Sri Lanka to open up Chinese-backed ‘port city’

A mega Chinese real-estate development in Sri Lanka will open early next year offering tax concessions to attract investors and revive the struggling economy, the government said on Tuesday in its first budget.

Colombo Port City — a $1.4 billion land reclamation project beside the capital’s port which started in 2014 — has doubled the size of Sri Lanka’s current financial district. The development — the largest single foreign investment in Sri Lanka so far — is one of several massive Asian infrastructure projects funded by China as Beijing increases its footprint in the region.

“I expect to present to Parliament a new legal framework conducive to promote commercial services and investment in this Special Economic Zone in January,” Prime Minister Mahinda Rajapaksa, who is also the Finance Minister, told Parliament in his budget address. He said the Port City — an area of 269 hectares reclaimed from the Indian Ocean — will offer tax concessions to attract trade, banking and foreign exchange transactions. He did not give further details.

Mr. Rajapaksa also said Sri Lanka will aim to cut its fiscal deficit to 4% over the medium-term, without specifying an exact time period, from the 9% foreseen in 2021. “This is a development budget presented to elevate an economy that has been shattered,” he said.