Colombo: Crisis-hit Sri Lanka has decided to give special 40-year tax relief for Chinese-built Colombo Port city to attract potential investors as the island nation’s largest foreign direct investment failed to attract investments after the much-touted project opened for nearly one year, a senior minister said on Tuesday.
Cabinet spokesperson Bandula Gunawardana during a weekly cabinet briefing said that the Cabinet had decided to offer the concessions to draw more investments to the Port City, the Economy Next news website reported.
We have taken this decision because other countries have offered more competitive tax relief than us in order to attract investors, Gunawardana said.
Gunawardana said that if such concessions draw more foreign investors it will help address the dollar crisis in Sri Lanka.
With this economic recession, attracting investors is a challenge while local investors in the country are moving to countries such as Bangladesh, Ethiopia and Kenya due to favourable investment opportunities, he said.
The Port City officials told the website that they had planned to sell 100 hectares of reclaimed land with an investment target of USD 5 billion.
A total of 269 hectares of land was reclaimed by China Harbour Engineering Company (CHEC) in the Port City project which raised concerns over 20 hectare outright grant to the Chinese firm and no fly zone.
However, later, the last government suspended the project and revised the cause to remove both land ownership and no fly zone in the agreement amid protests by India over security concerns.
As Sri Lanka defaulted on USD 51 billion foreign debt with most of its forex reserves drained out with no money to import fuel and cooking gas, the expansive Chinese build infrastructure projects were being showcased as projects that drained public exchequer for that lack of utility.
Also with the Sri Lankan government desperately trying to secure long-term IMF funding to recover from the complete bankruptcy, the future of the much-touted Chinese funded Colombo Port City project to build an artificial 665-acre island to set up an international financial hub also hangs in balance.
The USD 1.4-billion Colombo Port City project, expected to play a key role in China’s ambitious “Maritime Silk Road” project in India’s backyard, is said to be the single-largest private sector development in Sri Lanka.