By constructing a significant logistics hub, a state-owned Chinese company announced on Monday that it intends to increase its investment in Sri Lanka to $2 billion, according to AFP.
After defaulting on its foreign debt last year, when shortages of necessities like food, fuel, and medications led to major anti-government riots, Sri Lanka is attempting to jump-start its economic recovery.
The China Merchants Group’s $392 million investment in a sizable logistics complex at Colombo Port is the country’s first significant foreign investment after the default.
The logistics center project would increase CMG’s total investment in Sri Lanka to “over 2 billion US dollars,” the firm stated in a statement on Monday. This will make CMG the largest foreign investment enterprise on the island.
The business formed to construct the logistics complex at Colombo, the only deep-sea port between Dubai and Singapore, will be owned by CMG to the tune of 70%.
The project, which CMG described as the biggest logistics center in South Asia, is anticipated to be finished by the end of 2025.
On Sri Lanka’s southernmost tip, in Hambantota, CMG also oversees the port complex.
The port was one of the “white elephant” initiatives started by the previous president Mahinda Rajapaksa, who presided over the nation from 2007 to 2015.
For projects that many criticized as a debt trap that caused the biggest economic disaster in Sri Lanka’s history, Rajapaksa borrowed significantly from China.
Sri Lanka gave the port to CMG on a 99-year lease for $1.12 billion after being unable to pay back a huge loan it received from China in 2017 to construct Hambantota.
China’s massive Belt and Road Initiative, which opponents claim is burdening countries with debt, has financed billions for projects in Asia, Africa, and Europe.
China’s access to Sri Lanka’s ports has alarmed both neighboring India and the United States because it could give China a naval advantage in the Indian Ocean.
Sri Lanka has emphasized that no military activities will take place in its ports.
