Harsha says stock market doing well

Setting a new record, Rs. 26.7 billion in net foreign investment has been channelled during the last eight months through the stock market.

According to Deputy Minister of National Policies and Economic Affairs Dr. Harsha de Silva, the Government has identified necessary changes, which will help to increase net foreign inflow on the stock market and capital markets.

“In 2015, foreign investors withdrew Rs. 5.3 billion from the stock market against and Rs. 383 million was received as fresh investment. However, we are happy to inform the House that by 11 August this year foreign investment in the stock market has surged to Rs. 26.7 billion, which is the second highest net foreign inflow recorded by the Colombo Stock Exchange,” said the Deputy Minister.

The Deputy Minister, responding to a question for an oral answer raised by UPFA Joint Opposition MP Bandula Gunawardane, stated that a total of Rs. 67.5 billion worth of foreign investments had been reported since the income from dividends on investment in listed shares by foreign companies were exempted from income tax as per proposal No. 199 of the 2016 Budget.

“The former Government followed pump and dump where black money was widely in circulation. This money was brought from places such as the British Virgin Islands and was used to jack up prices where the share price of some poultry company went up to Rs. 250 from its market rate of Rs. 35. The same shares were then getting dumped at Rs. 180 where EPF money was used to purchase. This was the black money, which was exempted from tax during that time. As a nation, we have a fair policy and black money is taxed. We will not use the same policy to tax the ordinary people for their little investments,” clarified Dr. de Silva, who assured that the Government had no plans to introduce the Capital Gains Tax proposed in the 2016 Budget to the share market in the future.

The Government plans to boost investment include passing a new Securities and Exchange Commission Act by 2017 to further regularise capital markets, demutualise the stock exchange with the aim of having high productivity, introducing the DVP system to manage risk, creating a central counterparty by listing shares of State-owned companies on the Colombo Stock Exchange to increase the size of the exchange and the liquidity, popularise unit trust among small investors, conduct programs to increase public awareness on capital markets and to update all the rules and regulations pertaining to investments.