A Chinese state-owned firm said on Monday 1 May it plans to take its investment in Sri Lanka
to $2 billion by
building a major logistics hub.
Sri
Lanka is looking to kickstart its economic recovery after defaulting on its
foreign debt last year, when shortages
of essentials such as food, fuel and medicines sparked widespread
anti-government protests.
The investment by the China
Merchants Group in a large logistics complex at Colombo Port,
with an estimated construction cost of
$392 million, is the first major foreign investment in Sri
Lanka since the default.
The logistics centre project will take CMG’s
“accumulated investment in Sri Lanka to… over 2 billion US dollars, making it
the largest foreign investment enterprise in the island”, the company said in a
statement on Monday.
CMG
will have a 70 percent stake in the company set up to build the logistics
complex at Colombo, the only deep-sea port between Dubai
and Singapore.
Describing the project as South Asia’s largest
logistics hub, CMG said it expects to complete it by the end of 2025.
CMG also manages the port complex at Hambantota on the
southern tip of Sri Lanka. That port was considered among the white-elephant
projects launched by former president Mahinda
Rajapaksa, who ruled the country for a decade
until 2015.
Rajapaksa
borrowed heavily from China for projects that many criticised as a debt trap
that led to the worst economic crisis in Sri Lanka’s history.
Unable to repay a huge loan taken from China in 2017
to build Hambantota port, Sri Lanka handed it over to CMG for $1.12 billion on
a 99-year lease.
China has loaned billions for projects in Asia, Africa
and Europe under its gargantuan Belt and Road Initiative, which
critics say is saddling nations with debt.
Neighbouring India as well as the United States have
also expressed concern about China gaining a naval advantage in the Indian
Ocean with its access to Sri Lanka’s ports.
Sri
Lanka has insisted that its ports will not be used for any military purposes.