Colombo is going through a construction boom and none so bigger than the US$ 1.5 billion Colombo International Financial City project, formerly known as Colombo Port City. The project involves reclaiming about 660 acres of land from the Indian Ocean, adjacent to the Colombo Port and is backed by the Chinese government as part of its Maritime Silk Road initiative; a Chinese strategic initiative to increase present day investments and foster collaboration across the historic Silk Road; the antique trade route between Asian countries and Europe.
The FDI Spark
With expectations for US$ 13 billion in Foreign Direct Investment (FDI) flows to the Financial City, it forms a major part of the Sri Lankan Government’s US$ 40 billion investment in the Western Megapolis; an urban planning, zoning, and development project aimed at creating a planned Megapolis in Sri Lanka’s Western Province by 2030 for Colombo. Despite healthy economic growth, Sri Lanka’s FDI performance has been underwhelming over the past few years, plateauing around the US$ 1 billion mark.
The Financial City project is expected to change that. Just like Dublin’s International Financial Services Centre, which contributed significantly to Ireland’s rapid economic growth in the 1990s, the project could be the start of a bullish success story for investing in Sri Lanka.
The Financial City is bound to benefit from the ongoing boom in Sri Lanka’s tourism sector and the dynamic real estate market in Colombo. Ongoing infrastructure projects, as part of the Megapolis initiative, are also expected to provide the Financial City with high connectivity to the rest of the country. These include a high speed rail link to the International Airport, a Light Railway Track connecting to the Colombo suburbs and an elevated highway linking to the national highway system.
Financial Hub Recalibration
The aim of recalibrating the project as an International Financial City is to address the lack of a financial hub to serve the South Asian region. The region continues to depend on Dubai and Singapore for its international financial services at a time when its global economic clout is growing rapidly. The Sri Lankan Government has promised to enact a Colombo International Financial Centre law to ensure that the financial center has its own investor friendly financial status, separate from the domestic realities. To quote Liang Thow Ming, Chief Sales and Marketing Officer of CHEC Port City Colombo, this would mean “a separate court, separate arbitration centers, a city that is run under a different set of rules … from the rest of Colombo.”
In a region characterised by the geopolitical tensions between India-Pakistan and India-China, Sri Lanka provides a neutral setting. It maintains good balanced relations with all three of these countries, alongside other regional states like Bangladesh and Myanmar. Colombo is already a vital maritime hub for the region, handling large quantities of regional transshipments. Aided by the relatively high human capital, the city is well positioned to becoming the financial hub of South Asia.