The Colombo Port City Project which consists of 233 hectares will be launched by Chinese President Xi Jinping today.
An extent of 108 hectares from this reclaimed land is to be reserved for the company selected for this project, China Communications Constructions Company (CCCC) to cover its investment costs, marketing promotions costs and profits.
From the extent of land thus reserved, some 20 hectares will be on free hold right basis and the balance 88 hectares on a 99 year lease basis.
The remaining 125 hectares of this reclaimed land will be under the purview of the Sri Lanka Ports Authority (SLPA). The estimated cost of US$ 1.4 billion for the first phase of this project is to be invested by CCCC. Sri Lanka and China in recent years have developed increasingly closer economic and trade relations and a proposed free trade agreement (FTA) between the two countries will boost Sri Lanka's future development, according to the government of Sri Lanka.
During President Rajapaksa's state visit to China in May 2013 both leaders agreed to elevate the bilateral relations to a ‘Strategic Cooperation Partnership’, by substantially expanding the mandate for engagement.
The two countries signed a Memorandum of Understanding and agreed to establish a Joint Working Group on Trade to study the feasibility of a China -Sri Lanka free trade agreement (FTA) and measures to enhance Sri Lankan exports to China. A joint feasibility study on the proposed FTA completed in March 2014 concluded that the building of an FTA will bring benefits to both countries. Although Sri Lanka's exports to China have increased from US$ 28.39 million in 2005 to US$ 121.63 million in 2013, the exports have not increased up to its potential with the bilateral trade reaching US$ 3.62 billion in 2013.
Sri Lanka hopes the FTA will help the country to gain easier access to the Chinese market and gradually reduce its trade deficit towards the world's second largest economy.
Some of Sri Lanka's main export items to China include coir fiber, garments, tea, rubber and precious stones, among others. China has become Sri Lanka's second largest trade partner and the second largest sources of imports to the island with imports from China on a range of items have increased in recent years. Some of the main import items include cotton, textiles, iron and steel, vehicles and parts, and plastic products, among others.
In addition to the enhanced trade cooperation, China has become the largest investor in Sri Lanka. China has also become a major source of tourist arrivals to the island.