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Port City tilts balance toward China, as India watches on 

30 May 2021

  • Port City Commission Act cements China’s strategic entrenchment, to India’s chagrin 

  • Speaker orders probes on whether Port City Bill gained two-thirds majority or not 

  • GMOA under fire for administering limited Covishield stocks to families and friends 

  • MoD and US Embassy refute rumours of new domestic terror threat in Sri Lanka 

  The issue of the Colombo Port City Economic Commission is now done and dusted, with Speaker Mahinda Yapa Abeywardena on Thursday (27) signing and validating the Colombo Port City Economic Commission Bill, which was passed by Parliament the previous week.  The Speaker had signed the Act into law at around 11.30 a.m. on Thursday, the Speaker's Office announced.   Thereby, the Colombo Port City Economic Commission Act is now effective.   However, the legislation has surfaced several key geopolitical issues, from whether Sri Lanka will be able to effectively implement its non-aligned foreign policy, to the degree to which Sri Lanka will permit the Chinese to dictate its domestic policy.  The Port City has also pushed India to rethink its position in Sri Lanka – is India still Sri Lanka’s big brother, or has the island now found itself a new big brother in China? India, as well as other nations focused on the Indian Ocean region, believes that the Colombo Port City is the second major project for China in Sri Lanka, following the acquisition of the Hambantota Port on a 99-year lease. These two projects play a key role in China’s Belt and Road Initiative (BRI).  India reportedly views China’s BRI, as well as the Maritime Silk Route, as Beijing’s ventures to boost its influence in the world and saddle countries taking Chinese loans for the projects within the initiatives with unsustainable levels of debt.  The Chinese influence in Sri Lanka continues with China also receiving another major development project in the country – the elevated highway project – a week after the passage of the Port City Economic Commission legislation. Chinese companies are already engaged in many development projects covering key economic sectors in Sri Lanka. To India, all these are a series of continuous blows to its position as the regional superpower, since China seems to be setting up base right in India’s most strategically significant maritime neighbour – Sri Lanka. Given China’s growing ties with other South Asian countries, including Pakistan and Bangladesh, India seems to be in danger of geopolitical encirclement.  India has already suffered two setbacks in Sri Lanka. First was the decision by the Sri Lankan Government to renege on the tripartite agreement reached with India and Japan on the development of the Eastern Container Terminal (ECT) in the Colombo Port. The change in the Government’s stance on the ECT early this year was the first to sour relations between Sri Lanka and India.  The next issue was the granting of several hybrid renewable energy projects in the islands off the Jaffna peninsula to a Chinese company. Although the Government of Sri Lanka claimed the awarding of the project was following a tender process initiated by the Asian Development Bank (ADB), to India, it was the Chinese gaining access to India’s backyard, given the close proximity between the respective islands and India.  India immediately approached the Government led by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, and communicated its concerns over the project being granted to China, proposing that India would provide funding for the said project instead. India’s intention was for the Sri Lankan Government to cancel the tender and to proceed with the project with the funding promised by India. However, months have elapsed, and the Sri Lankan Government is yet to respond to the Indian request.  Several Cabinet ministers have however stated that cancelling such a tender would result in the country facing legal implications. Nevertheless, to India, all these are signs of Sri Lanka systematically snubbing its traditional democratic allies in favour of building stronger commercial and military ties with communist China.    