The Supreme Court of Sri Lanka is expected to give its decision on the constitutional validity of the proposed bill to set up a Colombo Port City Commission to govern the Chinese-built new commercial zone. The five-member bench has concluded its five-day hearing, which included submissions of amendments proposed by the government of the South Asian island nation. While the government stressed the need for a powerful commission to attract foreign investments, some of the petitioners stated that the setting up of a separate commission is unconstitutional and the zone will become a "Chinese Colony".  

Additional Solicitor General Farzana Jameel, appearing for the Attorney General’s Department, informed the Supreme Court that the government had decided to add several amendments to the bill at the parliamentary committee stage. He presented the amendments to the five-judge bench via a document and said the proposed bill does not reduce the powers of regulators, such as the Central Bank. 

In his brief remarks at the end of the submissions, Chief Justice Jayantha Jayasuriya said the bill does not seek to give concessions directly to investors and that the Port City Commission will be required to get tax holidays approved by the cabinet and these will also be submitted to parliament.

Importance of ruling

The Supreme Court ruling will open the pathway for the  Sri Lankan government to take the required steps to modify the bill if the apex judiciary rules any of its clauses are in contravention of the constitution. The court will also decide if the bill could be passed by a simple majority or a two-thirds majority in parliament, or further approval at a national referendum and/or approval by provincial councils is required.  

The early passage of Colombo Port City Commission new law governing a reclaimed extension to the capital’s central business district is vital for the economy as it would pave the way to sell 60 hectares of land, bringing about billions of dollars of investment to Sri Lanka.

Opposition to project

The legislation, titled Colombo Port City Economic Commission, was tabled in parliament last week, outlining proposed laws for the USD 1.4 billion-Port City being built on reclaimed land at Colombo’s seafront. Three opposition parties, Samagi Jana Balawegaya (SJB), Janatha Vimukthi Peramuna  (JVP) and United National Party (UNP), a foreign funded NGO and some labour organisations challenged the constitutional validity of the proposed legislation.

SJB MP Harsha de Silva said while his party wants the Port City project to succeed, for its potential to catalyse fin-tech and high-end knowledge services-driven growth in the country, he stressed that a solid legal framework was essential.  He pointed out that for this long-term project to succeed it must be consistent with the Sri Lankan constitution.

USD 15 billion investments

The incumbent Sri Lanka Podujana Peramuna (SLPP) government took effective steps to expedite the Port City project, which could attract USD 15 billion in investments, and emerge as a leading business, retail, residential and tourist destination in South Asia. CHEC Port City Colombo, a joint venture between the state and China Harbour Engineering Company, has 100 hectares of land ready for construction.

In the next five-year strategic plan, 20 plots, in total of 60 hectares, of land adjacent to Colombo’s central business district have been identified for the pilot projects.

Colombo Port City Commission Bill envisages extensive powers to approve investments without going to the Board of Investments, give tax breaks and regulate businesses in the most far-reaching one-stop-shop designed so far. It is expected to address several problems in Sri Lanka’s ease-of-doing business indicators that had kept back foreign direct investments.

A spokesman for CHEC Port City Colombo said 40 out of 74 buildable plots of land are allocated for commercial development which will bring investments and business activities, while 34 plots are for residential use. Out of 269 hectares reclaimed, China Harbour will get 113 hectares, 91 will be common areas vested in the government and the balance 60 odd hectares are land the government can sell and earn revenue.

In designing the Port City plan, significant emphasis was given to create a vibrant business hub, because of its extension to the existing central business district of Colombo.

Vital to growth

It is no secret that Sri Lanka’s current economic growth would not be sufficient to drive demand. Therefore businesses had to be attracted in phase one to drive activity. Sri Lanka is primarily seeking foreign investments through dollar inflows, but domestic businesses will also be allowed to buy land to gain a foothold within the Port City.

International trade, logistics operations, hospitality and tourism are considered the natural strengths of Sri Lanka. The Port has identified Information and Communications Technology/ Business Process Management, offshore banking, private equity, wealth management and investment banking as priority sectors, the CHEC spokesman stated.

However, all these plans for project implementation could only commence after the legal aspects are cleared in accordance with the Supreme Court decisions on the petition. Then the Port City Bill, as it is or with amendments, if any, could be proceeded with.

Sri Lankan leaders will get another important opportunity to discuss investment possibilities from China during the current visit of China's Defence Minister General Wei Fenghe who is in Colombo. Although the talks would focus on defence cooperation, the minister’s visit will provide a forum for bilateral discussions on trade, investment and other areas of cooperation as this would be the highest level of visit undertaken by a Chinese government official since the Gotabaya Rajapaksa government took office in November 2019.                                                               

Colombo Port City Special Economic Zone (SEZ) is expected to create a conducive and competitive environment in attracting FDIs. Urban development via SEZs is not unique to Sri Lanka and there are many successful SEZs in the world. SEZ  has 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 selectively implemented outside the SEZ in the rest of the country.

(The writer is Director (International Media), Presidential Secretariat, Colombo. Views are personal. He can be contacted at sugeeswara@gmail.com)