March 26, 2011, 7:20 pm
Foreign direct investments will pick up with planned projects in ports and hotels valued at 500 million dollars each, finance ministry secretary P B Jayasundera said.
He said a concession agreement has been signed in the Colombo port for a new terminal that will need 500 million US dollars to build.
"That is a 500 million dollar private foreign investment. A private foreign investment," he told a business forum in Colombo, organized by Sri Lanka’s software and services companies (SLASSCOM).
"People ask ‘Where is the investment?’ That is the investment."
The terminal will be built by China Merchant Holdings, a Chinese state firm, and Colombo listed Aitken Spence group.
Jayasundera said investments at the port alone will be equal to the annual foreign investments realized a year between 1990 to 2010.
Sri Lanka has still not published a foreign direct investment figure for 2010 but it is expected to be around 300 to 400 million US dollars, lower than the 600 million dollars achieved a year earlier.
The state investment promotion agency is expecting about billion dollars in FDI in 2011.
"In addition new FDI is coming to the hotel sector, particularly to the city hotels, and each investment is in the rank of 500 million dollars. Investment in land alone is 125 million dollars up-front cash payment."
Hong Kong based Shangri La is being given a block of land in Colombo’s Galle Face beachfront earlier used by the military.
The land is already being cleared and readied to be given over to the developer who is expected to build a hotel, shopping complex and apartments.
Another block of land is to be sold to CATIC, a Chinese state military hardware maker, who is expected to tap an international chain to manage the hotel it will build.
"We are no longer giving land without a fee or a nominal fee," Jayasudera said. "The World Trade Centre or the past investments that have happened in Sri Lanka, land has been given free. That is the effort probably made at that time to get the investment.
The World Trade Centre is a reference to a twin tower commercial property projects by Singapore based developer SP Tao in Colombo during the war.
"Today FDI is coming with upfront payment for the land whether it is in the form of a lease or whether it is in the form of outright sale."
"So that is the premium the country has gained during the last several months."
A 30-year war ended in 2009 and the post-conflict country is rapidly returning to normal, Jayasundera said. He said in the north refugees have been resettled and mines cleared.
He said security barriers were removed even in Colombo and transaction costs in the economy were down. Meanwhile the administration was also going on a massive infrastructure building drive.