Virtual economic zone to be activated by mid next year
The Virtual Special Economic Zone, (VSEZ) is a specialised economic area that provides a separate legal, regulatory, and fiscal framework for businesses to operate within a digital economy, and would be activated by mid next year, a top official said.
Board of Investment Chairman Arjuna Herath told the Sunday Times Business that the BOI with related agencies have almost finalised the draft regulations based on the conceptual framework that was devised. “Once the draft legislation is finalised, it will have to get the Ministry of Finance and the Cabinet approval, after which it will be activated by mid next year.” This zone, which is a part of a broader national strategy to shift the economy from being apparel-dependent to a more diversified, high-value services hub does not require the companies to be in a physical presence in a designated geographic area. Mr. Herath added the intention is to develop Sri Lanka as an intellectual property development hub, and to use the country as the headquarters for tech companies to expand into other locations.
Addressing the Sri Lanka Economic Summit recently, he noted that negotiations with Sinopec regarding a significant export-oriented investment project, with a final response from the Chinese energy company, is anticipated shortly. This project originates from a tender initiated before the current administration, and since taking office, the Government has engaged in multiple rounds of negotiations to align Sinopec’s proposal with the original tender conditions.
In January Sinopec signed an agreement with the Sri Lankan Government to expedite the construction of a US$ 3.7 billion oil refinery near Hambantota International Port. This agreement aims to resolve outstanding issues related to water access, land allocation, and taxes, making it the largest foreign direct investment in Sri Lanka’s history. While Sinopec has requested increased access to the domestic market due to changes in global market dynamics, the Government has remained firm on the tender’s terms, which focus solely on an export-oriented facility.
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