Sri Lanka’s new rules to favor China ties
Print Edition
SRI Lanka is to initiate legal reforms to encourage foreign investment as the cash-strapped island tries to turn its US$8 billion Chinese debt into equity, the prime minister said yesterday.
Ranil Wickremesinghe, speaking to reporters after a three-day visit to China, said streamlined regulations and a free trade agreement would be in place to increase economic ties with Beijing.
“The Chinese are interested (in investing) and are awaiting our (new) laws,” Wickremesinghe said, adding that he was hoping to unveil an economic master plan with a regulatory framework by June.
He said China would be offered equity stakes in loss-making projects — a second international airport and a deep-sea port in the island’s south — commissioned by former President Mahinda Rajapakse.
“We are setting aside an area of 400 hectares as a special investment zone for Chinese companies to set up operations in Hambantota,” the prime minister said, referring to an area where the projects are located.
The two ports could be viable for big logistics companies, he said.
He played down controversy over a US$1.4 billion land reclamation project in Colombo known as Port City, which is being built by a Chinese company.
The state-owned Chinese firm had demanded US$125 million as compensation from Colombo for suspending work soon after President Maithripala Sirisena came to power in January last year. Wickremesinghe said the compensation claim was not raised during his visit.
The new government held up work pending the resolution of several issues, including environmental concerns and reports that neighboring India feared the Port City project could lead to China getting a military foothold in its backyard.
However, Wickremesinghe told reporters: “The Port City is not a threat to anyone, it’s an opportunity for everyone to make money.”
The land reclamation represents the biggest single foreign investment received by the island, adding 233 hectares of real estate in the congested capital.
The mega project was initiated by Chinese President Xi Jinping in September 2014.
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