Business

Building Sri Lanka’s economic future through smarter cities

Published

11 months ago

2025/11/7

Each year on November 8, planners around the world celebrate World Town Planning Day—a moment to reflect on how planning can build fairer, greener, and more prosperous societies. The 2025 theme, “With Planning We Can!”, reminds us that planning is not just about regulating land use—it is about shaping the destiny of nations.

In Sri Lanka, urbanization is one of the most powerful forces defining our development pathway. Yet, over the decades, urban growth has remained uneven—concentrated in a few regions while vast areas with great potential, from the North to the East and from Uva to the South, remain underdeveloped.

To achieve true national prosperity, Sri Lanka needs a comprehensive, balanced, and inclusive National Urban Development Policy—one that integrates all provinces, strengthens regional economies, and ensures that every city, town, and village contributes to a shared national vision.

Because with planning, we can build a future where every region matters.

Urbanization is often a mirror of economic transformation. Countries such as Singapore, South Korea, and Malaysia used planning-led urban growth to accelerate their economies. Sri Lanka, however, continues to experience slow and spatially fragmented urbanization.

While the official urbanization rate stands at around 19%, the reality is far more complex. When peri-urban and functionally urban regions are included, nearly half the population already lives in areas economically tied to cities. Yet much of this growth is unplanned—spreading linearly along roads and lacking efficient infrastructure.

This has resulted in congestion, high service delivery costs, and widening disparities between regions. Western Province, with 28% of the population, contributes nearly 44% of GDP. Meanwhile, provinces like the Northern, Eastern, and Uva—rich in resources and human potential—remain underutilized.

To correct this imbalance, Sri Lanka’s urbanization must be guided, strategic, and regionally balanced.

Sri Lanka’s settlement pattern is diverse. The country is composed of:

· Core Urban Populations – Residents of municipal and urban councils.

· Suburban and Fringe Settlements

– Areas around main cities with growing housing and employment links.

· Peri-Urban Populations

– People living on the edges of rural and urban zones, economically tied to nearby towns.

· Small and Emerging Growth Centers

– Towns that provide services to rural hinterlands but lack urban-scale infrastructure.

From Jaffna to Galle, Kandy to Trincomalee, and Kurunegala to Badulla—these settlement types coexist, but not always in coordination. A new approach must weave them together into a single national system of Functional Urban Areas (FUAs)—connected by economy, mobility, and governance.

Sri Lanka’s development challenge is not lack of talent or resources—it is unequal spatial development.

· Western Province dominates economically, yet faces congestion, high land costs, and overuse of infrastructure.

· Northern and Eastern Provinces

have vast land, skilled populations, and coastal trade potential, yet remain under-industrialized.

· Central and Uva Regions

possess rich natural and cultural assets that can drive sustainable tourism and agro-industries.

· Southern and North Western Regions

hold strong manufacturing and fisheries potential but require better connectivity.

Balanced national development means every province becomes part of the growth story. The future must not be a competition between regions, but a network of interconnected, complementary city regions—each contributing uniquely to Sri Lanka’s prosperity.

To manage growth wisely, Sri Lanka must adopt a structured, forward-looking framework. The National Urban Development Policy envisions a system of Livable Cities 2060, based on three guiding principles:

· Logical Urbanization – Guiding population and investment toward areas where infrastructure, employment, and services coexist efficiently.

· Functional Urban Areas (FUAs)

– Recognizing urban influence by function, not administrative limits.

· Livable Cities 2060

– Compact, green, inclusive, and resilient urban regions ensuring quality of life for all.

Vision: Livable Cities 2060

By 2060, Sri Lanka will feature a balanced network of compact, climate-ready, and well-connected urban regions that support equitable economic growth and a high standard of living.

Key Targets:

· 60% of population in official urban areas by 2060

· Less than 20% of land urbanized

· 30% reduction in commuting time by 2045

· 80% of residents within 800m of public transport by 2050

· Net-zero municipal emissions by 2060

Ten Strategic Pillars

· Urban Space

– Compact land use, vertical development, and function-based city classification.

· Urban Population

– Skilled, inclusive, and civically active communities.

· Urban Lands

– Urban land banks, zoning reform, and land value capture.

· Urban Economy

– Industrial diversification, regional innovation hubs, and SME promotion.

· Urban Food Security

– Protect peri-urban agriculture and encourage local food systems.

· Urban Housing

– Affordable, disaster-resilient, mixed-income housing integrated with transit.

