Work on the USD 1.4 billion Port City Project in Colombo, which is expected to transform the landscape of the country with multiple benefits to the economy, is progressing smoothly with the filling of land taking place currently, a top official of the Ministry of Megapolis and Western Development said.
“We are on target to complete work on the project by mid next year. The delay was due to the Environmental Impact Assessment Report not having been done for around 1,045 hectares by the time the government commenced work on the project,” he said.
The official said, steps have been taken to ensure that there are no adverse repercussions to the coastal environment by the project, and added that this will be one of the largest development projects in the country, benefiting a large number of people.
Financial centre
The project renamed, the Colombo International Financial City (CIFC) is expected to be an offshore financial centre in the region. The project was added to the Megapolis plan by the present government with the aim of turning the Western Province into a megapolis of around eight million people.
Deputy Minister, Ministry of Megapolis and Western Development, Lasantha Alagiyawanna said, there has been the fullest backing of all stakeholders to complete the project on time, to boost foreign direct investments (FDI) to the country and accelerate economic growth.
Work on the mega development project, set to commence in early 2011 under the former government was stalled due to environmental issues and lack of transparency in the agreement. The reclamation of land was to be carried out by China Harbour Engineering Corporation, (CHEC) with 125 hectares of land for the government, 88 hectares to be leased out for 99 years to the Chinese company and 20 hectares to be given freehold to the Chinese Company.
The new agreement for the project was signed in August 2016 by the Megaplois and Western Development Minister, Patali Champika Ranawaka with the UDA and CHEC Port City. Economists and construction sector experts, while recognizing the importance of mega projects of this nature to boost the economy, opined, it is not sufficient to bank on a few projects alone to attract FDIs, and drive economic growth.
Ceylon Chamber of Commerce Senior Economist, Anushka Wijesinha said , Port City is the largest FDI project in post-war Sri Lanka. However. it must be managed carefully to ensure environmental pitfalls are resolved and long-term damage mitigated.
It could be a game-changer for the city, to produce a new growth driver. However, in building it, we have to mobilize the right talent, right investors, and the right regulatory climate with predictable and transparent policies.
“This is just one project. Our paltry FDI position cannot be reversed by banking on one project alone. We have to fire on all cylinders and go aggressively after FDIs and attract them to Sri Lanka with the right policy framework,” Wijesinha said .
A Verite Research economist said: “A major weakness of most mega projects planned by the previous and the present government is that the projects fail to add value to the economy. For instance, the overemphasis on physical infrastructure development without realizing that for physical infrastructure to deliver the expected outcomes, it is crucial to have soft infrastructure as well. Then again, e.g. we wish to be the global city between Singapore and Dubai, but for that, we need to have not only state-of-the-art physical infrastructure, but also modern technology, highly skilled people, efficient institutions and an effective regulatory framework.
Better synergy
“The customs and border procedures are outdated and carried out manually. The country has failed to automate border administration, including the Customs, despite speaking about a single window, for over a decade. The country ranks poorly in all global indicators, for example, in the enabling trade index of World Economic Forum the country was ranked 103 out of 136 countries.
“Poor planning and weak coordination and communication between government agencies are setbacks to boost economic growth. Since the port city is to be part of the megapolis project, plans to develop the city, the sea ports, the airports, highways and road network need better synergy.
At present, these subjects fall under different Ministries, who develop plans in isolation. As a result, our ports are not well connected to the country. It is ironical that we are planning to have a port city and make the Western Province a megapolis, and dream of being a logistics hub in the region, but to this date, we have not been able to address the congestion issue of containers coming in and out of the Colombo port.
Another example of poor planning and lack of synergy is the BIA expansion project, which is exclusively focused on enhancing only passenger capacity.
The new airport expansion has no provisions to increase cargo capacity, which is a major flaw for a country that is vying to be a logistics hub.
Global investment
Chartered Quantity Surveyor, Dr. Chandana Jayalath said, “the Port City project will be the CIFC situated in a reclaimed land of 269 hectares. The reclamation segment cost a titanic investment of approximately US$ 1.5 billion and it has been speculated that the overall investment could amount to over US$ 15 billion. Nonetheless, it is also assumed to attract a global investment of over US$ 5 billion into the country. The Financial Zone will create a milieu for international banking and financial services. Envisioned to have far-reaching economic benefits, including higher-paying service sector jobs, it may have a direct impact on the entire construction supply chain”.
According to Chief Economist, Ceylon Chamber of Commerce, Anushka Wijesinha: “CIFC is a prospect of a new growth driver and an added reason for international and regional investors to look at Sri Lanka.
But, it would be so only if the Government brings in the right regulatory frameworks, consistency in policies and credible institutions to govern it. We have the advantage of seeing what worked, what didn’t, and do it better, so that the Sri Lankan economy truly benefits, he added.
“The Al Raha Development Project in Abu Dhabi is one of my experiences as Cost Planner in establishing the likely financial commitment. With a total area of over 5.8 million square metres, along 11 kms of coastline, AI Raha Beach is evolving into one of the most stunning waterfront cities in the world, and gateway to the new Abu Dhabi, offering its more than 120,000 residents amazing opportunities for dynamic waterfront living.
“In the context of FDI, advantages and disadvantages are often a matter of perspective. Ideally, FDI can be an effective way to enter into a foreign market and reduce the cost of production if the labour market is cheaper and the regulations less restrictive. For example, it’s a well-known fact that the shoe and clothing industries have been able to drastically reduce their costs of production via economies of scale in these countries.
For starters, FDI offers a tremendous source of external capital and increased revenue. Developing governments can use this capital infusion and revenue from economic growth to create and improve its physical and economic infrastructure, such as, building roads, communication systems, educational institutions, and subsidizing the creation of new domestic industries. Sometimes, a local firm can develop a strategic alliance with a foreign investor to help develop a new industry in the developing country”.
However, the project has come under criticism by environmentalists for its environmental impact that would be far more than the economic benefits. Sand mining within 10 kilometeres which is prohibited by law has adverse consequences to marine life, according to ecologists.
The Movement Against the Port City claims, sand mining takes place within three to four kilometers from the shore which is detrimental to the conservation of marine life. The Deputy Minister denied such action and pledged to take to task those who violate coastal conservation regulations.
According to the Megapolis and Western Development Ministry, the project requires : 70 million cubic meters of sand which is obtained from an approved deep sea area of 10 km into the sea from the coastline, 34,700 cubic meters of water per day by 2035, undertaken by the National Water Supply and Drainage Board to supply using two reservoirs, 393 megawatts of electricity in 2035, to be provided by the Ceylon Electricity Board, and 3.45 million cubic meters of rock stones of which clearance has been granted for the Project Company to purchase the requirement from Central Environmental Authority approved, Geological Survey and Mines Bureau licenced quarries.
An output of around 370 tons of garbage is estimated per day by 2035. The plan for waste management will be designed by a private company.