August 04, Colombo (LNW): Sri Lanka has taken a significant step toward liberalising its capital framework, as Parliament’s Committee on Public Finance (CoPF) has approved a new set of regulations aimed at expanding the capacity of local businesses to invest abroad.
The decision signals a strategic shift in economic policy, focused on fostering international competitiveness among domestic enterprises.
The revised rules, formalised through a Gazette notification and now officially ratified by the committee chaired by MP Harsha de Silva, raise the thresholds for outward investment, while simultaneously simplifying the procedural framework that governs cross-border capital movement.
Under the updated structure, the outward investment cap for companies listed on the Colombo Stock Exchange has been increased from USD 500,000 to USD 750,000. Meanwhile, the limit for unlisted companies has been raised from USD 150,000 to USD 200,000.
These revised ceilings are intended to accommodate the growing demand among Sri Lankan firms for overseas expansion, particularly in emerging sectors such as IT services, software development, and digital infrastructure.
In an effort to support larger ventures, the new policy permits companies to source up to USD 2 million in external borrowing, provided such arrangements fall under the purview of the Central Bank of Sri Lanka. Investments exceeding this threshold will continue to require special regulatory approval, preserving a measure of oversight on substantial capital outflows.
To enhance operational efficiency, the guidelines mandate that all overseas investments be channelled through a designated Outward Investment Account (OIA), ensuring transparency and regulatory traceability. The Central Bank has also granted broad authorisation to licensed commercial banks to process such transactions without delay, streamlining what was previously a time-consuming and bureaucratic process.
Central Bank representatives also clarified that short-term supplier credit transactions conducted on DA (documents against acceptance) terms will continue to be treated as current account transactions, and will not be subject to new limitations—providing further reassurance to exporters and importers alike.
The reforms were enacted through an Order issued under Section 22 of the Foreign Exchange Act, No. 12 of 2017, and published in Gazette Extraordinary No. 2441/14 dated 18 June 2025.
