China Pulls Out Of Major Sri Lankan Port Project Worth $392 Million After External Pressures - Swarajya

<p>China Merchants Port Holdings has withdrawn from a $392 million joint venture to develop a major logistics hub at Sri Lanka's Colombo Port.</p><p>The Sri Lanka Ports Authority confirmed today that the South Asia Commercial and Logistics Hub project would not proceed following a mutual agreement amongst all stakeholders.</p><p>The Chinese state-owned firm announced the termination in a filing to the Hong Kong Stock Exchange on 15 October, citing changes in external circumstances, commercial considerations and shareholder interests. </p><p>Under the original arrangement unveiled in 2023, China Merchants held a 70 per cent stake whilst the Sri Lanka Ports Authority and local construction company Access Engineering each owned 15 per cent of the planned 150,000-square-metre facility.</p><p>The project, originally described as the first major foreign investment since Sri Lanka's 2022 economic crisis and debt default, had been granted Strategic Development Project status in December 2023. </p><p>The three shareholders had collectively invested $37.14 million, with China Merchants contributing $26 million through its subsidiary Fortune Centre Group. Following the cancellation, Sri Lanka Ports Authority has agreed to pay $21.9 million in settlement compensation within 30 days.</p><p>Industry observers suggest multiple factors contributed to the withdrawal, including geopolitical pressures from India and the United States regarding Chinese involvement in Colombo's logistics infrastructure, shortened tax break periods driven by IMF fiscal consolidation requirements, and slow approval processes involving land disputes and regulatory delays. </p><p>Sri Lanka Ports Authority has stated it will now seek fresh investors through a competitive public-private partnership bidding process to develop the logistics hub, maintaining its commitment to modernising port infrastructure despite the setback.</p><p><strong><a href="https://www.google.com/preferences/source?q=swarajyamag" target="_blank" rel="noopener noreferrer">Please click here to add </a></strong><em><strong><a href="https://www.google.com/preferences/source?q=swarajyamag" target="_blank" rel="noopener noreferrer">Swarajya</a></strong></em><strong><a href="https://www.google.com/preferences/source?q=swarajyamag" target="_blank" rel="noopener noreferrer"> as your preferred and trusted news source on Google</a></strong></p><p>Also Read: <a href="https://swarajyamag.com/news-brief/new-zealand-exporters-gain-quota-based-access-to-india-for-apples-and-kiwifruit-as-free-trade-agreement-enters-into-force">New Zealand Exporters Gain Quota-Based Access To India For Apples And Kiwifruit As Free Trade Agreement Enters Into Force</a></p>