The ‘Invest Sri Lanka’ Investor Forum organized by the Securities and Exchange Commission of Sri Lanka (SEC), Colombo Stock Exchange (CSE), in association with the Embassy of Sri Lanka in UAE and the Consulate General of Sri Lanka to Dubai and Northern Emirates was recently held at the Sheraton Grand Hotel Dubai. The forum made a strong case for investment flows into Sri Lanka. The event drew a strong turnout and a full house of leading Dubai–based Sri Lankans across multiple industries and was graced by Ajith Nivard Cabraal as the keynote speaker.
A Sri Lankan delegation including senior representatives of the SEC, CSE, the Central Bank of Sri Lanka, and representatives of Stock Broker Firms collectively pitched for further investment flows into Sri Lanka, a call that was also boosted by strong endorsements for Sri Lanka by the representatives of the Embassy of Sri Lanka in UAE and the Consulate General of Sri Lanka to Dubai and Northern Emirates.
Delivering the welcome address, Malraj de Silva, High Commissioner of Sri Lanka, Embassy of UAE stated that he was very happy with the enthusiasm shown by the Sri Lankan community in the UAE in participating in the forum and invited the participants to reap the benefits of investing in the CSE.
Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka making the keynote address at the event invited the diaspora community to be a part of the growth story of Sri Lanka and said “The first step that we took after I assumed office and as a central bank team was to ensure that we give clarity. So we set out a roadmap for the next six months, so that investors would know where is the economy going to move? What would the rupee do? Where would the interest rates be? What would be the situation with regard to the debt repayments? What would be the way in which the country would handle its balance of payments?”
He further added “So those questions needed to be answered. Those are the tough questions. Unless those questions are answered, the rest of the questions would not be relevant. That is why we have taken painstaking steps to individually answer those questions and give confidence. Now that the overall stability of the economy is being maintained, we also need to ensure that there is stability within the community.” The Governor went on to emphasize on commitments made by the Sri Lankan government in terms of interest rates “What we mentioned was that companies were doing well, how did that happen? If there was turmoil, would that have happened? Interest rates were at very low levels. So the advantage that all those companies received as a result of the interest rate differential was enormous. The ability to do business was, again, a very important factor that allowed them to make profits. And to have a decent bottom line, the reduction of taxes was the stimuli that the government provided. If you remember, since 2015, we had sluggish growth, so much so that by 2019, growth had come down in the country to around 2.3%. So what should the government have done? The government had to give a stimulus. And that stimulus, whatever anyone may say, has worked. That is why the economy was safeguarded.
‘’Even during the COVID, if we had another additional 20% 30%, more to be paid as taxes, many of these companies would have been struggling. If there were higher interest rates to have been paid, many of these companies would have been struggling, you wouldn’t have been having that same momentum. And if that momentum was not there, that wouldn’t have got translated into a good feeling. And if you don’t have a good feeling, you won’t have people coming and investing.”
“If Sri Lanka acts in line with its potential, we have an extraordinary growth story to tell for the future. And that growth story will come from you, from the investors, from the companies which are being listed and from the companies that are in operation in Sri Lanka”
“The time is now, for you to take up positions, we still have a lot of potential for the stock exchange to grow. I remember in 2014, if you look at the market capitalization, in dollars, it was about 25 billion after seven years, even notwithstanding the growth in numbers that was mentioned by the Chairman of the Securities and Exchange Commission as well as by the Chairman of the Colombo Stock Exchange, the market capitalization is still lower in dollar terms, as far as all the companies are concerned. If you work it out today, it will be less than $25 billion. So what does it say? It says that there is latent potential, and latent strength within the Sri Lankan market, the Sri Lankan equities that we haven’t still been able to realize”
Viraj Dayaratne PC, Chairman of theSEC speaking at the event explained how it is customary for the Colombo Stock Exchange, and the regulator the Securities and Exchange Commission to have events of this nature to invite investors to Sri Lanka’s stock market, from different parts of the world. But due to the pandemic, this exercise was prevented for over two years.
He further stated the role of the SEC “As the regulator of the stock market, the Securities and Exchange Commission has a dual role to play, we have to regulate the market and at the same time, ensure that we take steps to develop it. So, in managing these two, these twin interests or duties, if I may call it we have to strike a balance because whilst regulation is important to ensure the protection of investors and the integrity of the market, it is also necessary to ensure that we do not over regulate so that all market participants have the freedom and the space to engage in their activities.”
“The number of trades that take place has increased tremendously. And as a result, it is necessary for us to ensure the integrity of the market and ensure that no wrong doing is taking place. So in order to do that we have enhanced our surveillance functions and the supervisory function. We have real time surveillance on a daily basis with regard to the trades that are taking place. Our Corporate Affairs division supervises and looks into the affairs of listed companies, then market intermediaries are supervised by our Supervision division. So, that will ensure that market integrity is maintained at all times and that all investor interests will be looked after.”
He added, “One other significant achievement, was the enactment of the new Securities and Exchange Commission Act that was on the cards for several years. The new law was brought in and I must tell you, that not only does it help better regulation, but it provides a lot of opportunities for the development of the market, it will be possible for us to introduce new products, then it will be possible to facilitate the setting up of new funds. And that means creating more opportunities for you to invest.”