China Merchants Exits US$392m Colombo Port Hub: What It Means for Sri Lanka and Port City

Updated 20 October 2026. Based on Sri Lanka Ports Authority (SLPA) statements, stock exchange disclosures and testimony to Parliament's Committee on Public Finance.

China Merchants Port Holdings, the Chinese state-owned port operator, has walked away from a planned logistics hub inside the Port of Colombo. The joint venture was announced in 2023 at US$392 million and was the first major foreign investment announced after Sri Lanka's 2022 economic collapse (AFP via Dawn).

In the same week, Port City's regulator told Parliament that five planned projects had dropped out of Port City Colombo. The two stories are easy to mix up, but they are separate. This post explains what happened, who gets paid back, and what to watch next.

In one line: a Chinese company has left a logistics project inside Colombo Port, not Port City. Port City's Chinese master developer is still in place.

Key facts at a glance

• Who left: China Merchants Port Holdings, which held 70% of the project through its subsidiary Fortune Centre Group Limited.
• What it left: the South Asia Commercial and Logistics Hub (SACLH), a planned 150,000-square-metre logistics complex inside the Port of Colombo.
• When: the company confirmed the termination in a Hong Kong Stock Exchange filing on 15 October 2026. The SLPA announced it on 19 October.
• Value: US$392 million when announced in 2023. The SLPA's latest statement puts the planned investment at about US$280 million.
• Money back: the shareholders invested US$37.14 million and will get roughly US$29.8 million back.
• What's next: the SLPA will call open, competitive bids for a new logistics hub under a public–private partnership (PPP).

What China Merchants planned to build at Colombo Port

The hub was signed in April 2023 as a 50-year build-operate-transfer (BOT) partnership. China Merchants held 70%, while the SLPA and Access Engineering PLC held 15% each. It was meant to add modern warehousing and logistics services inside the port and strengthen Colombo's position as a regional hub (Ada Derana).

The government granted it Strategic Development Project status in December 2023. That came with tax breaks, including 15-year exemptions from corporate income tax and dividend tax (Newswire).

Why the joint venture collapsed

The warning signs came months earlier. In May 2026, the Board of Investment's director general told The Sunday Morning that the project would not proceed and that the SLPA would call fresh proposals for the land (The Morning).

In its Hong Kong filing, China Merchants pointed to changed external circumstances, a shifting implementation environment and timetable, and the partners' commercial considerations (Newswire). Newswire also cited shipping journal Lloyd's List as reporting land and regulatory hurdles.

The SLPA described it as a joint decision. After reviewing outside conditions and shareholder interests, it said "a decision was reached not to proceed with the proposed joint venture" (AFP via Dawn).

Who gets paid back: the settlement in numbers

The three shareholders had put US$37.14 million into the project company, including US$26 million from China Merchants' subsidiary (Newswire).

The settlement works like this:

• The SLPA pays US$21.905 million to the project company within 30 days.
• About US$7.85 million of remaining distributable cash is added to that.
• Roughly US$29.8 million in total goes back to the shareholders by stake, after deductions and expenses (EconomyNext).

That is about 80 cents back for every dollar invested. On a pro rata basis, China Merchants' 70% share comes to roughly US$21 million against the US$26 million it put in (our estimate, before deductions).

What it means for Access Engineering shareholders

Access Engineering PLC, the Sri Lankan partner, told the Colombo Stock Exchange it expects to recover about Rs. 1.453 billion of its roughly Rs. 1.762 billion investment (EconomyNext).

• Settlement share: US$3.286 million, about Rs. 1.087 billion.
• Distributable funds: about Rs. 365 million, at an indicative Rs. 331 per US dollar.
• Group accounts: about Rs. 387 million of losses were already booked for the year to 31 March 2026, so the company expects no further material loss at group level.
• Company accounts: where the investment is carried at cost, it expects a loss of about Rs. 310 million.

Final figures depend on exchange rates on the payment dates and the final settlement terms. You can read the full corporate disclosure on the CSE website.

What happens to the land: a new PPP tender

The SLPA says it will pick a new private partner through open, competitive bidding under a PPP model, subject to approvals. It calls the exit a chance to "pursue an alternative development model" (EconomyNext).

The planned hub would offer integrated, value-added logistics services on a large site inside the port. The SLPA says it would help Colombo grow from a container transshipment port into a fuller maritime centre for shipping lines, cargo owners and logistics operators.

Is China leaving Sri Lanka's ports?

