APRIL 5 — Sri Lanka’s real strategic question is not whether it can become “the next Singapore” or a miniature Dubai. It is whether it can finally learn the harder lesson those two city-states teach: that financial centres are not created by tax gimmicks, real-estate spectacle, or patriotic rhetoric. They are built by states that become credible before they become glamorous. In 2026, that distinction is even more important than it was a generation ago. The old haven model — low tax, light scrutiny, easy opacity — is being steadily constrained by the OECD’s global minimum tax rules, which allow other jurisdictions to impose top-up taxes when large multinationals pay below the 15 per cent floor. That means the future belongs less to secrecy jurisdictions than to places that can offer legality, speed, sophistication, and trust. Sri Lanka should not aspire to be a tax haven. It should aspire to be something more difficult and more durable: the Indian Ocean’s most credible platform for trade, capital, and cross-border services.
That was the deeper logic behind Singapore’s ascent. Lee Kuan Yew is often remembered as the prophet of discipline, but the true architect of Singapore’s economic state was Goh Keng Swee, who understood that a small postcolonial island would survive only by turning competence into comparative advantage. The Economic Development Board, created in 1961, was not merely an investment agency; it was a state instrument for industrial transformation. The Monetary Authority of Singapore, established in 1971, was not simply a central bank; it became the institutional spine of a carefully sequenced international financial strategy. Singapore did not leap straight into offshore finance. It first built a serious port, a serious bureaucracy, a serious workforce, and a serious reputation. When it later developed the Asian Currency Unit market, it did so in a way that connected the island to global capital without allowing offshore volatility to overwhelm domestic stability. Today, the financial sector contributes about 14 per cent of Singapore’s GDP; MAS says average daily foreign-exchange turnover reached US$1.485 trillion (RM5.99 trillion) in April 2025; and the country’s 2024 asset-management survey reported S$6.0 trillion (RM18.8 trillion) in assets under management. None of that was achieved by waving a zero-tax flag. It was achieved by making the state itself into an investable asset.
Dubai’s path was different in texture but similar in logic. It, too, is often romanticised as a place that became rich through low taxes and ambition. In reality, Dubai first became indispensable to trade. Jebel Ali, aviation, warehousing, customs efficiency, and free-zone administration came before the full flowering of finance. The Dubai International Financial Centre, created in 2004, was powerful not because it stood in the desert, but because it offered a ring-fenced legal and regulatory order that international firms could trust. DIFC’s own reporting shows 6,920 active companies in 2024, rising to 7,700 by the first half of 2025. In February 2026 it said it was home to more than 500 wealth and asset-management firms. The lesson is not that Sri Lanka should mimic Dubai’s skyline. It is that finance follows systems, not slogans. Capital arrives where contracts can survive politics, where regulation is legible, and where the surrounding logistics machine actually works.
Sri Lanka, for all its disappointments, possesses more of the raw ingredients for this than many of its own elites seem willing to admit. It has one of the most strategically located harbours in the Indian Ocean. The Port of Colombo handled 8.29 million TEUs in 2025, the highest throughput in its history, reinforcing its position as South Asia’s leading container hub. It has a common-law inheritance, deep English-language capacity, a sophisticated diaspora, and a location astride trade and data routes linking India, the Gulf, East Africa, and South-east Asia. And it now has Colombo Port City: not yet a success, but undeniably a rare piece of institutional hardware. The Port City’s official pitch is not as a tax haven but as a special economic zone for international business and services. Recent amendments moved the framework toward greater seriousness by strengthening the Central Bank’s role in overseeing offshore banking, tying incentives more explicitly to defined criteria, and requiring monitoring and disclosure of fiscal impacts. Properly governed, Port City could be less a glittering enclave than a carefully engineered jurisdictional laboratory.
