A City by the Port | Daily News
A boon for Lanka’s investment prospects

A City by the Port

A new gateway to South Asia and Sri Lanka’s catalyst for growth is surely but steadily taking shape and form on the horizon right next to the Colombo Port. To be developed as ‘the most liveable city in South Asia’ this new City is to be built on sustainable values, a healthy environment with future-ready infrastructure that enhances both quality and convenience.

The newly reclaimed land of 269 hectares in the heart of Colombo’s Business District last week received a nod from Parliament to set up a Special Economic Zone (SEZ) paving the way for the creation of an international business and multi-services hub for South Asia - the Port City Colombo.

The Colombo Port City Economic Commission Bill sets a stable policy environment and efficient framework for administrative purposes within the City. The bill significantly enhances the ease of doing business through a single-window facilitation, a streamlined arbitration mechanism and globally benchmarked incentives. Striking a virtuous balance between commercial, residential and retail spaces, the Port City is a public-private partnership between the Sri Lankan Government and the project company China Harbour Engineering Company (CHEC).

The Port City, an initial investment to the tune of US$ 1.4 billion is by far the largest Foreign Direct Investment (FDI) to the country. But why is this ambitious investment hotly contested?

“There appears to be various misconceptions and apprehensions about this legislation,” Education Minister Prof. G.L. Peiris told reporters during a media briefing held last week at the Government Information Department. “There appears to be basic fears yet much of it is misplaced.”

Interior of Port City

Pointing out unfounded claims of exclusivity which has been touted frequently on social media, Prof. G.L. Peiris said there has been talk of Port City being confined to one particular country and if investors from other countries would be welcomed.

“We want to make it abundantly clear that there would be no exclusivity, whatsoever,” he said adding that although it is evident that China has been instrumental in creating and adding to this City, it does not infer that the City would be exclusive to China alone. “The Sri Lankan Government has stated emphatically and repeatedly that the opportunities are open to all investors from all corners of the world.”

Another major reservation which has been articulated even during the Parliamentary debate is the supposed creation of a mechanism which detracts from basic democratic structures in this country. “This is an unwarranted fear, here is a mechanism established by the Commission which operates under the institutions and framework which is part and parcel of the Constitution of this country.”

He added that even during the debate, a dilution of the powers of Parliament was frequently raised. “Nothing could be further from the truth. Tax concessions and privileges are absolutely necessary if you are intent on attracting investments to the country. But it is certainly not the case that the Commission is an omnipotent authority, deciding arbitrarily and capriciously about tax concessions and other advantages.”

He said that these tax concessions and benefits can be conferred once they are approved by Parliament and that there was no open ended discretion. “One of the cornerstones of Sri Lanka’s Constitution contained in Article 148 is that Parliament and Parliament alone has powers over public finances that are not infringed, not contravened in any manner.”

He said all of this will go into a Consolidated Fund and not a fund operated under the aegis of the Commission. “This triggers the inalienable authority of the Auditor General of the Republic in terms of Article 154 of the Constitution.” He added that there was no grey area despite the lengthy Court proceedings and debates.

Responding to rumours that the Port City will become a haven for money laundering, Minister Prof. Peiris said that all of Sri Lanka’s statutes operate within the Commission except the statutes listed in Schedule 3. “Nowhere in Schedule in 3 is there reference to Money Laundering meaning that it will be fully operational.”

He said that if one compares the provisions included in this Act to those included in the Greater Colombo Economic Commission (GCEC) Act and later the Board of Investment (BOI) law, provisions in those two Acts went much further than envisaged in this law. Referring to the Greater Colombo Economic Commission law which was passed by the National State Assembly (NSA) before the passage of the Constitution, he said it reflects the degree of importance attached to this Act.

“It is ironic that individuals who were shrill in their protest against the current legislation not only acquiesced in the provision of the previous law(s), they created those laws. It is paradoxical that some of them challenged this law conveniently forgetting the past.”

Meanwhile, Justice Minister M.U.M Ali Sabry, PC, noted that there was nothing extraordinary about this particular piece of legislation. “We are Non-Aligned and we are open for business with everyone,” he said. “There is unanimity on the need for Port City. If you need a Port City, you need a law to govern it.” He added that the Bill was very transparent and there need not be different interpretations to this legislation. Around the world, there are similar laws governing Special Economic Zones (SEZs).

He added that the Government was in the process of creating Investors’ Courts for investments above US$ 100 million as well as special commercial high courts and had requested the Judicial Services Commission (JSC) to set up a special bench in the Supreme Court to hear special commercial law cases so that they can be disposed of as early as possible.

The Colombo Port City will allow Sri Lanka to get on the ‘missed bus’ since Independence that economists had been commenting on for many decades, Money and Capital Market and State Enterprise Reforms State Minister Ajith Nivard Cabraal said. “We don’t want to miss the bus this time,” Minister Cabraal told reporters. “This will be a turning point in our history. And we need to bring it in as quickly as possible.” He added that the Government democratically demonstrated its responsibility by bringing this Bill to Parliament for debate and approval.

Some people in a rather unsympathetic way have said that Sri Lanka has missed the bus for decades. They say at the time of Independence, Sri Lanka was only behind Japan. “But I think we need to put that narrative behind us, we need to ensure that we turn a new chapter in Sri Lanka’s economic history. We don’t want to be stagnating once again.”