Sri Lanka looks to appease China as hotel deal collapses
The deal to construct a hotel on the illustrious Galle Face Green with the Chinese defence contractor China Aviation Technology Import-Export Corporation (CATIC), was worth $500 million and was hailed as one of the island’s single biggest foreign investments.
See our earlier post: ‘Sri Lanka’s defence ministry and tourism investment’ (June 2011)
The Sri Lankan Government, anxious to placate the Chinese investors, were reportedly looking for alternate land and have now offered the university project worth $89.6 million.
The contract was cancelled after the Sri Lankan government came under intense scrutiny from opposition parties over the sale, who claimed the deal was not done transparently.
They also questioned why the “best property in Sri Lanka” was being sold to an arms company that owns only a few hotels in China and not a well reputed international chain, reportedly with not a single cent of tax being charged. CATIC does however, export military aeroplanes to Sri Lanka.
The announcement comes as Sri Lanka faces increased pressure from China for loan repayments, leading to Sri Lanka trying to swap some of its debt for equity with Chinese firms, starting with the Norochcholai power plant in the North-West.
