Since President Xi Jinping first proposed the Belt and Road Initiative (BRI) in Kazakhstan and Indonesia in 2013, China (Shenzhen) Comprehensive Development Research Institute (CDI) has been actively involved in the construction of overseas industrial parks, leveraging its extensive experience in economic zones and industrial park lifecycle management. The CDI has provided consultation services for the legislative, planning, and construction of special economic zones in countries such as Ethiopia, Congo, Mauritius, Kenya, India, Sri Lanka, Belarus, and Micronesia. This has involved sharing China’s experience in economic zones and promoting a full-service model for Chinese enterprises from project construction to investment, construction, management, and operation. The CDI’s efforts have not only provided intellectual support for the implementation of BRI projects overseas but have also been recognized by both the Chinese Foreign Ministry and host governments as a commendable practice of China’s research and consulting industry going global and exporting China’s soft power.
Sri Lanka: A Strategic Hub in the Belt and Road Initiative
Sri Lanka, known as the Pearl of the Indian Ocean and the Crossroads of the East, is an important node in the Belt and Road Initiative. As the largest trade partner and significant investor in Sri Lanka, China has played a crucial role in the development of industrial parks, which are vital for Chinese companies to go global and engage in international industrial capacity cooperation.
Challenges in the Business Environment and Industrial Park Development
Despite its strategic location and China’s significant involvement, Sri Lanka faces challenges in its business environment and industrial park development. The country’s economic structure is primarily agricultural, with a weak industrial base, substantial trade deficits, and a large foreign debt. Moreover, the country’s ranking in the World Bank’s 2017 Global Business Environment Report was 110 out of 190 economies, and its credit rating by major international rating agencies such as Fitch, S&P, and Moody’s was at the B-level with a negative outlook.
Sri Lanka has 16 industrial parks, with a total area of 708 hectares. These parks, mainly operated by the Board of Investment (BOI), focus on industries such as textiles, food processing, chemicals, automotive, IT, and education. However, these parks suffer from small size, small enterprise scale, scattered industry types, weak industrial agglomeration effects, limited radiation driving force, and low government service standards.
Strengthening Legal Framework for Investment Protection
Given these challenges, it is crucial for China and Sri Lanka to enhance legal cooperation and policy communication to protect the interests of investors, including Chinese companies. This can be achieved through the following measures:
-
Conclusion of Bilateral Agreements with International Legal Effect: China and Sri Lanka have already signed bilateral agreements, including the Agreement on Promoting and Protecting Investment and the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion. The two countries should strive to complete a comprehensive free trade agreement covering trade in goods, services, investment, and economic and technological cooperation.
-
Support for the Development of Highest-Level Legislation for Industrial Parks: China should support Sri Lanka in converting the provisions of bilateral or multilateral FTAs and BITs into more specific domestic laws, further strengthening the guarantee mechanism. It is also important to support Sri Lanka in enacting central or centrally authorized special legislation that aligns with high-standard international economic and trade rules.
-
Establishment of a Dialogue Mechanism for Industrial Park Construction: The two countries should establish a high-level dialogue mechanism for industrial park construction under bilateral or multilateral economic diplomacy dialogue coordination mechanisms, such as the Belt and Road International Cooperation Summit and the China-Sri Lanka Economic and Trade Joint Commission.
By implementing these measures, China and Sri Lanka can enhance legal risk prevention and control in the construction of overseas industrial parks, promote sustainable development, and achieve mutual benefits in the Belt and Road Initiative.
Views: 0