By Chandeepa Wettasinghe reporting from Maldives
Sri Lankan banks should extend financial assistance to local companies setting up operations in foreign countries, Finance Minister Ravi Karunanayake said during the launch of Sri Lanka’s Sanken group’s Amari Havodda resort in the Maldives.
“We want Sri Lankan talent to be expressed and see Sri Lankan intrinsic skills taken all over the world. I’m informed that Sampath (Bank) and Commercial (Bank) did the financing. I hope that the same type of assistance that Sri Lanka gave is given to them (others) to go overseas as well,” he said.
He added that Sri Lankan companies should team up with internationally recognized companies to set up foreign ventures, similar to how Sanken teamed up with the Onyx Hospitality Group.
Sanken Overseas (Pvt) Ltd started the construction of its 60 percent owned US$ 50 million 4-star resort in September 2014, and the Central Bank had no issue in green lighting the funds, since the company had been incorporated offshore in the 1980s specifically for foreign construction projects.
However, Sri Lankan banks are constrained from providing financial assistance to locally incorporated companies due to the draconian exchange control laws that prevail in the country.
The Budget 2016 called for the setting up of a Foreign Exchange Management Bill, as well as to make Sri Lanka a financial hub for
“You can see with the last Budget that was presented, we have given opportunities for companies like Sanken to go internationally. We have to liberalize our economy. We want to keep in touch with the changing world,” Karunanayake added.
Despite politicians making statements or requests, the relevant laws are gazetted weeks or months later, which could leave those who act immediately upon the requests open to legal action.
For example, no laws contributing towards the financial hub concept have been gazetted yet, despite Sri Lanka attracting nearly US$ 1.5 billion in savings from overseas due to a continuous request by Karunanayake since October. The Central Bank recently said that the laws would be gazetted by the end of January to allow these funds to be withdrawn from Sri Lanka just as freely as they were deposited, which would have left individuals wanting to withdraw their funds over the last few months in case of an emergency in limbo.
The Central Bank assured that there will be a great relaxing of exchange control regulations, spread over a long period of time in the future.
Local bankers have been seen to place confidence in the statements and seem to be willing to lend to local companies venturing overseas as Karunanyake wants.
Meanwhile, Karunanayake commended Sanken Overseas for constructing the resort in just 12 months in the Maldives which is known to be a logistics nightmare, and mulled why a similar construction project takes twice as long to complete in a resource abundant Sri Lanka.