CAL says SL needs to jumpstart asset management industry

By Charumini de Silva

Sri Lanka’s financial industry should give added impetus to the asset management sector that has a lot of growth potential, a leading investment banking firm opined, noting that it was a critical factor missing from the financial market of the country.

“Asset management has great potential for growth in the financial industry but unfortunately it is the missing sector in the financial market of Sri Lanka. We have the equity market, bond market, deposits, but the asset management is very small and that is the missing sector we need to jumpstart,” Capital Alliance (CAL) Managing Director Ajith Fernando told the Daily FT.

He said there was some confusion about the tax implication on the asset management sector and until that was resolved in the last Budget proposal the investors were quite sceptical.

It was pointed out that for everyone in the world tax incentives had been given to grow an industry that needed to be grown.

“I think asset management has now been recognised and certain tax concessions were also given to jumpstart the asset management industry. So that’s why the Government decided to give it some tax incentives because our country is coming to a point where the asset management industry needs to take off now,” he added.

However, Fernando said that the amount that needed to be invested and when it needed to be stopped would all be Government decisions.

According to him, the asset management sector grew three times immediately after the tax incentive and pointed out that had it been continued, it would have grown five times from what it was today.

“We cannot have these people losing money in banks and finance companies. We need to do whatever to stop that madness. I think asset management would be a significant sector in the financial market of the county in the future which will greatly contribute to the growth of the economy,” he pointed out.

Fernando also said that there was a lot of foreign interest coming into industries and Sri Lanka was being looked at very seriously.

“I see this trend growing while doing M&A (mergers and acquisition) transactions. I see an interest that I never saw before. I do not know why they are coming and whether those actually translate into business or not. But there is a healthy demand where foreign investors are looking at opportunities in Sri Lanka,” he stressed.Despite certain political uncertainties seen in the country, he insisted that Sri Lanka’s macro economy was on a strong footing for the businesses to continue. He also commended the regulations in the financial industry, pointing out that there were countries that have much more complicated systems to follow. “Our regulations and regulator are fairly good compared to other countries. When we hear about other countries and the things they have to go through, I think our regulations are quite alright.”

Pic by Sameera Wijesinghe