The Hon. Ravi Karunanayake

¶ 01 Thank you, Hon. Presiding Member. I wish everyone a Happy New Year.

¶ 02 We are addressing an important topic: developing the Colombo Port City Economic Commission. The country’s economy can be strengthened by effective implementation of Port City operations.

¶ 03 One key issue is the IMF’s interference in fiscal policy. An Agreement with the IMF does not mean it can dictate our economic activity. With revenues improving and expenditure controlled, we must have flexibility to bring investors. If the IMF blocks investors, we must tell them the debt sustainability plan will be in jeopardy if we cannot attract investment. We are not bound to do everything exactly as they say. No one will invest in Sri Lanka out of love alone. We must act proactively.

¶ 04 The Port City is designed as a new investment zone. Since 1977, starting with the GCEC leading to the BOI, we aimed to attract foreign investment and technology. Now, with broader needs, Port City was created to further incentivize. When it was set up, many said it would be hard to sell. I urge the Government to provide stronger incentives; do not wait for the IMF program to end in late December to act.

¶ 05 Our overall economic status must improve. Today, trading at the Colombo Stock Exchange was halted at 9.51 a.m., reportedly due to a technical issue: a new company’s share moved from Rs. 724 to Rs. 25,000; another transaction involving a 51% control change stalled. Such issues, particularly on a day we bring this Bill, undermine confidence. We must fix these.

¶ 06 On tax incentives: with OECD’s Pillar Two, even if we offer 7.5% corporate tax, a multinational’s home jurisdiction can top up to 15%, capturing the difference. We must be smarter. Multinationals with global revenue above EUR 750 million will need Pillar Two-compliant solutions. Beyond tax advantages, we must provide non-tax benefits—market access, positioning, and certainty.

¶ 07 We have excellent market access to India via the Indo–Sri Lanka FTA. With over 35% value addition, Sri Lanka can be a gateway to the Indian market. Port City is marketed as an offshore center; that is essential, but the Commission is leaning too much towards real estate and under-marketing the business dimension. We need offshore banking and manufacturing hubs to bring global earnings—examples exist in Singapore, Bahrain, Thailand, Malaysia, the Bahamas.

¶ 08 What we lack is a clear value proposition: a unique selling proposition. Decide—financial hub with offshore services or manufacturing hub harvesting global earnings—and strategize benefits. IMF resistance to “tax holidays” for strategic development can be managed with controlled, targeted concessions plus strong non-tax incentives.

¶ 09 We must overcome the trust deficit with India. Like Hong Kong to China, Sri Lanka can be to India. India, with US$4.2 trillion GDP, may soon become the world’s third-largest economy. Capturing even 2–3% of that market would be transformative. Present a neutral, South Asia platform for capital, trade, and risk. Emphasize time-zone advantages, cost efficiency, neutrality, and streamlined regulations.

¶ 10 We are over-regulated. The Central Bank should facilitate, not deter, incoming banks. Similarly, approval delays are crippling—exporters wait 3–9 months. Today, at the Ministerial Consultative Committee chaired by the President, an investor wanting to convert LHD vehicles to RHD for export required the President’s approval to begin—over-regulation chases investors away. If Port City rules mirror mainland regulations, why would anyone come to Port City?

¶ 11 Finally, incentivize new investors with both tax and non-tax concessions; make Port City service- and manufacturing-oriented; target US$3–4 billion in investments. Also note: Sri Lanka Bureau of Foreign Employment says 350,000 Sri Lankans will leave this year. Who will work here? We must act now. Thank you.