Sri Lanka rides high on region's growth potential


Senior Member
Jan 17, 2010
Sri Lanka rides high on region's growth potential- Nikkei Asian Review

The Port of Colombo is undergoing a massive expansion project.

COLOMBO -- Sri Lanka is becoming a hot commodity among businesses looking to position themselves in the Pan-Indian Ocean economic zone.

The region consists of a number of emerging countries expected to become ever more populated. Some estimates put the region's combined population in 2040 at around 3 billion, which would be a third of the world's total.

Conveniently situated in the middle of this vast area, Sri Lanka has a vision of becoming a hub for people, money and goods that flow through the region's economies. As such, the island nation is attracting companies from China, India and elsewhere that want to tap a massive potential demand.

After ending a civil war in 2009, President Mahinda Rajapaksa shifted his attention to the development of ports and other infrastructure. The government has thrown its full weight behind the goal of becoming a pivotal crossroads of the economies around the Indian Ocean.

The expansion of port facilities in Colombo, Sri Lanka's biggest city, highlights just how ambitious the government's vision is.

A brand new cargo terminal was added to the port last August for $500 million. The new giant cranes lining this facility are only the beginning. Plans have already been made to add two more terminals at the port. Already, 5km of breakwaters have been completed.

Construction sites at the port are peppered with the Hyundai logo. South Korea's Hyundai E&C has been handling the groundwork, and terminals are being built by a consortium that includes China Merchant Holdings (International), a major port facility operator.

The port development plan calls for boosting its total container handling capacity 2.5-fold to 12 million TEUs (20-foot equivalent units). Meeting this goal would lift Colombo's ranking among the world's major container ports from 32nd to around 10th.

Logistically sound

Logistics firms around the world have been paying close attention to this development. Japan's SG Holdings is one of them.

The holding company of Sagawa Express, a parcel delivery group, acquired a major listed Sri Lankan logistics company in June through a Singaporean unit for roughly 8 billion yen ($77.2 million). The deal, which is one of the biggest acquisitions ever for the company, took two years to put together.

Purchasing Expolanka Holdings gives the Japanese group the Sri Lankan company's broad business bases in South Asia and Africa.

"We made the decision to build a foothold in this growing pan-Indian Ocean economic zone," said Yoshifumi Matsubara, director at SG Holdings Global. The Singaporean unit, which oversees the group's global operations, began to see encouraging sales reports by July.

The group received an order to handle shipments from an apparel maker in the southern Indian city of Chennai. It was also asked to provide a quote for shipping goods to Africa. These opportunities were rare prior to the Expolanka acquisition. The Japanese group's overseas operations have until recently been focused on Southeast Asia and China.

10 years ahead of India

India's population of 1.2 billion makes it the central player in any pan-Indian Ocean grouping. But Sri Lanka, with just 20 million people, is drawing attention for two advantages over the giant neighbor.

The first is its location. Ships crossing the Indian Ocean can complete the journey in a nearly straight-line passage and still make call in Sri Lanka.

"If the ship stops at Mumbai, it will take an extra day to go there and come back," a Sri Lankan port bureau official said.

The second reason is infrastructure. Although the civil war had been nearly the only thing reported about the country in recent years, Sri Lanka has actually made more progress in infrastructure development than India has.

Its towns are clean. More than 90% of homes are on power grids. And the literacy rate is over 90%, thanks to free public education. Many Indian people who visit Sri Lanka say it is 10 years ahead of their country in terms of infrastructure.

Window to world

Just as Hong Kong and Singapore rose on the back of the economic growth in China and Southeast Asia, Sri Lanka may be able to tap India's explosive economic potential and become an advanced economy that acts as key driver of the pan-Indian Ocean economic zone.

The race is on to build luxury hotels at prime beachfront locations in Colombo.
It seems the vision of turning Sri Lanka into such a regional hub already enjoys wide acceptance.

In an exclusive area of Colombo, Indian conglomerate ITC and Hong Kong-based Shangri-La are building hotels next to each other. Two rival luxury hotels being built simultaneously in one location is rare anywhere in the world.