Consequences of the SC determination  It is in this backdrop that emphasis should be laid on the Port City Economic Commission Act that has been implemented.  The piece of legislation was amended in line with recommendations by a five-judge Supreme Court (SC) bench to ensure the Bill was in accordance with the Constitution. The SC bench determined that one-third of the Bill – 25 of the 75 clauses – were in violation of the Constitution. The Government agreed to amend the Bill accordingly, allowing it to pass by a simple majority with 149 votes.  The once-main Opposition, United National Party (UNP), was one of the petitioners to challenge the Port City Economic Commission Bill before the SC. Attorney Eraj de Silva, who appeared for the UNP, submitted some of the key points that were determined as inconsistent with the Constitution by the SC.  The UNP legal team last week prepared a document that noted that the SC determination had taken away to a large extent, the “teeth” of the original Port City Bill, so much so that what has now been passed is just a “half-baked” version of what was originally envisaged. In other words, the “concept” behind the Bill is completely undermined. According to the working note, the original concept, in effect, was to have a separate territory (the Port City – some four hectares of land) under the purview of an all-powerful “Commission”, which had complete control over permitting any kind of business enterprise and regulating all aspects of living (in effect, make laws, make regulations, impose criminal sanctions, levy taxes, and regulate all aspects of living and business within the Port City).   In respect of enterprise, it could (a) operate as a one-stop shop (single window facilitator); (b) suspend the operation of complete enactments (i.e., Income Tax Act, Customs Act, etc.); and (c) permit such enterprises to engage with businesses in mainland Sri Lanka. Following the SC determination, this concept has changed in many ways, including that it is no more a one-stop shop, but a “two-stop shop”.   “The original Bill envisaged the one-stop shop (single window facilitator) where all regulatory authorities in Sri Lanka (including Customs, Excise, the Monetary Board, Central Environmental Authority, Controller of Immigration and Emigration, Registrar General of Companies, etc.) ‘shall give their concurrence’ to any enterprise approved by the Commission.”  This has changed in, at least, two significant respects:   Now, not only must the Commission approve a new business, but so must the relevant mainland regulatory authority (where applicable) (in effect, now a “two-stop shop”); while the regulatory authorities will continue to exercise power over the enterprise (i.e., monitoring, supervisions, etc.). For example, if a Port City enterprise commits excise violations, the Commissioner General of Excise may take action in the normal way, the note had pointed out. In other words, de facto regulatory authority of the Commission has now been taken away.  Similarly:  
  1. i) Taxation powers taken away  
The original Bill allowed the Commission to impose “tax”. This has been held to be unconstitutional by the SC, which held that the sole prerogative of imposing tax lies with Parliament.  
  1. ii) The power to criminalise taken away
The Bill gave the power to the Commission to make “rules, codes, directions, or guidelines” – which, if disobeyed, would carry penal consequences (Rs. 1-5 million fine, or imprisonment or both) – s.68(f). So, for example, the Commission could make a rule regulating residents or other aspects of living – which could carry penal sanctions. s.68(f) is now totally taken away.   iii) All regulations in terms of the Port City Act to be with approval of Parliament   The Commission cannot make regulations by itself. Now, Parliament will have control.  
  1. iv) No ouster of court’s jurisdiction  
The Attorney General’s submission was cited in the determination (page 52 bottom – i.e., that resolution of a dispute under agreement by arbitration under Part XIII is not an “ouster clause” which precludes the court of Sri Lanka from exercising judicial power according to law”) and appears to form a part of the reasoning.  
