Investors shocked by SL government backtracking
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Foreign investors are knocking down the cabinet’s door in Colombo, begging for a stake in the exploding tourism sector. However the government would be well advised not to treat them negligibly if it wants to retain a positive image as an investment destination. Following the recent seizure of the Hilton property in Colombo, the government has again stirred the waters at the Kuchchaveli Tourism (KTZ) Zone in Trincomalee, a 600 acre plot which has been identified for tourism development. In 2009 an offering was made to around 75 investors, all looking for five to eight acre plots, for INR50,000 per acre on a 30-year lease. However, according to the Business Times, the Sri Lankan Tourist Board is now back peddling on the offer, asking for INR200 lakh per acre for a 99-year lease.
This is a little late in the day for the government to change the terms of contract so dramatically when many investors have spent lakhs on properties which are already under construction.
In response 48 investors have clubbed together under the Kuchchaveli Investors Association (KIA) and are now in talks with the government. Quoted in the Business Times, an inside source explained the investor’s bemusement at the decision when he told the paper; “Some say that it was an absolute waste of time and we can’t comprehend this change of policies.”
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