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China Merchants has won the approval to operate phase two of Sri Lanka’s largest container terminal. Photo: AFP

China Merchants lands Lanka contract

Logistics conglomerate China Merchants has won the approval to operate phase two of Sri Lanka’s largest container terminal in a deal signed during President Xi Jinping’s trip to the South Asian nation.

Logistics conglomerate China Merchants has won the approval to operate phase two of Sri Lanka’s largest container terminal in a deal signed during President Xi Jinping’s trip to the South Asian nation.

The Hong Kong-listed firm has been granted a 35-year lease to manage the Hambantota Port Development Project in a joint venture with the Sri Lanka Ports Authority and China Harbour Engineering Company. The two Chinese partners will invest a combined HK$3 billion into the project in return for a 64.98 per cent stake, according to a stock exchange filing.

Hambantota is on Sri Lanka’s southern coast and is billed as a future transit hub for goods moving around Southeast Asia. Xi will also inaugurate a US$1.5 billion project, the largest single direct foreign investment, to build a port city on reclaimed land in the Sri Lankan capital, Colombo.

China and Sri Lanka completed a feasibility study in March on a free trade agreement, which is expected to boost the island’s top exports of tea and garments.

Since the end of a nearly three-decade war in May 2009, Sri Lanka has been spending heavily on infrastructure, including ports, to attract foreign investments to its US$67 billion economy.

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