No investments yet for Colombo Port City due to delays in drafting laws
While reclamation of land of the Colombo International Financial Centre (CIFC) has almost reached completion, the form and content of offshore legislation relating to financial services is not yet disclosed to the public for investments. The city masterplan was released in April this year.
Last week a group of experts during a seminar organised by the West End Law Centre at the Lakshman Kadirgamar Institute in Colombo discussed the ups and downs due to delays in drafting the legislation and what content needs to be highlighted when drafting it. The title of the seminar was ‘Towards the Main Financial Hub of Asia; Port City Colombo.’
Member of the Public Service Commission and Attorney-at-Law, D.L Mendis while explaining the design of the CIFC and the legislation relating to it stated that the CIFC which will cater to the rich people around the world is of paramount importance to attract investors, high net-worth individuals and corporate clients who wish to establish offices and residences here. Though the city masterplan was released in April this year, the form and content of offshore legislation relating to financial services has not been disclosed as yet to the public.
Today Sri Lanka is not considered an offshore financial centre by the Offshore Directory although there is a legislation relating to offshore banking and offshore companies legislation, he added.
Mr. Mendis said the lease of land in the CIFC for international business companies and banks is a very difficult task without a fully-fledged legislation dealing with offshore products and services. The geographical location of the centre in the maritime silk route of China is certainly a comparative advantage for Sri Lanka.
On some of the content that needs to be highlighted in the legislation Mr. Mendis said that there is a need to establish the Colombo Offshore Financial Services Regulatory Authority to safeguard the reputation of the CIFC and take measures to prevent money laundering, fraud and proceeds of crime, in an efficient manner.
The legislation must deal with licensing and registration of banks with certain restrictions on investing their clients’ money, provide for incorporation and re-domiciliation of offshore companies in Sri Lanka, and deal with trusts concept and trust companies.
The legislation should also deal with the tax regime. The government of Sri Lanka should decide whether the CIFC would be a no-tax or low-tax regime. The legislation should deal with the settlement of legal disputes between the authority and the investors, and between the clients and their banks and international companies, deal with finances relating to the regulatory authority and should provide general provisions, he noted.
Meanwhile University of Colombo, Professor of Economics, Sirimal Abeyratne stated that Sri Lanka’s economy must grow at 8-10 per cent per annum over 10-20 years to reach the state of a developed nation. “You must allow capital to flow into the country for an investment driven growth model. Sri Lanka recently surpassed US$1 billion in capital flows,” he noted.
He also mentioned that there are no international or bilateral projects in Sri Lanka other than geopolitical partnerships. Economic growth has to sustain instead of slowing down. It is not about borrowing, but ways and means of investing in the country.
Prof. Abeyratne pointed out that Sri Lanka has opened the exit doors for local talent to go abroad whereas it has closed the entry doors for foreign professionals to come here.
Former Navy Commander, Thisara Samarasinghe explaining the ‘blue’ economic aspiration of Sri Lanka stated, “The future of Sri Lanka lies in the ocean. Resources on land are depleting and the population is growing. This region is a competition for strategic convergence where Sri Lanka is going through a strategic dilemma.
There is an unofficial cold war in the Indian Ocean.”
Sri Lanka should be mindful of its sovereignty. “We cannot do anything that affects both India and China, but work together with both powerful nations and act as a bridge between the two countries,” he noted. The Port City is a national project which is a stepping stone for the blue economy and maritime hub aspiration of Sri Lanka, he added.