Govt. grants sweeping powers to Port City Economic Commission
To become ‘Single Window Investment Facilitator’ for all investments in CPC with final say
Will exercise overall regulatory supervision and control over all investments and businesses
Empowered to facilitate establishment of an International Commercial Dispute Resolution Centre
Also establishment and operation of a stock, precious metal or commodity exchange for trade in any designated foreign currency
Will be enabled to grant tax holidays and other incentives up to 40 years, subject to Cabinet approval
But licences to carry on offshore banking will be issued by finance minister, with concurrence of CB
All port city employee remuneration to be paid in foreign currency; such earnings exempted from income tax
With the establishment of the Special Economic Zone in Colombo Port City (CPC), the government has granted sweeping powers to the proposed Economic Commission, for the promotion and regulation of CPC as a leading international business hub in the region, according to the Colombo Port City Commission Bill gazetted last week.
The commission is tasked with encouraging and promoting global and regional investments in international trade, shipping logistic operations, offshore banking and finance, information technology and business process outsourcing, corporate headquarters operations, regional distribution operations, tourism and other ancillary services to CPC.THE draft law is expected to be taken up in Parliament next month.
Once the bill is enacted by Parliament, the commission will become the ‘Single Window Investment Facilitator’ for all investments in CPC, with the final say. The commission is also tasked with facilitating all visa requirements of investors and port city employees.
“… it (the commission) may inform the Controller of Immigration and Emigration of such fact and recommend that such visa, entry permit or work permit or other approval, be granted as a matter of priority,” the draft law stated.
The commission will exercise overall regulatory supervision and control over all investments and businesses in and from the ‘Area of Authority’ of CPC.
Further, with the establishment of the commission, any land transfer, lease or agreement executed by the Urban Development Authority (UDA) and all agreements entered into by the Board of Investment (BOI) related to CPC will become documents and agreements entered by the commission.
The commission is empowered to facilitate the establishment of an International Commercial Dispute Resolution Centre and the establishment and operation of a stock, precious metal or commodity exchange for trade in any designated foreign currency. However, exchange or promissory notes or certificates of deposits issued by a bank are not allowed.
It was also proposed in the bill to the country’s judiciary to priorities legal proceedings related to CPC, in order to foster international investor confidence in the ease of doing business and in the enforcement of contracts.
Meanwhile, the commission will be granted powers to issue licences for business activities such as gaming and gambling and regulating such activities.
Under the proposed act, the commission will be enabled to grant tax holidays and other incentives up to 40 years for investments identified as ‘Business of Strategic Importance’, subject to the approval of the Cabinet of Ministers.
The President is tasked with appointing the chairperson and members of the commission as well as deciding remuneration packages of the commission. The bill proposed a minimum of five and maximum of seven members to the commission who would hold office for a three-year period.
“In making such appointments, consideration shall be afforded to ensure that such members possess relevant knowledge, expertise and experience and national or international recognition, in the fields of investment, finance, law, information technology, engineering, business or accountancy,” the bill stated.
It was also proposed to create a director general post for the commission, who will play the role of a CEO.
The commission will be set up with Rs.400 million initial contribution payable by the project company (CHEC Port City) and aims to become self sustainable by 2028.
It will be responsible for the functions of the investment facilitator in relation to marketable land situated within CPC and will charge one percent on all sums received from land transactions until 2028, from the government and project company. According to the bill, all investments into CPC, either from residents or non-residents, have to come from foreign sources with the permission of the commission.
“No foreign currency deposit in an account maintained or operated in Sri Lanka, in any licensed commercial bank or licensed specialised bank within the meaning of the Banking Act and no foreign currency raised through a foreign currency loan obtained from any such licensed commercial bank or licensed specialised bank, shall be used by an authorised person for the purpose of such investment within the Area of Authority of Colombo Port City,” the draft law noted.the authorised persons and firms that are permitted to engage in business in and from CPC are allowed to employ both Sri Lankans and foreigners and their salaries and other remuneration are required to be paid in a designated foreign currency, other than in Sri Lanka rupees. Further, their incomes will not be subjected to income tax applicable in rest of Sri Lanka.“any employment income of a resident employee so received shall be exempt from income tax and shall be deemed to be a permissible credit to a personal foreign currency account of such resident employee; any employment income of a non-resident employee so received shall be exempt from income tax and notwithstanding anything to the contrary contained in any other written law, such non-resident employee shall not be liable to income tax in Sri Lanka on any income earned outside Sri Lanka,” the bill stated.
The commission is empowered to impose levies on Sri Lankan citizens and residents who utilise any retail facilities or services within CPC, such as restaurants, cinemas, entertainment facilities, shopping facilities or parking facilities, upon making related payments in CPC.
Under the proposed law, licences to carry on offshore banking business in and from CPC will be issued by the finance minister, with the concurrence of the Monetary Board of the Central Bank.
“The President or in the event that the subject of Colombo Port City is assigned to a minister, such minister, may, in consultation with the minister assigned the subject of finance and the Monetary Board, make regulations from time to time as may be required to give effect to the scope of this act and to ensure prudent management and maintenance of confidence in the offshore banking business engaged in, in and from the Area of Authority of Colombo Port City,” the bill stated. It was also proposed to establish an ‘Estate Manager’ by delegating some powers, duties and functions of the commission. It will assist service providers in providing utility services, such as gas, water, electricity, Internet and communication facilities, sewerage and drainage, waste and garbage disposal and such other facilities to authorised persons, residents, occupiers and visitors, in CPC. It will also facilitate the collection of arearelated taxes and levies imposed by the commission within and will also collect fees and charges for services provided within CPC.