• Deputy MD Thulci Aluwihare says fiscal incentives, ring-fenced regulations still missing
• Notes investors looking at a minimum dollar return of 20% for investments
• State Minister of Investment Promotion says regulations drafted, sent to be gazetted

The delay in formulating the two main regulations related to the Colombo Port City has hindered the process of marketing the Special Economic Zone (SEZ) to the international community, said CHEC Port City Colombo (Pvt.) Ltd. Deputy Managing Director Thulci Aluwihare.

Speaking at the Sri Lanka Economic Summit 2022 organised by the Colombo Chamber of Commerce, he said the lack of fiscal incentive regulations and ring-fenced regulations, has not allowed them to fully promote the Port City.

“Two pieces of regulation are still missing to go out there and market the Port City,” he said.

He added that although tax incentives will not rank as the number-one priority for potential investors, a conducive environment needs to be provided to drive some of the initial investments that are required until the implementation of reforms such as State-owned enterprise (SOE) reforms, capital market access, and asset monetisation.

He noted that any investor who wants to invest in Sri Lanka is looking at a minimum dollar return of 20%, while with a Weight Average Cost (WAC) seven times higher than in Singapore, as well as a 30% income tax and other taxes, the project does not seem feasible at this current juncture.

Moreover, he said adequate regulations should be added to the Monetary Law Act to stipulate that money raised outside Sri Lanka for capital inflows into the Port City for the purpose of service exports is ring-fenced from other restrictive foreign exchange rules that are currently applicable within Sri Lanka.

“We are hoping to break ground on the first multi-mixed-use development project by 2Q 2023, provided that the two required regulations are in place,” Aluwihare said. 

Further, speaking in Parliament yesterday (8), State Minister of Investment Promotion Dilum Amunugama said that the general regulations that are required for the Port City have been drafted and submitted to be gazetted.

He said that the Business of Strategic Importance (BSI) Bill, which includes the financial regulations required for the Port City, is being formulated, and added that six companies are waiting to invest in the Port City once the regulations are passed.

Also, he said that new tax packages will be introduced for new Board of Investment (BOI)-registered companies, instead of the existing packages that were given to these companies.