Sri Lanka liberalises foreign exchange market

[RanaTop contributor]

http://www.srilankamirror.com/news/item/11898-sri-lanka-liberalises-foreign-exchange-market

Sri Lanka initiates the process of further liberalising the foreign exchange market repealing the draconian Exchange Control Act and replacing it with an Exchange Management Act.

Following the enactment of this bill, foreign investors will be allowed to bring in fund to any bank and there would be no necessity to bring them in through special investment accounts.

The Finance Ministry of the view that it is necessary to ensure the macroeconomic stability and very close monitoring of banks and the prudential regulations must be in place, officials said.

Some Central Bank officials expressed concern on the out flow of cash. However the committee concluded that the concept of exchange control is out dated but it is essential to tackle the issues of cash out flow.

A proposal has been made to extract the relevant provisions from the draft bill on Foreign Exchange Management act of 2003 and draft a new act.

In this new act a clause is to be included that with the Foreign Exchange Management Act coming into effect the Exchange Control Act is repealed.

Further it was decided to amend the relevant sections of the Inland Revenue Act parallel to the repealing of Exchange Control Act.

An investor friendly Foreign Exchange Management Bill (FEMB), would help attract foreign flows from the SAARC and the world at large.

In order to promote foreign investment inflows, the income from dividends on investment made by non-citizens and foreign companies in listed shares through inward remittances will be exempted from income tax.

The Agency for Development which will replace the BOI, will ensure that applications for foreign investment are completed to commence business within 50 days. This will certainly be a game changer in promoting investments.

[Ethical TraderTop contributor]

Thanks Rana. A long awaited Act. Good for the CSE.

[Axe]

Thanks for sharing Rana.