Sri Lanka to build South Asia’s largest logistics complex in Port of Colombo

Dignitaries at the signing of the milestone agreement with Ports, Shipping and Aviation Minister Nimal Siripala De Silva and China Merchants Group Chairman Miao Jianmin (sixth from left) and (from left) Access Engineering PLC Director Business Development Dharshana Munasinghe, SLPA Managing Director Susantha Abeysiriwardena, SLPA Chairman Keith Bernard, Ports, Shipping and Aviation Ministry Secretary K.D.S. Ruwanchandra, China Merchants Group Executive Vice President Deng Renjie, Access Group Chairman Sumal Perera, China Merchants Group Executive Vice President Feng Boming, China Merchants Ports Holdings CEO Wang Xiufeng and Colombo International Container Terminals CEO Jack Huang

An artist’s impression of the proposed South Asia Commercial and Logistics Hub to be completed by end-2025 – the largest logistics hub in South Asia

• China Merchants Port Holdings leads consortium of investors in US $ 392mn South Asia Commercial and Logistics Hub
• SLPA and Access Engineering to each hold 15% equity in venture
• 8-storey, 5mn square foot complex with design storage capacity of 530,000 CBM to be built

Sri Lanka’s aspiration to become a major logistics hub in the region took a giant leap forward yesterday, with the launch of a project to build the largest commercial and logistics complex in South Asia in the Port of Colombo, with an investment of US $ 392 million.

Agreements for the construction and operation of the South Asia Commercial and Logistics Hub (SACL) as a 50-year Build-Operate-Transfer (BOT) project were formally signed in Colombo by the representatives of the three investing entities, with China Merchants Port Holdings (CMPort) holding a 70 percent stake and the Sri Lanka Ports Authority (SLPA) and Access Engineering PLC each holding a 15 percent stake in the venture.

A public-private partnership project, the SACL will be built in the centre of the Port of Colombo and will have 530,000 CBM of storage capacity via an eight-floor building. The investment in the project will bring in the much-needed foreign investment into Sri Lanka.

Construction of the complex is expected to begin in the second half of 2023, with a target of completion by end-2025. Adjacent to the Port City and CBD, it will be directly linked with the airport via the Port Access Elevated Highway. The five million square foot complex will offer the full gamut of logistics-related facilities and services such as less than container load (LCL), multi-country consolidation (MCC), container freight station (CFS), general warehousing and various other value-added services.

A spokesperson for CMPort said the project would result in an infusion of US $ 126 million, in addition to an upfront payment of US $ 26 million, after the agreement is signed. The project is also expected to provide direct employment to a minimum of 1,800 people and create 10,500 other indirect job opportunities.

The project aligns with Sri Lanka’s national development strategy to transform the country into a major logistics centre, identified as a key sector and a driving force for economic development in the National Policy Framework 2019.

  It will provide better logistics and warehousing facilities and services, enhancing the port’s competitive advantage and consequently strengthening its hub status. The project will also improve the operational efficiency of the Port of Colombo and introduce leading-edge technology and innovation. 

The Port of Colombo is currently ranked among the top 13 ports in the world, in terms of shipping network connectivity. Despite its ideal location on the international trading route, the port still lacks a modern, state-of-the-art logistics facility, the spokesperson said. At present, mainly loading and discharging of cargo is done at the Port of Colombo, with little value-added services being offered. The SACL will change this landscape. 

Additionally, since the Port of Colombo was declared as a Freeport by the Government of Sri Lanka, the project will enjoy the associated Freeport advantages in its operations, such as no customs clearance for transshipment and MCC cargo, resulting in reduced paperwork and associated costs. The project also provides an ideal platform for the registration of hub companies – which will enjoy tax concessions in CIT, WHT, VAT, etc.

The project is expected to help the Port of Colombo to strengthen its competitiveness against other competing ports in the region. Furthermore, the improved services and cost benefits provided by the project are expected to attract more business and container volumes to the Port of Colombo, benefitting all its terminals and generating higher revenues for the port and port-related companies in Sri Lanka.

CMPort, the major shareholder in the SACL, is the parent company of Colombo International Container Terminals (CICT), which manages the South Terminal of the Port of Colombo. CMPort is the largest and a globally-competitive public port developer, investor and operator in China, with investments in Mainland China, Hong Kong and overseas. CMPort has a port network portfolio spanning 50 ports in 26 countries and regions. Guided by the vision ‘To be a world-class comprehensive port service provider’ and supported by its domestic, overseas and innovation strategies, CMPort strives to strengthen its core competencies in global throughput, port service and management.