Red tape holds up President’s order against foreign retail businesses
The President’s suspension order over the mushrooming of retail outlets owned by foreigners specially Chinese, Indians and Japanese in Sri Lanka has been delayed by bureaucratic red tape, informed sources divulged.
President Maithripala Sirisena has directed the relevant authorities to immediately suspend the process of approval and registration of foreign-owned retail businesses following representations made by the National Business Front (NBF) comprising around 10 frontline local retail traders and entrepreneurs.
He issued this directive at a recent meeting convened by the National Economic Council (NCE) whose Director General is Prof. Lalith Samarakoon heeding a request made by the NBF claiming that any fly by night foreign investor can set up a retail business or an industry in the island by just fulfilling negligible requirements under the section 16 of the BOI Act.
He categorically stated that permission to set up business to foreigners shou ld be allowed only for joint ventures with 51 per cent of local entrepreneurs.
This was disclosed to the Business Times by the NSF Convener and DSI Samson Group Managing Director Kulathunga Rajapakse who was among the participants at the meeting.
Mr. Rajapakse noted that the relevant circular indicating the suspension of the registration of small and medium scale businesses with foreign ownership has not been issued to the Department of the Registrar of Companies for it to take necessary action.
He said that several foreigners, majority of them being Chinese and Indians nationals, had opened retail shops that sell gifts, shoes, grocery, floor tiles and other items in Colombo and Kandy.
He said that if this continues, local traders would have to close their shops very soon.
At present the minimum investment requirement to qualify for the Section 16 (BOI) projects is US$ 250,000. This can be either 100 per cent foreign investment or a joint venture investment with a local collaboration. A foreigner has to remit a minimum of $1 million if they are to undertake trading activity.
Mr. Rajapakse emphasised the need of reviewing the Foreign Exchange Control Act and BOI Act which permits foreigners to enter the local retail market with a minimum investment of $1 million.