Why does Sri Lanka need mega development projects?

Friday, 27 March 2015 00:05 - - {{hitsCtrl.values.hits}}

Mega development projects such as the Colombo Port City can yield many dividends to Sri Lanka, if executed right By Ashwin Hemmathagama Land is used for agriculture, construction, and to meet many other diverse requirements essential for a country’s economic and social development. In the absence of land, particularly in central business areas, countries find it extremely difficult to harness their growth potential to meet the development targets, year on year, successfully. Such limitations push political leaderships to resort to land reclamation, and mega development initiatives that act as economic drivers of the future. Geographically smaller nations such as the Maldives and Singapore have always battled the issue of land scarcity. Over the years countries with considerably small landmasseshave resorted to land reclamation programs where land is artificially built to expand its core business areas. With this newly-acquired land, countries could now explore mega development projects that serve as a growth platform for its economy.

The Marina Bay project supports Singapore’s continuing growth as a major business and financial hub in Asia Singapore Singapore is at the forefront displaying the best example for well-planned land reclamation and expanding its boundaries to shoulder the needs of its growing population. Such needs may not always be housing but also trade and commerce, recreation and environment. Capital market specialist and economist Prof. Lalith Samarakoon states mega development projects by their nature involve enormous capital investments and become flagships for long-term economic development. “They are undertaken to generate a bigger economic impact in terms of the investment siz

e, contribution to the GDP, employment generation, export revenue, creation complimentary and subsidiary business activities. The idea is that if you have multiple mega projects they can help the country grow faster resulting in many economic and social benefits,” he said. According to a land survey conducted in the 1960s, the city-nation Singapore had an area of 581.1km2. But increasing demand for resources and the scarcity of land left its Government with no other option but to explore land reclamation. Following a well-plotted plan full of strategies to exploit its potential, reclaiming of land commenced, filling up the coast of Singapore, but well-selected to serve its purpose. As at June 2014, land reclamation has increased the size of Singapore by an additional 136.8km2 taking the total size to 718.3km2. Singapore is to grow 100km2 in size by 2030 with the possibility of merging smaller islands through land reclamation to form larger, more functional islands. Spearheading these development plans is a special government body, the Urban Redevelopment Authority (URA) – Singapore’s national land use planning and conservation authority. Preparing long-term strategic plans and detailed local area plans for physical development is part of URA’s responsibilities.It brings such plans to reality in partnership with developers and communities, to create a vibrant, sustainable and cosmopolitan city.In March 2004, Singapore announced Marina Bay under the URA would be Singapore’s key focus for development in the next 15 to 20 years. The Marina Bay project supportsSingapore’s continuing growth as a major business and financial hub in Asia. Set by the water’s edge, with the stunning city skyline as a backdrop, Marina Bay createsthe canvas for a 24/7 live-work-play Garden City by the Bay. Strategically located, well-planned and reclaimed from the sea in the 1970s Marina Bay provides room for the long-term expansion of the city. It played a prominent role in the spatial growth of Singapore’s Central Business District (CBD). Today Singapore’s strength as one of Asia’s premier financial centres stems from its openness and long-term sustainable vision for growth, and strong partnerships with the private sector. Sri Lanka Taking example from Singapore, mega development projects such as the Colombo Port City can yield many dividends to Sri Lanka, if executed right. The reality is that there is limited land in Colombo, especially in the core Central Business District CBD of Colombo. To stimulate economic growth, there is a need for quality real estate in the heart of the CBD of Colombo. The most viable option to create this land and space for investors and businesses is through the expansion of the city, this means extending over the seas. The Colombo Port City project, a privately funded foreign direct investment worth $ 1.4 billion to Sri Lanka,will expand the central business district of Colombo over sea, to offer a live-work-play environment much like Singapore’s Marina Bay. “In my opinion, mega projects are a very important part of an overall integrated long-term development plan. If designed and financed sensibly they can contribute to the ‘lift-off’ that the country has been talking about. To have a substantial and sustainable economic impact, such projects have to be planned within a proper development framework. It is also critically important that we get the financing side correct. Even well-planned and intended projects are bound to fail in the long-term if we are unable to pay off interest and principal amounts if they are financed through debt. The country must receive an economic benefit leading to higher GDP, Government revenue and cash flows so that the project borrowings can be paid off,” said Prof.Samarakoon. The project aims to offers retail, residential, business and entertainment locations and public recreational areas and will be the single largest development platform for the country in the next 15 to 20 years. Initial project estimates declare that 83,000 new employment opportunities within different sectors will be created and attract $ 13 billion of foreign investments and exponentially increase the number of tourists visiting the country. Competitive advantage As Sri Lanka competes with more developed East Asian and South East Asian markets for investors, the island needs to set bigger development ambitions and offer more lucrative investment opportunities to local and foreign investors to not just attract, but also, retain financiers. Mega development projects can give Sri Lanka this edge over other markets and further give the Sri Lankan economy the tools to progress. The Sri Lankan Government needs to explore mega development projects such as Colombo Port City along with supporting policies to encourage private sector investment, as the island nation sets ambitious development targets for the future.