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Forbes: Lanka, Pakistan and Maldives among biggest debt burdens to China

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Sri Lanka, Pakistan and Maldives in South Asia stand neck-deep in the Chinese debt. Pakistan has $77.3 billion of external debt to China while Maldives amounted to 31 per cent of Maldives’ Gross National Income (GNI). Maldives’ total debt amounts to MVR 86 billion by the end of 2020, MVR 44 billion of which is external debt, said a report by the Forbes.

Forbes, collecting data from The World Bank report as of 2020, says that 97 countries across the globe are under Chinese debt. Countries heavily in debt to China are mostly located in Africa, but can also be found in Central Asia, Southeast Asia and the Pacific.

China is reaching most of the countries under the One Belt and Road scheme. The world’s low-income countries owe 37% of their debt to China in 2022, compared to just 24% in bilateral debt to the rest of the world.The Chinese global project to finance the construction of the port, rail and land infrastructure across the globe, has been a major source of debt to China for participating countries.

Those with the highest external debt to China are Pakistan $77.3 billion, Angola at 36.3 billion, Ethiopia $7.9 billion, Kenya $7.4 billion and Sri Lanka $6.8 billion.

Maldives newspaper reported that according to statistics released by the Finance Ministry, Maldives’ debt rose to MVR 99 billion by end of Q1 2022. It made up 113 per cent of GDP. The projects in the Maldives funded with loans from China include the construction of the Sinamale Bridge and the airport development project.

Bangladesh too is a part of China’s Belt and Road Initiative. Dhaka owes 6 per cent of its total foreign debt to Beijing, which is around $4 billion. According to a report from FT, Bangladesh is seeking a first instalment from the IMF of $1.5 billion, as part of a total package worth $4.5billion.” This amount would include a financial line to help it fund climate change resilience projects and buttress its budget,” reads the report. According to the IMF, Bangladesh had a total foreign debt of $62 billion in 2021. The majority of the debt is owed to multilateral lenders such as the World Bank.

The countries with the biggest debt burdens in relative terms were Djibouti and Angola, where debt to China exceeded 40% of gross national income, an indicator similar to GDP but also including income from overseas sources.The equivalent of 30% of GNI or more in Chinese debt affects the Maldives and Laos, with the latter just having opened a railway line to China which is already causing debt issues for the country.

Sri Lanka May 2022 was the first country in two decades to default on its sovereign debt. Chinese debt to Sri Lanka was the fifth-highest overall in late 2020 and amounted to 9% of the country’s GNI. According to the Financial Times, which called the development in Sri Lanka and elsewhere China’s first overseas debt crisis, the country had to renegotiate loans worth $52 billion in 2020 and 2021—more than three times the amount that met this fate in the two previous years.

China has provided record amounts of financing to developing countries over the past two decades, supporting both public and private sector projects. The Belt and Road Initiative is President Xi Jinping’s flagship foreign policy initiative; launched in 2013 to invest in almost 70 countries and international organizations, it has propelled China to global dominance in international development finance.

China’s Belt and Road Initiative has caused dozens of lower- and middle-income countries to accumulate $385 billion in “hidden debts” to Beijing, a new study has claimed.AidData, an international development research lab based at Virginia’s College of William & Mary, says 13,427 Chinese development projects worth a combined $843 billion across 165 countries, over 18 years to the end of 2017.

China has faced criticism for its lending practices to poorer countries, accused of leaving them struggling to repay debts and therefore vulnerable to pressure from Beijing. China rejects this criticism and calls it as “propaganda/narrative of the vested interested countries” to tarnish its image.



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Sri Lankan among hundreds of foreigners freed from Myanmar’s scam centres

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More than 250 people from 20 nationalities including a Sri Lankan who had been working in telecom fraud centres in Myanmar’s Karen State have been released by an ethnic armed group and brought to Thailand.

The workers, more than half of whom were from African or Asian nations, were received by the Thai army, and are being assessed to find out if they were victims of human trafficking.

Last week Thai Prime Minister Paetongtarn Shinawatra met Chinese leader Xi Jinping and promised to shut down the scam centres which have proliferated along the Thai-Myanmar border.

Her government has stopped access to power and fuel from the Thai side of the border, and toughened up banking and visa rules to try to prevent scam operators from using Thailand as a transit country for moving workers and cash.

Some opposition MPs in Thailand have been pushing for this kind of action for the past two years.

