Exclusive Interview on Port City Colombo with Thulci Aluwihare, Deputy Managing Director, CHEC Port City Colombo

By Sulochana Ramiah Mohan

Port City Colombo (PCC), a multi-billion dollar FDI-funded PPP (Public-Private Partnership) project located in the metropolis of Colombo, Sri Lanka is positioned as the gateway to South Asia, offering a combination of global investment opportunities, international business environments, world-class infrastructure and sustainable yet cosmopolitan living, say the Port City developers.

Upon completion, Port City Colombo will encompass over 6.4 million square metres of built space that will incorporate a unique blend of planned city living, including world-class developments in Healthcare, Education, Entertainment, Hotels and Restaurants, Retail and Commercial Complexes. The four hospitality offerings and luxury yacht marina further enhance the appeal of living by the sea. The PCC developers look forward to establishing the offshore banking facility, so that investors can bring foreign capital to invest in the PCC.

Thulci Aluwihare, Deputy Managing Director of CHEC Port City Colombo (Pvt) Ltd, responded to inquiries by Ceylon Today, elaborating on the Port City’s visionary objectives and its ambition to engage in global business endeavours.

Following are excerpts of the interview:

Port City wanted an offshore banking facility, and why is that important?

A: Port City Colombo is positioned as a Special Economic Zone (SEZ). Our objective is to create a vibrant, business-friendly and sought-after Special Economic Zone in all of South Asia. Providing banking facilities for international businesses is an essential prerequisite.

When will offshore banking be commissioned in Port City?

A: The prerogative of passing the offshore banking regulations is with the Colombo Port City Economic Commission. We understand that the draft regulations have been submitted for review by the Monetary Board. We hope that it will be passed as soon as possible because, without these banking regulations, investors will be reluctant to bring foreign capital to invest in Port City Colombo. Also, it is important that with these banking regulations, we demonstrate that the project is economically ring-fenced from the application of some of the existing restrictive foreign exchange regulations. Since Sri Lanka is currently going through a Balance of Payment crisis, we must underscore to prospective investors that the funds that they would be investing in the country will be safeguarded, and they could repatriate without any hindrance.

How many investments have been approved so far at the Port City?

A: Fifty-two per cent (52%) of the Marina District, one of Port City Colombo’s five distinct precincts, has already attracted investment. To date, forty-one businesses are registered as Authorised Persons (APs) by the Colombo Port City Economic Commission, with another 15 to 20 in the pipeline who have already submitted AP applications. Our target is to onboard at least 200 Authorised Persons before the close of 2024. The country went through a challenging macroeconomic crisis for the past three years – we aim to now resurrect the conversations with the prospective investors who had demonstrated interest, which took place before the crisis. With the country’s situation improving, provided that we stay on course with the IMF programme, we are confident that we will be able to entice more interest from investors in South Asia, Southeast Asia, the Middle East and China.

Have the CHEC developers taken loans from Chinese banks to develop the Port City? If yes, how much? Have you paid back the loan interest on time, and what is the total amount settled in interest so far?

A: The total envisaged Foreign Direct Investment in Port City Colombo is USD 1.4 billion, of which USD 1.3 billion has been invested in the project to date. Our investment includes debt annuity as disclosed in our agreement with the Government of Sri Lanka. We have, to date, been able to meet all of our debt obligations on a timely basis. Our parent company, China Communications Construction Company Limited (CCCC), has been ranked #63 among Fortune 500 Global Companies in 2023, and hence, demonstrates the balance sheet strength to withstand the adverse impact of the macroeconomic challenges that Sri Lanka faced in the last three to four years.

Is the Port City already operating at a loss due to the lack of investor participation?

A: Port City Colombo is a long-term project, and we have taken a long-term investment horizon approach. As highlighted before, we are required to monetise the project’s land parcels to recover our investment and achieve our investment returns. We have already managed to secure investments valued at USD 200 million, as of now. Despite the challenges we experienced in attracting investments to Port City Colombo, primarily as a result of a lack of investor confidence in the country, not the project, we believe that as the country recovers and bounces back, there will be much more interest from prospective investors.

Based on your focus, when do you anticipate the Port City to be completely sold out and flourish?

A: Based on our projections, we estimate that it would be 15 to 20 years, or even earlier, if we can successfully position Port City Colombo as an attractive global investment and doing business destination in South Asia, with progressive laws and regulations.

Regarding the investors who visited in the last three months and last year, have there been any follow-ups on those visits and any new takers?

A: We had our first international launch in Dubai and Abu Dhabi in September 2023, which was patronised by David Cameron, the former Prime Minister and current Foreign Secretary of the United Kingdom. There was significant interest stemming from this occasion, and we are presently in the midst of follow-up discussions and conversations with these prospective investors, and we are actively working on converting these into actual investments.