"We definitely want to win orders for Shangri-La Hotel's 500 or so guest rooms," Keitaro Suma, president of Shin Nippon Lanka, said.

The local unit of Shin Nippon Air Technologies, a major Japanese air-conditioning company, won an order from a 500-room hotel project in July. More than 100 construction plans exist in Sri Lanka today for hotels alone.

Shin Nippon Air Technologies made a foray into Sri Lanka in 1980. The company has suffered some setbacks, but it has been on an uptrend in recent years, with sales doubling in the past two years.

"The construction boom will last for at least 10 more years," Suma said.

As more businesses wake up to the potential of Sri Lanka as a key regional hub, more investment and development projects are set to follow. This will likely attract even more foreign companies to come to the country for opportunities.
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Senior Member
Jan 17, 2010
China, India vie for Sri Lanka influence- Nikkei Asian Review

COLOMBO -- China is aggressively trying to play a leading role in massive infrastructure projects in Sri Lanka. The move is part of Beijing's efforts to secure a sea lane in the Indian Ocean and ensure a dependable energy flow.

China's growing influence in Sri Lanka does not sit well with India, which has deep connections with the island nation. India has also stepped up infrastructure investment in its southern neighbor, in a bid to counter Chinese influence.

The Lotus Tower, currently under construction in Colombo, is scheduled to be completed in 2015. "It will be a landmark for Sri Lanka like the Eiffel Tower in Paris," one local said. Completed, the structure will stand 350m tall, making it one of the highest buildings in South Asia.

Chinese engineers are overseeing works to expand and modernize the Port of Hambantota in southeast Sri Lanka. Signs with Chinese characters greet visitors at the main entrance to the construction site.

Colombo's new landmark is not an exclusively domestic affair: More than $100 million in funding for the project is coming from Export-Import Bank of China. In addition, construction has been handled by Chinese state-run enterprises. A large signboard for CEIEC stands at the entrance to the construction site.

Major presence

There are a lot of Chinese inside Colombo hotels these days. The Lotus Tower is just one major infrastructure project involving Chinese companies are handling in Sri Lanka. They are also developing the Port of Hambantota on the southeast of the island.

The port aims to change this once sleepy little fishing port into one of the biggest sea hubs in South Asia. Here again, state-owned China Harbor Engineering is handling construction. At the main gate of the construction site, Chinese engineers give instructions to local laborers.

This project consists of three stages. The first has been completed: Breakwater and other key basic structures have been installed, as well as crude oil tanks. The second phase involves the construction of a shipping terminal that can accommodate nearly 40 large tankers at one time. The first two stages will cost more than $1 billion.

The Indian Ocean provides passage for not only tankers carrying crude oil from the Middle East, but also container ships. Half the world's ocean freight containers go through the Indian Ocean. Already, 300 or so ships sail past the Hambantota's offshore waters daily.

Diamonds and pearls

China's national security strategy includes plans to create a dependable sea lane from the Middle East to its ports. One key pillar of this strategy, known as the "string of pearls," is to create ports that guarantee safe passage and resupply for Chinese ships along the passage. Sri Lanka will be home to some of the most crucial of these ports.

"China is just building them for us, the ports will belong to Sri Lanka," an official at Sri Lanka's port authorities said. But there is no doubt China is making massive investments because the Sri Lankan ports are a crucial part of its strategy to secure the flow of natural resources.

India has a similar security strategy concerning sea lanes. This plan, dubbed the "necklace of diamonds," also regards Sri Lanka as a key component. Its investments in the country are also strategic.

For example, India's state-owned National Thermal Power is participating in the construction of a coal power plant in the northeastern part of Sri Lanka. Railway construction in the country's northern part is also supported by Indian companies.

Tricycles and other Indian products can be seen throughout Sri Lanka.

Tata Housing Development is engaging in an urban development project in a prime Colombo location to build large residential properties and other buildings. The roughly $400 million project symbolizes Tata Group's ties with Sri Lanka, an official at the Indian group said.

