SOEs Vested in Line Ministries to Drive Economic Growth
- 5opn1
- January 12, 2025
- Business News
- SOEs Vested in Line Ministries to Drive Economic Growth
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NEWS OF THE DAY
The new government has made a major policy turn by assigning Sri Lanka’s State Owned Enterprises or SOEs and mixed development projects to line ministries.
According to the Cabinet Spokesman Nalinda Jayatissa, these are now supposed to function in a manner that should lead to the economic development of the country.
The government will integrate SOES like Sri Lanka Telecom and Sri Lankan Airlines as well as mixed and strategic development projects into the overall economic framework at the same time as aligning these with strategic objectives.
Plans in question today are various, including the Grand Hyatt Colombo, a controversial 47-story development led by Canwill Holdings Ltd. In Colombo 3, the building houses 458 hotel rooms and 100 serviced apartments.
The project was first launched in 2003 as Ceylinco Celestial Residencies under the Ceylinco Group before being derailed when that group collapsed in the wake of the 2008 Golden Key financial crisis, thus halting construction.
The then-Mahinda Rajapaksa administration, through the Underperforming Enterprises Act, took over the project in 2012 and rebranded it as the Grand Hyatt Colombo.
The state-owned Canwill Holdings undertook the operation of the project, propelled by enormous investments valued at Rs 18 billion from multiple institutions like the Sri Lanka Insurance Corporation, Litro Gas Company, and the Employees’ Provident Fund.
It is situated on Galle Road, surrounded by important landmarks such as Temple Trees and the Cinnamon Grand Hotel, and has immense economic and tourism potential.
Despite its promising location and earlier efforts, the Grand Hyatt Colombo remains incomplete as of January 2025.
Efforts by the previous government to divest equity in Canwill Holdings resulted in a call for Expressions of Interest in December 2023.
Six companies, five of which are Indian, namely RKG Fund 1-Scheme of RKG Trust, Gland Celsus Bio Chemicals Ltd., DB Realty Ltd., Jindal Films India Ltd., and Bright Star Investments Ltd., and one Sri Lankan consortium, Consulting Engineers and Contractors Ltd. along with K.D.A. Weerasinghe and Company, were pre-qualified to submit proposals.
It has been declared a “Strategic Development Project,” with a raft of tax concessions not only for the construction phase but also during its operational life.
However, the project is still in search of completion investors who can take over and make it an operational hotel. The government is committed to pursuing this and other strategic investments that meaningfully add to Sri Lanka’s economic growth.
This policy direction shows that the priority of the government is to restructure and optimize state-owned enterprises and strategic assets with a view to attracting foreign investment for the key sectors of its economy.
