The current Sri Lankan government on 6th of March 2015 temporarily suspended the US$ 1.4 billion Colombo Port City project, launched by the previous government in partnership with China in September 2014, due to the environmental issues and called for a comprehensive environmental impact assessment.

Following the environmental impact assessment (EIA), the Cabinet Committee on Economic Management has recommended allowing resumption of the project.

"The Cabinet Committee on Economic Management has recommended allowing resumption of the project subject to limitations and conditions stipulated in the EIA report," the government said in a statement.

The Cabinet of Ministers at its meeting on Wednesday has approved the proposal, made by Prime Minister Ranil Wickremesinghe, to extend the project agreement for a further period of six months from 15 March 2016.

The project, funded by Chinese state-owned company China Communications Construction, represents the biggest single foreign investment ever received by Sri Lanka.

The urban complex project will build a city on 233 hectares (583 acres) of land reclaimed from the sea between the Colombo South Port and the Galle Face Green. Once completed the offshore city will have sport complexes, mini golf ground, housing and office complexes, luxury hotels and many other modern facilities.

The project is expected to create employment, tax income and indirect opportunities for other services. The location of the project is expected to help connect businesses from India, Sri Lanka, Myanmar, Bangladesh, Pakistan and Singapore and the Middle East.

According to the Chinese Embassy in Sri Lanka, Colombo Port City will become "a high-end urban complex in South Asia concentrating industries, including finance, tourism, logistics and information technology", and the whole project will create more than 80,000 jobs.

The Colombo Port City is one of China's key projects along the 21st Maritime Silk Road.