Joint venture with govt:

China to run Hambantota port and airport

by Chandani Jayatilleke

A consortium of Chinese companies has agreed to manage and operate the Hambantota port, Mattala airport and to set up an industrial zone in Hambantota on a joint venture basis with Sri Lanka.

Accordingly, the sea port will be managed in a joint venture with the Sri Lanka Ports Authority and the Mattala Airport in a joint venture with Airport and Aviation and Services Ltd. “China will send a proposal in connection with these projects,” Minister of Development Strategies and International Trade, Malik Samarawickrama told Sunday Observer Business.A Memorandum of Understanding (MoU) will be signed during the forthcoming visit of Prime Minister Ranil Wickremesinghe to China from April 7-8. Talking about his recent official visit to China, Minister Samarawickrema said the discussions with their Chinese counterparts were cordial and fruitful.

“We are re-negotiating with China now, because the earlier projects were not done according to the law. We are regularising all the systems and projects,” he said. China will continue its ongoing projects in Sri Lanka. “They will also look at the projects offered under the Megapolis project.”

He said the number of Chinese tourists to the island will increase to one million in a few years. About 200,000 Chinese tourists visit Sri Lanka now and within the next three years the number is expected to grow to 500,000.

The Chinese love to travel and millions of people go to exotic destinations each year. “If we can attract one percent of that number it would be sufficient.”

“By managing the Mattala Airport, China hopes to bring in more tourists to Sri Lanka through Mattala,” the Minister said.

“This will be another plus point for the tourism industry,” he said. Simultaneously, the government has drawn up plans to develop the Eastern Province for tourism.

A major city development project will be launched in Trincomalee which will be developed by the Singapore government with a Japanese consortium and India.

Talking about the proposed Free Trade Agreement (FTA) with China, the Minister said the government hopes to start negotiations with the Chinese officials as soon as possible.

“We want to finalise negotiations and sign the agreement by the end of the year.” The Minister who did not wish to reveal more details about the FTA at this juncture said the FTA with China will be different from the FTA with India, when it comes to operational issues. “Hopefully it will not be based on quotas, but boost preferential trade.” Among some of the other projects supported by China are the extension of the rail track from Beliatte to Kataragama, water projects in Kandy and the Southern Expressway extension.

“If we don’t look outwards, and develop trade partnerships, the country can never be developed. Therefore, we will further improve our diplomatic relations and trade and investment ties not only with China but also with India, Japan, Europe, America and the rest of the world in the years to come,” he said.

He said China will proceed with the Port City development project in Colombo. The initial issues have now been ‘sorted out’.

There are several changes to the new plan including the ownership issue and the extent of the land from the earlier plan. Earlier, a part of the reclaimed land was to be given on a freehold basis – now it will be given on a long lease.

As far as the extent of the land is concerned, approval has been given on the basis of not less than 233 hectares and the EIA assessment has been done on the basis of 269 hectares - that is the maximum.

“So we have asked them to proceed as per the agreement of 233 hectares and any change can only be done after discussions with our consent. The total investment is USD 1.4 billion; it is up to China to decide if it is to be increased,” he said.

When the land is filled, the development of the reclaimed real estate will be done in a joint venture between Sri Lanka and China. The Urban Development Authority which handles the project will be the joint venture partner on behalf of the government. The ownership ratio is yet to be discussed, he said.