ECONOMYNEXT – Sri Lanka’s China-backed Colombo Port City will be a driver of growth and knowledge transfer but the draft bill for a Commission directly under the President raises questions over the constitutionality and regulatory integrity, opposition legislator Harsha de Silva said.
He said the Port City Commission envisaged during the last administration would have had members appointed by a Constitutional Council and Central Bank Governor and Treasury Secretary would have been ex-officio members.
Existing regulatory agencies, such as the Central Bank would have direct oversight.
“This (Port City) will catalyze the next phase of growth,” de Silva, who was involved in developing a first draft for a law administering the Colombo Port City, said.
“However for this to work we want to make sure that is done right.”
Sri Lanka’s main opposition Samagi Jana Balawegaya, of which de Silva is a member, has also gone to court against the draft bill to set up a Colombo Port City Commission, where board members and the CEO will be appointed by the President.
De Silva says in the Port City law envisaged by the previous administration there were eight members with several appointed by a Constitutional Council, where the opposition and the speaker was also represented.
The Port City Commission would also have had five ex-officio members included the Central Bank Governor, Treasury Secretary, and the heads of the Urban Development Authority and the Board of Investment, de Silva said.
The ex-officio members in particular would have kept the Port City closely linked to the executive arm government, de Silva said.
“Now anyone could be appointed,” de Silva said.
The Port City Commission bill envisages that will license and regulate banks, stock exchanges in an off-shore financial centre.
De Silva said under the previous plan, the Central Bank, the insurance regulator would have regulated the businesses.
“The Port City Commission is the business development arm, it cannot also be regulator at the same time,” de Silva explained.
“That is a conflict.”
He said there had to be credible regulation.
Under the proposed law the central bank “shall” give concurrence to certain activities.
“We need to attract the right type of banks,” de Silva said. “We do not want fly by night operators.
“Financial Regulators in other countries will not allow their banks to set up in the Port City if there is no credible regulation.”
But the Colombo Port City area was planned to be a ‘policy lab’ where new initiatives were tried and if they worked, they could be expanded to the rest of the country, he said.
It was also expected to provide an environment to stop a brain drain where people were migrating to other countries.
The Colombo Port City will also pay salaries in dollars, protecting its businesses from currency depreciation caused by money printing of the central bank, which causes a peg with the US dollar to break and impoverish the people and drive them to seek jobs abroad.
Over a dozen petitions had been filed in the Supreme Court challenging the Colombo Port City Commission law.
Sri Lanka Bar Association, opposition parties to challenge China-backed Colombo Port City bill
The Sri Lanka Bar Association had also raised concerns saying the law infringes on the judicial functions and may violate articles of the constitution dealing with the unitary state and sovereignty of the people.