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Early Launch For Sri Lankan Tax-Free Port

by Lorys Charalambous,, Cyprus

15 March 2010

Sri Lanka’s tax-free port at Hambantota, a USD550m investment, part-financed by a Chinese loan, will become operational five months ahead of schedule, in November 2010, according to the Chairman of the National Ports Authority, Priyath Wickrama, who has invited foreign companies to establish their own operations at the new shipping hub.

The port is expected to see considerable traffic since it is situated en route to the Suez Canal and Malacca Straits, and in close proximity to the fast-developing emerging economy, India. Wickrama told Bloomberg that he has already received interest from Australia, India, China, Russia and Dubai to create shipbuilding, ship repair and warehousing facilities. Significant government investment into infrastructure following the end of the civil war in Sri Lanka, worth over a billion dollars, will further bolster the port and the surrounding area's offering.

The first phase of the project, which will enable the port to deal with 5 million containers annually, will be completed in the short-term. The port will comprise of a total of four phases, which are currently forecast for completion in 2022.

To attract shipping companies and investors alike, the port will offer a number of tax incentives. According to Wickrama, users will be free to use the port for loading, value addition and distribution without any taxes.

Port users will be able to operate without additional charges other than port handling and rent or lease charges, says Wickrama. It is also proposed that a free trade zone be created in the area between Hambantota port and Weerawila airport.

TAGS: tax | marine | India | Sri Lanka | tax incentives | law | trade

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