More than 200 businesses choose Port City
Mr. Thulci Aluwihare
The Port City Colombo has seen an aggressive marketing drive since the end of last year, aligned with the macroeconomic indicators of the country.
Sri Lanka’s first dedicated services export zone, the Port City, has attracted more than 200 Authorised Persons (AP) to do business with a few more in the pipeline, Thulci Aluwihare, Deputy Managing Director of CHEC Port City Colombo, said.
The organisation represents Sri Lanka’s first multi-services-oriented export zone, aiming to leverage the country’s strategic location in the Indian Ocean and access to international markets. Initially a waterfront real estate project, it has evolved into a public-private partnership governed by the Colombo Port City Economic Commission. The zone focuses on attracting global businesses by addressing market access, foreign capital, and talent.
“From the start this year, we have seen a renewed interest from real estate developers, and we managed to secure US$250 million, with two additional investments. It’s really encouraging feedback from many investors, and potential companies who want to set up in the country,” Mr. Aluwihare told The Sunday Times Business in an interview recently.
According to the Port City Economic Commission law, there are two investment types – businesses who are worth more than $100 million and those buying to expand, meeting the minimum qualifying criteria. Mr. Aluwihare said that currently there are 200 Authorised Persons (AP), and that already 20 such AP in IT are already categorised under the Business of Strategic Importance (BSI). “Around 40 – 50 applications are pending for BSI status. The delay in approving this was due to certain IMF conditions and the Commission was awaiting the Port City Amendment Act. The majority of these 200 AP will qualify as BSI.” He said that about half of the APs are more than IT and IT- enabled services, which is a thrust for the sector in the country. The next 30 per cent is in financial services, trading etc, and the balance 20 per cent is in maritime, retail etc.
There are 74 marketable land parcels, Mr. Aluwihare said, noting that close to 8 to 10 lease agreements have been signed so far. “Already, 3 to 4 land parcels have been committed for, along with the down payment, but the lease has not yet been executed.”
Designed to emulate successful examples like the Dubai International Financial Centre, Mr. Aluwihare stressed that Port City will not be competing with Dubai or Singapore but has a position to complement those propositions. “We are 1/5 of the cost of Singapore in doing business and 1/4 of the cost of Dubai. We are trying to attract global multinationals. The economic zone law clearly states that there is no restriction on foreign workers who can be employed here. We wanted to attract talent because where talent goes, capital will follow.” The Port City allows transactions in 16 different currencies and offers full capital mobility, allowing companies to employ 100 per cent foreign staff.
Mr. Aluwihare emphasised the need for investor incentives, highlighting a negotiated fiscal package with the government, including a 10–15-year corporate tax holiday and reduced construction costs through duty-free imports. He noted that investors prefer a clean tax holiday compared to incentives such as enhanced capital allowances that involve administrative issues as well.
Amongst the challenges facing Port City Colombo, he counted predictability of policy as a direct correlation with political stability. “In this part of the world, investors will attach a higher risk premium before they invest in a country like ours, which is why tax holidays need to be extended. We are a start-up city, and we need to systematically get foreign direct investment.”
He added that now, with a majority government and a stable political setting, the hope is that the policy environment will also be consistent. “We have witnessed renewed interest in not only the Port City but also Sri Lanka too. Investors feel that we are meaningfully trying to improve the governance within the country.”
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