Sri Lankan affairs and a professor of security studies at Nanyang Technological University, Singapore, also agreed foreign policy is aligned more towards Asia and other countries against the West, a traditional friend. "However, engagement with the West is most crucial," he said, arguing that Asia is still a decade away from becoming the dominant global power. Last week, the treasury department at Sri Lanka's ministry of finance said China was the biggest donor to Sri Lanka in 2009 with US$1.2 billion (Dh4.4bn) worth of assistance in the form of grants, loans and credit representing 54 per cent of the total $2.2bn committed by foreign countries and multilateral agencies. The next highest contributors were the Asian Development Bank with $423m and the World Bank with $241m.

China's contribution is essentially for two major projects - a huge port in the south and a coal power plant on the north-western coast. Japan, once Sri Lanka's biggest donor, made a commitment of just $19.5m last year, compared to an average of $250-$300 million in previous years. Japan was a facilitator along with Norway of the 2002 peace talks between the government and Tamil fighters which broke down two years later. The rebels were finally defeated in May 2009, ending a near 30-year secessionist movement.

The foreign policy shift comes at a time when Sri Lanka desperately needs billions of rupees to fund post-war infrastructure development in the war-ravaged northern and eastern regions. However Dayan Jayatillake, Sri Lanka's former ambassador in Geneva and a commentator on foreign policy issues, said the West does not seem interested in development aid and infrastructure development. "Rather it seems more interested in post conflict rehabilitation and reconstruction especially in the former conflict areas," he said.

Mr Jayatillake said in the fields of development aid and infrastructure, it is the rising economic powers - China and India - that are the most interested, together with Japan. "In the development field partnerships have shifted 'Asiawards or Eastward', which is in keeping with the new global economic trends," he added. Though Sri Lanka resents interference - so far only verbally from the West - in its internal affairs, it continues the process of engagement with the West. Britain, another critic of Sri Lanka's human rights record, was sending Sir Peter Ricketts, the permanent under-secretary of the British foreign office to Colombo on a two-day visit to discuss various issues starting yesterday.

In another development, a government delegation will head to Brussels next week for talks with the European Union (EU) on suspended trade concessions, the government spokesman and minister GL Pieris said. The team includes the foreign secretary and the treasury secretary, both high-level government officials. The EU last month said duty-free imports into Europe benefiting mostly Sri Lanka's clothing exports will be withdrawn from June after the government failed to meet obligations outlined in the UN human and labour rights conventions. However, the EU has said it is willing to reconsider the decision if the government prepares a workable road map on enforcing the conventions.

@Email:foreign.desk@thenational.ae

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

The specs

AT4 Ultimate, as tested

Engine: 6.2-litre V8

Power: 420hp

Torque: 623Nm

Transmission: 10-speed automatic

Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)

On sale: Now

Test

Director: S Sashikanth

Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan

Star rating: 2/5

The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

'Gehraiyaan'
Director:Shakun Batra

Stars:Deepika Padukone, Siddhant Chaturvedi, Ananya Panday, Dhairya Karwa

Rating: 4/5