Go big or go home?

Monday, 15 August 2016 00:01 - - {{hitsCtrl.values.hits}}

THE Port City, reincarnated as the Colombo International Financial City (CIFC), will underpin the Government’s most ambitious development project to date and in many ways cement Sri Lanka’s relationship with China.

Rolled out on Friday, a day ahead of Prime Minister Ranil Wickremesinghe’s trip to China, the revamped project arguably puts more at stake for the Government than ever before.

For starters the Port City now holds the International Financial City. The initial extent of the 233 hectares have been expanded to 269 hectares under the new agreement that was signed last week and land for public use including recreational parks has been increased from 63 hectares to 91 hectares, which will be held by the Government along with another 62 hectares that will be used for State-led investment including the establishment of a international financial centre.

The China Harbour Engineering Company (CHEC) has expressed interest in considering additional investment to build the facilities required to house the financial centre, according to the Megapolis Ministry.

Desperate for investment, the Government has largely pinned its hopes on a financial city to attract precious foreign exchange. The project was approved by Cabinet last week and will be set up in Fort before the end of the year with plans to shift it to the Port City once it is completed. The former Attorney General and international law firm Baker & McKenzie have been tasked with drawing up extensive legislation needed to establish the financial city along with a strong arbitration system. An independent court system will be in place to make the financial city viable and attract investment.

Of the 269 hectares, 153 hectares belong to the Government with the rest being given to CHEC on a 99-year lease. As the fresh agreement has not been released to the public or tabled in Parliament, the details of how the Government will tax the investment brought in by CHEC or what tax holidays and concessions it will be eligible for, remain vague. But the Government has the power to develop its share of the land in any way it wishes, which could mean an opening for several industries, especially tourism and healthcare.

The Port City is at the core of the Government’s extensive Megapolis Plan, which seeks to systematically urbanise the entire Western Province. China, more than any other country, has the largest stake in the new development plans of the Government. The debt-equity swap proffered by Colombo, establishing a dedicated investment zone for Chinese enterprises, signing a Free Trade Agreement (FTA) and continuing old and new infrastructure projects also depend on the successful implementation of the Port City. In addition, the Port City will also be a catalyst for China’s 21st Century Maritime Road aspirations.

From criticising the Port City, the Government has done an about turn to throw open the doors to China and its success is likely to underpin Chinese relations from here on out. Already groaning under massive debt, the Government has decided to ride the dragon in a ‘go big or go home’ move that will shape Sri Lanka’s future for decades to come.