The problem is that Sri Lanka’s history has repeatedly inverted the correct sequence. It has too often wanted the rewards of credibility without enduring the discipline required to earn it. The 2022 sovereign crisis did not create that habit; it merely exposed it. The country is recovering, and faster than many expected. The IMF said in its latest Article IV materials that tax revenue in 2025 was projected at 14.8 per cent of GDP and the primary balance at 3.4 per cent of GDP, both stronger than earlier projections. The World Bank, meanwhile, has noted that the rebound is real but incomplete, warning that over a third of the population is expected to be in poverty or at risk of falling into poverty in 2025. These are not the conditions of a country that can afford a fantasy strategy. Sri Lanka cannot build a financial centre as a decorative appendage to a weak state. It must build one as the disciplined extension of a repaired state.
That means abandoning the lazy language of “becoming a hub” and replacing it with a much more exact ambition. Sri Lanka should aim to become a trusted Indian Ocean services platform with five distinct functions. First, it should become the easiest place in South Asia to intermediate trade finance, treasury operations, and shipping-related services tied to the Port of Colombo. Second, it should build a high-trust jurisdiction for regional arbitration, insolvency, and contract enforcement, especially for disputes involving South Asia, East Africa, and the Gulf. Third, it should target fund administration, family-office services, and wealth structuring for regional capital that wants exposure to India and the Indian Ocean but would prefer not to operate directly under Indian administrative burdens. Fourth, it should cultivate fintech, regtech, and cross-border compliance services that exploit its talent pool rather than merely its tax code. And fifth, it should turn the Sri Lankan diaspora from a remittance base into an institutional class of returning investors, lawyers, bankers, and founders. These are not fantasies. They are adjacent possibilities grounded in geography and history. What is missing is policy stamina.
The required statecraft is neither mysterious nor easy. Sri Lanka needs its own version of the Singaporean sequence: macro stability, bureaucratic insulation, logistics excellence, legal modernisation, and only then financial deepening. The first step is to keep the IMF programme’s discipline intact and make fiscal credibility non-negotiable. The second is to ring-fence Port City from the old pathologies of patronage, discretion, and opaque exemptions. The third is to create a genuinely world-class commercial dispute-resolution regime, because legal speed and predictability are more valuable in 2026 than theatrical tax holidays. The fourth is to invest in human capital and targeted migration policy, creating a fast-track route for the Sri Lankan diaspora and foreign specialists in law, banking, compliance, and technology. And the fifth is to market the country not as “cheap” but as “serious”: a place where business can be done quickly, cleanly, and with fewer political surprises than its regional competitors.
This is where Sri Lanka’s political class usually stumbles. It still thinks in slogans when the world now trades in governance spreads. The era when a clever minister could launch a free zone, promise tax exemptions, and wait for offshore money to roll in is over. In a Pillar Two world, tax alone is a blunter instrument. And in a post-default Sri Lanka, credibility is the scarcest commodity of all. That is why the country’s greatest obstacle is not India, not global competition, not even the scars of war. It is discontinuity: the inability of the Sri Lankan state to hold a coherent economic line long enough for investors to believe that this time is different.
Yet history also suggests that moments of deep crisis sometimes force overdue clarity. Singapore was born amid separation and insecurity. Dubai matured amid regional instability and geographic constraint. Neither had the luxury of incoherence. Sri Lanka, after default and humiliation, now faces its own such reckoning. President Anura Kumara Dissanayake inherited a republic chastened by collapse. His real test is not whether he can manage recovery, but whether he can convert recovery into institutional permanence. Stabilisation gets a country back on its feet. Strategy determines whether it ever learns to walk in a straight line.
Sri Lanka’s opportunity, then, is not to imitate Singapore’s image or Dubai’s swagger. It is to recover their discipline. The island’s future will not be secured by pretending to be a tax haven. It will be secured by becoming something rarer: a small state in a dangerous region that can be trusted with other people’s money, contracts, and time. That would be transformational not only for Colombo’s skyline but for the republic itself. For the first time in decades, Sri Lanka has the chance to build a national project equal to its geography.
The question is whether it has the patience to deserve it.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
