The moment for investors will arrive in 2018 : Reforms set stage for Lanka to join first world | Sunday Observer

The moment for investors will arrive in 2018 : Reforms set stage for Lanka to join first world

Dulindra Fernando
Dulindra Fernando

The recent introduction of legislative reforms such as the new Inland Revenue Act, Foreign Exchange Act, Securities Exchange Act, together with a business-friendly Budget has set the legislative stage for Sri Lanka to join the first world, a top Investment Fund Manager said last week. According to Managing Director of Ceylon Asset Management Co. Ltd, Dulindra Fernando, the reforms while enabling the government to raise tax revenue, will facilitate a transparent foreign exchange management regime supporting foreign investment and a well regulated capital market enhancing the prospects of listing some exciting companies.

“The current valuations of the Colombo Stock Exchange at a Price Earnings (PE) ratio of 10.6, is even less than half the valuation of Indian stocks and therefore presents great investment potential. This attractive PE valuation was last seen as far back as July 2009 and therefore it appears that the moment investors waited for, new economic and investment reform, attractive valuations, in a peaceful Sri Lanka has finally arrived,” Fernando said.

He outlined that the proposed listing of State Owned Enterprises (SOEs) on the Colombo Stock Exchange will energize the capital market and offer exciting new opportunities for foreign investors to return. On the other hand, the SOEs will gain access to investor capital for growth and improve profitability by adopting a robust corporate culture.

Commenting on the path to unlock real estate value in Sri Lanka, Fernando advocated that Sri Lanka should follow the Singapore and Hong Kong model, where the Real Estate Investment Trusts are listed on the stock exchange.

“This has helped drive property momentum for decades bringing profits to investors as well as liquidity for real estate developers. In time, foreign investors will recognize the vast opportunity of Sri Lanka re-emerging as part of the Maritime Silk Route and invest in Colombo’s real estate opportunities,” the investment fund manager highlighted.

He pointed out that the Sri Lankan Government which has embarked to position Sri Lanka as the regional service hub of South Asia may undergo uncertain beginnings like Singapore and Dubai which resolved a host of issues along the way to reach hub status in shipping, tourism and finance.