World Economy

Sri Lanka Eyes China as Major FDI Source

Sri Lanka Eyes China as Major FDI Source Sri Lanka Eyes China as Major FDI Source

Under the new government, Sri Lanka is looking at China as a major source of foreign direct investment to further expand its growing economy, a top business executive said.

In an interview with Xinhua, Mangala P.B. Yapa, CEO of Sri Lanka’s biggest business group, the Ceylon Chamber of Commerce, said China and Sri Lanka had been trading partners for years and due to Sri Lanka’s strategic importance, China can pour investment into the country to benefit not only both nations but other South Asian countries as well.

“China is a fast growing market. China’s expanding middle class and upper class will require a lot of goods and services that Sri Lanka can provide. On the other hand, China is also looking at investment globally with Sri Lanka as an ideal destination,” Yapa said.

So far, bilateral trade between Sri Lanka and China was valued at more than $3 billion. But Sri Lanka is looking forward to increasing its exports to the world’s second largest economy.

In order to further improve their business relations, China and Sri Lanka are working out a free trade agreement.

“China has been and will be a strong partner for Sri Lanka’s economic growth. I see this as a relationship which needs to be further strengthened,” Yapa said.

Relations between the two countries had encountered a slight bump after the $1.5 billion expansion of the Colombo port project was suspended for a review process when the new president took over.

According to Yapa, President Maithripala Sirisena’s recent visit to China was a clear indication of Sri Lanka’s commitment to strengthen its relations with China.

China became Sri Lanka’s largest loan provider after the end of three decades of civil war in 2009. Beijing has provided Colombo with over $5 billion in loans, mostly for massive infrastructure projects, including highways, railways and ports, and another $1.2 billion for a coal-power plant.

Sri Lanka also sees great opportunities of growth as the economy expands after the end of the civil war. Sri Lanka grew by 7.4% in 2014 and although growth is expected to slow marginally to 7% this year, the country remains an exciting investment point in South Asia.