SL needs new instruments, markets, entrepreneurs and institutions: Cabraal
Sri Lanka needs to look for new instruments, new markets to absorb new capital, new entrepreneurs as well as new institutions, to achieve eight per cent growth target in GDP. Central Bank Governor, Ajith Nivard Cabraal made this comment at the Islamic Finance road show held in Cinnamon Grand Colombo this week.
“Sri Lanka needs investment to come from outside. If our country is looking for a growth of eight per cent with the current savings, it cannot be sustained. The current savings would probably take us to a growth of around four to five per cent maximum. Sri Lanka’s growth since independence was around the four per cent mark. Our country needs to look for new instruments, new markets from which we could absorb capital, new entrepreneurs as well as new institutions to partner Sri Lanka’s progress,” said Mr. Cabraal.
“Sri Lanka is open for business and also welcomes new instruments into the country. We want to ensure that Sri Lanka will stay open for business on a sustainable basis so that people who begin to block themselves into positioning Sri Lanka would also benefit by the partnership. We encourage the Islamic Finance industry to support the tourism industry and at the same time support the five hubs that Sri Lanka is putting in motion as the thrust of our economy for the next 10 to 15 years. Looking at Sri Lanka as a commercial hub in future, we see that Sri Lanka is only doing business within the country and in the region,” added Cabraal.
Amana Bank Managing Director and CEO, Faizal Salieh said, “Sri Lanka is an emerging market. It has tremendous potential in the post war period. The country is well positioned geographically to attract Islamic investments and tourists from the Middle East to the Far East. Out of 20 million population in the country, 1.9 million are Muslims. The Islamic Finance space in Sri Lanka today has one fully Shariah based bank, four banking windows, four finance and leasing company windows and one fully fledged Takaful company. We also see a progressive formation of an Islamic Finance eco-system in Sri Lanka and there are many others preparing to enter the Islamic Finance space.”
He also said that the market potential of the space is estimated to be around US$ 1.5 billion to $2 billion and is growing.
“The main challenges that Islamic Finance companies face today lies in the areas of product and product development, market reach, liquidity management, creating a level playing field particularly in taxation and transaction level, integration with the country’s growing need for infrastructure development, integration with the agriculture sector, farming and fisheries, microfinance, changing the unique value proposition of Islamic finance, banking and insurance beyond the traditional Islamic market segment and attracting Shariah compliant cross border transactions and foreign investments in the country,” added Mr. Salieh.
Ariff Sultan, Ideal Ratings Regional Director (Asia), during the panel discussion on ‘laying the groundwork for long term growth’ said that Sri Lanka will become the top country for Islamic Finance, globally within the next five to six years. He said, “Today Malaysia is in the leader for Islamic Finance globally. But Sri Lanka will become the top country for Islamic Finance in the world within the next five to six years.”
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