Foreign workers are typically lured to these scam centres by offers of good salaries, or in some cases tricked into thinking they will be doing different work in Thailand, not Myanmar.

The scammers look for workers with skills in the languages of those who are targeted for cyber-fraud, usually English and Chinese.

They are pressed into conducting online criminal activity, ranging from love scams known as “pig butchering” and crypto fraud, to money laundering and illegal gambling.

Some are willing to do the work, but others are forced to stay, with release only possible if their families pay large ransoms. Some of those who have escaped have described being tortured.

The released foreign workers were handed over by the Democratic Karen Benevolent Army, DKBA, one of several armed factions which control territory inside Karen State.

These armed groups have been accused of allowing the scam compounds to operate under their protection, and of tolerating the widespread abuse of trafficking victims who are forced to work in the compounds.

The Myanmar government has been unable to extend its control over much of Karen State since independence in 1948.

Thai News Pix Three people released from scam centres walk across a tarmac
The scammers look for workers with skills in the languages of those who are targeted for cyber-fraud, usually English and Chinese [BBC]

On Tuesday, Thailand’s Department of Special Investigation, which is similar to the US FBI, requested arrest warrants for three commanders of another armed group known as the Karen National Army.

The warrants included Saw Chit Thu, the Karen warlord who struck a deal in 2017 with a Chinese company to build Shwe Kokko, a new city believed to be largely funded by scams.

The BBC visited Shwe Kokko at the invitation of Yatai, the company which built the city.

Yatai says there are no more scams in Shwe Kokko. It has put up huge billboards all over town proclaiming, in Chinese, Burmese and English, that forced labour is not allowed, and that “online businesses” should leave.

But we were told by local people that the scam business was still running, and interviewed a worker who had been employed in one.

Chart showing nationalities of rescued workers

Like the DKBA, Saw Chit Thu broke away from the main Karen insurgent group, the KNU, in 1994, and allied himself to the Myanmar military.

Under pressure from Thailand and China, both Saw Chit Thu and the DKBA have said they are expelling the scam businesses from their territories.

The DKBA commander contacted a Thai member of parliament on Tuesday to arrange the handover of the 260 workers.

They included 221 men and 39 women, from Ethiopia, Kenya, the Philippines, Malaysia, Pakistan, China, Indonesia, Taiwan, Nepal, Uganda, Laos, Burundi, Brazil, Bangladesh, Nigeria, Tanzania, Sir Lanka, India, Ghana and Cambodia.

[BBC]

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Sri Lanka and UAE sign agreement to Strengthen Economic and Investment Relations

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Coinciding with the President’s three-day official visit to the United Arab Emirates (UAE) to attend the World Governments Summit 2025, Sri Lanka and the UAE reached an agreement on Reciprocal Promotion and Protection of Investments to strengthen economic and investment relations between the two countries.

The agreement was signed by Mohamed Bin Hadi Al Hussaini, UAE’s Minister of State for Financial Affairs, and Vijitha Herath, Sri Lanka’s Minister of Foreign Affairs.

This bilateral agreement establishes a secure legal framework to expand investment opportunities in global markets while ensuring the protection of foreign investments.

The purpose of this agreement is to facilitate and strengthen foreign investments between the two nations by ensuring investor rights protection, promoting economic cooperation, and establishing comprehensive investment protection mechanisms, dispute resolution frameworks, and policy structures. This agreement will also contribute to strengthening global economic partnerships and creating opportunities for exploring new investment prospects in Sri Lanka.

This agreement underscores the importance of bilateral economic development and financial stability while demonstrating the commitment of both the United Arab Emirates and Sri Lanka to strengthening economic cooperation. It aims to foster trade and business expansion in Sri Lanka while promoting a transparent and stable investment environment.

Furthermore, this agreement also highlights Sri Lanka’s commitment to enhancing Foreign Direct Investment (FDI) and fostering a more attractive investment landscape. By enhancing investor confidence, it is expected to generate new business opportunities and contribute to economic progress as well as reinforce the long-term partnership between the UAE and Sri Lanka, facilitating sustainable investments and advancing trade and financial collaborations between the two countries.

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Adani Green withdraws from controversial renewable energy project in Sri Lanka

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The Hindu has reported that Adani Green has withdrawn from the controversial renewable energy project in northern Sri Lanka, amid persisting controversy and a legal battle over its approval and potential environmental impact.

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