No. China Merchants still operates a deep-water container terminal in Colombo Port, built at a cost of about US$500 million, and manages Hambantota Port (AFP via Dawn). It took over Hambantota on a 99-year lease in 2017.

Port City Colombo is run by a different Chinese company. Its master developer, CHEC Port City Colombo, is a subsidiary of China Harbour Engineering Company. It will market 48 of Port City's 118 land parcels, while the government sells 28 (EconomyNext). The Finance Ministry says CHEC has invested about US$1.4 billion in land reclamation and infrastructure (Daily FT).

The separate Port City story: five projects pulled out

On 15 October, the Colombo Port City Economic Commission (CPCEC) told Parliament's Committee on Public Finance that five of ten earlier projects had withdrawn and five were still active (EconomyNext). The projects that pulled out include:

• An Asiri Hospital project.
• A Gateway educational facility.
• A mixed-use development by Clothespin Management and Development.
• An integrated resort plan by Universal Entertainment Colombo, which withdrew during due diligence on a 10-hectare plot.

Even so, primary investment across nine leased land parcels has reached US$1.12 billion. Lease agreements are complete for two residential plots, two mixed-use plots, a marina and a hotel. Work reported under way includes:

• Construction of the marina.
• Piling for the Colombo International Financial Centre (CIFC), a 160,000-square-metre office, residential and retail development backed by US$515 million for its first phase.
• ICC Port City's residential construction, with ICC Bay 1 at first-floor level.
• Piling at Home Lands and at Prime Melwa Project 1.

A signed Marina Hotel project has yet to start. The commission is targeting another US$1 billion of pipeline investment over the next 12 months.

Earlier this year, the Finance Ministry said 71 approved Businesses of Strategic Importance had brought more than US$600 million of new investment into Port City in the first half of 2026 (Daily FT). For background on the project, read our guide to Port City Colombo as an international financial hub.

What it means for investors, businesses and property buyers

• Investor sentiment: losing the first major foreign investment announced after the 2022 crisis is a visible setback. The SLPA announced a replacement tender the same day it confirmed the exit.
• Listed companies: Access Engineering expects no further material loss at group level. Read its disclosure before reacting to headlines.
• Logistics businesses: a new PPP tender for the hub is coming, subject to approvals.
• Port City property: the withdrawals named so far are a hospital, an educational facility, a casino resort and one mixed-use scheme. Residential construction by ICC Port City is still under way.

What to watch next

• The SLPA's call for PPP bids on the logistics hub.
• The US$21.905 million settlement payment, due within 30 days.
• Whether Port City meets its US$1 billion pipeline target over the next 12 months.
• New lease signings on the 28 government-owned Port City parcels.

Frequently asked questions

Is China leaving Port City Colombo?

No. China Merchants Port Holdings left a logistics hub inside the Port of Colombo. Port City's master developer, CHEC Port City Colombo, remains and will market 48 of Port City's 118 land parcels.

Why did China Merchants pull out of the Colombo Port logistics hub?

Its Hong Kong filing cited changed external circumstances, the project's implementation environment and timetable, and commercial considerations. Lloyd's List has also reported land and regulatory hurdles.

How much was the South Asia Commercial and Logistics Hub worth?

It was announced at US$392 million in 2023. The SLPA's October 2026 statement put the planned investment at about US$280 million.

Who pays the settlement?

The SLPA pays US$21.905 million to the project company within 30 days. With about US$7.85 million of remaining cash, roughly US$29.8 million goes back to the three shareholders by stake.

Does China Merchants still operate in Sri Lanka?

Yes. It still runs a deep-water container terminal in Colombo Port, built for about US$500 million, and manages Hambantota Port.

Which projects pulled out of Port City Colombo?

The ones named include an Asiri Hospital project, a Gateway educational facility, a mixed-use scheme by Clothespin Management and Development, and an integrated resort plan by Universal Entertainment Colombo. Five of ten earlier projects have withdrawn, while five remain active.

What happens to the logistics hub land now?

The SLPA plans an open, competitive tender for a new logistics hub under a public–private partnership model, subject to approvals.

Follow Colombo's property and business space market

Watching how these projects shape demand around Colombo? Browse commercial property for rent, apartments for sale and all property listings on buyme.lk. Have space to let or a property to sell? Post your ad on buyme.lk and reach buyers across Sri Lanka.

This article is general information, not investment or financial advice. Figures come from the sources linked above and may change as the settlement is finalised.