Nov 02, Colombo: Sri Lanka will lease an islet off the north western coast of the island to a private firm for 1.07 billion rupees to build a luxury hotel resort.

The Cabinet of ministers had approved a proposal by Economic Development Minister Basil Rajapaksa to lease the 450 acres of land at Uchchimunai Island for 99 years to Sapphire Bay Resorts (Pvt) Ltd, Cabinet Spokesman Keheliya Rambukwella said.

The islet off Kalpitiya, about 140 kilometers north of Sri Lanka's capital Colombo along the Western Coast is offered to the developer for a Rs. 1.07 billion upfront payment to convert the area as an international tourist hub.

This land to be given on a 99-year lease term basis will incorporate hotels, resorts, water villas, spas, golf courses etc. and other leisure and recreation facilities provided to meet the present day needs of tourists.

Kalpitiya, the stretch of land planked between the sea on one side and the lagoon on the other side and the nearby islets in the Puttalam District, will be developed under the Kalpitiya Integrated Tourism Resort Project as a major tourist destination similar to Bali in Indonesia.

Since the end of the war against the Tamil Tiger terrorists in May 2009, the country has seen increasing tourist arrivals every year for the past three years. Last year 855,975 tourists arrived in the island and the country targets one million tourist arrivals this year.

Lonely Planet, the world's largest travel guide and the digital media publisher has named Sri Lanka as the number one destination in the world to travel in 2013.