The Hon. (Prof.) Ruwan Ranasinghe - Deputy Minister of Tourism

¶ 01 Hon. Presiding Member, I support the proposed Amendments to the Colombo Port City Economic Commission Act, No. 11 of 2021. Historically, Sri Lanka used lengthy tax holidays and broad exemptions to lure FDIs, often without transparent, rules-based criteria, creating fiscal costs and governance concerns. The proposed Amendments introduce structured benefits: corporate tax holidays shortened from 20–30 years to 8–15 years, with clear thresholds.

¶ 02 Prior regimes granted extensive VAT, Import Duty, levies, and employment tax exemptions, leading to significant revenue losses—problematic amid IMF debt reform obligations. There was lack of transparency, discretion-based approvals, and uneven benefits disadvantaging SMEs and labor-intensive sectors.

¶ 03 Investment is crucial for growth—especially FDI via Port City. To sustain 7–8% growth in the next decade, private investment must be mobilized, as the public sector cannot carry the load. These Amendments ensure long-term benefits are realized; if not, we must reassess incentive design.

¶ 04 We estimate substantial tax expenditure losses: Rs. 978 billion in 2022/23, about Rs. 900 billion in 2023/24, and likely exceeding Rs. 1 trillion in 2025, driven largely by overly generous strategic development project incentives. Some who now criticize in Opposition previously misused that scheme. We should publish details of those projects and their costs.

¶ 05 We also propose ending complete employment income tax exemptions for Port City employees while allowing a transition for current authorized employees, and embedding transparency mechanisms for income tax reliefs. The aim is not to discourage investors, but to ensure maximum benefit to the national economy.

¶ 06 On earlier inappropriate remarks: Parliament must maintain basic standards. Students watch these proceedings. Education reforms should continue despite orchestrated disruptions; investigations are underway, and reports will clarify who is responsible. We must modernize education, including vocational pathways; reforms are not about “stone industry” or malign content as alleged.

¶ 07 On the “Rebuilding Sri Lanka” Fund: funds go directly to the Treasury under proper accounts and procedures, unlike past opaque practices. Full compliance with financial regulations applies; the same measurement cannot be applied to all contexts, but transparency is ensured.

¶ 08 We are rebuilding after Cyclone “Michaung,” restoring infrastructure stronger than before, while directing funds and investments to drive growth. These Amendments align incentives with clear thresholds, shorter, targeted reliefs, and enhanced transparency and oversight consistent with international best practice and IMF commitments. They are designed to be more effective, not to deter investment. Thank you.