A port project being built in Colombo by the Chinese is not a threat, Sri Lanka's prime minister said Saturday amid concerns Beijing is trying to boost its influence in the Indian Ocean.

The $1.4 billion "Port City" represents the biggest single foreign investment received by the island, adding 233 hectares (575 acres) of real estate in the congested capital.

But it is controversial, as Beijing has been accused of seeking to develop facilities around the region in a "String of Pearls" strategy to counter the rise of rival India and to secure its own economic interests.

"The Port City is not a threat to anyone, it's an opportunity for everyone to make money," Prime Minister Ranil Wickremesinghe told a news conference. "The Chinese have not asked for any military base in Sri Lanka."

Wickremesinghe described Sri Lanka as a "small country" before adding: "Sri Lanka will not allow in any way the security of other countries to be threatened by third parties. Sri Lanka is committed to the freedom of navigation in the Indian Ocean."

The mega project was initiated by Chinese President Xi Jinping in September 2014 and is expected to include real estate, a marina and a Formula One racetrack.

Wickremesinghe made the comments on the final day of his visit to the Asian giant, where he is seeking to restructure some of the cash-strapped island's $8 billion Chinese debt and convert some of its loan burden into stakes in infrastructure projects.

Sri Lanka's president suspended the Port City plan shortly after taking power in January last year, before recommending last month that it be resumed.

Former president Mahinda Rajapakse, who is under investigation over allegations of corruption during his decade in power, relied heavily on China to rebuild the country's infrastructure after the end of the island's decades-long ethnic war in May 2009.

The present administration has accused the previous government of agreeing to unfavourable terms for the loans.

China, the largest single lender to the island, secured contracts to build roads, railways and ports under Rajapakse's regime.

Sri Lanka eyeing Chinese investments with law reforms: PM
Colombo (AFP) April 10, 2016 - Sri Lanka will bring legal reforms to encourage much needed foreign investment, as the cash-strapped island tries to turn its $8 billion Chinese debt into equity, the prime minister said Sunday.

Ranil Wickremesinghe, who returned home Sunday after a three-day visit to China, said streamlined regulations and a free trade agreement would be in place to increase economic ties with Beijing.

"The Chinese are interested (in investing) and are awaiting our (new) laws," Wickremesinghe said, adding that he was hoping to unveil an economic master plan with a regulatory framework by June.

He said the Chinese would be offered equity stakes in loss-making projects -- a second international airport and a deep sea port in the island's south -- commissioned by former strongman president Mahinda Rajapakse.

"We are setting aside an area of 1,000 acres (400 hectares) as a special investment zone for Chinese companies to set up operations in Hambantota," the prime minister said, referring to an area where the white elephant projects are located.

The two ports could be viable for big logistics companies, Wickremesinghe said.

He played down a controversy over a $1.4 billion land reclamation project in Colombo known as Port City, which is being built by a Chinese company.

The state-owned Chinese firm had demanded $125 million as compensation from Colombo for suspending work soon after President Maithripala Sirisena came to power in January last year. Wickremesinghe said the compensation claim was not raised during his visit.

The new government held up work pending the resolution of several issues, including environmental concerns and reports that neighbouring India feared the Port City could lead to China getting a military foothold in its backyard.

However, Wickremesinghe said Port City was not a threat.

"The Port City is not a threat to anyone, it's an opportunity for everyone to make money," he told reporters on Saturday.

The land reclamation represents the biggest single foreign investment received by the island, adding 233 hectares (575 acres) of real estate in the congested capital.

The mega project was initiated by Chinese President Xi Jinping in September 2014 and is expected to include real estate, a marina and a business district.