Business

Cabinet approves the ‘Dhammika visa’, economists sceptical

  • Dhammika Perera’s new visa for foreign investors gets Cabinet nod
  • Prof. Sirimal says no foreigners want to stay in SL amidst shortages
  • Prof. Colombage says ‘nuts-and-bolts’ solutions inadequate 
  • Dr. Senarath warns of money laundering risks

 

 

By Shenal Fernando

Economists question the effectiveness of the Government’s new long-term residence visa issuance methodology for foreign investors aimed at addressing Sri Lanka’s foreign exchange liquidity crisis, pointing out that Sri Lanka’s current economic crisis requires the development of the country’s foreign exchange earning potential through export development instead.

The Cabinet of Ministers had on 25 April 2022 granted approval for the revised visa issuance methodology, proposed by President Gotabaya Rajapaksa as Minister of Defense, for long-term residence visas to implement the “Golden Paradise visa programme” proposed by Vallibel One Chairman and Hayleys Co-Chairman Dhammika Perera.

Speaking to The Morning Business yesterday (26), University of Colombo Department of Economics Senior Professor Sirimal Abeyratne stated that when the overall economic engine of the country has broken down, these measures amount to replacing a few nuts and bolts, which will have no effect. The current economic crisis of the country requires an overall repair and restoration.

“The fundamental cause of the current economic crisis is the weak foreign exchange earnings. In order to address this we must achieve export growth. The reason for the weak growth in exports is the lack of investment in the export sector. Investors are hesitant to invest in the country due to a whole set of problems. Without addressing these issues, when we try to fix minor issues such as this (long-term residence visa issuance), we might derive some short-term benefits but that doesn’t address the current economic crisis in the country,” he opined.

He further pointed that Sri Lanka already has already implemented a similar residential visa mechanism to attract foreigners to bring money to the country under the name “My Dream Home Visa Programme”, under which senior foreign nationals are granted a renewable residential visa for two years, provided they deposit $ 15,000 in a fixed deposit account in any approved bank in Sri Lanka.

Prof. Abeyratne questioned the performance of the aforesaid visa programme, and claimed that this new long-term residence visa issuance will suffer a similar fate, as no foreigner would want to stay in Sri Lanka due to the prevailing energy crunch and commodity shortage.

Similar sentiments were expressed by University of Colombo Faculty of Arts Department of Economics Senior Lecturer Dr. Shanuka Senarath, who, speaking to The Morning Business yesterday, questioned why a foreigner would want to live in Sri Lanka, considering the current situation in the country.  

He also claimed that this new initiative could lead to another wave of money laundering and claimed that “our politicians who have black money abroad will pay dummy foreigners to bring it to Sri Lanka to start a business, and then sell it to the person who funded it”.

Accordingly, in terms of the new methodology for the issuance of long-term visas, any foreigner or director of a foreign company, their spouses, and their dependents shall be eligible for the issuance of a long-term residence visa for a period of 5-10 years if they invest at least $ 75,000 or more in condominium properties within Sri Lanka. 

Furthermore, for the implementation of the “Golden Paradise visa programme”, the new visa issuance methodology permitted the issuance of a 10-year resident visa for foreigners who deposit at least $ 100,000 in a local commercial bank recognised by the Central Bank of Sri Lanka.

Perera had presented the proposal to President Rajapaksa as a viable initiative to help the country overcome the current foreign exchange crisis.

This proposal was submitted by Perera at the meeting held on 21 February 2022, which was convened by the Government and chaired by the President to call on private sector leaders to invest in local industries and to lend a hand in the nation-building process.

This proposal by Perera was reportedly approved by the President, who has subsequently informed the relevant authorities to take the necessary steps for its implementation.