Colombo Port City; Where is the Foreign Investment ? Posted On 2026 June 15

By Chanaka Bandarage

When establishing the Colombo Port City (hereinafter referred to as the Port City), the main objective was attracting foreign capital to the country. To establish it, the country has paid a high price thus far.

The environmental damage this project has caused the country is enormous. Thanks to it, sea erosion in southern Sri Lanka has increased tremendously. One only needs to travel from Kalutara to Chilaw along the seaboard to observe the carnage the sea has inflicted upon the land since the Port City reclamation work commenced. Still, large foreign ships continue to dredge sand from the seabed for Port City construction. Inside the Port City, one can see huge sand dunes piled several metres high, which simply get washed away by the rains, prompting even more sand to be mined from the sea.

The vast granite rocks that intermittently existed between the Battaramulla and Meepe areas are no more; most were crushed and transported to build the Port City. People in these areas have complained of rapidly fluctuating temperatures (both high and low) and declining water levels in their domestic wells.

The long-term effects of the environmental destructions are known to nobody.

Though official reclamation supposedly ended in 2019, is the work continuing? We state this because one can see the Port City slowly and gradually expanding towards the Galle Face Hotel end.

For the Port City’s infrastructure construction, the Sri Lankan government has spent US$1.4 billion. The present government has made a new lavish allocation of US$250 million for Phase 2 work. Once that is galloped, of course, more provisions will have to be made.

These are not small amounts; they are massive. This is money belonging to the people of this country, including the poor.

The Port City is something this country never needed; Governments, including the present one, have poured millions into its sustenance. The present government may not agree, but currently, the Port City is a real burden on the populace. It could be more burdensome than running Sri Lankan Airlines.

The Port City is like a leaky bucket wherein water endlessly drains off. The cost of running the Port City is astronomical. To a heavily debt-ridden Sri Lanka, the Port City is the last thing that was needed.

There is a separate staff at the Port City whose job is globetrotting - these lucky people travel around the world trying to sell it. There is a dollar budget allocated for this. Basically, these salesmen are looking for investors. Have they secured any? The authorities must answer by showing true statistics.

Some time ago, the Port City administration entrusted an ex-UK Prime Minister - who during his premiership acted as an enemy of Sri Lanka (during the CHOGM, 2013) - to lure new investors. He conducted a seminar-type show in Dubai, which is considered a failure. How much was he paid?

If they are bringing in new foreign investors, that is fine, but that does not seem to be happening.

What earlier governments boasted was that the Port City would become a regional hub for multinationals in South and Southeast Asia. We anticipated that giant multinationals like Google, Meta, X, Microsoft, Citibank, Samsung, Apple, Starlink, Pepsi, and Coca-Cola would flock here. It is evident that this is not happening.

Owing to the ongoing Middle Eastern war, Dubai is facing a massive economic slowdown. It is a city built on the hope of creating infinite wealth. Yet today, Dubai’s prestigious apartment occupancy rate has fallen below 15% (prior to the commencement of the war, it was 80%). Dubai now has a high-end event cancellation rate of 70%. It is reported that British Airways and Virgin Atlantic have cancelled their flights to Dubai. DXB Airport reports that 43% of flights have been cancelled. From March this year to the end of May, there were 37,000 flight cancellations.

The Port City failed to capitalise on Dubai’s debacle. Though they have a specialised sales team, it is believed they have failed to secure a single departing Dubai bank, legal firm, real estate agent, or financial institution. To the writer’s knowledge, leaving multinationals aside, a bona fide foreign company is yet to set up an office in the Port City. If this assumption is wrong, the writer is willing to accept it.

Of course, the Chinese are setting up companies and industrial-type complexes in their free-enjoying allotments, but that is a different story.

Curiously, not even a single Indian company has so far established a running business in the Port City. When the writer asked a friendly, top Indian businessman about this, he stated, “Chanaka, we are scared after the Apollo debacle.” He was referring to the DCSL group’s takeover of the Apollo Hospital.

In Sri Lanka, it is normal for established big businesses to swallow up emerging businesses via the stock market. This is wrong and should be stopped. Due to this stock exchange anomaly, prudent foreign businesses are scared to set up public companies here. Not a single government has taken decisive steps to curb the menace of hostile takeovers. It is rumoured that insider trading remains rampant in Sri Lanka.

Of course, some local laws and regulations, like the CSE laws, may not apply to the Port City, but overall, our governments have failed to create a favourable environment for foreign businesses doing business in Sri Lanka.

To fill the void left by the lack of foreign investors, the Port City Economic Commission has been clever in selling Port City land plots to Sri Lanka’s corporate giants. In fact, locals are setting up businesses there at a rapid pace. For example, Prime/Melwa and Home Lands have already started their elite real estate projects. For this, they have secured the most sought-after Port City sites. How much did they pay, if anything? Multistorey apartment developments are a real success in Colombo because expatriate Sri Lankans with deep pockets snatch them from the word go.

