The Deputy Secretary to the Treasury at the Ministry of Finance and Planning, Dr. B. M. S. Batagoda last week said that the government is finding it difficult to implement some of the proposals put forward by the private sector towards the development of the country’s equity market as there have been disagreements on some issues within the sector itself. Addressing a panel discussion on the topic of ‘Capital Markets, Integrity and Development’ organized by the European Chamber of Commerce of Sri Lanka, Dr Batagoda citing an example said that although some feel that government intervention in the equity market was necessary some others felt otherwise.
“Over the last five years, we have granted every possible proposal made by the private sector. However, sometimes proposals that come to us are not clear because there are oppositions within,” Dr Batagoda told a forum held at the Galle Face Hotel last week.
He noted that every time, the government was planning to put money into the capital market, some stakeholders who perceive the market as non performing have raised concern and therefore the government was taking a cautious approach.
“The government’s policy is to encourage bigger Corporates to enter the market leaving the banks to fund the smaller companies”, he said pointing out that there is nothing wrong with the rules as the market has both performed exceptionally well and done not too well when the same rules were in place.
Meanwhile, Member of Parliament Dr. Harsha de Silva speaking on the topic of ‘importance of an independent regulator’ said that investors have lost confidence in the capital market as there has been a regulatory capture by a special group of investors with vested interests.
“A regulator is supposed to ensure market doesn’t fail. The regulator in this case is in the form of government intervention and they are required to deal with all parties (whether they be big or small investors) in a fair manner. However, the situation with the stock market in Sri Lanka is that it is the special group that regulates”, Dr. Harsha charged.
He noted that as soon as the new Chairman of the SEC, Dr. Nalaka Godahewa took office, he did some changes by shuffling the people who were in charge of surveillance.
“We also heard that SEC sent letters to 50 odd investors saying that their cases of suspected fraudulent transactions under investigation are exonerated”, he said.
He added that one of the advantages these captors have is that they know what is happening in the market and these people have a lot to lose in a strong regulatory framework”.
“In Sri Lanka nobody has gone to jail for securities fraud but cases have only been compounded and therefore the fear of wrongdoing doesn’t exist”, he highlighted.