Sri Lanka venture aims high with China partners

COLOMBO, Sri Lanka — The low hum of excavators and dump trucks echoes across 228.5 hectares of land belonging to the industrial park of Hambantota International Port, or HIP, as contractors scramble to complete ground leveling for a $300 million tire factory.

Sri Lanka’s southern district of Hambantota is mostly known for its sprawling paddy fields, peacocks and the ancient Ruhuna Kingdom ruins. But the sound of heavy machinery signals the impending arrival of modern manufacturing, which the government hopes will transform the district into an industrial powerhouse and commodities trading hub.

Though the COVID-19 pandemic disrupted international shipping, HIP had a busy first half of the year in 2021, with throughput nearly tripling year-on-year. At the same time, a slew of newly signed investments are set to kick-start export-oriented manufacturing in the port industrial park and generate domestic container traffic.

“Since the pandemic, Hambantota has been able to achieve good results and seize business opportunities,” said Johnson Liu, CEO of the Hambantota International Port Group, or HIPG. “The most important thing is that cargo volume for the first half of this year increased by 187 percent compared with the first half of last year. The number of our investment agreements has also increased significantly.”

In November, HIPG signed a $300 million agreement with Chinese company Shandong Haohua

Tire to manufacture tires in the port industrial park using local rubber resources and exporting to the world market. Ground leveling for this factory is expected to be completed by the end of this month.

HIPG also signed a $16 million agreement with Chinese company Shenzhen Xinji Group in June to set up a plug-and-play “Park in Park” facility in the port industrial park. The facility is expected to transfer skills and technology, and begin production of household electric and electronic appliances within 12 months.

Unique strengths

Liu has set his sights on leveraging Sri Lanka’s unique strengths to attract new investors.

“The secret of Hambantota Port’s success in the past year is that we have a comparative advantage of having an industrial park linked to the port area, alongside favorable logistics and energy costs,” he said.

HIP’s immediate pandemic response was to update their standard operating procedures and divide staff into two different groups so that there is no interaction between the two groups. Workers from each group are required to undergo tests before duty.

The Sri Lankan government has also indicated that it wishes to negotiate a free trade agreement with China, and appointed State Minister of Foreign Affairs Tharaka Balasuriya as chief negotiator early this month.