12 August 2024 01:10 am Views - 179
SJB Leader Sajith Premadasa explaining their plans to transform country into a competitive financial hub, while alliance members Kabir Hashim and Dr. Harsha de Silva look on.
Pic by Pradeep Dilruckshana
By Nishel Fernando
Opposition Leader and Samagi Jana Balawegaya (SJB) Presidential Candidate Sajith Premadasa has unveiled a comprehensive strategy aimed at transforming Sri Lanka into a competitive financial hub. His plan includes turning the Colombo Stock Exchange (CSE) into a technologically advanced, multi-asset class exchange.
Speaking at the Capital Market Development Summit: Challenges and Opportunities in Sri Lanka, organised by SJB in Colombo last Friday, Premadasa highlighted CSE’s “negligible progress” despite becoming the first South Asian stock exchange to introduce a scripless trading system in 1991.
“The CSE has made very little progress in the last 30 years. As a result, foreign investors have been compelled to seek investment opportunities elsewhere, depriving Sri Lanka of valuable foreign exchange inflows,” Premadasa stressed. He proposed creating a technologically advanced, multi-asset class exchange connected to numerous regional and international exchanges. This infrastructure, he argued, would attract foreign investments by offering a reliable and efficient trading environment, enhancing liquidity, and increasing market depth.
Premadasa shared that, under an SJB government and with the support of industry stakeholders, the market capitalisation would be increased to 75 percent of GDP from the current 18 percent.
“As a starting point, we aim to increase our market capitalisation to GDP ratio to 75 percent, with the next step being to reach the global average of 107 percent. To achieve this, we need a vision for the development of our capital markets and a strategy to realise this vision. I invite all stakeholders to work together to develop this strategy, as you already possess the necessary knowledge to achieve these important objectives,” he said.
Premadasa emphasised the need to introduce new asset classes, such as short selling, futures and options, derivatives, and commodities, without waiting for the second exchange in Colombo Port City to commence operations.
“While the second exchange has been designated for Port City, we need to leapfrog by setting up a multi-asset class second exchange on the mainland until the Port City is completed and the relevant rules and regulations are finalised. We should then introduce a range of asset classes, including short selling, futures and options, derivatives, and commodities. The inclusion of commodities trading is particularly important as it will diversify market offerings, stimulate economic activity, and stabilise prices for essential goods,” he elaborated.
Additionally, Premadasa outlined plans to introduce a transparent and electronic system for bonds and foreign exchange trading.
“We should implement a transparent and electronic system for bonds and foreign exchange trading, ensuring the public receives the best rates. We propose conducting an international tender in a highly transparent manner,” he added.
Regarding cryptocurrency, Premadasa stressed the need for an in-depth study before proceeding with such initiatives.
“We should conduct a thorough study to assess the pros and cons of establishing a strictly regulated cryptocurrency exchange. It is crucial that appropriate studies are carried out before embarking on such an initiative,” he stressed.
Premadasa also emphasised plans to popularise unit trusts at the grassroots level in Sri Lanka, similar to practices in India.
“We will promote unit trusts at the grassroots level to those who are not financially literate. The unit trust industry has flourished in neighbouring India; given that the Sri Lankan population is more literate, we should aim to replicate India’s success,” he said.