📈 Port City Mulls Sandbox to Trial Crucial Labour Reforms

The Colombo Port City Economic Commission is considering using the Special Economic Zone (SEZ) as a regulatory sandbox to pilot labour market reforms. Officials argue that rigid employment laws, rather than tax rates, are the primary barrier to entrepreneurship and investment. Key Highlights: • Labour Reform Focus: Rigid hiring and firing rules discourage risk-taking and business restructuring, pushing local talent and entities overseas. Workers' remittances, projected to hit US$ 9 Bn this year, prove Sri Lankans readily adapt to flexible labour regimes abroad. • Tax vs. Stability: Property developers failed to start construction under a 2023 framework offering 25-year tax holidays. However, under a revised September 2025 framework with shorter 10-to-12-year concessions, construction has begun, proving policy certainty outweighs tax holidays. • Investment Momentum: Following a 2025 political transition, investment has accelerated. Ten land parcels are now leased (4 added since Jan 2025). Six active developments represent US$ 500 Mn in investments, with 4 more starting soon. • Current Footprint: Port City has licensed ~185 businesses, occupying 150,000 sq. meters of office space. It employs ~15,000 people, including 8,000 foreign professionals, bolstering the ICT/BPM and services ecosystem. • Land Ownership Clarification: All Port City land remains 100% state-owned and is leased to investors, completely refuting claims of freehold sales to foreign nations.