* Investments will create numerous high-paying jobs for youth
* Duty-free mall to be opened shortly
With the Sri Lankan economy bouncing back to normalcy earlier than expected, the investor appetite for Port City Colombo is also rapidly increasing as its infrastructure too is on track.
The latest addition to Port City Colombo would be the Downtown Duty-Free Mall that will be opened shortly and the Port Access Elevated Highway will provide direct connectivity to Port City Colombo from Q1 2025, reducing travel times to the airport to less than an hour.
These will woo more investments to Port City Colombo, which in turn will create numerous high-paying jobs for youth and invoke a significant impact on the national economy in terms of employment generation, while attracting FDIs, GDP contribution and BOP when the project progresses as planned.
According to the special Economic Impact Assessment report compiled by PwC in 2021, the first stage of the employee benefits was during the pre-Covid-19 era where over 1,500 direct job opportunities and nearly c. 4,900 indirect skilled and unskilled employment opportunities were generated during the land reclamation and common infrastructure development phases.
The construction stage was estimated to directly generate c. 343,400 jobs, which included local and foreign employees based on the skill requirement and the availability of labour in the local market.
“As the commercial operations of the businesses within Port City reach a mature level, c. 143,000 direct and c. 85,000 indirect jobs have been estimated to be created based on the envisaged operational scale of each segment,” the 2021 PwC Economic Impact Assessment report said.
The estimated value addition towards GDP during the land reclamation, infrastructure development and land lease stage is c. USD 5bn.Moreover, the project’s social infrastructureand hospitality developments, such as the proposed International Hospital, the International School and University, the Integrated Resort, Iconic Hotel, and the Exhibition and Conventions Center will further foster employment opportunities, whilst also enhancing the value proposition of Port City Colombo.
With the economic recovery in full swing, many foreign investors are once again expressing interest in Sri Lanka as a potential investment destination. Port City Colombo, with its appealing incentives and robust regulatory environment, could be one of the marquee foreign direct investment projects that the country has to offer.
The Colombo Port City Economic Commission Act, passed by the Parliament of Sri Lanka in 2021, outlines a progressive regulatory framework within the Colombo Port City Special Economic Zone (SEZ), which fosters competitive, low-risk financial conditions that enhance the ease of doing business, and provide attractive fiscal and non-fiscal incentives for prospective investors from across the South Asian region.
During the construction stage, the FDI was estimated atc. USD 8.7 bn (assuming 100% of construction cost being foreign funded, excluding the residential sector in which case part may be funded through pre-sales), based on the provision in the CPCEC Act, which requires development capital to be raised outside of Sri Lanka.
Based on the phased development strategy, nearly USD 5.7 bn is estimated to be received as FDIs during phase 1.0 and phase 1.1, which will facilitate the development of the key strategic developments soon to be featured at Port City Colombo.
As operations commence, the foreign entities may reinvest profits in Sri Lanka or repatriate profits, which will have a positive impact on the country’s balance of payment. The reinvestment during the operational stage was considered as the FDI, and this was estimated to be c. USD 1.0bn per annum on a mature year of operation.
The value addition towards the GDP will be in the form of investments and consumption of goods within Port City Colombo which will directly contribute towards the GDP. There will also be an envisaged indirect impact and increased flow of proceeds, where individuals employed by the business operations to be set up at Port City Colombo would potentially engage in the direct consumption of the goods and services on Sri Lanka’s mainland.
The operational stage is estimated to add a total contribution of c. USD 15bn towards the country’s GDP on an annual basis, which similarly includes both the direct and indirect impact. This will be mainly driven by the commercial, residential and retail developments set to be established within Port City Colombo.
Port City Colombo, located strategically in the heart of the South Asian region, will showcase a unique combination of global investment opportunities, international business environments, world-class infrastructure, and sustainable yet cosmopolitan living.
The proposed signature developments, such as the international school and university, international hospital, luxury yacht marina, and the Colombo International Financial Centre, provide the ingredients that make this project a truly visionary master-planned city by the sea.
As a Special Economic Zone (SEZ) governed by the Colombo Port City Economic Commission (CPCEC), Port City Colombo aims to be a business-friendly environment for investors. The SEZ includes tax incentives and exemptions of over 25 years for Businesses of Strategic Importance (BSI), along with free mobility of capital, 100% foreign ownership of businesses, and no cap on foreign employment. Employees will additionally benefit from no personal income tax, remuneration in designated foreign currencies, and preferential visas of 5–10 years (extended for spouses and children) for foreign employees.
After the project is fully operational, Port City Colombo will feature five distinct precincts: The Financial District, Central Park Living, Island Living, the Marina, and the International Island. The city will encompass over 6.4 million square metres of new developments in residences, healthcare, education, entertainment, hotels, restaurants, retail, and commercial complexes.
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