Do the Chinese have similar port city structures, and if so, how do they conduct business in their country?

A: There are seven major Special Economic Zones (SEZ) in China. In fact, before China rolls out some of its open economic policies, it tests and incubates these policies within the controlled financial environment of an SEZ. China has truly optimised Special Economic Zones as a tool for economic reform and growth. The Colombo Port City Special Economic Zone enables us to replicate the same concept by acting as a tool to reform some of the existing economic policies in a controlled environment, but as customised for the country of Sri Lanka.

While the Port City Commission has been established, are there new laws or regulations incorporated newly for the Port City’s legal framework?

A: The Colombo Port City Economic Commission Act, which was enacted in 2021, oversees the administration and control of all corporate governance, dispute resolution and operational matters within the Special Economic Zone. This needs to be supported by subsequent required regulations, and the majority of these regulations have been now enacted, except for the banking and duty-free regulations.

Can you share the experience of the marketing roadshows held overseas, including in Russia?

A: We have presently not conducted any roadshows in the Russian Market. However, we have engaged in roadshows across our identified top investor markets, including the UAE and APAC regions, which have been quite successful in generating positive investor interest.

What are some of the incentives offered by the Port City to attract investors?

A: Positioned as the gateway to South Asia and a Special Economic Zone (SEZ), Port City Colombo will feature a business-friendly environment including 25+ years of tax exemptions and fiscal incentives for Businesses of Strategic Importance (BSIs), the opportunity to conduct transactions in 16 different foreign currencies, with no capital or exchange controls, and up to 100 per cent foreign ownership for prospective investors. Other incentives further encompass preferential visas for 5 – 10 years and 0 per cent income tax for all employees and remuneration in foreign currency.

What are some of the setbacks for the Port City that need to be rectified immediately?

A: The priority is to ensure a consistent and predictable policy environment. What is lacking at present are long-delayed banking regulations and downtown duty-free regulations. This is despite the fact that we have made the initial investment of USD 7 million, identified two international operators – one of which is ranked No. 1 in travel retail, made an investment of approximately USD 5 million for fit-outs, and recruited staff. We were originally envisaging to commence operations by February 2024. However, due to delays in implementation, we are waiting for the Government to quickly gazette those regulations, so that we can immediately begin the duty-free operations, projected to be the first-ever in South Asia.

How helpful has former British Prime Minister David Cameron been in promoting the Port City?

A: As highlighted before, David Cameron was a key focus at Port City Colombo’s first international launch last year. His stature and reputation as the UK’s former Prime Minister supported Port City Colombo in garnering a significant level of attention and awareness within the global investor community, especially in the UAE. David Cameron’s participation enabled us to communicate factual information about Port City Colombo, its status as a project owned by the Government of Sri Lanka, and the pioneering, transformational impact that this project will have on Sri Lanka. His presence further contributed towards reinforcing the accurate narrative that we have always striven to underscore for Port City Colombo.

Can local investors take loans from private banks in Sri Lanka to do business in the Port City?

A: Local investors can take loans from the banks set up within the Colombo Port City Special Economic Zone, under the Port City Colombo banking regulations.

What benefits do investors gain by obtaining a Port City visa?

A: We offer a streamlined green channel for 5 to 10-year preferential visas, which includes all the required investor and employee visas. This process is governed by the Colombo Port City Economic Commission as a single-window facilitator in an efficient manner.

What new steps have been taken to boost investment in the Port City?

A: We have planned a series of international roadshows in our identified target investor markets, as well as, are targeting various business chambers and associations. We are approaching large institutions and ultra-high-net-worth individuals to engage in one-on-one discussions. Further, to promote brand awareness of Port City Colombo, we are presently executing our local and international Public Relations and Media plan currently in place for 2024.

The landscape and basic amenities are ready at the Port City. What else is in progress?

A: Port City Colombo has now entered into Phase II of the project, where we are projecting to complete 99.9 per cent of all public utilities infrastructure (water, electricity, and fibre-optics) by early Q2 2024. We also recently commemorated the groundbreaking of the Business Center at Port City Colombo, a premier business park which is slated for completion and handover by Q3 2024.

Did the land owned by CHEC developers on a 100-year lease attract any investors? Are Chinese investors showing interest?

A: CHEC possesses a leasehold right over 116 hectares, which will enable us to recover our investment. Any new investor will gain a fresh lease for 99 years, as granted by the Colombo Port City Economic Commission, on behalf of the Government of Sri Lanka. At that time, CHEC Port City Colombo (Pvt) Ltd will surrender its leasehold right by deed of release, which will result in the investor entering into a new lease agreement with the Colombo Port City Economic Commission on behalf of the Government of Sri Lanka.

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