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Sunday, 8 February 2009





Marriage Proposals
Government Gazette

Attractive investments for expatriates

To reverse the deterioration of foreign reserves as the short term foreign investments are being withdrawn by investors, the Government last week sought investments from the Sri Lankan diaspora and the migrant working community. Central Bank of Sri Lanka last week opened Rupee denominated treasury bills and treasury bonds market for Sri Lankans living abroad at attractive returns and other benefits.

The Governor of the CB Ajith Nivard Cabraal said that with the present global financial crisis these new instruments will be more attractive investments for Sri Lankans living abroad.

These are gilt-edged securities for which the interest rates are determined by the market and therefore high and tradable in the secondary market. The capital gains are fully repatriable and joint investments are allowed. The only tax is 10% withholding tax charged at source and there is no stamp duty. The funds will be deposited in a sinking fund in the CB to assure the safety and repayment of the investments, the CB said.

Explaining the back ground for the issue of these new instruments Cabraal said that from November last year investors in the West have withdrawn around US$ 1.2 trillion investments out of the Asian region after the financial crisis intensified. As a result Sri Lanka lost US$ 400 million investments and our reserves depleted. To improve our reserves we thought of new approaches and this is one of them, he said.

CB expects to raise US$ 500 million this year from this new drive. The Sri Lankan migrant workers have brought US$3 billion foreign remittance last year.

The Deputy Governor of the CB W.A. Wijewardane said that this is also a move towards relaxing the capital account. We opened our current account in 1993 but it took long years to open our capital account. We liberalised the capital account in 2007 and as a result received US$ 650 million investments to improve the foreign reserves. There is a perception that opening of the capital account is unsafe, because capital flows out. This is a myth and when the capital account is opened the capital flows both ways, in and out, he said.

Wijewardena said that the new instruments will be more attractive investments for expatriate Sri Lankans because in the global markets the interest rates are low as 0-2% today and in some countries it is negative due to depreciation of currencies and high bank charges. During the last three years the Sri Lankan rupee has depreciated only by 3.4%, Wijewardena said.

CB will launch an extensive marketing campaign around the world to attract expatriate Sri Lankans that is estimated over 1.5 million. The campaign will be carried out in five zones Asia (including Australia and New Zealand), two zones in the Middle East, Europe and the North America. The campaign in each zone is led by a senior CB official and it includes road shows in 19 cities in 11 countries.

Five lead managers; Bank of Ceylon, Commercial Bank of Ceylon PLC, National Savings Bank, NatWelth Securities Ltd, People's Bank and Sampath Bank, have been appointed to market the products.



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