Forex bottleneck deters foreign firms from MCB listing
Over 20 companies have expressed interest in listing on the Dollar Board of the Colombo Stock Exchange (CSE), but major exchange control red tape is preventing them from doing so, top officials said.
Those companies wishing to raise capital through the dollar board, or better known as the multi-currency board (MCB), can only repatriate 60 per cent of the raised capital to their countries. The exchange control requires 40 per cent of the raised capital to remain in Sri Lanka. “This is not a supportive direction. Companies raising capital in Sri Lanka need to be able to use the monies they raised as they wish,” one capital markets source told The Sunday Times Business.
The MCB, launched in 2018, has still not been able to onboard a single foreign entity to raise capital. The Sunday Times Business learns that at least three Maldivian companies, eight companies from the African continent, and about 10 other foreign firms are interested in listing on MCB.
Officials at the time said that many large companies, transacting in dollars, requested this facility to raise capital in dollars for regional expansion and the like. Capital market sources said that discussions with the Central Bank are on with regards to removing this bottleneck. An inter-organisation fortnight meeting with the Central Bank has been mooted by several authorities, including the Treasury, the capital market operator, as well as the regulator and other related entities.
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