It was thought that all Port City transactions would be in US dollars, but these apartments are also being sold in Sri Lankan rupees. All the cafes and restaurants in the Beach Park (which are modest single-story structures; currently, all buildings in the Port City are like that – a maximum of 2 stories) accept Sri Lankan rupees. One café there continually plays only Tamil music extremely loudly. Isn’t Sinhala music nice too?

Overall, the Port City is a serene, beautiful place. The Chinese have done a good job setting it up; we do not know how much they have spent. However, one can now observe slightly piled-up garbage (especially plastic bottles) in some areas of the Port City, which are real eyesores.,.

It is no wonder foreign companies are reluctant to come. It is important to address the nitty gritty stuff too.

While it is anticipated that Sri Lanka’s corporate giants such as Hayleys, John Keells, Cargills, the Araliya Group, LOLC etc. will stamp their presence in the Port City, this contradicts its core purpose. Rather than facilitating state and local private banks (e.g., People's, Commercial, Sampath, HNB etc.) to establish branches there, what the Port City Commission ought to have done was attract foreign banks. They have failed to do so. It seems they do not have capable salespersons to undertake this task? The argument that when the world-renowned HSBC recently shut its doors and left Sri Lanka, how can one expect other foreign banks to come and establish here, is not valid.

If the Port City is to be inundated with local companies, it defeats the purpose of its creation. These companies have many branches in Colombo; they can easily set up branches elsewhere in Colombo. Spending millions of taxpayer money and causing massive environmental destruction are not acceptable trade-offs if external investment is not coming.

The Port City Economic Commission would argue that local companies are paying for their slots in USD, meaning Sri Lanka is still receiving foreign currency. But these are not new dollars for Sri Lanka. Some of these companies perhaps earned them overseas, but they are Sri Lanka-related businesses. Rather than holding them in foreign bank accounts, such money ought to have been remitted to Sri Lanka anyway.

The Port City Economic Commission’s argument that if local companies were not given space in the Port City, they would invest their dollars overseas is bunkum.

Why do we need genuine foreign investors in the Port City?

To build offices, shops, warehouses, apartments, mini factories/workshops foreign investors bring in fresh cash reserves. Tech giants (such as Tesla, IBM, or Samsung) share modern technology and superior work ethics and practices. Our local workers can learn from them, acquiring critical new skills that make the entire country's workforce stronger. Local businesses already operating here cannot provide this on a comparable scale. When we lost the Indian Apollo Hospital, the exodus of Indian experts denied our doctors, nurses, and medical staff the opportunity to learn from them. Lanka Hospitals simply became yet another Sri Lankan hospital, missing out on obtaining the latest state-of-the-art technology.

With the outside capital they bring in, foreign businesses build better products, giving local buyers more choice and higher quality. Furthermore, foreign companies often have established channels to sell goods all over the world. This would help Sri Lanka, as the host country, sell more of its own products globally.

Though the SJB is not among them, our opposition political parties and trade unions have a habit of strenuously opposing every new foreign investment venture. Some social media content creators are also a huge obstruction. Traditionally, our governments listen to them and are scared of them. Foreign companies know this; they do not like to invest in such countries.

Such nonsense does not happen in Dubai, Singapore, Malaysia’s Bayan Lepas, or China’s Shanghai. They have strict laws, and the laws are strictly enforced as well.

All developed countries have grown largely through foreign investment. Without it, it is almost impossible for economies to build and expand.

It is important for the Port City authorities to acknowledge that to build the Port City, they must attract new dollars and fresh ideas—and those come mainly through foreign investment. Anyone can soon fill up the Port City land with local companies, but that is contrary to the purpose for which it was built, especially given the massive environmental destruction that the country had to forego.

Finally, the government is issuing visas willy-nilly to all foreign visitors without a charge. The previous administration had a prudent plan (unfortunately laced with corruption) to charge a fee (such as US$50) to every foreign visitor. That was reasonable and healthy for the country’s dollar reserves. This foolish government scrapped that plan and allowed everyone to enter the country free of charge. If tourists are paying thousands of dollars for an air ticket, why cannot they pay US$50 to enter this paradise land?

There are so many Chinese nationals now in Colombo 1 through 6 that a Sinhalese resident quipped, "In 10 years' time, they will push us to the number four spot within the CMC limits." According to the police, there are numerous Chinese digital racketeers conducting illicit operations in Sri Lanka. In some instances, hundreds of them were caught together. Some Chinese nationals were even caught begging on the roads of Colombo. Were all of them deported? It is doubtful, as Sri Lanka’s illegal immigration enforcement is very weak. Of the Chinese living in Sri Lanka (who must number in the lakhs now), only a minute fraction actually works in the Port City, there are so many Chinese visa overstayers. We have given the Hambonthota Port to them, is there any proper immigration control there?