China Merchants Port Holdings has decided to discontinue its collaboration with the Sri Lanka Ports Authority (SLPA) on a project announced in 2023. However, the Sri Lanka Ports Authority has stated that the project will continue and is looking for a new investor for this logistics hub at the Port of Colombo, which spans 150,000 square meters.
Project Details and China's Investment
The Sri Lanka Ports Authority announced in a statement that it is seeking to find an alternative investor for this project. Meanwhile, China Merchants Port stated in a statement to the Hong Kong Stock Exchange that the cancellation of this project would be beneficial for both parties. The share of China Merchants, agreed upon in April 2023, was the first major foreign investment announced after Sri Lanka's economic collapse in April 2022.
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Other Chinese Projects in Sri Lanka
China Merchants is also managing a deep container terminal with a cost of $500 million at the Port of Colombo. The company also oversees a deep port complex in Hambantota, located on the southern coast of Sri Lanka. Hambantota Port is recognized as one of the large and costly projects initiated by former Sri Lankan President Mahinda Rajapaksa, who was in power for a decade until 2015.
The exit of China Merchants from this project raises questions about the future of foreign investments in Sri Lanka. The country is facing serious challenges in attracting foreign capital due to the economic crisis and political instability, and there is an urgent need for new investments to overcome the current crisis.
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