Last update:Tue, 01 Aug 2023

Govt. gazettes Colombo Port City investment incentives


  • Reliefs include concessionary 50% tax rate; enhanced capital allowance; flexibility of currency choice on payment of dividends or other financial benefits by businesses
  • Lists secondary businesses of strategic importance at Colombo Port City
  • Spanning 269 hectares of ocean reclamation, Port City Colombo, which also includes first ever Special Economic Zone dedicated for exports of services, is visionary project that aims to redefine Sri Lanka’s economic and social landscape
  • Initial 5-year roll-out plan envisages $ 5.6 b in FDI which will fast-track Sri Lanka’s economic recovery, positioning both Port City and Sri Lanka as leading player in service export industry
  • Overall, Colombo Port City envisages creating over 140,000 direct job opportunities and contribute $13.8 b to Sri Lanka’s GDP annually
  • Estimated fiscal revenue of $ 1.7 b is expected at construction stage while recurring revenue of approximately $ 700 m per annum is expected at operational stage of project

In a major breakthrough to boost foreign direct investments, the incentives and tax exemptions for investors intending to start ventures in the Colombo Port City have been published by the Government via Extraordinary Gazettes (2339/31 and 2339/32) dated 7 July.Two prospective groups of investors have been identified who will be able to avail themselves of these incentives and tax exemptions.

Businesses that invest $ 100 million per plot of land or a pro-rated investment in a subdivided plot of land according to the Colombo Port City (Development Control) Regulations or one that will make an investment of a minimum of $ 25 million in the plots of land for the Marina will be entitled to exceptions or incentives according to several schemes set out in the gazette.

These include an incentive of 50% of the prevailing corporate tax rate applicable for the respective year of assessment under the Inland Revenue Act, No. 24 of 2017 from all gains and profits and an incentive of an enhanced capital allowance of 300% of the expenses incurred on depreciable assets, other than intangible assets used within the Area of Authority of the Colombo Port City during a year of assessment.

The gazette noted that businesses can make a choice out of the two exemption or incentive schemes specified and inform such choice to the Port City Commission. However, once the choice is made investors will not be allowed to change the option chosen at a later date.

A second gazette issued on the same date set out regulations with regard to the payment of dividends or other financial benefits payable by businesses. Accordingly, it stated companies can pay investors dividends or any other financial benefit on the investment in a designated foreign currency other than in Sri Lanka Rupees.

"Where the Commission has leased out marketable land to a person or company under section 39 of the Act and a dividend or any other financial benefits accrues to the investor within a period of five years from the date of the lease paid, such dividend or other financial benefits shall be remitted into a Resident Foreign Currency Account of the investor maintained in the name of such investor with a licenced commercial bank", it noted.

It also set out that businesses operating within the Port City may accept payments in Sri Lankan Rupees in respect of any goods or services provided subject to several conditions including depositing it in a Rupee account of a licensed commercial bank and converting it to another currency through the same.

Spanning 269 hectares of ocean reclamation, Port City Colombo, which also includes the first ever Special Economic Zone dedicated for exports of services, is a visionary project that aims to redefine Sri Lanka's economic and social landscape. It promises to offer a cosmopolitan lifestyle, world-class infrastructure and sustainable living.

The gazette also identified investments that will be considered Secondary Businesses of Strategic Importance. These can include companies working in the areas of global and regional economic activity in international trade, shipping logistic operations, offshore banking and finance, IT, business process outsourcing, corporate headquarters operations, regional distribution operations, tourism and other ancillary services, innovation, entrepreneurship, entertainment, generation of employment opportunities, sustainable development or urban amenity operations in the settlement of a residential community. Certain incentives and exemptions will also be provided to these investors according to the Gazette.

Recently, an updated Development Control Regulations (DCR) was published via Extraordinary Gazette No 2334/47 of 2 June, which enables the Colombo Port City Economic Commission to receive development proposals for evaluation and the issuance of Planning Clearance, Development Permits, and Certificates of Conformity, aligned with the approved Master Plan - Spanning a buildable area of 6.3 million square meters, that will offer a world-class environment for various amenities, including a Marina Facility, Luxury Villas, Apartments an Integrated Resort, Convention Centre, International School and University, a Hospital and a Financial Centre etc.These and all developments of Colombo Port City will be subjected to the regulation of the newly published DCR 2023.

The primary objective of 2023 for Colombo Port City is to benefit developers, residents, investors, and all stakeholders, including the surrounding community. These regulations establish guidelines for development intensity, building height, and overall construction framework across all plots within Colombo Port City. They serve as a vital planning tool, ensuring logical and orderly development.

The initial 5-year roll-out plan envisages $ 5.6 billion in FDI which will fast-track Sri Lanka's economic recovery, positioning both Port City and Sri Lanka as a leading player in the service export industry.

Overall, Colombo Port City envisages creating over 140,000 direct job opportunities and contributing $13.8 billion to Sri Lanka’s GDP annually.

Estimated fiscal revenue of $ 1.7 billion is expected at construction stage while a recurring revenue of approximately $ 700 million per annum is expected at the operational stage of the project.

