COLOMBO - Sri Lanka is considering a special zone in the southern part for Chinese investors as China looks to expand its investment in the island nation, a top official said.

Chairman of the Board of Investments (BoI) Upul Jayasuriya said the government had decided to set up the zone in the southern town of Hambantota.

Sri Lanka has already conveyed its decision to China and is now awaiting a response.

"The government has decided that we will open the gates for the Chinese to make their investment particularly at the moment as it is in Hambantota." Jayasuriya said in an interview to Xinhua.

According to the BoI chairman, Hambantota is a city which already has a harbor and an international airport. "So we feel that is a suitable venue for the Chinese investment to come up," he said.

"This is the correct time for China to come here as whatever is available at very cheap, cost effective prices," said Jayasuriya. "Not only the labor rate, but the salaries and the cost of doing business here are much cheaper than the entire region. So I hope the Chinese investors will make use of this opportunity."

China has been Sri Lanka's biggest contributor of foreign direct investment with over $400 million in 2014, according to statistics from the Central Bank.

Over the past five years, a large number of Sri Lanka's infrastructure and real estate projects have been developed by China and the government of President Maithripala Sirisena is now eager to attract more direct investment from China.

"Sri Lanka-China relations are right now at its peak," Jayasuriya said. "The BoI has been working with many Chinese investors and in the recent past there has been a lot of Chinese interest in Sri Lanka."

"We look forward to working with them," he said.

The Colombo Port City, one of the mega projects funded by China which was suspended by the Sirisena government in March, has received clearance and will resume construction early next year.

Jayasuriya said the Port City will be a face-lifting project for Colombo.

"I can assure with confidence that the Port City will recommence its operation before March," he said. "This project will also add a lot of color and tourist attractions and the entire world will be looking at it as this will be the first ever of its kind in the recent past."

Sri Lanka is now being labelled as an investor friendly nation as the constitution guarantees that no investment is liable to be taken off by the government, particularly countries that have investment protection agreements with the island nation.

The government is now working to further strengthen the constitutional clauses in a positive manner, enabling more investors to come in, Jayasuriya said.

China is one of the countries that has signed the investment protection agreement with Sri Lanka.

Furthermore, Jayasuriya said any investor who is willing to invest more than 14 million U.S. dollars could buy and own properties in the country and for investors who require land on a lease-hold basis, the special tax would been reduced from 15 percent to 1 percent.

"This is the same that is expected by any local investor when they lease out land. These two major obstacles have now been removed."

The BoI has signed agreements for foreign direct investment of $1.6 billion so far this year. The agency said improved facilitation under the new government which is committed to speeding up project approvals and eliminating delays had yielded high value projects.

The Sri Lankan government is also aiming to attract more investment from countries in the region, such as India and Pakistan.