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Singapore/Sri Lanka: Development Agreement Signed

(July 26, 2016) On July 18, 2016, Singapore and Sri Lanka concluded a Memorandum of Understanding on investment by Singaporean businesses in Sri Lanka. The pact was signed by International Enterprise (IE) Singapore, a government agency, and the Ministry of Megapolis and Western Development of Sri Lanka; it is the first MOU signed between Sri Lanka and an agency of the government of Singapore. The expectation is that investment from Singapore will help develop the Western Region Megapolis in Sri Lanka. (Sri Lanka, Singapore Ink Agreement to Develop Western Province, COLOMBO PAGE (July 18, 2016).)

Tan Soon Kim, Assistant Chief Executive Officer of IE Singapore, who signed the MOU for his country, stated, “[g]iven its accelerated growth, the Western Region Megapolis is a good first stop for Singapore companies to consider when doing business in Sri Lanka.” (Id.) He added that the agreement is a good platform for partnerships. (Id.)

According to Nihal Rupasinghe of the Sri Lankan Ministry, the Megapolis project is expected to create an “urban transformation” in the area of the capital city, with many investment opportunities. He stated that the MOU will increase cooperation between the Ministry and IE Singapore, making it easier for investors from Singapore to “participate in Sri Lanka’s growth.” (Id.)

The sectors open to investment from Singapore include:

  • master planning, urban design, and investments in industrial and tourism development zones;
  • port-related development and logistics services and infrastructure to build an Aero-Maritime Trade Hub;
  • technology for development of smart city infrastructure; and
  • development of the Central Business District of Colombo, including the restoration of historic buildings and strengthening the transport infrastructure. (Id.)

Megapolis Project

The Western Region Megapolis is a development plan initiated by the Government of Sri Lanka with the goal of tripling per capita income in the region; it is estimated that there will be 142 projects in the area over the next 15 years and that their value will be about US$40 billion. The target is an annual growth rate of 7-8% for the next four years. (Id.) The plan was submitted to the country’s President, Maithripala Sirisena, on December 30, 2016. (Megapolis Development Plan Presented to President, President of the Democratic Socialist Republic of Sri Lanka official website (last visited on July 22, 2016).) Sirisena said that all government offices will be involved in implementing the plan, noting that “[e]very ministry, department and government officer should fulfill their responsibilities in that regard, considering it as a prominent task.” (Id.)

The development plan for the Megapolis includes a trade hub, a central business district with at least 60 high-rise towers, a science and technology city, and rapid transit to alleviate traffic congestion. It is estimated that 2.1 million jobs would be created by instituting the plan. (Munza Mushtaq, Sri Lanka’s $40bn ‘Megapolis’ Plan Is Bold – but Achievable?, NIKKEI ASIAN REVIEW (Mar. 10, 2016).)

Criticism of the Project

A spokesman for a former Sri Lankan President criticized the plan, noting that “[a]nyone can draw up beautiful and flamboyant proposals, but eventually it depends on commitment and enthusiasm for a project.” (Id.) He also disparaged the 15-year timeline, stating that the country needs to “set out something where targets are achieved yearly and not blankly in 15 years.” (Id.) Other points of concern over the viability of the project are Sri Lanka’s economic difficulties and the lack of assured financing to carry out the plan, together with the political “vulnerability” of the country. The current administration has been in power for only half a year. (Id.)