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Port City will put SL on the map for services exports - Wignaraja

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The success of the Colombo Port City (CPC) Special Economic Zone (EPZ) will depend on the provision of access to larger markets especially with neighbouring countries, investment-friendly policies and consistent tax structures, noted Lakshman Kadirgarmar Institue of International Relations and Strategic Studies Executive Director, Ganeshan Wignaraja

Speaking at a webinar organised by PWC Sri Lanka on Colombo Port City, he further cited the examples of Malaysia and South Korea, which in addition to building diplomatic relations with ASEAN countries, also entered into several trade and investment agreements with large countries/markets, providing confidence for large investors to enter their countries.

He further remarked that Sri Lanka should move from its current position at 99th on the World Bank's Doing Business Index, to at least the 35th position, by cutting red tape for investors with business/investor-friendly policies to increase its market share in modern services exports, like ICT and Financial Services.

Wignaraja listed the categories of Traditional Services as public administration, education, trade and retail, whereas Modern Services comprise ICT, Insurance, Financial Services, etc. Although Modern Services exports have been dominated by North America and the European Union, focus has been shifting towards Asia in the last two decades, making the CPC project crucial to increasing Sri Lanka's market share, stated Wignaraja.

He stated that Sri Lanka's Modern Services exports are still low due to many issues like regulatory affairs, human capital, and inconsistent tax policies, reflected in the fact that Sri Lanka ranks 99th in the World Bank's Doing Business Index. The CPC's SEZ exclusively for Services would bypass these barriers and give investors opportunities free from such red tape.

"Investors express concerns over Sri Lanka's tax policies. Dubai for instance provides 40-year tax concerns for corporates of certain categories. We are not looking for investments to the tune of US$ 2-3 million; we are looking for investors with US$ 100-200 million. Such large investors would be looking for places where laws are transparent, protecting their rights. We should provide reasonable tax concessions to attract large investors, and have clear policies and laws on leasing, ownership, regulations, labour, etc.," noted Wignaraja.

"Our foreign exchange reserves are low, we don't have a debt crisis issue as of now, but we have a debt distress issue. Luckily this project is not a loan, it is a investment. CPC isn't an isolated project; it would be a catalyst to the next wave of growth. We need to invest in human capital for Sri Lanka to benefit from CPC's success. Foreigners would also be employed at all stages of development of CPC, which should be looked at positively, as there would be enormous skill transfer to locals, like in the case of Dubai and Malaysia."

With regards to global development, Wignaraja notes that some investors might leave Hong Kong due to the ongoing crisis and may prefer Sri Lanka. "The trade war between USA and China may lead to supply chain changes, but it will not affect CPC, as it is not a manufacturing SEZ, but a fully-fledged service-oriented SEZ," noted Wignaraja.

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