Sri Lanka, hoping to improve the business climate for foreigners as well as local investors, is relaxing a range of foreign exchange controls among which is allowing foreigners to open companies here or invest in local entities without the usual restrictions.
The relaxed rules will come into force soon and operating guidelines to commercial banks are currently being prepared for this purpose, Central Bank Governor Ajit Nivard Cabraal told the Business Times.
Listing out eight major rules that are being relaxed, he explained that:
1) Foreign companies will be permitted to open ‘places of business’ without any restriction apart from sectors like money lending, pawn broking, retail banking, etc.
New areas that would be allowed include mass communication, fishing. Some cases may however need permission from the Controller of Exchange at the Central Bank (CB). In general the negative list (to open businesses) is being reduced to facilitate business growth in the economy.
2) Insurance companies will be permitted to invest some of its assets abroad in the range of 6 %, 12 % and 20% over a period of three years, of the life and general funds. There have been requests in the past from the Insurance Board of Sri Lanka for such investments.
3) Foreigners will be allowed to invest in rupee denominated debentures issued by local companies.
4) Sri Lankan residents would be permitted to lend to/invest in overseas companies. This authority will be delegated to commercial banks but a higher, stipulated amount would required CB permission.
5) Foreign visitors and tourists will be permitted to open foreign currency accounts here.
6) Foreign staff of foreign embassies to be allowed to open any number of accounts.
7) Quantum of advances for opening LCs to be increased to $50,000 from $10,000 now.
8) Sri Lankan companies will be permitted to borrow any amount of funds from abroad. However there would be a national cap on the total amount that would be permitted.