CB simplifies exchange controls

Ramani Kangaraarachchi

*Foreigners can invest in rupee denominated debentures

*Permission for foreign companies to open business places

*Permission to open accounts in foreign currency

The Central Bank of Sri Lanka has introduced new foreign currency accounts for a number of vital sectors including tourism and the gem and jewellery industry.

This is following the arrangement made by the Central Bank to simplify foreign exchange controls to facilitate foreign exchange transactions.

Central Bank Governor Ajith Nivard Cabraal

Central Bank Governor Ajith Nivard Cabraal said the implementation of these policies is expected in two stages. The first set of nine policies will be implemented from November 22, this year. Under the first policy foreigners can invest in Rupee denominated debentures.

The Governor said Sri Lanka’s Rupee has been stable during the past and there is greater confidence it will help to reduce competition.

The Central Bank has expedited approvals for companies to borrow from foreign sources which will ease pressure for funds in the local market and enhance opportunities available to expand economic activities in the country.

Cabraal said a special unit will be set up shortly and within 14 days the matters will be dealt with. Permission to foreign companies to open business places in Sri Lanka has also been granted to further facilitate foreign direct investment into the country.

The Governor said the Gazette notification outlining the procedure to be followed by overseas companies in establishing business places in Sri Lanka has now been issued. The Central Bank has granted permission for foreigners on tour or business in Sri Lanka to open accounts in foreign currency. These foreign currency accounts would facilitate the non-resident, non-national categories to execute their transactions smoothly and safely during the stay in the country.

Permission to open foreign currency accounts for the gem and jewellery industry has been given to facilitate the policy objective of making Sri Lanka a centre for manufacturing, trading and retailing in gems and jewellery to importers.

Permission has been given for certain banking transactions in foreign currency and Sri Lanka rupees to foreign diplomatic missions and their families.

The advance payment for imports has been increased from US$ 10,000 to 50,000. This relaxation will ensure smooth functioning of external trade activities in the domestic market as well as entreport trade.

Meanwhile, the second set of policies to be implemented from January 1, 2011 include permission to Sri Lankan resident individuals ,corporate and unincorporated bodies to invest in equity of overseas companies and to insurance companies to invest part of their assets abroad.