China Merchants Group is in the final stages of completing a $1.1 billion investment into a 99-year lease for the majority stake in an underdeveloped deep-water container port in Hambantota, Sri Lanka. It is expected that China Merchants will take over management of the port within the next month. Analysts believe that once under Chinese ownership, the port could serve to shake up current trade routes.
Industry-watchers believe that China Merchants has what the Sri Lankan government’s Hambantota port operator never had: the operational skill, clout, capital, and commercial relationships to attract significant traffic to Hambantota.
According to reports, China Merchants Group will enlist other large China state-owned enterprises to invest and set up shop in an 11-square-kilometer special economic zone abutting the Hambantota port. The special economic zone was created at the request of the Chinese government, with the promise of $5 billion of Chinese investment and 100,000 new jobs to follow.