Port City Colombo has officially announced the gazetting of two critical regulations, Offshore Banking and Offshore Banking – Prudent Management and Confidence, for commercial operations within the Colombo Port City Special Economic Zone. This milestone was marked by Gazette Notifications 2394/66 and 2394/67 dated July 26, 2024. These regulations are a significant step towards establishing Port City Colombo as a regional offshore financial hub in South Asia.
Xiong Hongfeng, Managing Director of CHEC Port City Colombo Ltd., stated, “We are pleased to announce the gazetting of offshore banking regulations for commercial entities setting up operations within Port City Colombo. These core regulations will form the foundation for a progressive, business-friendly environment, enhancing global investor confidence and promoting increased FDI inflows into the Sri Lankan economy.”
The new regulatory framework ensures that Port City Colombo is insulated from domestic macroeconomic challenges, allowing investors to transact in designated foreign currencies under favorable business conditions. Similar to other competitive economies like Singapore and Dubai, investors will enjoy greater trading freedom, full capital and profit repatriation, and attractive tax exemptions. These regulations assure investors that their funds will be safeguarded, bolstering Sri Lanka’s position as a regional FDI hotspot.
The Colombo Port City Economic Commission is now accepting applications from the following entities to engage in offshore banking within the Special Economic Zone:
- Companies incorporated in Sri Lanka and licensed as commercial banks under the Banking Act.
- Companies incorporated outside Sri Lanka, registered as offshore companies under Sri Lanka’s Companies Act, No. 07 of 2007, and licensed under the Banking Act.
- Companies incorporated outside Sri Lanka, registered as offshore companies in Sri Lanka, and licensed to engage in banking under any other country’s laws, though not under the Sri Lankan Banking Act.
The regulations permit commercial entities to engage in various offshore banking activities, including transactions in designated foreign currencies with other offshore units or non-residents, acceptance of deposits from authorized persons or non-residents, borrowing in foreign currencies from non-residents, and other transactions authorized by the Colombo Port Economic Commission with the concurrence of the Central Bank of Sri Lanka.
With these regulations in place, Port City Colombo aims to lead Sri Lanka towards becoming a significant regional offshore economy and a commercial powerhouse in South Asia.