  1. v) Parliamentary oversight over all regulations and taxes 
Procedure in Article 154 of the Constitution was required to remain. “Even auditors/international audit firms are to be appointed in accordance with the procedure in Article 154 in view of the court’s determination that the first two limbs in proposed clause 15(1) must be read conjunctively to avoid any inconsistency with Article 154,” it was stated on p45. Thus, if Article 154 has to be complied with, then arguably the Commission and funds are subject to parliamentary oversight and sub-committees of Parliament, such as the Committtee on Public Enterprises (COPE).   It also has no more power to grant non-application of complete Enactments (2nd Schedule – 14 Acts including:  Income Tax Act, VAT Act, Excise, Customs, Termination of Employment Act, Foreign Exchange Act, Casino Business (Regulation) Act). Instead, regulations must be made with parliamentary approval, on what exemptions from those enactments can be granted and the circumstances; while exemptions can only be granted in accordance with such regulations. If exemptions are to be granted, then there is a procedure to be followed.   The protection of local industry was also considered in the Supreme Court;s decision. The original Act contemplated Port City entities doing business with other businesses in the mainland. This could lead to mainland businesses taking advantage of the tax exemptions, and therefore, local industry being compromised (i.e., transfer pricing etc.) leading to a parallel economy. Now this is no longer possible. The Court held if any such permission was to be granted, a new sub-clause (Proviso) should be added – “restraining such person from making use of any exemptions or incentives granted under the Bill when conducting business outside the area of authority of the Colombo Port City to the detriment of similar businesses conducted outside such area of authority but within the territory of Sri Lanka”. As for citizens’ right to visit Port City, the original Bill had required a person to obtain prior approval of the Commission in order to visit the Port City. This attempt to restrain citizens from entering the Port City has been struck down by the SC. According to the note, what has been passed is a completely watered-down version of the original Bill. In fact, it does not serve its original purpose. Its original purpose (or concept), right or wrong, in theory, was to have a “one-stop shop” commission, which was the sole deciding authority, with teeth. The rationale, right or wrong, was that this was necessary to avoid red tape and bureaucracy, in order to attract large scale investment in a self-contained land, without the rigorous oversight of Sri Lankan authorities such as regulators, Parliament, or the courts.   Constitutionally, the SC has determined that if the model envisioned by the Government was to be adopted, then there needed to be a special majority and, in some cases, a referendum. Instead of a two-thirds and referendum, however, the Government chose to pass the Bill with the SC-mandated changes.  As a result of the Bill being passed by a simple majority, it is clear that any unpopular provisions, or even the Bill in its entirety, could in theory be repealed by a simple majority in a future Parliament. This feature of the Bill raises the question of whether the Chinese Communist Party, traditionally strongly aligned with the political fortunes of the Podujana Peramuna, may choose to hedge their bets by building bridges with Opposition parties to protect their strategic interests in the event that the Government is defeated in a future parliamentary election.    The next question is – can this watered-down bill serve the original purpose?   “What should have happened is one of two things: The Bill should have gone for a two-thirds or referendum, so that its original intention/concept could have been intact and preserved; or the Bill should have been taken back to the drawing board, so that a new concept could have been developed and devised in line with our present Constitution, such as targeted focus on particular sectors – such as insurance, banking and finance, and education, with a view to developing and creating the Port City into a regional hub in respect of those sectors – without an all-embracing, open ended, concept city, which the original Bill sought to do. Passing it with the amendments suggested by the SC achieves nothing for anyone and creates tremendous ambiguity, which will perhaps be a recipe for countless and numerous litigation in the future,” the UNP legal team had opined.    Probe on vote  Meanwhile, since the passage of the Port City Economic Commission Bill in Parliament, the governing SLPP has claimed that the Government had in fact achieved two-thirds support in Parliament to pass the piece of legislation, but was prevented from reaching the magical 150 due to a miscalculation of the votes.  The SLPP claimed that the votes of several government MPs had not been included in the final count, which would have allowed the Government to get 150-plus votes for the legislation.  SLPP General Secretary MP Sagara Kariyawasam and several others called on the Speaker for a probe on the votes, which the Speaker said could be done if such a request was made.  