SL aims at 50 percent GDP by 2016 - Minister Amunugama

by Manjula Fernando

Sri Lanka is envisaging a market capitalisation to reach 50 percent of the GDP by 2016 to maintain a consistent 8 percent economic growth, Deputy Minister of Finance and Planning Dr. Sarath Amunugama said.

"In the efforts to develop Sri Lanka as a commercial hub, capital market development is one of the key challenges," the Minister said speaking as chief guest at the Diploma Awards ceremony 2012 of the Securities and Exchange Commission of Sri Lanka at the BMICH yesterday. Minister Amunugama who is also the Senior Minister for International Monetary Cooperation said a vibrant capital market can facilitate the projected economic growth by converting savings to investments and also assisting companies to raise funds. "In reality, ours is not a matured capital market yet."

He said: "the Capital market heavily depends on equity contribution. At present the market capitalisation of the Colombo Stock Exchange is still below USD 20 billion, a 33 percent of the GDP. The target is Rs.6.5 trillion market capitalisation of CSE by 2016.

"The Government has identified ten key initiatives to serve as the basis for the capital market development road map.

"They include listing more companies in the CSE, developing the Unit Trust market further as a vehicle for small time investors, developing corporate debt market, demutualize the CSE to make it more innovative and aggressive and amend the 25 year old SEC Act to align with the modern capital market requirements.

"Currently 288 companies are listed in the CSE although more than 10,000 registered and operationally active companies are in the country and less than 1 percent of the Sri Lankan population is actively involved in the market," he said.

The Minister said 2012 marked the highest ever net foreign inflow of Rs37 billion. In its on-going efforts the Government offered attractive incentives such as a three year half tax holiday for new companies that will be listed with the CSE before December 2013, through its national budget.

Over 800 industry professionals and other stakeholders received diplomas and certificates at the ceremony, of which one of the objectives is to create public awareness through enhanced financial literacy and attract more private investors to the CSE.