The CHEC Port City Colombo was an ambitious project from the start: the ongoing development of 269ha of land reclaimed from the Indian Ocean with an investment of $1.4 billion is set to attract FDIs worth $15 billion. Yamuna Jayaratne, Director Sales & Marketing at CHEC Port City Colombo Private Limited, discusses how the Port City, the proposed Special Economic Zone, and International Financial Centre, will forever transform fortunes of the city, the entire country, all its people.
Can you define a special economic zone and how will it positively impact the country?
Jayaratne: I see two questions here: to answer what a special economic zone (SEZ) is, it is an area in a country that is subject to unique economic regulations that differ from the rest of the country. SEZ regulations tend to be conducive to attracting foreign direct investment (FDI). A difference between an SEZ and an export processing zones (EPZ) in Sri Lanka is that people will live and carry out normal lives in an SEZ area. Their characteristics are distinct from those available to economic actors located in the surrounding economy in which the SEZ is established. SEZ typically offer relief from various forms of taxation to businesses and individuals who qualify. They also offer superior infrastructure; have streamlined administrative processes in place that results in ease of doing business. SEZ’s have been a useful tool for developing nations to upgrade infrastructure, human capital and institutional frameworks and test out policies and their impact before they are implemented outside the SEZ in the rest of the country
The government of Sri Lanka owns 100% of all the land in the Port City: A realized master plan for the Port City provides 5.7 million square meters of built-up area valued at $15 billion
To answer your question about the positive impact an SEZ can have, there are several. For one, by upgrading resources and capabilities within a confined area, or SEZ; policymakers can overcome bottlenecks in resource availability and attenuate the costs of larger-scale implementation or upgrading across the entire country. A successful SEZ sends an important signal that the country is open for business. The Port City will provide the first-world infrastructure and we expect the proposed SEZ legislation will complete the missing piece of the puzzle by bringing in first-world administrative efficiency at globally competitive prices. This will result in the inflow of both financial capital and human capital including both local and foreign entrepreneurs, create employment opportunities and enable talent retention. We also hope the SEZ will attract multinational enterprises to set up headquarters or regional offices here and in turn, they will bring in financial recourses, technology, technical and managerial know-how.
We hope the establishment of an SEZ will accelerate Sri Lanka’s economic growth. A realized master plan for the Port City provides 5.7 million square meters of built-up area valued at $15 billion that will be home to multinational enterprises, corporate headquarters, transient workers, and residents. It will be the catalyst for a modern services hub that will help Sri Lanka’s transformation into a services-led growth model and elevate the economy to high-income status.
Can you discuss the ownership structure of the Port City? Can you also discuss the primary objective of the project?
Jayaratne: The government of Sri Lanka owns 100% of all the land in the Port City. The agreement to develop the Port City as a public-private partnership is a tripartite agreement between the government of Sri Lanka, Urban Development Authority of Sri Lanka, and the project company CHEC Port City Colombo (CPCC). An initial investment of $1.4 billion was envisaged for the land reclamation and infrastructure development and this was in the form of FDI, and without any debt upon the people of Sri Lanka. The government will hold freehold title for the entire 269ha of land reclaimed from the sea of which 91ha will be developed into public spaces and 179ha will be marketed for commercial use. Of this, the government will lease 116ha; to the project company CPCC for 99 years to monetize or release to third party developers to cover capital investments and generate returns. The other 62ha of land will be either developed by the government of Sri Lanka or released to investors for development. I believe the primary objective for the government is to develop a fully-fledged Central Business District with modern infrastructure to attract capital inflow, retain and attract talent, enable knowledge transfer and ultimately fast track the development of our nation.
Who developed the Master Plan for the Colombo Port City?
Jayaratne: Being a planned integrated urban development, CPCC developed the Master Plan in consultation with SWECO of Sweden, Atkins of UK, Suburna Jurong of Singapore, the Master Planners for the city of Singapore that specialize in design control regulations for buildings, and AECOM. For the first time in Sri Lanka, a Master Plan and Development Control Regulations unit (DCR) has been set out for all of the 269ha of land to provide development regulations on urban design, utilities, landscaping, and sustainability. Unilateral changes to the masterplan or DCR cannot be done by any party. No other commercial city in South Asia boasts a Master Plan developed by such world-renowned consultants. A testament to the planning excellence is the multitude of international awards won by the project such as the Silver Award for Master Planning at the Singapore Landscape Architecture Award 2017, the Gold Award at Yuan Ye Urban Design Awards 2018, and an honourable mention at the International Federation of Landscape Architects AAPME Awards 2018 in the category of Analysis and Master Planning, and most recently Global Best Project by International Engineering and Construction News Magazine, Engineering News Record (ENR) at their 8th Annual Global Best Projects Competition.
