The Hon. Ajith Agalakada

¶ 01 Hon. Deputy Speaker, we debate the Bill approved by Cabinet on 24 November last year to amend the Colombo Port City Economic Commission Act, No. 11 of 2021.

¶ 02 Sri Lanka cannot produce all goods domestically; we must earn foreign currency to import what we lack. Historically, we relied on tea, coconut, rubber, spices, then apparel, and then migrant labour remittances. Our needs keep growing, and from 2028 we must resume repaying past external debts, increasing dollar requirements. Therefore, we must pursue new avenues: attract FDI via the BOI with a single-window, pursue PPPs, and joint ventures, leveraging state resources and facilitation.

¶ 03 Port City—built with about USD 2.4 billion in investment by a Chinese company and our Government—must be productively used to earn dollars, while considering feasibility, environmental impact, geopolitics, and cultural aspects. In 2021, seven general laws (e.g., Urban Development Authority Act No. 41 of 1978; Municipal by-laws; BOI Act No. 4 of 1978) were rendered inapplicable within the Port City area, as were thirteen tax laws (including Inland Revenue Act No. 24 of 2017; Special Provisions of Excise (Special Provisions) Act No. 13 of 1989; Betting and Gaming Levy Act No. 40 of 1988). Given this special status, we appointed an expert committee to review and recommend changes, forming the basis of these amendments.

¶ 04 Key changes: - Rationalizing tax incentives and exemptions, especially limiting employment income tax exemptions. Existing registered entities’ current employees will enjoy a three-year income tax exemption, but new registrants’ employees will be taxed per the Inland Revenue Act, No. 24 of 2017, like the rest of the country. - Enhancing regulation, supervision, and compliance for Businesses of Strategic Importance (BSI), including construction-phase facilitation and post-commencement tax structures, replacing the blanket 25-year tax holidays with four categories tied to investment and employment thresholds.

¶ 05 Investors do not come solely for tax holidays. We now have double taxation avoidance agreements with six countries; investors consider macro-political stability, infrastructure, human capital, rule of law, and transparency. Inflation has been contained; revenues improved; debt servicing discipline has risen; interest rates are in single digits; and growth is picking up. In 2025, exports reached USD 17.2 billion, worker remittances USD 7.8 billion, tourism receipts USD 3 billion, and FDI about USD 1 billion. With transparent, rules-based reforms, Port City can deliver the targeted jobs and foreign exchange.