CHEC Deputy MD says Port City Colombo ready for business with $ 1.3 b in investments secured

CHEC Port City Colombo 

Deputy Managing Director Thulci 

Aluwihare -Pic by Upul Abayasekara 

• Thulci Aluwihare says discussions underway with about six more potential investors, expects these to translate into additional $ 600–850 m over next three to four years
• Attracting investors requires incentives to compensate Sri Lanka’s weaker competitiveness rankings; key incentives non-fiscal ones to reduce foreign investor risk, mainly currency exposure
• Confirms Port City negotiated a fiscal package with Govt. and IMF
• Asserts Port City provides full capital mobility, a major deviation from South Asia’s typically tight capital controls

By Charumini de Silva

CHEC Port City Colombo Deputy Managing Director Thulci Aluwihare said Colombo Port City is now positioned as Sri Lanka’s first dedicated services export zone and has already attracted $ 1.3 billion in foreign investment, with more in the pipeline. 

Speaking during a panel discussion at the Sri Lanka Economic Summit organised by the Ceylon Chamber of Commerce last week, Aluwihare outlined the project’s evolution, highlighting China Harbour Engineering Company’s (CHEC) three-decade presence in the country and the shift from engineering contracting into long-term urban development.

“Our journey is similar to Axiata’s, CHEC has been in this country for 30 years. Initially we were doing roads, bridges and ports. With Port City, we really migrated up the value chain to become a developer,” he said.

He noted that the original concept was a large-scale reclaimed land project intended as a premium waterfront real estate development. However, during reclamation, the Government and project company decided to reposition it as Sri Lanka’s long-missing services export zone.

“As many of you know, close to 60% of Sri Lanka’s GDP is services. But we still did not have a dedicated services export zone. Therefore, the idea was conceived that the Port City can be a special economic zone for export of services,” Aluwihare said. 

He said CHEC has invested $ 1.3 billion to date in reclamation and infrastructure, with a further $ 250 million planned for phase two. “What I would like to say is that we are now ready for business,” he added.

According to Aluwihare, Port City Colombo has already secured investors for six plots of land, with a total committed value of around $ 1.3 billion. Discussions are underway with about six more potential investors, and he expects these to translate into an additional $ 600–850 million over the next three to four years, depending on macroeconomic stability.

“As a company that has been in the country for 30 years, we are very optimistic about the potential. When we sell the Sri Lankan story overseas, what we are really trying to sell is potential. And in that story, what we try to address is the risk,” he said.

Aluwihare said that attracting investors requires incentives that compensate for Sri Lanka’s weaker competitiveness rankings. “There are varying counterviews about providing tax holidays, especially under an IMF program tax holidays are considered taboo. But the question is, when other doing-business indicators are not competitive, what incentives do we need to attract investors?” he asked.

He confirmed that Port City successfully negotiated a fiscal package with the Government and the IMF, including a 10–15-year corporate income tax holiday, duty-free importation during project construction and exemptions from border taxes.

“These should result in savings of about 20–25% in construction costs. Once operations start, investors will have a 10- to 15-year tax holiday,” he said.

However, he emphasised that the most important incentives are non-fiscal those designed to reduce foreign investor risk, particularly currency exposure.

“The largest risk is foreign currency risk, especially in real estate development. Within Port City, the Sri Lankan rupee is not legal tender. It’s a complete hedge against currency risk. There are 16 designated currencies you can invest and transact in,” Aluwihare said.

He added that Port City provides full capital mobility, a major deviation from South Asia’s typically tight capital controls. “Some of these restrictive capital controls that apply in the rest of South Asia do not apply in Port City,” he noted, adding that companies can employ 100% foreign staff, who are eligible for long-term visas.

He affirmed a single-window investment facilitation system is also in place to streamline approvals.

Aluwihare acknowledged that early-stage implementation challenges persist. “There are certain initial teething problems, but these are currently being fixed. As we speak, we have 155 companies operating under Port City licences outside Port City, until the infrastructure is ready, and the total utilised space is close to 500,000 square feet,” he added

He added that the project’s early traction has also given “a much-needed boost to the real estate sector in Colombo,” signalling rising investor confidence as the special economic zone approaches full operational readiness.