It was then announced last week that on the instructions of Speaker Abeywardena, a decision has been reached to conduct two inquiries into the allegation that votes were not counted properly during the Colombo Port City Economic Commission Bill vote in Parliament.  The Speaker had told the media that the inquiries are being carried out following a request made by the SLPP.  Accordingly, one inquiry is to look into whether the vote was not properly calculated due to a technical error. The assistance of experts from the Ministry of Technology is to be sought for this purpose, the Speaker had said.  Another inquiry is underway to determine whether there was an administrative error with regard to the counting of votes. A committee headed by a retired Secretary-General of Parliament is to conduct this inquiry.  According to the Speaker, directives have been issued to submit the inquiry reports expeditiously.  -- Suspension  -- Several Opposition MPs were suspended last week for violating their party stance during the vote on the Port City Economic Commission Bill in Parliament.  Accordingly, the All-Ceylon Makkal Congress (ACMC) led by MP Rishad Bathiudeen has suspended the party membership of two MPs after they had voted in support of the Port City Economic Commission Bill.  The ACMC stated that it had suspended the membership of MPs Ishak Rahuman and Ali Sabri Raheem. The ACMC is a coalition partner of the Opposition Samagi Jana Balawegaya (SJB) alliance led by Sajith Premadasa.  The alliance had decided to vote against the controversial Bill in Parliament the previous week. However, both Rahuman and Ali Sabri had voted in favour of the legislation, violating the party stance. The two MPs had earlier also voted in support of the 20th Amendment to the Constitution, despite the SJB voting against it.  Meanwhile, Rahuman had told The Morning last week that he voted in favour of the Bill because it will not have a negative effect on the economy of Sri Lanka.  “Developed countries such as Singapore, Qatar, and Hong Kong have enacted similar bills, and worldwide, there are about 146 countries under such bills. It is a big advantage for us, as it will bring in huge amounts of foreign currency into the country,” he had said.  Meanwhile, Ali Sabri Raheem told The Morning that he had decided to support the Bill because he wants Sri Lanka to develop as a country. “If anyone is opposed to voting in favour of the Bill, they are against the development of this country. This is why I am supporting it,” he had said.  “I am against being opposed to this Bill. This Bill was initially proposed by Mahinda Rajapaksa’s Government. However, when the Yahapalanaya Government came to power, they put a stop to it. As a result, they almost had to pay millions in compensation, along with giving up 26 hectares to the Chinese Government,” he had added.  - Covid chaos  - Amidst focus on the Port City Economic Commission Bill, the raging cases of Covid-19 in the country have caused panic among the public, with much importance being placed on the vaccination programme. It is against this backdrop that various issues surfaced last week, pertaining to the administration of the second dose of the Covishield AstraZeneca.  Frustrated members of the public who have been waiting for the second dose of the AstraZeneca vaccine accused the Health Ministry and relevant authorities of failing to follow the required protocol. It was also alleged on Monday (24) that some doctors from the Government Medical Officers’ Association (GMOA) had got the vaccine administered to their family and friends in 22 centres in Colombo.   The limited vaccines that were in stock were to be administered to front-liners and medical workers, as well as those who urgently required it due to the shortage of AstraZeneca vaccines. The 22 centres where the AstraZeneca second doses were rolled out mostly to family and friends of the GMOA were allegedly done under the pretext of vaccinating such front-liners and frontline service providers, as well as medical staff.  However, the public health inspectors (PHIs), who have also been waiting for the vaccination, last week claimed that doctors from the GMOA had misused this protocol. Sources from the medical fraternity confirmed this allegation to The Black Box.  A series of messages, allegedly from the GMOA, that was shared over WhatsApp with instructions on the proceedings were also seen by The Black Box. One reads: “All branch secretaries, this the general instruction given to all. 1. The name list of doctors with pending vaccination (western province- AZ 2nd dose) of their immediate family members has been sent to you. 2. The vaccination will take place tomorrow morning. 3. You are kindly requested to inform them immediately regarding their vaccination centre. 4. If vaccination center is stated as LRH [Lady Ridgeway Hospital], the vaccination will take place on 25 June. 5. Previous vaccination card, NIC, and the SLMC number of their doctor needs to be produced for vaccination. 6. Only those who have filled the Google form will be vaccinated tomorrow. 