When the 2004 Asian tsunami hit Sri Lanka, the sleepy fishing region of Hambantota was flattened and 3,000 people perished. Now it is riding a massive wave of construction.

Hambantota, the home constituency of President Mahinda Rajapakse, is not only emerging as a commercial and logistics hub of Sri Lanka, but is also attracting attention as a new geo-political hotspot in South Asia.

"The port in Hambantota will be the catalyst to make Hambantota the new commercial capital of Sri Lanka in the next three years," said Priyath Wickrama, the chairman of the Sri Lanka Ports Authority.

He dismissed suggestions that the Chinese who were given contracts to build the first phase of the $1.5 billion deep-sea port will have a foothold in the region and be a threat to neighbouring India.

"What we have with China is purely a commercial transaction," Wickrama said. "The Chinese will have nothing to do with running the port. We are opening up the port area for investments in industries by anybody."

Indian officials have expressed fears that the southern town is part of a Chinese policy to throw a "string of pearls" -- or a circle of influence -- around South Asia's nuclear-armed regional power India.

South Asia expert at the London-based Chatham House think-tank, Gareth Price, said China's port developments in the region were primarily aimed at supporting its own economic growth rather than any sinister strategic move.

"India believes it is their backyard and wants to know what China is doing there (in the Indian Ocean region)," Price said. "Is there a sinister design? Even if there was, it would be secondary."

China is building ports in Bangladesh, Myanmar and Pakistan, and has plans for rail projects in Nepal and as well as in Sri Lanka.

Concerned with the growing Chinese presence, India opened a consulate in Hambantota, the first diplomatic mission in the region, in November last year.

"It is no secret that we are very concerned about the Chinese presence in Hambantota," an Indian diplomat who declined to be named said. "We have marked our presence with the consulate."

For the Sri Lankan government, the port is the centrepiece of a major development drive in an area which was a backwater for decades as the island grappled with its separatist war.

--Ambitious projects--

With the fighting finally over in May 2009, the government has been pouring millions of dollars into a string of ambitious projects financed through commercial loans.

"We are building a planned city," said civil administrator W. A. Dharmasiri. He said they had fully recovered from the December 2004 tsunami and the once-backward, poverty-stricken region is now unrecognisable.

An abandoned saltworks is the new deep-sea port. A short distance away, the Chinese are also building a new international airport capable of accommodating the giant Airbus A380 aircraft, a first for the island.

Dharmasiri said Hambantota, which has less than a quarter of the 2.2 million population of the capital Colombo, will end up having the island's best road network and other infrastructure.

A new expressway linking Colombo, 160 kilometres (100 miles) away, is nearing completion. Even the smaller roads in Hambantota are being improved.

"All our streets will be turned into four-lane roads," Dharmasiri said warning that the rapid construction could see a major labour shortage in the district which once had one of the worst unemployment records in Sri Lanka.

A world-class convention centre and the island's first dry-zone botanical gardens are coming up and a new cricket stadium, named after the president, hosted two World Cup matches earlier this year.

The seven-million dollar stadium confounded critics who doubted its viability, but Hambantota is now setting its sights on an even more ambitious project -- hosting the 2018 Commonwealth Games.

"We expect 4,000 new hotel rooms in Hambantota in the next five years," said Nivard Cabraal, Sri Lanka's Central Bank governor who is also a key figure in the city's bid to host the Games in competition with Australia's Gold Coast.

Hambantota encompasses the Yala National Park, the island's largest wild-life sanctuary known for elephants, leopards and migratory birds, but for decades its tourism potential had been neglected due to poor infrastructure.

All that is rapidly changing. Dump trucks criss-cross the countryside carrying building materials, while hundreds of workers can be seen laying new roads and erecting high rise buildings.

The region lost some 4,000 houses to the tsunami but 6,000 have been built, providing an excess of accommodation, officials said.

The beachfront of Hambantota town, where hundreds of houses were completely washed away during the tsunami, is now being cleared to host the first South Asian beach games to be held later this year.

Port engineer Sahan de Silva said Hambantota will start fuel storage services later this year with capacity of 80,000 tonnes. Just south of the port is one of the world's busiest sea lanes used by 200 to 300 ships daily.

Central Bank governor Cabraal denies that Hambantota is getting special attention because it is the president's home constituency and plays down the strategic geo-politics of the region.

"Plans had been there for the past 25 years, but successive governments failed to implement them," Cabraal said. "Hambantota will add a new dimension to our economic activity and we are open to investors from any country."

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