Sri Lanka Moving Forward With Port City

Sri Lanka will sign $2 billion worth foreign direct investment (FDI) deals, including the $1.3 billion investment from China Communications Construction Co Ltd to build a port city, the island nation's investment minister said on Wednesday.

Along with the port city, Sri Lanka will sign two mixed-development projects totaling $700 million on Thursday, Investment Promotion Minister Lakshman Yapa Abeywardhena told reporters in Colombo.

The realized FDI had already reached $1 billion this year and with the start of some already signed projects, Sri Lanka will be able to achieve its $2 billion FDI target for this year, Abeywardhena said.

The project by China Communications Construction will build the port city on a 233 hectare site that will be reclaimed from the sea. The deal will be signed on Thursday, the minister said.

The site is next to Sri Lanka's main port and Colombo's historic Galle Face Green seafront. It is also close to where Shangri-La Hotels Lanka Ltd, a subsidiary of Hong Kong-listed Shangri-La Asia Ltd, is building a 500-room hotel.

According to the proposed deal, 108 hectares of land will be given to the Chinese firm after the port city development, while 63 hectares and 60 hectares of land will be given to public usage and state-run Sri Lanka Ports Authority respectively.

The land will be given to the Chinese company on a 99-year lease and the project will be completed in eight years.

It has already created new land near the proposed port city as part of its expansion of the Colombo port to double its capacity by 2015.

Since the end of a nearly three-decade war in May 2009, the Indian Ocean island nation has been spending heavily on infrastructure, including ports and highways to attract foreign investments to its $59 billion economy.