Port City to add over US$ 9bn in value to GDP: PwC

• Enactment of Colombo Port City Economic Commission Act expected to be most influential factor
• Modern services that will bring in economic value addition include ICT, maritime services, offshore banking & financial services and professional services
• Project’s well integrated construction and operational stages with local economy to achieve desired results

The upcoming mega Port City Colombo project, Sri Lanka’s first multi-services special economic zone (SEZ), will bring significant positive effects to the economy, where the new legislation and the implementation of the proposed plans will bring over US$ 9 billion value addition to the country’s Gross Domestic Product (GDP), an assessment by PwC revealed.

The latest PwC estimates on Port City indicate that the landscape of the project has undergone notable changes since their initial assessment in early 2020 and the most significant boost comes from the enactment of the Colombo Port City Economic Commission Act, the ‘Five Year Plot Roll-out Strategy’, and a revision of the Master Plan to 6.3 million sqm of gross floor area.

According to PwC, the Act provides for a number of measures that strengthen the ease of doing business within the ‘Area of Authority’, especially with regard to setting up a business, obtaining building permits and approvals, employing workers and enforcing contracts which are crucial to achieve the objective of being a home for exporters of modern services such as information communication technology, maritime services, offshore banking and financial services, professional services and regional headquarters. 

“These modern services could create up to US$ 9 billion of economic value addition to the GDP and have a significant positive effect of US$ 5.3 billion to the Balance of Payments from service exports foreign earnings receipts annually, once the Port City reaches its full potential,” PwC said in a statement to the media.
Estimates also indicate that the commercial sector is expected to create over 100,000 direct employment opportunities upon completion of the Port City Colombo.

Tourism, retail, and leisure activities are estimated to generate up to US$ 1.8 billion of direct economic value annually and provide 39,000 direct employment opportunities. The PwC pointed out that noteworthy is the indirect contribution made by this sector that could amount to US$ 850 million per annum via local supply chain.
As a lifestyle destination, Port City is expected to rejuvenate Colombo’s appeal as a destination for city tourism similar to regional capitals such as Bangkok, Kuala Lumpur and Singapore by leveraging on attractions such as a luxury yacht marina, a world-class integrated resort, high-end retail malls and an international convention & exhibition Centre to attract high value travellers.

With the Special Economic Zone legislation drafted to provide concessions to investors, PwC stated that about US$ 12.7 billion can be reeled in from the realization of value from land plots and construction activities that would be required to develop the 2.7 sqkm extension of the Central Business District of Colombo.

PwC stated that a clear beneficiary of this FDI would be the construction sector, where US$ 8.7 billion of investment is expected. This would create over 340,000 direct employment opportunities during the envisaged completion period of 20 years.

“The analysis indicates that Sri Lanka stands to benefit by the Port City project, provided construction and operational stages proceed as planned and are well integrated with the local economy,” the PwC said.

It added that a clear indication in this regard is that about 45-50 percent of the total value addition to the Sri Lankan economy is expected to accrue indirectly, via procurement of construction material locally, expatriate and tourist spending across Sri Lanka and services rendered by local firms to occupiers of the Port City.