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Port City modern services to add $ 9 b to GDP

25 Oct 2021

As per PwC estimates, modern services at Port City could create up to $ 9 billion economic value addition to our gross domestic product (GDP) and have a significant positive effect of $ 5.3 billion to the balance of payments from service exports foreign earnings receipts annually once the Port City reaches its full potential. The commercial sector is expected to create over 100,000 direct employment opportunities upon completion of the Port City Colombo. With the provisions of the Colombo Port City Economic Commission Act of No. 11 of 2021, Port City has been recognised as a multi-services Special Economic Zone along with CHEC Port City Colombo’s “Five-Year Plot Roll-out Strategy”. The landscape for Port City has changed the initial assessment of its economic impact done by PwC Sri Lanka in early 2020, the most significant of which is the enactment of the Colombo Port City Economic Commission Act No. 11 of 2021. As such, a comprehensive update has been undertaken to incorporate the effects of the newly enacted legislation as well. CHEC Port City Colombo’s “Five-Year Plot Roll-out Strategy” and a revision of the master plan to 6.3 million m2 of gross floor area (compared to 5.7 million m2 used previously). The Act provides several measures that bolster ease of doing business within the area of authority about setting up a business, obtaining building permits and approvals, employing workers, and enforcing contracts which are crucial to achieving the objective of being a home for exporters of modern services such as information communication technology, maritime services, offshore banking and financial services, professional services, and regional headquarters.  The analysis further indicates that Sri Lanka stands to benefit from the Port City project, provided construction and operational stages proceed as planned and are well integrated with the local economy. A clear indication of this is that 45-50% of the total value addition to the Sri Lankan economy is expected to accrue indirectly, i.e. through procurement of construction material locally, expatriate and tourist spending across Sri Lanka, and services rendered by local firms to occupiers of the Port City.  As a lifestyle destination, Port City could rejuvenate Colombo’s appeal as a destination for city tourism similar to regional capitals such as Bangkok, Kuala Lumpur, and Singapore by leveraging on attractions such as a luxury yacht marina, a world-class integrated resort, high-end retail malls, and an international convention and exhibition centre to attract high-value travellers. Tourism, retail, and leisure activities are estimated to generate up to $ 1.8 billion of direct economic value annually and provide 39,000 direct employment opportunities. Also noteworthy is the indirect contribution made by this sector that could amount to $ 850 million per annum via the local supply chain. The Special Economic Zone legislation also seeks to provide concessions to investors, with an expected $ 12.7 billion to be attracted from the realisation of value from land plots and construction activities that would be required to develop the 2.7 km2 extensions of the Central Business District of Colombo. A clear beneficiary of this foreign direct investment (FDI) would be the construction sector, where $ 8.7 billion of investment is expected, leading to the creation of over 340,000 direct employment opportunities during the envisaged completion period of 20 years. A detailed report that evaluates the economic impact of the Port City in light of CHEC Port City’s “Five-Year Plot Roll-out Strategy” is due to be published shortly via PwC Sri Lanka’s website and social media platforms.


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