Govt. plans International Financial Centre

Thursday, 30 June 2016 00:54 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Motivated by growing global economic challenges, the Government yesterday rolled out an ambitious plan to establish an International Financial Centre in Colombo to make up 10% of GDP within five years and serve local companies as well as South Asia.

Acting Finance Minister Lakshman Yapa Abeywardena outlined the plan, which aims to create 15,000 jobs by 2021, during the weekly Cabinet briefing.

The financial centre, which aims to be a rival to Dubai, Singapore and Hong Kong, hopes to attract investment to Sri Lanka and reduce brain drain by retaining professionals eyeing migration.

“The International Financial Centre will give the opportunity for local companies to access international capital markets and foster efforts to expand overseas or locally,” Abeywardena told reporters, adding that ambitious professionals would have the chance to work for global companies at high salaries in Colombo.

“We want to build a financial sector of international standards. The structure of the centre is being worked out now but it will have three dimensions. One dimension will be an arbitration and dispute settlement mechanism while the second will be a regulatory system and the third, an authority to oversee the functions of the International Financial Centre,” he said.

To establish the financial centre, the Government will draw up new regulations covering banking and financial transactions, company law, recruitment and employment rules, arbitration laws and all special regulations and laws needed.

The Sri Lankan Government hopes to partner with well-known law firm Baker & McKenzie to set up the IFC in Colombo. Headquartered in Chicago, Baker and McKenzie has been ranked the largest international law firm in the world, with 11,500 employees including 4,365 lawyers on a full-time equivalent basis in 77 offices across 47 countries. It is ranked as a top three law firm in the world in terms of revenue with $2.43 billion in annual revenue in FY2014-2015.

International Monetary Fund (IMF) Managing Director Christine Lagarde was a former Chairperson of Baker and McKenzie.

A financial centre is a location that is home to a cluster of nationally or internationally significant financial services providers such as banks, investment managers or stock exchanges. A prominent financial centre can be described as an international financial centre or a global financial centre and is often also a global city. An offshore financial centre is typically a smaller, low-tax jurisdiction that primarily serves non-residents.

International Financial Centres (IFCs)—such as London, New York, and Tokyo—are large international full-service centres with advanced settlement and payments systems, supporting large domestic economies, with deep and liquid markets where both the sources and uses of funds are diverse, and where legal and regulatory frameworks are adequate to safeguard the integrity of principal-agent relationships and supervisory functions.

In Asia, Singapore and Hong Kong have long been in competition to round off the top five financial centres in the world.