Sri Lanka to widen negative list for foreign investments

ECONOMYNEXT – Sri Lanka will expand a negative list for foreign investments in an unspecified set of industries, a government policy document for the next five years said.

Sri Lanka will restrict” entry of foreign enterprises into industrial areas that are easily handled by domestic businesses” the policy document said.

At the moment Sri Lanka has restrictions on foreign investments into areas like arms manufacture.

There are also restrictions on import export trade, which has prevented foreign firms setting up trading operations like in Singapore or Hong Kong.

In addition there are ownership limits in areas like, warehousing and shipping which has prevented Sri Lanka from fully realizing its trading and logistics potential from its location, unlike Singapore and Hong Kong.

In the ancient Sri Lanka, when the country was a global trade hub, foreign traders were allowed to live and trade in the capitals at the time.

Sri Lanka relaxed entry of foreigners into many areas as part of the opening up of the economy after 1978.

Sri Lanka expropriated foreign investors, especially in agriculture, amid growing nationalism after independence from British rule.

External trade was also blocked as a money printing central bank set up in 1951 triggered foreign exchange shortages, which due to Mercantilism was attributed to trade or current account deficits, analysts have said. (Colombo/Dec16/2019)