CATIC's Galle Face deal off!

Tuesday, 25 October 2011 02:13 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

The US$ 500 million China Aviation Technology Import-Export Corporation (CATIC) investment to build the CATIC Grant Skyline Hotel and Rainbow Multifunctional Complex on Galle Face land has been called off, the Government confirmed yesterday.

Minister of Economic Development Basil Rajapaksa yesterday stated that though it was viewed as somewhat of a drawback for the Government, the decision was made in the best interest. The Government has taken a decision to lease out land of high commercial value on a long-term basis and not on a direct sale basis as classified before.

“As a Government we have come to the conclusion that unless it is on a long-term lease, such property under the Government will not be given out,” Rajapaksa said.

He further explained that CATIC was owned by the Chinese Government and decisions on their part must be taken with Cabinet approval.

“The Government is trying to settle this as a long-term deal. Meanwhile we are looking at other investors who share an interest in acquiring the said land.”

Deputy Minister of Economic Development Lakshman Yapa Abeywardena however confirmed to Daily FT that the deal was in fact “off,” noting that “it is not just paused for the moment, it has been annulled”.

When asked about the US$ 54.5 million that Abeywardena on previous occasions claimed had been paid in advance, he stated that the money had still not been returned to the institution. “The money is still here,” Abeywardena said. “We are now discussing with CATIC on directing the money to build other properties in a different location. We are now negotiating various terms and conditions.”

The CATIC deal had previously come under constant fire both in Parliament and outside from the Opposition especially by UNP MP and its Chief spokesman on the economy Dr. Harsha de Silva.

At yesterday’s briefing Minister Rajapaksa responding to Opposition allegations on the matter, dismissed them as a “speech for survival,” adding that “they have to say something now and so they will speak.”

He said that while the Government was doing its best to provide for the country in terms of investment and infrastructure development, the country was in need of more private and foreign investment.

Acknowledging that more investors, both foreign and those from the local private sector, are showing interest, the Minister warned that the good times would not be a permanent fixture. “This environment will not be there all the time. We need to call in all investors now before they move elsewhere, before the excitement of Sri Lanka dies down.”

Rajapaksa stated that the Ambassador for Oman speaking to him recently had commented on how many companies from the Middle East were now eyeing Sri Lanka as the next best alternative to invest. “But we must remember that Sri Lanka is not the only country around. New countries will come enter the picture. We must use this time to grab the investors that will be good for us. If not we will be left squirming around bad investors and their unhealthy conditions.”