Blood thicker than water?

"China is a friend, but India is a brother," one top executive at a Sri Lankan company said. This sums up the complicated relationship Sri Lanka has with the two powers. China stood by Sri Lanka when the nation was ostracized by the West because of the civil war, the executive said. Sri Lanka has a complicated history with India, but this does not change the fact the country is the most influential neighbor, he added.

In reality, however, Sri Lanka has been attracting investment from other countries as well.

Japan's investment in Sri Lanka in the five years through 2013 was tied in second place with India. China took first spot, which was previously occupied by Japan.

Japanese general contractor Maeda is handling the construction of a hydroelectric station in the central Sri Lanka. "Large projects are being signed one after another," a Maeda official in Colombo said. "We are at the forefront of international competition today."

Other Japanese builders are eyeing upcoming opportunities, such as the expansion of an international airport near Colombo. Japanese Prime Minister Shinzo Abe's visits Sri Lanka in September, and business is likely to be on the agenda.

Considering the huge growth potential of the pan-Indian Ocean economic zone, the importance of Sri Lanka will only grow and competition for business there among major powers is set to grow.


Senior Member
Jan 17, 2010
SL to India like TAIWAN to China they are way ahead of their Neighbors later no one cares ............

Taiwanese are hard working/smart compared to South asians.And Lanka with 10% each Hindu,Xian,MUSLIM with HARD CORE BBS violence have little hope to RIDES HIGH :rofl:
what does BBS mean here? 10% each Hindu,Xian,MUSLIM ? then who're the rest of 70%?

Lanka's population 2.1 bln vs. Taiwan 2.3 bln, while Lanka's landmass 1.8 x Taiwan. More space for less people.

I don't subscribe to such a theory of superior "work ethics" of E. Asians over others . My finding is both S. and E. Asians are equally hardworking . In essence it all boils down to a competent governance, plus natural endowments, for development. In Lanka's case additionally they were in the aftermaths of a raging civil war, and in an adverse neighbourhood (unlike Taiwan in generally favourable surroundings, Japan, Korea, Hong Kong as sources of investment / transfer of tech/expertise, plus a huge market of Mainland...).

According to pics of their big-ticket projects SL looks quite promising -

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Senior Member
Jan 17, 2010
BBS BODU BALA SENA regularly attacks Tamils,Churches &Musjids, SL news is highly censored so very few incidents r reported....
If u agree or not who cares South asians r religious (u dont have 10% Muslim population) RIOTS are Common &Will for another 20 yrs :laugh:

Why can't u apply space&people with CHINA VS jpn/US :rofl:
Ok for a moment I forgot SL is consisting of Buddhist majority. 10% Moslem (Mores) not much compared to over 200 mln in India (i.e. roughly 15% Indians).

Anyway with so much FDI pouring into such a tiny island there shall be visible progress.

COLOMBO -- China has emerged as Sri Lanka's largest foreign direct investor accounting for 24 percent of the inflows for 2013, an official said here on Tuesday.

Sri Lanka's government has set a target of $2 billion in foreign direct investment (FDI) for 2013 and as of November had achieved $1.2 billion.

Investment Promotion Minister Lakshman Yapa Abeywardene told media that companies from China accounted for the largest amount of FDI into the country followed by Hong Kong with 12 percent.

Singapore came third in line with 10 percent while the Netherlands and Malaysia rounded out the top five.

"We are very satisfied with the FDI progress this year. Last year FDI was $1.2 billion. We have already matched this amount and are confident of exceeding it by December. This year FDI created 10,000 additional jobs in Sri Lanka," he said.

Thirty one percent of the FDI was for manufacturing with 19 percent for port terminals and 17 percent for telecommunications. Property development received 13 percent of the investment while hotels and restaurants grabbed 6 percent.

Not quite sure abt the spread of SL's demography. The worst-case scenario can be ghettoization of Moslems like Israeli pressing millions of Palestinians into a narrow Gaza strip, so to speak...

Perhaps only Lankan members can give a local touch to the ground reality of SL.

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