· Urban Safety

– Climate-resilient, crime-free, and disaster-ready cities.

· Urban Mobility

– Smart transport, rail integration, and non-motorized connectivity.

· Urban Environment

– Blue–green networks, circular economy, and renewable energy.

· Planning & Governance

– Evidence-based decision-making, institutional reform with favorable laws, and professional capacity building.

Island wide Transformative Impact

If implemented consistently, this policy can deliver:

· Reduced regional disparities through balanced investment

· Economic diversification

across all provinces

· Efficient urban infrastructure

and reduced congestion

· Climate-smart cities

ready for future challenges

· Empowered local governments

and professional planning systems

· Higher national productivity

through spatial efficiency

As we commemorate World Town Planning Day 2025, Sri Lanka stands at a turning point. The next phase of national growth must be planned, inclusive, and regionally balanced.

From Colombo to Jaffna, from Kandy to Batticaloa, from Galle to Anuradhapura—each region has a vital role to play in shaping our collective future.

A well-crafted National Urban Development Policy can bridge regional divides, modernize our cities, and ensure prosperity reaches every community.

Because ultimately, with planning, we can build one Sri Lanka—united in vision, diverse in strength, and equal in opportunity.

By Y. A. G. K. Gunathilake
President Elect, ITPSL
Director, Western Province, Urban Development Authority

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Business

Sri Lanka pitches Saudi investors for new investment partnerships

Published

11 hours ago

2026/09/29

Sahan Weerasooriya

Saudi and Sri Lankan dignitaries at the National Day reception.

By Ifham Nizam

Sri Lanka is pitching Saudi Arabia for greater investment and deeper trade ties, seeking to attract Saudi capital into new development opportunities while aligning bilateral economic cooperation with the Kingdom’s ambitious Vision 2030 agenda, Ports and Civil Aviation Minister Anura Karunathilaka, chief guest at Saudi Arabia’s 96th National Day celebrations in Colombo, said.

Addressing the National Day reception at ITC Ratnadipa, Karunathilaka said Sri Lanka was keen to identify new areas of economic cooperation with the Kingdom and create fresh opportunities for Saudi investors and businesses.

‘We look forward to creating new opportunities for the people of both countries by working in cooperation with Saudi Arabia’s Vision 2030 and its broader development initiatives, he said.

The minister said Sri Lanka wanted to move beyond its existing development cooperation with Saudi Arabia and build a broader economic partnership encompassing investment, trade and new development projects.

He noted that Saudi Arabia had already made a substantial contribution to Sri Lanka’s development. Since 1981, the Kingdom has provided concessional financing amounting to around Saudi Riyals 1.5 billion for 13 projects in Sri Lanka, supporting key sectors including energy, healthcare, education, drinking water and infrastructure.

Karunathilaka said Sri Lanka appreciated this support and was keen to build on the foundation created by those projects by opening further avenues for Saudi investment.

The minister’s investment pitch comes as Saudi Arabia advances its Vision 2030 programme, with the Kingdom seeking to diversify its economy and develop new international partnerships. Sri Lanka, meanwhile, is seeking to attract investment and expand economic opportunities through closer engagement with international partners.

Karunathilaka also highlighted the strong people-to-people links between the two countries, noting that nearly 250,000 Sri Lankans currently work and reside in Saudi Arabia.

‘They serve as an important bridge between our two countries and contribute significantly to strengthening the people-to-people ties between Sri Lanka and Saudi Arabia, he said.

He expressed appreciation for Saudi Arabia’s continued assistance to Sri Lanka and thanked the Saudi government for the facilities extended to Sri Lankan Muslims undertaking Hajj and Umrah pilgrimages.

Karunathilaka said Sri Lanka looked forward to working more closely with Saudi Arabia to strengthen political relations, broaden investment opportunities and enhance development cooperation.

Yaser Abdulrahman Al-Hazme, Chargé d’Affaires of the Royal Embassy of Saudi Arabia to Sri Lanka, said the embassy remained committed to strengthening bilateral relations by promoting political, economic and cultural communication between the two countries.

‘The embassy of the Kingdom of Saudi Arabia in Colombo has been keen during the past period to strengthen bilateral relations between the two countries by playing its role in supporting political, economic, and cultural communication, Al-Hazme said.

Al-Hazme also highlighted the embassy’s role in strengthening communication between Saudi and Sri Lankan institutions and following up on the interests of Saudi citizens in Sri Lanka.

