China Merchants Port Holdings Pulls Out of $392M Colombo Port Logistics Venture in Sri Lanka

POLICY WIRE — Colombo, Sri Lanka — State-owned enterprise China Merchants Port Holdings has officially stepped back from a major $392 million joint venture aimed at establishing a logistics hub at the Port of Colombo, marking a notable shift in Chinese capital commitments within the island nation.

Back in 2023, the China Merchants Group initially committed to funding the proposed South Asia Commercial and Logistics Hub, which pushed its cumulative investment in Sri Lanka up to $2 billion. Under the original framework of the agreement, China Merchants was slated to maintain a 70% stake, with the Sri Lanka Ports Authority and a local private construction firm each holding 15%.

The Sri Lanka Ports Authority announced on Monday that the decision to halt the project was reached after a careful evaluation of prevailing external conditions, commercial factors, and the mutual interests of all stakeholders involved. Moving forward, the authority plans to pursue an alternative development strategy by establishing a new logistics hub through a competitive bidding process under a Public–Private Partnership model.

When the initial investment was secured in 2023, it was celebrated as the premier major Foreign Direct Investment to enter the country following its foreign debt default during the severe economic crisis the previous year. This departure marks the second instance of a major investor backing out of a previously finalized Sri Lankan initiative, following Adani Green’s withdrawal from a $442 million renewable energy project in northern Sri Lanka in February 2025 after tariff renegotiations pursued by the Anura Kumara Dissanayake administration.

In an official filing submitted to the Hong Kong stock exchange on Thursday, China Merchants explained that shifts in the project’s implementation environment, timeline adjustments, and individual commercial considerations prompted the firm to reassess the venture and conclude that termination served the best interests of all parties.

Positioned along vital global shipping lanes, the Port of Colombo remains a critical maritime asset in the region. China Merchants Port Holdings currently maintains an 85% stake in the Colombo International Container Terminal, while Adani International Port Holdings holds a 51% majority stake in the neighboring Colombo West International Terminal, alongside China Merchants’ ongoing management role at the southern Hambantota Port.

Reporting by Policy-Wire (PW)