Can you discuss some of the salient features of the proposed Special Economic Zone Act?
Jayaratne: We expect the composite new legal framework will be conducive to promote commercial services and investment. This Special Economic Zone provides for extensive employment opportunities for Sri Lankans and earnings even in foreign currencies. It is expected to provide tax concessions required for specific goods, trade, banking, and foreign exchange. Some of the salient features of the SEZ Act will include defining the business-friendly legal and regulatory framework, establish a single-window approvals process, introduce flexible employment laws, enable an efficient dispute resolution mechanism, and set up an attractive tax regime with relaxed foreign exchange controls.
Can you give us a brief update on the project, and the investment so far?
Jayaratne: A total of $900 million has been invested to date on the development of the Port City and a further $500 million is in the pipeline. Total land reclamation of 269ha was completed by January 2019 and the breakwater in June that year. The landmass including the breakwater was deemed as part of the Colombo Administrative District by a resolution passed in Parliament last July. Two months later, Port City Colombo land titles were vested with the Urban Development Authority and subsequently lease titles were issued to CPCC in October 2019. The internal infrastructure including utility infrastructure works and landscaping have commenced and will be completed by 2021. EIA for the future vertical development was granted as early as August 2018 and 48 development certificates have been obtained and a land extent of 68ha is ready for construction. The first vertical building will be a mixed-development and will be called the Colombo International Financial Centre. Groundbreaking and construction of this are expected to take place in 2021. Discussions are underway with a few potential investors and we expect firm commitments to come in once the SEZ Act is passed in Parliament and becomes law.
Could you elaborate a bit more on the strategic plots, or areas within the Colombo Port City?
Jayaratne: The Port City will comprise eight key strategic developments; of which, the more immediate would be an international convention centre, an international school (1000 students), and a specialized state of the art international hospital (500 beds). The development of these strategic land parcels would deliver the first-world state of the art social infrastructure we envisage to be available at Port City. We are already seeing some interest in these zones. There are over 13 international schools that have expressed keen interest in having a presence in the SEZ. Several market studies have shown encouraging opportunities for the MICE sector. While there is encouraging healthy demand for the convention centre, garnering investments based on return viability is somewhat challenging. As regards to the international hospital, while certain policy gaps would require being addressed, we hope to attract medical tourists from new markets such as Pakistan, Bangladesh, South East Asia, and the Middle East. At the moment, Sri Lanka’s medical tourists are mainly from the Maldives and Seychelles.
What will the Port City look like once completed? Can you discuss some of the features that will set it apart from other major cities in the region?
Jayaratne: The Port City is positioned as the ‘Most Liveable City’ in South Asia and will be developed as an urban oasis. This will be the ideal destination to live, work and play. We hope that with the enactment of the SEZ Law and backed by the excellent infrastructure provided within it, Port City will be a catalyst in improving Sri Lanka’s ease of doing business significantly.
There are several other reasons why the Port City will stand out in the region. First, it will exploit Sri Lanka’s inherent geographical advantage where major cities and markets in the South Asian Region are within a four-hour flight. Connectivity from Port City to the Katunayake Airport will be a 30-minute drive with the elevated highway Already Colombo’s quality of life is enviable in the region and is ranked No.1 in South Asia on Mercer’s 2019 Quality Living City Ranking. The city has the highest literacy rate in South Asia and is on par with cities in the ASEAN region with a talent pool that is globally competitive and peerless in terms of skills. The Port City will be developed with an emphasis on innovation, knowledge, technology, and services, which will give Sri Lanka a competitive advantage to attract large scale investments. In addition to the first world social infrastructure I mentioned before; Port City will be a true urban oasis with 27ha of green areas, a 2km public beach, a 109ha calm water lagoon, a 70m wide water channel for waterfront activities, and an international marina.
What investment opportunities are there for potential investors currently?
Jayaratne: We have released RFP’s for 10 land plots that are closest to the Galle Face Centre Road. These include four plots for the marina, two plots envisioned for hospitality developments, three plots allocated for residential development and one for mixed-use development. Apart from these, we are also open for discussions on other selected plots with strategic importance.
Any last thoughts you like to share?
Jayaratne: Just some home truths that I think we need to understand, for instance, we cannot be an international city without international people. Also, successful people want to live in successful places. What we are trying to create here is just that: an international city on par with any city in the world where people and business thrive; and where future generations of Sri Lankans will not have to leave these pristine shores in search of better fortunes and a better life. Port City is just the start, and over time all of Sri Lanka would be a magnet for business, talent, and wealth.