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Sri Lanka's Chinese-built port opens for business
by Staff Writers
Colombo (AFP) June 6, 2012


Sri Lanka's first Chinese-built port, a strong symbol of Beijing's investment in South Asia, opened for international shipping on Wednesday with the arrival of 1,000 cars from India.

The $1.5-billion deep-sea port in southern Hambantota, the home constituency of President Mahinda Rajapakse, straddles a major east-west shipping lane used by 200-300 international vessels daily.

The project, which was delayed by just over a year, was conceived to create a new logistics hub to handle transshipments from Asia and provide a boost to Sri Lanka's economy as it recovers from decades of civil war.

Regional power India turned down an offer to construct the port soon after Rajapakse came to power in 2005 saying it was not commercially viable, but China's presence has created unease in New Delhi.

India views Sri Lanka as being firmly within its sphere of influence and has been concerned about China getting a foothold there and in other surrounding countries.

China loaned money for the port and construction was led by Chinese engineers and workers, but the facility is managed exclusively by Sri Lankans.

"We have a vast area of land for storage at the port. This we can offer to car manufacturers in Asia to hold their stocks," Authority Chairman Priyath Wickrama told AFP, adding that there was also space for car assembly around the port.

He hopes to raise the number of vehicles handled at Hambantota -- 240 kilometres (150 miles) south of the capital Colombo -- to one million within five years.

China is also building a second port in Colombo and Chinese firms have pledged investments amounting to $50 billion spread over the next 10 to 15 years, according to Sri Lanka's trade ministry.

Elsewhere in South Asia, China has funded port facilities in Pakistan, a long-standing ally, and has plans for rail projects in Nepal, a traditionally India-aligned country where Beijing is increasingly influential.

Bangladesh has asked for Chinese help to build a port and Beijing in November 2011 opened an embassy for the first time in the Maldives.

According to Charu Lata Hogg, an analyst at London-based think-tank Chatham House, India has come to terms with China's rise.

"There seems to be a tacit understanding that their commercial interests can be complementary," Hogg told AFP. "Indian cars going through a Chinese-built port in Sri Lanka reveals a lot about this relationship."

The first consignment of cars on Wednesday came from Hyundai's plant in the auto hub around the city of Chennai in the southern Indian state of Tamil Nadu and is destined for Algeria.

The South Korean car maker's local shipping agent Aitken Spence said the volume of Hyundai vehicles in Hambantota "is expected to grow substantially with three to four vehicle carriers expected to call each month".

Hyundai, one of the world's top five car makers, will store up to 10,000 cars at a time in Hambantota which will be shipped to Europe, Africa and other destinations.

The idea is Hambantota will be a storage hub supplied by smaller ships from around Asia, including nearby India.

Larger ships, which are unable to dock at other ports because of their deep drafts, will then carry the cargo on to other destinations making use of Hambantota's dedicated vehicle terminal.

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