What Sri Lanka must GIVE to GET $480m MCC “Gift”

The US embassy Colombo is repeatedly saying $480m is a gift & not a loan from the US to the People of Sri Lanka but then insists on signing an agreement & having it passed in Parliament, affording US troops, personnel & contractors immunity and complete waiver of all forms of taxes & levies while section 5.4 has a Late Payment Interest!. MCC also requires Sri Lanka to bear project costs if MCC agreement projects are not complete. Though the MCC agreement is 5 years the economic corridor that was shown by MCC at Temple Trees envisages an electric railway line cutting across 7 districts & connecting Colombo Port with Trinco Port extending 200m & covering 1.2million acres which the railways can lease for 99 + 99 years. Has Sri Lanka factored the costs GoSL is likely to incur against the $480m ‘gift’ the US is trying to shove upon us by force? How much of this ‘gift’ returns to US in form of salaries/equipment etc purchased from them while questioning the direct & indirect costs the GoSL will have to bear in particular from waiving all forms of taxes & levies for 5 years? Thankfully the Gunaruwan Committee has factored these risks in recommending not to go ahead with the MCC in their supplementary report

Of the $480m – MCC is allocating $350 million for the transport project & $67million for the land project. 

We are being presented the notion that the GoSL has sought the MCC presence, if so why should US Govt via its Colombo mission say $480m is a gift from the US to Sri Lanka & why would Sri Lanka’s parliament need to pass it?

There are plenty of foreign projects operating as BOI ventures and these are given tax holidays and other incentives as well.

MCC claims the Bim Saviya title registration will continue. The Bim Saviya tragically removes judicial role to adjudicate land frauds etc. Who will adjudicate land grievances when title registrations are given & land is acquired for MCC project. A new role granted to Commissioner of Title & an Assurance Fund for compensation is created by Bim Saviya.

The Commissioner of Lands says 50% of land deeds in Sri Lanka are frauds.

If this 50% frauds are entered into the electronic land registry, the judiciary cannot adjudicate because of Act 21 of 1998 Torrens Law (Bim Saviya). Who will hear the grievance of the original owner and will the owner be able to legally win back his/her property or will he/she have to make do with a compensation?

  • What is the allocation of funds as compensation for any lands taken over by State for the transport project?
  • What is the allocation for funds for Assurance Fund by the GoSL especially since the Land Registrar says 50% of land deeds are fraud as the original land owner is unlikely to get his/her land back how much of compensation will the GOSL have to allocate to this Fund and how will the GoSL obtain the funds?

Contract for cadastral mapping to US company – Trimble Navigation at a cost of $154million. Is this money from the MCC gift” of $480m? If not, isn’t this a case of taking $480m from one hand & paying $154m to the other hand of the same party?

  • Cadastral mapping given to a US company at $154million is virtually 1/3 of what we are getting as a gift from US

E-Land Registry also given to a US company – how much have we paid for this contract and is this too part of the $480m?

  • E-Land Registry – have we factored the cost of amendments as most foreign companies charge from the roof for the smallest of amendments! Also all passwords and back-office secret codes etc are all in the possession of the US.

MCC Economic Corridor from Colombo Port to Trinco Port with an electric railway line that will cover some 1.2million acres calculated as 10miles (5miles left of railway line and 5miles right of railway line) into 200miles from Colombo to Trinco.

With privatization of State land & provision for foreigners to buy land and foreign investors to land and set up shop across the economic corridor there are also chances that any issues arising will end up with these transnational companies taking the GoSL to a foreign tribunal.

  • To create this electronic railway line the State will have to acquire land under the railway department. Which means the State will have to buy land from those holding land deeds or forfeit land under State (for both scenarios there is a cost – how much and how will GoSL bear this cost?) If State is buying lands from private land owners how much will it cost. If MCC is buying the land will that be part of the $480m?

MCC Pre-condition outlined in the power point presentation made by MCC requires the GoSL to privatize all State land and place them under the State Land Bank and have that electronically accessible globally as well. All this fits into the end endeavor to make lands available to the foreign private sector for investments.

  • By privatizing state land – what is the loss of revenue to the Government when it can no longer tax for state land used? If MCC claims to be buying this land – how much is going to be reduced from this ‘gift’ of $480m?

Procurement as per US guidelines – how compatible is that with Sri Lanka’s?

  • For all of the transport project and equipment, construction items and other material that has to be imported – all taxes, levies, duties etc are not part of $480m ‘gift’ – if so how much will the GoSL have to cough up by stomaching all the taxes, customs duties & levies under its belt? Read the Tax component in MCC Agreement alongside the Project Implementation Agreement to be shocked at the enormous cost Sri anka will have to stomach. How many of the pro-MCC talkers have looked at the tax schedule against the $480m ‘gift’. Who is going to pay for pumping fuel for personal use of project officers of MCC? Who is going to pay import duty on fuel and tax? Has anyone calculated this cost borne by GoSL across 5 years?

