Finance and Mass Media Minister Mangala Samaraweera while commending the move to set up a Board dedicated to small and medium scale entrepreneurs (SMEs) at the Colombo Stock Exchange (CSE) said the country had been having a state led economy for a period far too long and that it will be revised with more liberal policies that enable entrepreneurs to excel and contribute much more to the economy from what they do now.
Speaking further at the launch of the SME Board titled CSE ‘Empower’ a listing platform to encourage small and medium sector entrepreneurs to raise capital through the equity markets the minister said the SME Board will be a vital tool to complement the ‘Enterprise Sri Lanka’ initiative to develop entrepreneurship in the country.
“ Entrepreneurship is in our DNA. Our forefathers had conducted trade with the rest of the world several centuries ago. The Roman and Persian coins found in the country are a proof of merchandising that took place between our country and the West. The ‘Enterprise Sri Lanka’ program was launched to revive the entrepreneurial skills of youth who had been discouraged due to obstructions to funding. The new initiative will provide not only access to funding but also almost zero interest loan schemes to enable youth to expand from the level of a start up to a fully grown enterprise in the country,” the minister said.
He said the debt-led economy must be changed. The 15 tailor made loan scheme provides highly concessional interest rates. Lack of collateral had impeded youth from seeking funds for self employment and enterprise development. Issuing loans will be based on the plan of the project. Companies must evolve to be large entities and take the first step to the capital market.
“I understand that the SME Board of the CSE will provide flexibility to encourage listing of for small enterprises and gradually expose them to the expectations of mature capital markets. The launch of the new Board will help in the evolution of mature capital markets in the country,” Samaraweera said.
Securities and Exchange Commission Chairman Ranel Wijesinha said the SMEs have not reached their full potential because of the absence of a medium for institutional fund harnessing and for the channeling of funds for industrial and economic development.
“Empowering SMEs is nothing new as incentives to propel small and medium enterprises were initiated 29 years ago. However, fiscal and investment incentives did not provide for meaningful investments in the capital market,” Wijesinha said and called upon the ADB, the World Bank, the banks and the chambers to do much more than what they are doing currently in the country for its development.
To be eligible for listing at the CSE ‘Empower’ Board a company should have a stated capital above Rs. 25 million and bellow Rs. 100 million at the time of listing and in an Initial Public Offering (IPO) the applicant entity should have a stated capital not less than Rs. 10 million at the date of the listing of application. The company must be in operation at least two years immediately preceding the date of application and total assets should be of or below Rs. 600 million as at the date of the initial listing.
Colombo Stock Exchange CEO Rajeeva Bandaranaike speaking on the overview and framework of the SME Board said timely disclosure of information pertaining to the company or its shareholders that is likely to affect the share price should be disclosed to the CSE.
“Sponsor should guide and assist SMEs in the listing process and also abide by the listing rules,” he said.