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“A New Chapter for Ceylon Tea”

TEA InternationalDay 2023 1The Sri Lankan Tea Industry Celebrates Major Gains by the Smallholder Sector despite Economic Challenges

On the International Tea Day, the local tea industry is celebrating impressive achievements by the smallholder sector despite facing an array of unprecedented challenges posed by the economic challenges and the currency collapse. “It goes without saying that the local tea industry has faced many demanding issues, but on this year’s International Tea Day, we want to celebrate the resilience of our smallholder tea growers, who have overcome pandemic adversity to be back on track to reach high profitability levels,” says Niraj de Mel, the Chairman of the Sri Lanka Tea Board. “The smallholder sector has already achieved so much in terms of sustainability in the past couple of decades that is worth celebrating. This is a new chapter in the story of Ceylon Tea,” he added.

In Sri Lanka, smallholder growers contribute a substantial 75 percent to the overall tea production, making the sector critical to the industry's success, and to the millions of families who depend on it for their livelihoods. Though smallholder tea growers have faced tremendous obstacles in the past decade, the sector is emerging with renewed vigour to reach production goals, particularly in the areas aligned with the Sustainable Development Goals (SDGs). This year’s International Tea Day is set to focus on the smallholder tea growers specifically to support the sector through adversity. The Sri Lanka Tea Board has implemented a number of notable initiatives to safeguard smallholder tea producers in challenging times, many of which have already shown considerable gains, according to Chairman de Mel. “One very important measure the Tea Board has been involved in is ensuring fair prices for smallholder growers that are on par with the big players, so they don’t miss out on opportunities and are protected,” he said. “While we are aiming to strengthen the smallholder business model, we’ve been quite impressed by what they have done in terms of SDGs that have improved livelihoods and reduced costs.”

Local tea plantations have taken leading measures in adopting SDGs that focus on enhancing workers' livelihoods and preserving the environment. For an industry once plagued by hardship, the approach has been transformative, with significant gains achieved in terms of social welfare, conservation, and even energy security. In the verdant estates of the Elpitiya Plantations, the scenic routes going uphill to the tea factories are lined with solar panels. The plantation had installed the panels as part of a sustainability initiative, which is now generating phenomenal results that have helped the estates seamlessly navigate the energy crisis. The Elpitiya Plantation Group is now generating 141 percent renewable energy against consumption.

“We are proud to say that our total energy generation now exceeds our energy consumption,” said Ms. Thilini Edirisinghe, Deputy General Manager of Human Resources of Elpitiya Plantation. “A majority—and 85 percent—of our energy consumption is now from renewable sources. We can say our tea is green-energy produced.” Numerous other tea plantations have also prioritised green energy generation, driven by both a push towards sustainability and as a practical solution to rising energy costs. The Mathugama Estates, nestled in the hills of Kalutara, now has four hydropower plants. Notably enough, the first-ever zero-liquid discharge plant in the country was built on a tea estate.

The Talawakelle Plantations, which is generating 138 percent energy against consumption, is planning to expand further as part of a broader drive towards environmental sustainability. The estate is currently heavily involved in a reforestation programme to improve the biodiversity of its commercial land. “We started the reforestation program last year, and we have already planted 2,000 endemic plants on two hectares of land,” elaborated Mr. Krishna Ranagala, Manager of Sustainability and Quality Systems Development of Talawakelle Plantation. “In total, we have planted over 500,000 plants as part of our forestry management programme. Continuing to improve the ecological biodiversity of our estates is a key SDG initiative for us.”

The plantation industry is placing urgent emphasis on worker welfare, with nearly every estate actively engaging in a range of social programmes that provide assistance to field workers and their families. These social welfare initiatives proved to be a lifeline during the pandemic, particularly when many workers had limited access to daily meals due to quarantine restrictions. In an inspiring move, the Horana Plantations encouraged their workers to cultivate gardens, setting aside hectares of plantation land for employees to grow vegetables that served as a vital source of sustenance throughout the difficult times of the pandemic.

The Elpitiya Plantation initiated program to look after the social wellbeing of the plantation workers. “We also built a retirement home for our elderly employees, which is the first time any company in the country has built a retirement home for its own employees,” said Ms. Thilini Edirisinghe, Deputy General Manager of Human Resources of Elpitiya Plantation. An increasing number of estate companies are actively engaged in promoting upward mobility for their workers. One notable example is the Kahawatta Plantation, which has launched a programme to build infrastructure for employees, including a school for the children of workers. Moreover, the company has spearheaded various initiatives aimed at empowering its workers to earn additional income, fostering a culture of financial stability and growth. “We have leased out land for employees to cultivate their own food crops,” said Mr. Alex Samuel, Deputy General Manager of HR and Administration at Kahawatta Plantation. “We occasionally donate blocks of our rubber land for contract tapping, so that workers have opportunities to earn additional income,”

“We first implemented this policy in our Malwatte Valley Plantation in 1998, and since then, we have shared 178 million rupees with our workforce through this programme,” said Mr. Jaliya Wijekoon, General Manager of Estate Marketing and Special Projects of Malwatte Valley Plantation. Plantation companies are undertaking unique, forward-thinking initiatives that are revolutionising the traditional dynamics of the estate sector and setting new standards for worker well-being, some of which are even getting noted by international development professionals. A youth empowerment program at the Hayleys Plantations, which offers an array of educational programmes to young workers and children of employees, was recently selected as a case study separately by the United Nations Global Compact initiative and the INSEAD School of Business in France.

