Uchchamunai Island sold? !

The Sri Lanka Tourism Development Authority (SLTDA) has clarified the recent reports on social media that the Uchchamunai Island in Kalpitiya has been sold to a foreign country.

Various media revelations and reports that lands have been sold to foreign investors without due process have led to public misinformation. Therefore, the Sri Lanka Tourism Development Authority (SLTDA) hopes to clarify matters in this regard.

The island of Uchchamunai was not sold, and a 30-year lease agreement was signed with a foreign investor in an attempt to bring in the required foreign direct investment (FDIs). The revenue for SLTDA is rent. The rent is based on the value provided by the Government Assessment Department in October 2020, when the agreement was finalized. The declared $ 417.5 million is the project cost estimated by the investor for a phased tourism project. The project can be started only after all the necessary approvals from the line agencies including the Coast Conservation Authority and the Environment Authority are implemented.

According to the Tourism Act No. 38 of 2005, SLTDA is required to lease (not sell) SLTDA-owned land to potential investors for the development and maintenance of tourist hotels and resorts in a planned and sustainable manner. SLTDA continues to attract foreign and domestic investment as in the past, and the Parliamentary Committee on Public Enterprises (COPE) is responsible for any delays in signing lease agreements for already approved projects.

With regard to Kalpitiya Uchchamunai Island, SLTDA has invited prospective investors in July 2019 through newspaper advertisements in all three languages. Following the evaluation and approval of the project proposal evaluation committee, it was approved in February 2020 by the SLTDA Board, which includes industry stakeholders and government representatives. In August 2020, the Minister of Tourism approved the signing of a lease agreement through the Secretary of the Ministry of Tourism. In technical terms, the draft lease agreement was finalized in October 2020 and the draft agreement was finalized in December 2020. It is set to be signed in March 2021.

However, the signing of the agreement was delayed due to the epidemic situation and the investor's internal affairs. In April 2022, the Board of Investment (BOI) gave the investor a final notice to sign the lease agreement on or before May 11, 2022, failing which the application would have to be withdrawn. As a result, the investor was asked to sign a lease agreement with SLTDA on May 9 or 10, 2022. However, due to the unfortunate events that took place in Sri Lanka on 9th and 10th May 2022 and at the initial request of the Board of Investment, SLTDA Management proceeded to sign the Lease Agreement on 11th May 2022 for a 30 year lease in accordance with the policy of alienation of land. .

Despite popular opinion, SLTDA would like to clarify that neither SLTDA nor the Government of Sri Lanka nor any of its affiliates will receive USD 417.5 million as a result of this transaction. SLTDA had the final right to lease the land for a full 30 years under the agreement.

For SLTDA, as reiterated earlier, the source of income is leasing. The investor pays a fixed monthly rental fee for a period of 30 years, based on an assessment made by the Government Valuation Department in 2020. The total cost of USD 417.5 million simply represents the total commercial value of the investment made by the aforementioned investor.

We kindly request the tourism industry and the general public in Sri Lanka to be careful and not to be misled by false and misleading information.