April 20, Colombo (LNW): Port City Colombo officials expressed concern over delays in opening Sri Lanka’s first-ever downtown duty-free shopping complex’s set to be opened in April this year due to some legal issues..
Originally scheduled to commence operations in April, the facility now faces an uncertain timeline for opening to the public, primarily due to unexpected legislative hurdles.
While concerns have been raised regarding the potential impact of the duty-free mall on local businesses and Sri Lanka’s taxation framework, CHEC Port City Colombo Deputy Managing Director Thulchi Aluwihare has asserted that the facility will not have the negative effects perceived by some in the political and business communities.
“The aim is not to cannibalise but to expand the market and promote economic growth. The broader objective of Port City is to increase footfall and benefit the entire Colombo ecosystem,” Aluwihare said .
He stressed that adequate measures are in place, serving as effective guardrails to protect against cannibalisation of the local market and ensure there is no leakage of goods into the local market.
“The goal is to attract tourists and create a shopping destination in Sri Lanka, capitalising on the average tourist’s stay of seven to 10 days, with an average spending day in Colombo being just one day,” added Aluwihare.
Pointing out that the delays are sending a negative message to investors, existing and potential, he stressed it is imperative for authorities to understand the importance of having investor-friendly processes.
“As a country facing a balance of payment crisis, we are actively seeking foreign direct investment and capital. Therefore, it is essential to ensure that the experience for investors in Sri Lanka is positive and encourages further investment,” added Aluwihare
The partnership was underscored with the formalisation of two critical agreements: an Authorised Person Agreement between ODF and the Commission and a lease agreement between ODF and CHEC Port City Colombo Ltd (CPCC).
However the Department of Fiscal Policy (DoFP) has to evaluate and guide the design of all tax incentives, including those based on the Strategic Development Project Act and the Port City Act, finance ministry sources said.
Preparing the necessary structures, including data sharing protocols and legal documents that assign authority to the DoFP will take time, it claimed. .
There was to be a 5,000 US dollar allowance for returning Sri Lankans and any amount for foreigners, according to concessions gazetted on May 29 2023. .
The Colombo Port City Economic Commission Act No 11 of 2021 was given the authority to grant tax incentives within the Chinese-built Colombo Port City.
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