‘On this precious national occasion, I extend my sincere thanks and appreciation to the government and people of the Democratic Socialist Republic of Sri Lanka for the attention and care given to relations between our two countries, and for the constructive cooperation that has contributed to strengthening the bonds of friendship and partnership between the Kingdom and Sri Lanka, he said.

Business

Sonali Rodrigo earns national recognition from Australia’s finance industry

Published

11 hours ago

2026/09/29

Sahan Weerasooriya

Sonali Rodrigo receiving the prestigious AFG Women on the Move Scholarship at the awarding ceremony held in Melbourne.

Australian finance professional Sonali Rodrigo has been recognised with the prestigious AFG Women on the Move Scholarship, presented by Australian Finance Group (AFG), in recognition of her leadership, industry contribution and impact spanning more than two decades in Australia’s finance industry.

The AFG Women on the Move program is dedicated to supporting and advancing women in the finance and mortgage broking industry, recognising individuals who demonstrate leadership, professional contribution, growth, impact and a commitment to empowering other women. The scholarship is supported by leading industry partners, including HSBC and Thinktank.

Sonali’s career spans more than 20 years in Australia’s finance industry, encompassing senior leadership, financial advisory and governance roles. Alongside her professional responsibilities, she has actively mentored and supported women in their career development, contributed to financial literacy, and helped individuals make more informed financial decisions. Her recognition reflects both her professional achievements and the broader impact of her leadership, particularly in creating opportunities and empowering the next generation of women in finance.

Business

Beyond the crisis: Sectoral paths to durable growth

Published

11 hours ago

2026/09/29

Sahan Weerasooriya

Institute of Policy Studies of Sri Lanka (IPS)

Continued From last Friday

Regional infrastructure improvements beyond the Western Province are essential to close market-access gaps and improve efficiency. The Western Province alone generates 42% of Sri Lanka’s GDP, but the dynamics of such agglomeration may also be highly underestimated. Officially, barely a fifth is deemed ‘urban’ in the province, but IPS re-estimates from the 2024 census using population density and infrastructure access, place the true figure at nearly 61%. The absence of strong secondary cities and industrial clusters outside the province reduces the potential gains from this agglomeration, thereby weakening incentives for firms to locate elsewhere or decentralise operations.

Fiscal incentives can promote decentralised corporate operations by offering tax rebates, lower property taxes, and land access in secondary cities like Kalutara and Gampaha, leveraging the connectivity of Southern and Colombo-Katunayake Expressways. The Hambantota seaport and airport, along with Koggala and Mirijjawela Export Processing Zones, can help develop the Southern Province through geography-based tax concessions.

Immediate measures, such as pricing vehicle entry into Colombo city will support regional agglomeration while tackling the acute problem of city congestion. Adopting a low-cost, technology-anchored free-flow method, similar to the Automated Number Plate Recognition (ANPR) currently used in commercial parking facilities for vehicles entering the city, is one such means. Installing high-mounted overhead ANPR gantries at key arterial entry points can operationalise congestion pricing without disrupting traffic speed. Fee collection can use a system like E-Tags electronic toll collection on expressways, integrated with digital payment gateways like GovPay and LankaQR for dynamic, time-of-day variable pricing.

The renewable energy transition is vital to drive competitiveness, external shock resilience, and green growth. Sri Lanka’s transition to renewable energy (RE) has advanced from a mere aspiration to tangible progress. Yet, the evidence suggests the transition is advancing faster on the generation side than the system built to absorb it. Transmission capacity, market design, financing channels, and digital infrastructure have not kept pace with capacity additions, and this gap is what will determine the pace of the transition through 2030.

Capital spending on transmission must be ring-fenced by legally, operationally, and financially separating the electricity grid (the transmission network) from the rest of the energy sector or by the broader government budget as a protected public investment within the medium-term budget framework. Funding should shift from general budget support to dedicated multilateral facilities, reinforced by sovereign guarantees for eligible borrowing. To safeguard public funds, this must be paired with a clear tariff pass-through mechanism that effectively limits open-ended Treasury exposure.

To build market trust, domestic budget funding should be earmarked for market-design technical assistance, signalling strong policy ownership rather than relying on external donors. Transparency too should be strengthened by publishing a firm implementation timeline in the Budget statement and fully disclosing long-term fiscal commitments from Power Purchase Agreements, capacity arrangements, and ancillary services.

(Concluded)