Friday, 16 August 2013 00:00
The granting of approval for setting up companies in Sri Lanka is vested upon both the Board of Investments of Sri Lanka (BOI) and the Registrar General of Companies (ROC) and the proposed activities of such companies are governed by the Exchange Control Regulations of the country.
The country as a whole is well and truly poised towards the promotion of foreign investments into the country. As a result of the efforts so taken in this aspect, the ‘Doing Business 2013’ index prepared by the World Bank and its private sector funding arm International Finance Corporation (IFC), ranks Sri Lanka at 81 out of 185 countries which amounts to a 15-notch improvement from the 2012 ranking of 96.
The BOI offers a wide variety of incentives/concessions targeted at FDIs, small, medium and large scale investments. In addition to this, all foreign investments are protected by the island nation’s constitution and provisions of any agreements entered into with the BOI remains unchallenged, irrespective of any regime change.
Since the end of a three decade old civil strife, Sri Lanka under its present government has taken significant steps towards the overall development with special emphasis on infrastructure development and tourism. Sri Lanka had always been blessed with a wide array of tourist attractions at close proximity, giving it an insurmountable competitive advantage over other neighbouring countries.
The presence of many renowned giants in the hospitality industry such as Hong Kong based Shangri-La Hotel Group, United States based Sheraton Leisure Group and Thailand’s Minor Hotel Group validates the identified future potential in this sector.
The ROC and the Labour Department have already embarked on a project to venture towards automated filing and in time to come, once fully functional, it will further simplify the current corporate registration process. As a result, in the Doing Business 2013 under the ‘starting a business’ category, Sri Lanka had achieved a ranking of 33 from previous year’s position of 71.
In general, it takes five days to get a company registered at the ROC. The Government allows the registration of overseas companies for both commercial as well as non-commercial purposes and readily identifies such companies as an extended operation of the respective foreign parent. By 2008, Sri Lanka had 235 listed companies which had increased to 287 by October 2012, irrespective of the financial crisis prevalent during that period.
Project funding for investors is simple and straightforward as a result of the presence of renowned foreign banks such as Hong Kong and Shanghai Banking Corporation, Standard Chartered Bank, Citibank, Deutsche Bank, State Bank of India, ICICI Bank and Habib Bank to name a few. The country’s FDI inflows had improved to US$ 1.07 billion in 2012. The recent relaxation of foreign exchange control regulations has enabled Sri Lankans to invest in the equity of foreign companies and sovereign bonds and make payments in terms of setting up businesses out of the country
My core area of specialisation revolves around advisory on the regulatory and legal framework in setting up of Foreign Direct Investment (FDI) and business entities in Sri Lanka whilst ensuring a smooth commercial operation of such entities in Sri Lanka.
(The writer is a Partner of SJMS Associates, an independent correspondence firm to Deloitte Touche Tohmatsu.)