Even small-scale initiatives undertaken by plantation companies have yielded excellent results in uplifting worker welfare. The Kelani Valley Plantation implemented a policy to reduce worker injuries, a goal originally set to be achieved by 2030. However, the estate has already witnessed a significant decrease in the number of injuries among its field workers. Once called the “world’s finest tea,” the Sri Lankan plantation industry is on a radical journey to reclaim its title with revitalised focus on worker welfare and environmental sustainability. The concerted efforts of plantation companies, government bodies, and trade associations are creating a more equitable and prosperous future for the industry and its workforce. As the demand for premium tea continues to grow globally, Sri Lanka is poised to take its place as a leading producer of high-quality, socially responsible tea.

“What we want to highlight this year is that Ceylon Tea is not just a product that tastes great, but also a brand that values its workforce and prioritises environmental protection,” Chairman de Mel said. “When we celebrate the rich heritage of Ceylon Tea, we also want to highlight these great achievements that have had a major positive impact on the estate community and the country as a whole.”

Sri Lanka targets the growing European market for organic food products at BIOFACH 2023, Germany

Biofach2023 4A delegation from Sri Lanka participated at the ‘BIOFACH’ Trade Fair, world’s largest annual organic food products trade show, held from 14 to 17 February 2023 in Nuremberg, Germany. This annual trade fair held since 1990 attracts food industry professionals from across the world. This year, 2,765 exhibitors from 95 countries participated in the trade fair. The fair was also attended by 36,000 trade visitors from 135 countries. Germany is one of the largest organic food markets in the world and BIOFACH figures show that the organic sector recorded revenues of €15.3 billion for the German organic market in 2022. In Europe, Germany is the largest market for organic products as well as the largest organic producer. In addition, veganism is increasingly popular in Germany creating export opportunities for meat and dairy substitutes as well as breakfast foods.

Biofach2023 1Sri Lanka’s business delegation to BIOFACH 2023, comprising thirteen Sri Lankan companies, was led by Mr. Suresh De Mel, Chairman of the Export Development Board (EDB). The country pavilion of Sri Lanka showcased certified organic agricultural products such as spices, coconut-based products, tea, fresh fruits and vegetables, beverages, herbal products and dried fruits. The inauguration of the Sri Lanka Pavilion was attended by Sri Lanka’s Ambassador to Germany, H.E. Ms. Varuni Muthukumarana and EDB Chaiman Mr. Suresh De Mel.

The Sri Lankan companies at BIOFACH 2023 benefitted from the exposure at the trade fair which provided a forum for producers, exporters, and buyers of organic products to meet business partners, observe new trends and technological developments. The participation of the Sri Lankan companies at BIOFACH 2023 was facilitated by the EDB, Import Promotion Desk (IDP) of the German Government and the Sri Lanka Embassy in Berlin. In parallel to BIOFACH 2023, nine Sri Lankan companies took part in a study tour of Germany and Netherlands organized by the EDB and GIZ, the German government’s service provider in the field of international cooperation.

Biofach2023 2

Sri Lanka’s organic food exports have emerged as a promising sector and the country has maintained a reputation in organic crop production and exports different varieties of organic products adhering to international standards. Sri Lanka is considered a pioneer in the Asian region championing organically certified tea and cinnamon in the world market. In April 2022, Sri Lanka was awarded its first Geographical Indication (GI) certification for Ceylon Cinnamon by the European Union. The organic food export sector is an important driver of sustainable development and job creation, particularly in rural areas.

The IPD regional office in Sri Lanka was established in 2022 funded by the Federal German Ministry for Economic Cooperation and Development (BMZ). With the aim of promoting fresh and natural product groups, IPD identifies suitable exporters and tour operators in selected developing and emerging countries to integrate the partner countries into international trade. Sri Lanka is one of sixteen partner countries chosen by IPD to support SME companies. Sri Lanka is also one of four IPD Hubs where regional offices are maintained with the others being at Côte d’Ivoire, Ecuador and Uzbekistan. In Sri Lanka, IPD partners with the Export Development Board. For BIOFACH 2023, the IPD regional office provided financial assistance for the participation of select Sri Lankan exhibitors. Workshops for exhibitors were organized by the IPD and EDB to improve their networking and marketing skills at the trade fair. Next year’s BIOFACH’ Trade Fair is scheduled to be held from 13-16th February 2024 in Nuremberg, Germany. Biofach2023 3

Embassy of Sri Lanka, Berlin, 23rd February 2023.