Port City

According to some it is the next big thing. It is going to revolutionise the Lankan economy. Investors are going to flock to secure their place in this tiny island off the coast of another tiny island. According to some it spells doom from the start. To them this is another elaborate money laundering scheme or another tax haven. So, we decided to look at the bill that unleashed more division on to our society, which is already divided enough.

Colombo Port City Economic Commission will soon be debated in the parliament. There will the usual controlled opposition from the 'discount left'; Wimal, Vasudewa, Udaya etc. Like their resistance before, this will last a few hours. The actual opposition will make a few speeches and that too will be it. The only real opposition can come from the people, but the timing is in favour of the government. With COVID running all over the country, people have bigger things to worry about. 

So, knowing our 'resistance' is futile with super-majority government, we thought it would be a good idea to actually look at the bill in question. This bill details the structure, duties, and responsibilities of the commission itself and the laws related to the city.

The commission is made up of 5 to 7 members, one of whom is the chairperson. Each member can hold the post for 3 years at the will of the president and the minister.  They are responsible for producing, updating, amending, and publishing laws and regulations inside the city. However, if the laws in question fall under the purview of another authority, they must seek permission from the relevant body. In essence, they are responsible for Port City masterplan, which according to the government should be designed to benefit the country’s economy (Which country you ask? Your guess is good as ours.).

The commission’s duty is to attract foreign investments, which include multinational corporations, offshore companies, banks, regional transportation companies etc. It is also their duty to implement the laws that are enabled by other authorities. For example, the commission has the power to enact the powers of the Central Environmental Authority inside the port city. They also oversee business licensing inside the city.

Part 6 of the bill highlights the procedure for a Sri Lankan citizen to register a business inside the city. Budding Lankan entrepreneurs, it turns out you can start register your business. Oh yeah, just make sure you have foreign currency ready to be pumped into the Lankan economy. Hang on though. You cannot use the money you have saved on your NRFC account. Perhaps you might have an international cooperation backing you to expand their business with money to show for it. In that case welcome already filthy rich budding entrepreneurs.

All port city employees are paid in foreign currency. Lankans can buy goods using Rupees, but they have to pay taxes when coming back to Sri Lanka. To make it easier for businesses, once enacted Lankan Bank Act can be overridden by the Port City Commission act. If that is not enough for businesses, law suites are given priority over other hearings. Yes, there is no Port City court, yet.

From the day this bill becomes law, registered businesses have a 5-year period where they can work outside the port city according to the port city bill. To put it simply they will function in a ‘virtual Port City’. This is the essence of the Port City Commission bill. Now we need to ask whether this project is all it is hyped up to be.

Commission

“the national interest or in the interest of the advancement of the national economy”

Anyone reading the bill will come across this set of words at least once every page. There is nothing wrong with the commission considering national interests. The issue is that the commission is picked by and serve at the will of the president. Even though it is not explicitly mentioned the purpose of the parliament, regional councils and provincial councils is to make decisions in the best interest of the country and its’ people. To ensure these bodies make decisions in the best interest of the country, we hold election. If they are competent enough, we give them another chance. If not, we elect the other lot only to be disappointed by them as well. This might not work that well in practice, but it can work. There is no such mechanism for the port city commission. Their only job is to please the president. To quote Monty Python, this “is no basis for a system of government. Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony committee”.

Local Businesses

Speaking of already wealthy, the act prevents any local business from registering a business in the port city unless they have direct foreign investments. If we are not going to work on our research and development sector, we do need foreign investment to keep the economy alive. This will not open any new opportunities for new businesses. The usual suspects will thrive. In fact, when foreign businesses provide the same services without the added taxes, it will likely run local businesses into trouble.

Taxes

The president might not know this, because according to him, he does not do politics. Regardless, a government impose taxes to reduce wealth disparity, to provide services and to balance the budget. It a necessity. Give them a part of our ocean. Let them do business. Give them priority in legal matters. Allow them to forego other acts and on top of that they do not have to pay any taxes. Where is the logic in that? A certain few will get new year bonuses credited into their Seychelles bank accounts. What about the average person? What is in it for us?

All employees are also paid in foreign currency inside the city. This might actually be a smart move by the government. However, there is no guarantee that workers are going to Lankan. Not a single sentence in this 80-page bill mentions employing Lankans. Even if it does employ Lankans, majority of them will be well-to-do’s living in Colombo. This will only increase the wealth disparity. We do not have an agenda against the well-to-do. It is not their choice to be born into wealth. The government, however, needs to consider how an investment as big as this can work for all Sri Lankans, not just the already wealthy.

 Lessons not learned

Port city, in its raw concept is very similar to the export zones in Biyagama and Katunayaka. These export zones were made to attract new businesses with the promise of zero tax. It did the trick too. The export industry is one of the biggest contributors to our economy. However, behind that multi-million-dollar industry lies a dark, dirty alleyway. One full of poverty, family violence and entrenched economic issues.

The banner looks nice though. We might call these businesses ‘garments’, but in western countries these factories are called ‘sweatshops’. It is one of the most heinous practices of the global economic system. Rich investors prefer to get their cheap labour from a developing nation. This model is so profitable, that they prefer to make goods in developing countries and ship them back Europe, rather than paying European workers. It is a system based on exploiting the economic hardships of countries like Sri Lanka.

The lesson we have not learned is that if we are not careful, Port City might become another sweatshop, or another tax haven. The skyscrapers will look pretty from the slums in Kaleniya, and the school kids will get to go on a day trip explore this new world, but behind that will lie unregulated banks, unregulated, non-tax-paying corporations. Are we ok with that as long as we get some shiny lights off the shore of Colombo?