South Korea is expected to participate in a $17 billion urban development project in Sri Lanka that will create new towns in the Sri Lankan capital of Colombo and its adjacent areas.

According to the Korean Ministry of Land, Infrastructure and Transport, Minister Kang Ho-in on Tuesday signed a memorandum of understanding (MOU) with his Sri Lankan counterpart Champika Ranawaka to cooperate in the development of new towns in the South East Asian country. The urban development project is estimated to cost as much as $17 billion, according to the ministry.

Under the deal, the Korean government will support Korean companies that will participate in the project by providing its expertise in creating a so-called smart city enabled with smart devices and services such as intelligent transportation system (ITS), smart water management and smart resources recycling, said Kang.

The Sri Lankan government has been working on the development of nine new towns to ease population density in the capital and other cities by 2030. Each town will be developed to serve a specific industry, such as science and technology, tourism, as well as airport and logistics sectors. Of the nine new town development projects, the Korean government plans to cooperate on two projects - a science and technology town, as well as a town with an airport-related industry zone, according to the ministry.

The science and technology town would be located south of Colombo, sitting on a site of 50 square kilometers. The new town project would cost about $530 million. The Sri Lankan government also asked the Korean government to participate in the development of a new town that could serve airport-related industries, sitting on a site of 170 square kilometers near an airport. This town project is estimated to cost $16.47 million.

However, it remains to be seen whether the two countries would sign a final contract. Currently key to the success of the project is financing as the Sri Lankan government wants to develop towns in a form of Public-Private Partnership (PPP). Korean companies will likely remain reluctant to take part in the projects as it is difficult to secure profitability from public housing or infrastructure in new town development projects.

By Moon Ji-woong

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]