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Special bank accounts for Colombo Port City; transactions in foreign currency only
View(s):By Namini Wijedasa
The Central Bank of Sri Lanka (CBSL) has authorised a special class of bank account called the Colombo Port City Investment Account (CPCIA) exclusively to carry out business in the Chinese-built Special Economic Zone (SEZ).
Directives were issued to all banks in Sri Lanka in relation to two types of CPCIAs—investor and investee. The accounts may be used by companies seeking to attract foreign currency from overseas to establish businesses. The money can be held in foreign currency for investing in the reclaimed financial city.
In terms of the investor accounts, the money must be foreign currency from overseas; income or capital proceeds payable to non-resident investors on the investments in the Colombo Port City; or interest earned on funds held in the account.
“The accounts can only receive money from overseas,” the spokesman said. “That is the main thing, because that’s in the spirit of the Act which rules that, for any development activity to be done, the money must be from overseas. The funds are to be used for investments in the Port City.”
“You cannot, for instance, withdraw dollar cash or say you wish to import something into
Sri Lanka and to pay for it through these accounts,” he explained. “It must be used for business-related investments in the Port City. This includes capital expenditure on construction or payment of fees or services related to the Port City Entity. Payment is through electronic transfer.”
Separately, the groundwork is being prepared for banks to be set up within the Port City. They will be licensed under the Colombo Port City Economic Commission Act for carrying out business within its area of authority, a spokesman for the Commission said. Six local banks have so far expressed interest.
“The Colombo Port City is a Special Economic Zone which is expected to have various businesses to come and set up,” he said. “Banks and financial institutions are one such group. To date, six banks have shown interest. The Monetary Board of Sri Lanka (MBSL) and the Finance Ministry have granted initial approvals, subject to certain post-operational and pre-operational conditions. These banks are reviewing those conditions and are in the process of working through them.”
The financial institutions will be governed by rules and regulations issued by the Commission and not the CBSL. But the guidelines will be formulated in consultation with the MBSL and the Finance Ministry.
“At present, we have carried out benchmarking studies looking at, for example, how the Dubai Financial Services Authority runs, or a number of Special Economic Zones in Malaysia, Mauritius, and other countries. The objective is to come up with a framework of rules and regulations in line with these studies.”
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