INP
\nBEIJING
\nA senior Djibouti government official dismissed the accusation that the African country was \u201cillegally induced\u201d by a Chinese company to breach a contract with another foreign investor, stressing that Chinese investment is legitimate and helps build a foundation for its economic development.
\nThe remarks were made by Aboubaker Omar Hadi, chairman of Djibouti Ports and Free Zones Authority, after African media reported that the Hong Kong-based China Merchants Port Holdings Co \u201cunlawfully procured and induced\u201d Djibouti into breaching agreements with DP World, a Dubai company.
\nDP World filed a lawsuit against the Hong Kong-based company before the High Court of the Hong Kong Special Administrative Region, Eritrean media Tesfa News reported on Tuesday.
\nHowever, Hadi said \u201cChina Merchants Port is a third party that has no connection with the Djibouti authority\u2019s decision to terminate the deal.\u201d
\nThe chairman said that as early as 2011, the Djibouti government had to turn to international courts to seek to terminate the deal, claiming it was a result of corruption and, therefore, invalid.
\nHadi added that in 2010, Djibouti also terminated an agreement with DP World on the management of the country\u2019s old port (PAID). All these legal actions started way before the China Merchants Port began investing in Djibouti, he stressed.
\nThe Djibouti government in February terminated the 50-year concession agreement that allowed DP World control of the country\u2019s Doraleh terminal, one of the largest employers in the African country.
\nThe terminal was jointly owned by DP World (33.34 percent) and a Djibouti state-owned entity, PDSA (66.66 percent). In 2013, China Merchants Port Holdings bought 23.5 percent of PDSA from Djibouti and became a shareholder of the port until Djibouti announced it would nationalize the terminal in September.
\nDjibouti accused DP World, which operates 78 ports in more than 40 countries and regions, of deliberately underusing the facilities in favor of other terminals along the Red Sea, Financial Times reported in October.
\nThe Dubai company insisted that the 2006 contract cannot be revoked, citing a ruling by the London Court of International Arbitration in August, which was slammed by the Djibouti government as \u201cinconsequential.\u201d
\n\u201cThe government of a sovereign state has the right to renegotiate or terminate agreements that it regards as violating national interests or development, and the Djibouti government is not the only one that has done so,\u201d Meng Guangwen, a professor specializing in free trade zones at the Tianjin Normal University, told the Global Times.
\nBut it has to weigh the loss, such as compensation and possible damage to national image and investor confidence, Meng noted.
\nHadi regards abolishing the deal as a worthy move, as he said the contract has made the terminal half empty while turnover at the terminal increased by 32 percent after terminating the deal.
\nThe senior Djibouti official also referred to the African media reports as part of a campaign from DP World to smear the Djibouti government and \u201cscare away\u201d foreign investors. \u201cBut Djibouti will resolutely protect the interests of foreign investors and they are welcome,\u201d he said.
\nHadi also dismissed talk that China is causing a \u201cdebt trap\u201d in the country. He said that the money to pay back the loans from China will not come from the government budget or from taxpayers.\u201d
\nHe stressed that the loans, which are mostly spent on infrastructure and tied with projects, are helping stimulate consumption and building a foundation for the country\u2019s economic development as it virtually changed the investment environment of the country.
\n\u201cWhat differentiates Chinese investment from US and European ones is that the investment comes with no political attachment and aims at developing, instead of merely taking advantage of Djibouti,\u201d Hadi told the Global Times on Tuesday night.
\nWith projects for the loans, Djibouti has a better capability of paying back foreign loans, said Hadi, noting that the debt-to-GDP ratio in Djibouti, which stands at around 85 percent, will drop to 35 percent in the next five years.
\nThe latest Doing Business 2019 Report released by the World Bank has named Djibouti as one of the economies with the most notable improvement, as the country jumped from 154th in 2018 to 99th in 2019 among 190 countries and regions.<\/p>\n
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