Changes to Exchange Control to help start-ups
The Central Bank (CB) is looking at amending the Exchange Control Act to facilitate a fund of funds to boost start-ups. CB officials told the Sunday Times Business that the regulator is now in discussion with the Ministry of Digital Economy and the Ministry of Finance to enable this.
Meanwhile, on the sidelines of a recent post-budget seminar organised by the University of Colombo Alumni Association, Deputy Minister Digital Economy Eranga Weeraratna told the Sunday Times Business that his ministry is working with the CB and the Ministry of Finance on the right regulations and modalities to start, the fund of funds. “We are trying to start a fund of funds for both local and foreign investors. When foreign companies invest in Sri Lanka, there will be market access created for local start-ups, which will be important for them to scale up.”
He also noted that the regulation on fund of funds will entail relaxed policies, such as enabling an entity to take cash out of the country to expand elsewhere.
Imal Kalutotage, Founder and Chairman nCinga Pvt Ltd, joining in the panel discussion, noted that there is a dearth of capital for start-ups, and if this issue is addressed, entrepreneurship will flourish. Drawing from examples, he said that start-ups are encouraged in Singapore and even given loans up to 80 per cent backed by that government, while the risk is shared with the financial institutions. “If this mechanism for funds of funds is established, the start-up ecosystem will flourish.”
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