COLOMBO - A controversial $500-million investment deal from a Chinese company has been called off in Sri Lanka, a government minister said here on Tuesday.

The deal that China Aviation Technology Import-Export Corporation (CATIC) intends to build the CATIC Grant Skyline Hotel and Rainbow Multifunctional Complex on prime seaside land in Colombo has been called off.

Economic Development Minister Basil Rajapaksa told media that the decision was changed since the government has decided that it would only give land on a long term lease of up to 99 years and not sell the land outright.

"As a government we have come to the conclusion that unless it is on a long-term lease, such property under the government will not be given out," Rajapaksa said.

"The Sri Lankan government is trying to settle this as a long- term deal. Meanwhile we are looking at other investors who share an interest in acquiring the land," he stated.

Sri Lanka's main opposition United National Party had vociferously protested the deal on the grounds that it does not follow due process and transparency laid out in the agreements signed by the two parties earlier in the year.