7. You can collect the details of doctors with unvaccinated immediate family members but have not filed the Google form for future use. Thank you very much in advance for your corporation! (sic)”  A message which alleges that the Association has also gone to the extent of establishing an online portal to collect information on the family members of doctors affiliated to it, who are expecting to receive the vaccine, had also been shared.  “Vaccination of Doctors immediate family members. Online portal is reopened due to many requests. This will be open for a limited time. If anyone has missed earlier please fill it immediately. If you have not filled the revised form (Second one) please fill this again. Thank you. https://forms.gle/2E7xYVNTtnPkvmVx9, (sic)” the message had stated.  Another message had also been shared with contact details of hotlines that are to facilitate any questions from those to be vaccinated. “Vaccination of AZ 2nd dose of immediate family members in Western Province will take place tomorrow except CMC area (LRH Vaccination Centre). Please contact your Branch Secretary or our hot lines for further details. 0706326360, 0706326361, 0706326362, 0706326363, 0706326364. (sic)”  GMOA Office Bearer Dr. W.M.S. Amarasingha had told The Morning early last week that the GMOA was the only association that had requested the Health Ministry to vaccinate family members of all healthcare workers. “The data collection on family members of doctors attached to the GMOA was an initiative which was made in collaboration with ministry officials,” he had said. Dr. Amarasingha had further noted that while this data has been collected, vaccinations have not taken place as yet.  He had added that even though the GMOA had requested that family members of all healthcare workers should be vaccinated, other unions have failed to participate in the data collection drive.  In response to this situation, the Association of Medical Specialists (AMS) issued a statement last Sunday (23), slamming attempts to act in violation of the stipulated protocol by the Government. “The unfair prioritisation of certain categories of frontline workers for vaccination at this critical juncture could give rise to serious disharmony among frontline staff battling the present pandemic,” the AMS noted.  Highlighting that because immediate family members of all frontline workers are increasingly exposed presently due to the magnitude of the current wave, the AMS stated that family members of all healthcare workers and other frontline workers should be offered the said vaccine without any delay or discrimination.  In order to ensure a safe and mentally comfortable environment for all the frontline workers and their families at this critical juncture, the AMS has strongly urged the Government to implement the following vaccination plan: 
  1. Provide a second dose of Covishield vaccine to all the healthcare workers, other front-line workers and their immediate family members, solely based on “exposure risk”, as minor staff members working in a Covid ward have a higher risk of exposure than administrative medical officers. We feel it is best, following the recent directive of the Army Commander, to define immediate family members for such vaccination. 
  1. Arrange the first dose of Sinopharm vaccine as an urgent priority to all the frontline workers, health workers, and others, and their immediate family members islandwide. 
The AMS warned that if the Government fails to rectify this anomaly, which may result in severe disharmony and even unrest among frontline health workers, they will resort to further collective action.   Meanwhile, the PHIs Association, seeing the alleged injustice and misconduct by the doctors, authorities, and Health Ministry, decided to pull out from their operations on Tuesday (25) in protest, claiming that if the limited doses continue to be administered with preferential treatment, then those whose 16 weeks are up may have to be administered fresh doses again, which the doctors will have to explain.  --  TU actions  -- The controversy created by the GMOA resulted in several health sector associations and trade unions (TUs) resorting to trade union action demanding vaccines. The Sri Lanka Grama Niladhari Association had stated that they w9uld resign from their duties from midnight Tuesday (25).  Sri Lanka Grama Niladhari Association President Sumith Kodikara had said that the decision was taken in protest of the Covid-19 vaccination system. He had told the media that although the vaccination programme was initially carried out in a systematic manner, it is now being implemented in violation of the priority lists.  Meanwhile, a strike that was to be held on Tuesday (25) by certain health sector TUs, over their relatives not being afforded Covid-19 vaccines whilst relatives of members of the GMOA were prioritised, was called off following a discussion with Minister of Health Pavithra Wanniarachchi late on Monday (24).  PHIs’ Union Secretary M. Balasooriya had told The Morning that the Minister had agreed to have a transparent system for the vaccination purpose, and had identified the need to vaccinate relatives of frontline health workers as a precautionary measure.  “Relatives of all frontline health workers are allowed to take the vaccine now. However, we would be examining if this process is operated in a transparent manner without giving priority to any association, especially the GMOA.”  Almost all health sector TUs had joined the decision to strike, including the Joint Council of Nursing, Professions Supplementary to Medicine (PSMs), Paramedic Services Union, the Government Nursing Officers’ Association, Management Assistants, and the PHIs’ Union.  Meanwhile, Sri Lanka Association of Government Medical Laboratory Technologists (SLAGMLT) President Ravi Kumudesh had said that an investigation should be carried out into the administration of the first dose of the vaccine to relatives of GMOA members.  “During our meeting with the Minister, it was accepted that the first dosage of the vaccination was administered to relatives of the members of the GMOA. The earlier decision was to provide the first dosage of the vaccination for the front-liners, not for family members. So, who gave permission to administer the first dose of the vaccination for the relatives of frontline health workers?” he had queried.  Kumudesh had added that according to Wanniarachchi, 12,000 AstraZeneca Covishield vaccine doses are available at the moment for health sector workers and their families, to be administered as the second dosage.  --  Tensions rise  -- Meanwhile, a tense situation was reported last Tuesday (25) when over 3,000 people had gathered outside the premises of the Lady Ridgeway Hospital for Children (LRH) with the intention of receiving the second dose of the AstraZeneca Covishield vaccine.  A large number of people had gathered outside the LRH after it was announced on social media that the second dose of the AstraZeneca Covishield vaccine would be administered at the venue. However, it was reported that the vaccine had been given only to hospital staff and a selected group of people at the location, while a large number of people had been asked to leave.  Public Health Services Deputy Director General and Health Ministry Disaster Preparedness and Response Division Head Dr. Hemantha Herath had told The Morning that the situation had arisen due to the lack of proper communication regarding the relevant vaccination programme. He had added that the situation could have been avoided, had it been clearly communicated as to who should come to receive the vaccine.  The Government meanwhile is still on the hunt to procure the remaining 600,000 doses of the AstraZeneca vaccine.  The Cabinet of Ministers last week approved the purchasing of one million AstraZeneca vaccines. The Government has reportedly spent approximately $ 3.27 million so far on Covid-19 vaccines, with a further $ 250 million allocated by the Treasury for the future procurement of vaccines.  The Government has spent $ 2,774,250 to purchase 500,000 doses of the Oxford-AstraZeneca Covishield vaccine, while $ 646,750 has been spent to purchase 65,000 doses of the Russian Sputnik V vaccine. From the 65,000 doses of the Sputnik V vaccine, 15,000 doses had already reached the country last month, while a further 50,000 reached the country on Thursday (27).  It is learnt that Oxford-AstraZeneca vaccines were purchased from the Serum Institute of India at $ 5.25 per dose, while the Sputnik V was purchased at $ 9.95 per dose. Thus, a total of $ 3,271,750 has been spent on vaccine procurement to date. Treasury Secretary S.R. Attygalle had told The Morning that $ 250 million has been allocated for future vaccine purchases.  State Pharmaceuticals Corporation (SPC) Chairman Dr. Prasanna Gunasena told the media last week that Sri Lanka has secured 32 million vaccine doses in total.  -- Terror threat  -- Meanwhile, the US last week clarified that there is no change in the terrorist threat level in Sri Lanka.  The US State Department had on Monday issued an updated travel advisory on Sri Lanka, telling Americans not to travel to Sri Lanka. A part on terrorism was also in the advice, raising fears that there was a terrorist threat to Sri Lanka.  “Do not travel to Sri Lanka due to Covid-19. Exercise increased caution in Sri Lanka due to terrorism,” the updated travel advice said.  However, the US Embassy in Sri Lanka said the travel advisory for Sri Lanka had been updated from Level 3 (reconsider travel) to Level 4 (do not travel) solely due to the prevailing Covid-19 situation in the country.    “There is no change to the terrorist threat level,” the Embassy said. The Centre for Disease Control and Prevention (CDC) in the US issued the Level 4 travel health notice for Sri Lanka due to Covid-19, indicating a very high level of Covid-19 in the country.   Defence Secretary Kamal Gunaratne immediately announced that there was no threat of terror attacks in the country.  Even without a terrorist attack on the horizon, as investigations into the 2019 Easter bombings that killed over 250 continue, the country remains terrorised by the viral attack of Covid-19, whose death toll to date is over five times that of the Easter attacks. Unlike in the case of the Easter attacks, there is no one to prosecute, and a long way to go before we can be assured that the danger has passed, with many more fatalities to be expected between now and then. 


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