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Sri Lanka is a vibrant island nation in the Indian Ocean at the crossroads of the world’s major international trade routes. The country is going through an economic transformation, which has positioned it as a key destination for global business and investment.
Central to this transformation is Port City Colombo, an ambitious master-planned city development, which is also the nation’s first multi-services Special Economic Zone (SEZ). With its strategic location, advanced infrastructure, and investor-friendly policies, Port City Colombo is set to become the premier destination for global investors seeking to unlock new opportunities in South Asia.
Sri Lanka’s business landscape is undergoing significant transformation as the country has positively turned its economy around, following a successful debt restructuring and ongoing IMF programme. There is also a concerted effort to attract foreign direct investment (FDI), as Sri Lanka positions itself as a regional hub.
In fact, the Information and Communication Technology Agency (ICTA) of Sri Lanka projects the industry to reach USD 3 billion in revenues by the end of 2024, while the apparel sector is expected to grow by 2.00% (CAGR) through 2028. Meanwhile, the real estate sector, which is especially attractive within Port City Colombo, is projected to grow at a CAGR of 7.50% from 2023 to 2028.
Additionally, Sri Lanka’s commitment to sustainable development presents opportunities in renewable energy and eco-friendly projects, particularly with the government’s plans for Sri Lanka to generate 70% of its electricity from renewables by 2030.
Sri Lanka is also a globally favoured tourist destination that is enjoying a resurgence in popularity. In fact, tourism is the third-largest foreign exchange earner, accounting for over 4% of GDP.
Port City Colombo stands out as a catalyst in this effort, offering unparalleled opportunities for businesses looking to expand their operations in the region. It also leverages all of Sri Lanka’s key strengths as a logistics hub with an ideal geographic position, and a fast-growing modern economy backed by a highly-skilled workforce.
Port City Colombo offers a unique proposition for global investors, presenting an array of investment opportunities within its multi-service SEZ. This SEZ is designed to provide a competitive edge for investors, offering extensive benefits such as 0% personal income tax, corporate income tax breaks for up to 25 years, streamlined regulations and processes, and world-class amenities.
It is also equipped with world class infrastructure, making Port City Colombo an ideal base for industries such as information technology, financial services, and real estate. Its strategic location at the heart of South Asia, combined with its advanced infrastructure, positions it as a gateway to one of the world’s most dynamic regions.
The much-awaited regulations for offshore banking operations within the Colombo Port City SEZ have been gazetted and are now in force. These regulations, titled Offshore Banking and Offshore Banking – Prudent Management and Confidence, were announced via Gazette Notifications 2394/66 and 2394/67 on 26th July 2024. This crucial development means that the SEZ is now ready for commercial activity, and to work towards its strategic goal of becoming a key offshore financial hub in South Asia.
The offshore banking regulations provide a strong foundation for investor confidence, allowing companies to engage in foreign currency transactions with non-residents and offshore units. These rules are also designed to insulate Port City Colombo from the domestic financial system, giving businesses the freedom to operate under globally competitive terms, similar to offshore hubs like Singapore and Dubai. With provisions for full capital repatriation and attractive tax exemptions, the new regulations offer a robust framework for companies licensed under Sri Lanka’s Banking Act or incorporated as offshore entities licensed under Sri Lanka’s Banking Act or licensed to operate as a bank in another country. This milestone enhances Port City Colombo’s appeal to global investors, positioning it as a vital player in South Asia’s offshore economy, opening up several investment and business opportunities.
Sri Lanka’s Information and Communication Technology (ICT) sector is a dynamic force in the nation’s economy, playing a pivotal role in its ongoing digital transformation. With over 500 companies spanning industries such as banking, healthcare, retail, and manufacturing, the ICT sector has established itself as the country’s second-largest export earner. The government’s bold vision aims to elevate the ICT sector to a $3 billion export revenue generator by 2024 and a $15 billion contributor to the digital economy by 2030.
As industries continue to undergo digital transformation, there is an urgent need to equip the workforce with the relevant skills. Thus, the future of Sri Lanka’s ICT industry is promising, with the government targeting the establishment of 750 tech companies and 1,500 IT-infused startups by 2024. With approximately 600,000 Sri Lankans already employed in the sector as of 2020, the country is well-positioned to capitalise on future growth. With digitalisation playing a pivotal role in the economic growth story of Sri Lanka’s closest neighbour – India, Port City Colombo will help support South Asia’s regional focus on the export of IT services with its exciting business and investment propositions.
Port City Colombo plays a crucial role in bolstering the ICT sector by attracting global IT companies, providing local professionals with invaluable exposure to cutting-edge technology and global market dynamics. The financial benefits offered to companies, such as a 25-year tax holiday and no personal income taxes for employees, create an attractive environment for both organisations and talent. This, in turn will help to mitigate the brain drain currently affecting the country. Through facilitating job creation and offering tax incentives, Port City Colombo is set to be a game-changer for the IT industry, reinforcing Sri Lanka’s position as a rising tech hub in the region.
Setting up a business within Port City Colombo is a highly streamlined process thanks to the Colombo Port City Economic Commission, which acts as a single-window facilitator – handling all regulatory requirements and processes. Port City Colombo also offers several unparalleled advantages, as previously discussed, including personalised guidance and support.
Investors looking to capitalise on Sri Lanka’s growing economy will find a wealth of opportunities, particularly within Port City Colombo. Real estate is a prime sector, offering high returns on investments in commercial, residential, and mixed-use properties, together with several opportunities in tourism. The technology sector also presents significant potential. In fact, over 100 tech, financial services, trading, and other companies have already registered as Authorised Persons within the Colombo Port City SEZ.
Positioned as the “Gateway to South Asia”, Port City Colombo is unlocking business and investment avenues in one of the world’s fastest-growing regions. Now is the time to seize these unparalleled opportunities.
Invest in Sri Lanka with Port City Colombo – reach out to us and we will provide you with personalised information, guidance, and support throughout your journey.
