The Government and China yesterday had talks on developing the Hambantota Port, following Chinese investors expressing interest in setting up an investment zone in the area. 

Minister of Development Strategies and International Trade Malik Samarawickrama, Minister for Special Assignments Dr. Sarath Amunugama and the Chinese Ambassador to Sri Lanka Yi Xianliang inspected the Port in Hambantota, Colombo Gazette reported. 

Public Enterprise Development Minister Kabir Hashim earlier this month announced that a State-run Chinese company was interested in taking over the management of the Mattala Airport and was currently in discussions with the Government. Though no names have been revealed, the potential investor had come forward during Prime Minister Ranil Wickremesinghe’s visit to China earlier this year. 

Speaking to reporters at the port, Amunugama said that the Government was keen on developing the port which was constructed with Chinese assistance and opened in 2010. The Government, which was in the Opposition when the port was declared open, says it wants to make the port more profitable.

Amunugama said that China would open 150 factories in Hambantota in an investment zone which would help solve unemployment in the area. “We need to urgently look at the land for the investment zone, as well as water and electricity,” Amunugama said.

The Minister said that once the projects get off ground, the entire area would see a massive change.

Earlier this week Samarawickrama said that Sri Lanka and China hoped to conclude discussions on a Free Trade Agreement (FTA) by March 2017. A Chinese Government delegation is due in the county next week to have further discussions on the proposed structure of the agreement.

Under the China FTA, the Government is focusing on apparel, tea, gems and jewellery, rubber, coconuts and spices as key industries, with plans to include a priority tariff line for competitive Sri Lankan products that would go into immediate effect on signing of the agreement. 

Beyond the FTA, Chinese officials are also in discussions with the Sri Lankan Government to secure 15,000 acres of land for a special investment zone, Minister Samarawickrama noted, adding that the Government was currently assessing potential land for the venture.

Pending FTA creates China investment momentum

By Devin Jayasundera

With controversies relating to the Port City project easing, Chinese investment to the country has revitalised and is gaining momentum, buoyed by a pending Free Trade Agreement (FTA) between the two countries, a top Government official said yesterday. 

“After small hiccups, investment from China is picking up,” Industry and Commerce Ministry Secretary Asitha K. Seneviratne told a group of top Chinese exporters in Colombo on Friday.   

Referring to the much-discussed China-Sri Lanka FTA, he emphasised that the Government had placed the highest priority on finalising the agreement before the end of the year. He pointed out that the country’s economy would have tremendous potential if the FTA were to succeed, citing the success of the Asian Tigers.

“Regional countries that have signed FTAs with China such as Thailand, Laos, Cambodia and Vietnam have experienced huge economic gains in the recent past,” he noted.

Ceylon Chamber of Commerce CEO Dhara Wijayatilake echoing similar sentiments said that the trade between the two countries had been increasing rapidly in the recent past. “Sri Lanka’s economic partnerships with China have developed extending beyond trade and tourism to other diversified sectors.”

Coinciding with the forum a B2B meeting was also facilitated with Sri Lankan traders and businessmen of the Chinese delegation from Liaoning and Funjin Provinces.

China is Sri Lanka’s second largest trading partner and importer (both after India) accounting for 12% of the total external trade and 18% of total imports. Sri Lanka currently imports mainly fabrics, petroleum products, engineering equipment and iron and steel. In the first week of August a top Chinese Government delegation is expected in Sri Lanka to pick up negotiations on the proposed FTA.  

In 2015 China recorded the slowest economic growth in the last 25 years. This resulted in unusually large global trade slowdown mainly contributed by China due to its negative growths in both exports and imports.