Sri Lanka offers tax-free zone at new airport

MATTALA, Sri Lanka (AFP) - Sri Lanka is turning its newest international airport opening Monday into a tax-free zone to attract aviation-related industries, a top official said.

Talks were under way to set up aircraft maintenance, repair and overhaul operations at the US$209 million (S$260.7 million) airport located near wildlife sanctuaries in the island's southeast, airport chairman Prasanna Wickremasuriya said.

The airport can accommodate Airbus A-380, the biggest passenger liner in service, and is part of ambitious plans to turn the district of Hambantota, the home constituency of President Mahinda Rajapakse, into the new commercial capital of Sri Lanka.

"We can be a regional hub for aircraft maintenance. Negotiations are on with a big European operator to set up a facility at Mattala," Wickremasuriya said.

"We have huge potential for cargo and tourist traffic as well." The airport and its immediate surroundings, about 1,000 ha. are being designated a free zone for foreign and local investors to set up warehouses, maintenance hangars and other industries, Wickremasuriya said.

Work began in 2011 for the Mattala International airport (MIA), located within Hambantota district, but it is being re-named after the president as Mahinda Rajapakse International Airport (MRIA).

The first flight is to be operated by the national carrier, Sri Lankan Airlines.

China's Export-Import Bank funded the airport which can handle a million passengers a year. China also funded the $1.5-billion sea port opened for commercial shipping in Hambantota last year.

The first foreign carrier to fly to MRIA will be Air Arabia which has announced twice weekly flights to Sharjah from Mattala, about 270 kilometres south of Colombo by road.

Fly Dubai, the low-cost carrier of Emirates, is also due to start operations in a few months.

The airport is initially aiming at migrant workers employed in the Middle East as nearly 30 percent of those who travel abroad for employment from Sri Lanka are from districts neighbouring the airport.

"We see a huge potential for tourism because the airport is close to wildlife parks," Wickremasuriya said. "We have 540 mid-range hotel rooms in the area and more are coming up." Hong-Kong based luxury hotel chain Shangri-La is building a hotel in the area.

Mattala was initially planned as an expansion of the small Wirawila military airstrip, but Wickremasuriya said they shifted the location 25 kilometres away to ensure no disruption to local rice farmers.

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