The Sri Lankan government announced on Thursday that the Chinese-run Port City project will continue, after a cabinet meeting on the issue.
The project was reviewed by the new government along with several others initiated by former president Mahinda Rajapaksa.
State-owned China Communications Construction Company Limited (CCCC) had defended the project, saying all procedures of the procurement regulations were followed before the deal was signed with the previous government.
The $1.5 billion development project with the company was agreed during former president Mahinda Rajapaksa's term in office, however it appeared under threat following the recent election, after the new president, Maithripala Sirisena and prime minister, Ranil Wickremasinghe, said they would cancel the deal if elected.
The pledge to cancel the deal led to investor uncertainty, as doubts rose over the new government's economic policies.
In January Kabir Hashim, Sri Lanka’s investment-promotion minister, expressed security concerns over the $1.5 billion project, which would CCCC, a Chinese state-owned company, to hold land in a high-security zone close to a planned expansion to Colombo’s port.
“The port city project has to be completely looked at,” Mr. Hashim told reporters in January. “You cannot have land given on freehold basis to another country in a high security zone.”
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