In a major move to anchor its ambitious $20 billion Special Economic Zone (SEZ), the Colombo Port City Economic Commission (CPCEC) has designated four massive real estate projects as "Primary Businesses of Strategic Importance" (Primary BSI).

The designation, formalised in a series of extraordinary gazettes (Nos. 2445/2 to 2445/5) on July 14, 2025, by President Anura Kumara Dissanayake, unlocks a powerful and controversial suite of incentives for a combined Foreign Direct Investment (FDI) exceeding US$1 billion.

These projects are now entitled to one of the most aggressive tax relief packages in the region.

The 35-Year Incentive Package

Under the designation, these four companies receive staggering fiscal incentives, including:

• Years 1-25: A 100% exemption from corporate income tax, withholding tax, VAT, Customs duties, and a host of other levies, including the Ports and Airports Development Levy.

  
  

• Years 26-35: A 50% concession on the prevailing corporate tax rate for an additional 10 years.

This 35-year tax holiday also extends to perks like long-term visa facilitation and personal income tax exemptions for foreign employees, all designed to attract premium, high-capital investors to the 269-hectare reclaimed island.

The "Big Four" Anchor Investors

The $1 billion investment is spread across four distinct, large-scale developments set to define the SEZ's skyline:

1. IFC Colombo 1 (Private) Limited: A subsidiary of China Harbour Engineering Company (CHEC), the Port City's primary developer.
   
   

• Investment: US$142.71 million

  
  

• Project: A mixed-use development integrating commercial, retail, and residential spaces.

2. Ceylon Real Estate Holdings (Private) Limited: A subsidiary of Browns Investments PLC (part of the LOLC Group).
   
   

• Investment: Over US$411 million (plus land costs)
  
  

• Project: A major business and commercial complex featuring Grade A office spaces and high-end residential units, expected to create 4,000–6,000 jobs.

3. Clothespin Management and Development (Private) Limited:
   
   

• Investment: US$540.1 million

  
  

• Project: The ambitious "Clothespin Towers." This twin-tower complex plans to feature luxury residences, a seven-star hotel, elite offices, and the world's largest vertical art gallery, aiming for a Guinness World Record.

4. ICC Port City (Private) Limited: An entity established by Sri Lankan construction giant International Construction Consortium (ICC).
   
   

• Investment: US$66 million (plus Rs. 13.8 billion)

  
  

• Project: A premier luxury residential project consisting of two apartment towers and five luxury villas.

  
  

The IMF Controversy

This move, however, places the government's investment drive in direct conflict with its commitments to the International Monetary Fund (IMF).

• Under Sri Lanka's Extended Fund Facility (EFF) agreement, the government had explicitly committed to suspending all new tax exemptions under the Port City and Strategic Development Projects Acts.

The IMF's Fourth Review in July 2025 highlighted that such discretionary exemptions have historically led to significant revenue losses, increased risks of corruption, and eroded investor trust.

Despite a pledge not to issue new exemptions in 2024, these four Primary BSI designations were gazetted without IMF consultation. Critics argue this undermines Sri Lanka's fiscal discipline and debt restructuring efforts, while the government maintains it is a necessary step to secure anchor investors in a post-crisis economy.

A Loophole in Time

The timing of the designation is critical. These projects were approved under the original, more generous framework of the 2021 Port City Act.

New, stricter regulations (gazetted in September 2025) are now in effect, significantly raising the bar for future investors. These new rules demand higher minimum investments (starting at $100 million), mandate the creation of 100-300 jobs, and, most importantly, slash the corporate tax exemption period to just 8-15 years.

These four projects, having secured their status just in time, represent the last of a generation of "35-year" beneficiaries, making their $1 billion gamble on the Port City a uniquely privileged one.

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