The Committee on Public Finance (COPF) has now approved the Colombo Port City Economic Commission (Amendment) Bill, but the discussion revealed why approvals inside Port City have been uneven — and why investor uncertainty persists.
What COPF Approved
COPF cleared amendments to the Colombo Port City Economic Commission law aimed at aligning Port City incentives with Sri Lanka’s current fiscal reality and IMF commitments.
Key elements discussed and endorsed:
Tax incentives tightened
Income tax exemptions for Port City employees will not be open-ended. Existing entities may receive a limited transition period, but future entrants will face narrower concessions.
Application fees rationalised
Some fees may be deferred until later stages to reduce upfront friction, without weakening regulatory oversight.
Foreign exchange alignment
Port City operations must align clearly with the Foreign Exchange Act, removing grey areas around currency treatment.
Offshore banking oversight
COPF pressed for clarity on how offshore banking licences will be supervised, with emphasis on the Central Bank’s role and international compliance norms.
Stronger enforcement powers
The Committee emphasised monitoring, penalties, and compliance to protect Port City’s credibility as a regulated financial zone.
Why This Matters
The COPF process explains the current approval imbalance:
A small number of approvals were granted under the existing legal framework.
Dozens of other applications remain stalled pending full enactment of the amended law and related regulations.
COPF Chair Dr Harsha de Silva flagged concerns that relying on older legal provisions for selective approvals risks:
legal inconsistency
investor confusion
and perceptions of expediency over clarity
What COPF Did Not Do
COPF did not authorise a fresh wave of approvals.
It did not settle final incentive structures — those depend on Parliament passing the amended Act and the issuance of detailed regulations.
The Bottom Line
Port City is in a legal transition phase, not a freeze — but approvals will remain selective until the amended law is fully enacted.
For investors, the message is mixed:
regulatory discipline is tightening (a long-term positive),
but certainty will only arrive once Parliament completes the process.
Until then, Port City remains open in principle, cautious in practice.
