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Hambantota Port Development project will bring in an FDI inflow of US$ 1.12 billion, said Minister of Development Strategies and International Trade, Malik Samarawickrama.
“There will be an immediate positive impact on our foreign inflows, as the Chinese entity brings in an immediate advance payment of 30%. The balance will be received within 6 months,” he added.
“Thereafter, the two new companies are likely to invest a further US$ 500-600 million for infrastructure development over the project implementation period adding more FDI inflows to the country.”
The newly operational Port and surrounding industrial zone will attract new investors in bunkering and port-linked industries such as a refinery, cement plants, a dockyard etc. “All of this will create new opportunities for local entrepreneurs of the area and create new and better jobs.”
Minister pointed out that one of the biggest challenges the government has had to grapple was the heavy overhang of debt, due to unfeasible projects undertaken in the past and a buildup of unproductive assets and Hambantota Port is one such project.
Hambantota port was build with a loan of Rs 193 billion. To date, the Port of Hambantota has severely underperformed and recorded an accumulated loss of over Rs. 46.7 billion as at the end of 2016.
“It was built with little attention to its commercial viability and with little consideration for the burden it would place on our people if it isn’t operational properly. It is our poor people who have to bear this burden for generations. We had to look for ways to lift this burden off the people, while not losing this public asset. And this is what we are doing today.”
The way in which this project has been structured, it brings in much needed foreign investment, but at the same time complies with all relevant international laws, and most importantly takes well into account Sri Lanka’s national security and national interest considerations.
An important point for us to note is that the two companies, Hambantota International Port Services and Hambantota International Port Group - are two companies that are registered in Sri Lanka, will operate by all our laws like anyone other company, and the asset remains Sri Lankan. “Yes, there is majority Chinese equity, but both legal entities are Sri Lankan.”
For too long now the country’s Gross Domestic Product -GDP – has been concentrated in the Western Province - 42% of the GDP is generated from, and enjoyed by, the Western Province. While the Southern Province is at just 10.8% and Uva is at 5%. Why is the Western Province so dominant? A key reason is that there is a well-operational and competitive sea port and airport.
“Just like what Colombo Port has become for the Western Province, an efficient and competitive port in the South can help the Southern and Uva regions connect with international trade, connect with the forthcoming new trade agreements and also the opportunities from GSP Plus.”
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