As Beijing aims to boost its influence in the Indian Ocean, China will invest US$1bn in the construction of three 60-storey buildings at a mega-project near Sri Lanka’s main port in Colombo.
The deal follows an earlier Chinese investment of US$1.4bn to carry out reclamation work for the wider Colombo International Financial City development, strategically located next to Colombo’s harbour, the only deep-sea container port in the region.
The Colombo Port City which is being constructed by China Harbour Engineering Company Ltd.(CHEC) will be the first of its kind in South Asia.
The two countries hope the project, initiated by former Sri Lankan President Mahinda Rajapakse, will create a financial centre in the Indian Ocean comparable with those in Singapore and Europe, drawing billions in foreign investment and thousands of jobs.
“The CHEC is reclaiming land from the sea to construct this city and we must make use of it.
“In the future, this Port City will have at least 75,000 people residing here and 200,000 people moving in and out of the city on a daily basis,” said Sri Lankan Prime Minister Ranil Wickremesinghe.
Wickremesinghe visited the site yesterday to inspect the progress of reclamation.
“We will shortly have legislation to turn this area into a financial centre like in Europe or Singapore,” he said.
Sri Lankan officials said 60% of the 269-hectare reclamation project, due to finish next year complete with yacht marina, had already been completed. The rest is expected to be reclaimed by June 2019.
No completion date was given for the buildings, the first for the development.
“China Harbour [Engineering Company] will put in US$1bn to build three buildings,” Sri Lanka’s Urban Development Minister Champika Ranawaka told reporters.
“These three 60-storey buildings will be able to attract more foreign companies into Sri Lanka.”
Sri Lanka is preparing legislation with tax incentives to lure investment to the site.
The controversial project was formally launched after a visit to Colombo by Chinese President Xi Jinping in 2014 but work was suspended by the new administration, which came to power in January the following year.
It resumed after the state-owned China Communications Construction Company (CCCC) entered into a fresh agreement with the new government in August 2016, despite geopolitical concerns from regional superpower India.
Colombo is a key hub for Indian import-export cargo.
Beijing has been accused of seeking to develop facilities around the Indian Ocean in a “string of pearls” strategy to counter the rise of its rival and secure its own economic interests.
After protests by New Delhi, Colombo removed freehold rights granted to the Chinese company and offered the land on a 99-year lease instead.
The CCCC has said it expects the project to create 83,000 new jobs and help Sri Lanka attract another US$13bn in direct foreign investment to develop infrastructure.
China, the largest single lender to Sri Lanka, secured contracts to build roads, railways and ports under Rajapakse, who is facing investigations over allegations of corruption during his decade in power.
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