Value addition will be key if foreigners want to own land: FM

By Chandeepa Wettasinghe
Foreigners may be able to purchase land for commercial purposes in Sri Lanka once more under the new regime if they add enough value in Sri Lanka, while land lease taxes and financial services for foreigners are also being amended, according to the Finance Minister who hosted the 3rd monthly Doing Business Forum yesterday.

Ravi Karunanayake was responding to a question raised by the American Chamber of Commerce Vice President and Ceylon Tobacco Managing Director Felicio Ferraz, who said that the move would improve the doing business environment of Sri Lanka.

“Certainly, (if) any value added companies come to us with a proposal which is meaningful, and in line with our national policy, we’ll certainly be looking,” Karunanayake replied.

He said that foreigners who are able to have a greater advantage than locals by  lowering prices more than usual due to their ability to absorb losses will not be tolerated.

“But we also don’t want to open it up for nothing. Foreigners come and buy, and not make it competitive for local people to go forward,” he noted.

According to the Land (Restrictions on Alienation) Act No. 38 of 2014, foreign individuals, foreign companies or locally incorporated companies with a foreign shareholding of over 50 percent are not allowed to own any land in the country, while also not being able to own condominiums below the 4th floor.

Exempted from the legislation were companies falling under the Strategic Development Projects Act conceived by the previous government, and international companies setting up regional offices.

Therefore, foreign companies entering the country were forced to lease land, as well as pay a 15 percent tax on the lease, while certain parties were made to pay 7.5 percent tax on the lease.

Investment Promotions and Highways Deputy Minister Eran Wickramaratne has been adamant since the regime change that the Land Act will not be overturned, since all parties in Parliament had agreed and passed it in unison.

However, while many investors had expressed disappointment over the inability to purchase land, most had communicated that they wanted stable policy continuance in order to invest in the country.

Meanwhile, Karunanayake said that the government is working towards moderating the land lease tax, as well as allowing foreign entities to gain financing from local banks easier, as promised at the 2nd Doing Business Forum.