Fresh Government Gazette further boosts Colombo Port City as special economic zone
Daily FT: The Colombo Port City Economic Commission (CPCEC) has achieved a significant milestone in its journey to transform the Colombo Port City into a globally competitive special economic zone (SEZ).
The Parliament approved a comprehensive incentive programmed proposed by the Commission in consultation with the Minister of Investment Promotion, the guidelines for granting exemptions or incentives to businesses designated as Businesses of Strategic Importance (BSI). This was published by Extraordinary Gazette No. 2343/60, on 4 August 2023.
Established under the Colombo Port City Economic Commission Act, No. 11 of 2021 (Act), the Commission aims to attract global investors, promote economic stability, and position Sri Lanka as a leader in service exports. In accordance with the Act, the Commission identified businesses important for the success of the Colombo Port City to be designated as a BSI and recommended exemptions or incentives from the scheduled statutes of the Act.
To offer a competitive value proposition to potential investors, the Commission engaged with top international advisory firms such as PricewaterhouseCoopers, Ernst & Young, KPMG, and Boston Consulting Group for international benchmarking of selected factors.
These collaborations resulted in a proposed framework that establishes Colombo Port City as a globally competitive SEZ with transparent regulations and good governance principles, along with proposed sector incentives.
Businesses of Strategic Importance in Colombo Port City are classified into two groups: “Primary Businesses of Strategic Importance” and “Secondary Businesses of Strategic Importance”.
Primary businesses involve the development of physical infrastructure of $ 100 million per land plot or $ 25 million in the Marina or Social Infrastructure. Secondary businesses encompass sectors such as international trade, shipping logistics, banking and financial services, information technology, and tourism, among others.
For “Primary Businesses of Strategic Importance,” two optional incentive schemes are available. Scheme A offers exemptions or incentives from relevant enactments for 25 years, along with 50% off the prevalent corporate tax rate for 10 years after the initial 25-year period. Scheme B provides an enhanced capital allowance of 300% on depreciable assets used within Colombo Port City, with deductions allowed for up to 40 years. All Authorized Persons thus qualified must select their preferred structure at the outset.
For “Secondary Businesses of Strategic Importance”, there are 04 alternatives of eligibility criteria for receiving the incentives or exemptions. The criteria laid out are revenue, employment creation, projected enterprise valuation growth or a significant contribution to enhancing social development in Sri Lanka and creating an international financial center within Colombo Port City. Secondary Businesses of Strategic Importance will be eligible for exemptions or incentives from scheduled statutes of the Act for 25 years.
The Colombo Port City Economic Commission is the focal point, for investors as the Single Window Investment Facilitator, creating a Business Enabling Environment within the Colombo Port City’s Multi-Service, SEZ, and is also committed to fostering a successful ecosystem that attracts global investment and drives sustainable development in Sri Lanka.
The Colombo Port City project is one of the key development projects aimed at taking Sri Lanka to the next level of development. Sri Lanka is currently working towards becoming an emerging business destination in the South Asian region supported by the country’s geographical positioning in the Indian Ocean and the strong trade ties. The government of Sri Lanka has introduced several programmed aimed at promoting the Colombo Port City as a growing business/investment opportunity as well as a special economic zone in the country. There has been much interest shown in the Port City by many foreign businesses/investors. Given the overall growth and business potential in Sri Lanka, foreign businesses/investors could confidently explore the growing opportunities in the country.
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