MCC will not have to pay any levies or taxes throughout the 5 year of MCC Compact. 

MCC Section 2.6 (a) – GOSL is committing to providing ‘all funds & other resources’ and to take all other actions necessary to carry out the Government’s responsibilities when the grant is supposed to cover entire project?

  • As per MCC Section 2.6 (a) – when GOSL commits to providing ‘all funds & other resources’ and to take all other actions necessary to carry out the Government’s responsibilities. According to 3.2 d) the GOSL has to even fund anything exceeding the MCC Funding – does the Govt even have a ballpark figure of how much this ‘funds’ is likely to be that the GoSL may have to incur?
  • How much of tax exemption are we talking about over 5 years – VAT, NBT, PAL etc – why should only MCC get tax exemptions, it will reflect badly and unfairly on our other investors who may even demand same exemptions! This is a very bad precedent to create.

US claims to be giving us a ‘gift’ but we have to give immunity to US troops, US personnel & US contractors – in other words even if any of these categories regularly runs over Sri Lankans and kills them, the Americans are given immunity. In all probability Americans get immunity even if they kill a fellow foreigner on Sri Lankan soil too.

  • With immunity given to US troops, personnel & even contractors – in the case of fatalities by them or even life-long injuries – who is going to compensate? GoSL? If so where the hell do they find money when all sources of income to the GoSL have been clipped simply to accept a ‘gift’ of $480m!

MCC personnel in Sri Lanka for 5 years – their salaries, their accommodation, their perks, their maintenance, their health insurance etc, consultants – who is paying for this?

  • Do we know how many foreign MCC personnel are to be living in Sri Lanka & how many are to arrive off & on and how many Sri Lankans inducted & the costs of their salaries, personnel effects imported duty free, their accommodation & other perks? Is this to be reduced from the $480m – if so what is the cost? If their costs are not to be covered by $480m how much is it and will GoSL have to bear this cost and where the hell is the GoSL going to get the money for this?

One of the most disturbing clauses in this ‘gift’ agreement is in Page12 Section 3.9 Intellectual Property: The Government grants to MCC a perpetual, irrevocable, royalty-free, worldwide, fully-paid, assignable right and license to practice or have practiced on its behalf (including the right to produce, reproduce, publish, repurpose, use, store, modify or make available) any portion or portions of Intellectual Property as MCC sees fit in any medium, now known or hereafter developed, for any purpose whatsoever”

  • As per Page 12 Section 3.9 Intellectual Property: the GoSL is GIFTING to MCC a perpetual  irrevocable, royalty-free, worldwide, fully-paid, assignable right and license to practice or have practiced on its behalf (including the right to produce, reproduce, publish, repurpose, use, store, modify or make available) any portion or portions of Intellectual Property as MCC sees fit in any medium, now known or hereafter developed, for any purpose whatsoever” – can we even remotely imagine how this costing is?

MCC is only committing to digitalize only 10 of the 45 land registries – what about the 35 land registries – who is going to digitalize that and bear the cost for it? 

  • Of the 45 land registries – the MCC is committing to digitalize only 10. Sri Lanka’s land and resources are divided into 9.5million blocks – only 200,000 blocks of land has been digitalized from 1998 to 2019. So in 20 years we have only digitalized 200,000 blocks of land for the $5million given by World Bank which excludes maintenance & other costs. $2.5m spent annually to digitalize land. MCC is giving only $67m for the land project. How much is needed to digitalize entire 9.5m blocs of land and will the MCC ‘gift’ suffice? Who has costed this factor?

There is another allegation that the Transport Project has been ‘stolen’ from the KOICA (Korean Aid to Sri Lanka) and all plans were with RDA and Koreans had done all ground work and drawn up plan to do the project with a concessionary loan. How far is this allegation true? Who knows & who will answer?

With the chances of transnational companies taking Sri Lankan Government to international tribunals for various issues – If Sri Lanka is ordered to compensate a foreign company – how will GoSL do so? There is an increasing trend of foreign companies taking sovereign governments to international courts & winning cases!

Another cost that GOSL must weigh is the likely displacement of some 4million people if foreign companies begin to take over the 200m economic corridor and demands they leave area. Where with GoSL relocate this 4million people. How will GoSL find them jobs? What is the cost for this?

How much of this $480m goes back to the US for their personnel/their equipment etc? (Cadastral mapping by US firm $154m / E-land registry to US company excludes cost of maintenance & changes to be paid in $$$)

How much expense is GoSL likely to incur throughout the 5 years MCC is in operation?

How much will GoSL lose across 5 years by waiving all taxes/levies/duties which GoSL may have to pay?

Is this $480m worth it by creating a precedence against other foreign projects?

More importantly, when the country & people begin to face the heat as a result of land issues, displacement, lack of jobs etc is the GoSL up to facing the people?

Without properly presenting the people with the costs & legal clearance to assure Sri Lankan citizens that our constitution, our sovereignty & people’s human rights are not compromised GoSL cannot sign MCC

By Shenali D Waduge



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