Financial and corporate work in Sri Lanka has been intermittent in the last year. Sentiment and outlook remain optimistic from lawyers however, as the pall of war lifts off the country....
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Financial and corporate work in Sri Lanka has been intermittent in the last year. Sentiment and outlook remain optimistic from lawyers however, as the pall of war lifts off the country. "Things have continued to look up in the country," says a lawyer. "There were a flurry of IPOs last year and lots of foreign investment is being established." The negative is that 100% tax on foreign investments in real estate remains a structural hurdle for foreign investors, though firms have not reported this as such a substantial deterrent. On a positive note, the recent liberalisation of exchange control has been viewed with encouragement by both lawyers and foreign companies.
One of the most notable changes in the country's legislative framework has been the notification of the Secured Transactions Act in June 2011. The new provisions will allow the use of movable property, assets that are not land and real estate, to be used as collateral for loans. This change is expected to bring a wider distribution of credit to the country and open the door to greater growth opportunities.
The other key development has been the implementation of the Strategic Development Projects Act, which introduces a tax-free regime for certain projects as part of an incentivisation scheme concocted by the Board of Investment. "There has been talk of restructuring the Board and making changes to the role it plays in the country," comments a partner, "there may be a focus placed on high value investment." Not all parties are sure about this decision however. "Personally I don't agree with this strategy of high value investment, as it may squeeze out entrepreneurs," says a practitioner.
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