Courtesy Hiru News

The Balance of Payments, (BOP) is what you get when take a country’s total foreign currency inflows and subtract its total foreign currency outflows. This has a direct effect on the value of that nation’s currency. In Sri Lanka, our BOP has been negative for decades, meaning that more foreign exchange flows out of Sri Lanka than into it. That’s why the Rupee has seen such significant depreciation.

FDIs and trade inflows are some of the best ways to narrow the BOP gap, and projects like Port City Colombo, Sri Lanka’s largest FDI-driven development, are perfect for this. As a global hub for trade, investment, finance, entertainment, leisure and other services, Port City Colombo will attract huge amounts of foreign currency inflows for Sri Lanka, which will help our BOP. But investors are reluctant to commit right now because they do not know what the regulations will be, because, although the Colombo Port City Economic Commission Act was passed in Parliament in May of 2021, the final regulations for the Special Economic Zone have not been published yet.

Speaking at the Sri Lanka Economic Summit 2022, held at the Shangri-La Hotel in Colombo on the 5th and 6th of December 2022, Thulci Aluwihare, Deputy Managing Director at CHEC Port City Colombo (Private) Limited said, “ We’re unable to execute our marketing strategies and proceed with other matters of logistics and outreach until the regulatory framework, as provided for by the Colombo Port City Economic Commission Act, is finalized and published by the Government of Sri Lanka. We cannot make any official representations to any parties until this is completed, and until there is clarity over regulations related to taxation. If these matters aren’t finalized soon, it may send the wrong signals to investors and cause them to become hesitant, which will impede the progress of development, which at present is proceeding exceedingly”well.”

With infrastructure development slated for completion by Q3 of 2023, Port City Colombo is Sri Lanka’s biggest FDI-funded development project with USD 1.4 Bn committed by the project company, USD 1.2 Bn already having been invested, and a further USD 1.5 billion expected to flow in during the vertical development phase, which will commence thereafter. A USD 7-million Duty-Free Shopping Mall, the first of its kind in South Asia, and a magnet for shopping and tourism is also expected to open doors at Port City Colombo in April 2023.