Ahead of the parliamentary debate on the Port City Economic Commission Bill, Director – Sales and Marketing of the Port City Yamuna Jayaratne spoke to Mirror Business about the economic importance of the project and the plans in place for its attraction. Excerpts of the interview are as follows.
How do you see the economic impact of Colombo Port City?
I think there are stages of the project that is going to have an impact on the economy. One is direct impact. It is directly associated with the project and its development.
Then, you have the indirect impact. That is the supply chain that will build around this development. Direct impact is employment. We are still at the project implementation level. Land reclamation is completed. Breakwater is done. Now, infrastructure is being put in. You have even an indirect impact in terms of employment, value addition to the GDP (Gross Domestic Production), and fiscal contribution.
Induced impact is coming from money circulation within the project. That is once it is in operation. Induced impact will be supported by the spending pattern. Implementation stage alone has given rise to about 8000 employment opportunities.
It is a small percentage that gives employment for foreigners. The main benefit is for local employees. If you take our own company, 70 percent of employees are locals and the rest foreign nationals. No company would establish a centre in another country without expecting that country to provide the skilled and unskilled labour that is required. It is in fact going to push our education system to supply that category of employees required.
We are expecting 160,000 direct and indirect employment in the construction phase. Once the city is fully complete, we expect 300,000 direct and indirect employment opportunities. It will bring money into circulation.
What is your assessment of its contribution to GDP expansion?
Once it is completed, the port city is expected to contribute at least US$ 740 million per year in terms of FDI (Foreign Direct Investment). If you take the total FDIs per annum we generate right now, that is only US$ 1 or 1.5 billion. The port city is an opportunity to double it. The expected inflow of FDI through the port city is sizeable.
How do you compare this with other economic zones elsewhere in the region and the world?
We have done various bench marking studies. If you look at the Unique Selling Propositions (USP), Singapore, Mauritius and Hong Kong are countrywide economic zones.
Then, there are standalone economic zones – DIFC, Dubai International Financial Centre, and Qatar International Financial Centre etc. The special economic zones such as Singapore, Mauritius and Hong Kong had been established some time back. Hong Kong was established almost 50 years ago.
The most recent standalone ones are slightly different in structure and the way they work. But, all these have more streamlined policies and practices than in the rest of the country concerned. It is a key common factor. It is also reflected here in what we are going to do. We are right in the middle of two financial giants- Dubai and Singapore. We are in a maritime super highway.
If you look at the USPs in these comparative economic zones, one common factor is location on a trade route - geographical positioning. If you take Hong Kong, Singapore, DIFC, their location on a trade route are enablers.
If you look at the Belt and Road Initiative without a geopolitically motivated view, we are in a very central, strategic sea route. If we can tap into the potential, it will offer any investor access to 50 percent of the world population.
Historically, we did a lot of business through the silk route. We have benefitted historically by being in a strategic positioning. We are an important node in the silk route. Now it is how we tap into the opportunity we have.
Colombo Port is the 35th busiest port in the world. Another advantage is proximity to a bigger economy. Hong Kong is basically providing access to China and Singapore to ASEAN.
For Sri Lanka, it is India which is slated to become an economic giant in the world in time to come. We have access to China as well as a country in the Belt and Road.
In addition to access to large markets, we are faring better than some of our other South Asian peers in terms of quality of life. We can capitalize on that and truly serve as a gateway to South Asia.
All these economic zones have competitive, favourable tax regimes different to those applicable in their mainlands. We are not talking about anything new. Hong Kong is a mature, established economic zone. The companies are already established there.
All these economic zones have world class infrastructure. That is something we were lacking. We cannot compete without having that. In Singapore, the time taken to incorporate a company is only 15 minutes. That is what we are competing with.
Another important thing is access to skilled and unskilled labour force. That is an area where we have to work. In the IT sector, the companies are there to hire graduates the moment they pass out from the Moratuwa University. Our education system will also fall into shape with this project. It will be a stimulus. What we are trying to do here is creation of opportunities to stop brain drain. Also, we are going to attract the best expatriate talent as well. You are going to have knowledge sharing. Singapore did it.
Once the bill is signed into law, what will be your next step?
Our next step is to really develop a very comprehensive value proposition. We may need some help from global consultants to do it.
We have the hard infrastructure for it along with the legal framework which is investor-friendly. There are three risks for investors – development risk, territory risk and demand risk. Development risk and territory risk, to a great extent, are addressed. What we need to address is the demand risk. If you put up a commercial building as a developer, you must have the confidence that you can lease it out and get a rental for it. We must address the question of demand.
Our plan is to develop that value proposition and have two types of conversations. One is direct investor engagement. That is the engagement we have primary investors who will invest in the lands- real estate developers. Secondly, we need to engage with the service sectors. We need to indentify the service sectors. We should be able to talk to the companies willing to set up here. It is a nationally important project. Once the law is in place, the Commission will be established.
The entire land is owned by Sri Lanka. This land comes to us at no economic cost. But, 43 percent of land has been given on lease hold basis to the project company. That is for the project company to find investors.