Last update: May 01, 2023, 5:11 PM IST
A Chinese state-owned company said on Monday it plans to boost its investment in Sri Lanka to $2 billion by building a major logistics hub.
Sri Lanka is seeking to revive its economic recovery after defaulting on its external debt last year, when shortages of essentials such as food, fuel and medicine sparked widespread anti-government protests.
China Merchants Group’s investment in a large logistics complex at the port of Colombo, with an estimated construction cost of $392 million, is the first major foreign investment in Sri Lanka since the default.
The logistics hub project will bring “CMG’s cumulative investment in Sri Lanka to…more than US$2 billion, making it the largest foreign investment company on the island,” the company said. in a statement Monday.
CMG will hold a 70% stake in the company created to build the Colombo logistics complex, the only deep-water port between Dubai and Singapore.
Describing the project as the largest logistics center in South Asia, CMG said it plans to complete it by the end of 2025.
CMG also manages the port complex of Hambantota, at the southern tip of Sri Lanka.
This port was considered one of 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 have criticized as a debt trap that led to the worst economic crisis in Sri Lanka’s history.
Unable to repay a huge loan taken out from China in 2017 to build the port of Hambantota, Sri Lanka handed it over to CMG for $1.12 billion on a 99-year lease.
China has lent billions for projects in Asia, Africa and Europe under its gargantuan Belt and Road Initiative, which critics say is burdening nations with debt.
Neighboring India as well as the United States have also expressed concern over China’s naval advantage in the Indian Ocean through its access to Sri Lanka’s ports.
Sri Lanka has insisted that its ports will not be used for military purposes.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)