Sri Lanka's Forex Liberalization Package - A Glimpse

05th November 2010, www.news360.lk, By Prasanna C. Rodrigo

Central Bank of Sri Lanka is likely to allow local companies to invest in overseas firms and also allow foreigners to buy “debentures” issued by local companies under its latest foreign exchange liberalization program.

This is according to a senior Central Bank official who in an earlier occasion revealed to us some of the Foreign Exchange liberalization plans which is expected to be introduced very soon.

www.news360.lk carried the story on the 30th of April under the heading “CBSL Relaxing Rules”.

According to the official, listed firms will be allowed to take US $ 500,000 per annum while non listed / resident companies will be allowed a sum of US $ 150,000 to invest in overseas companies.

The Official said they will have to invest those dollars to buy “share capital”.

However he said the above amounts & conditions might be changed when the liberalization package comes into the market.

Debentures
Central Bank is also planning to allow foreigners to buy “debentures” issued by local firms running up to 50% of the total value of the issued amount.

This move the bank says will help increase private sector activities and also bring in more dollars to the country.

Currently such approval is given only on a case by case basis.

Foreign Companies Branch office
In another move, the monetary Authorities are planning to allow foreign companies to open “Branches” in Sri Lanka.

The official said this will be an “open permission”.

The foreign companies who set up branches in Sri Lanka will have to open a “special account for their transactions”.

The respective companies can take their dividends & profits emanating out of its branch activities and also the value of the asset liquidation.