Anjalika Silva – USA

I.                  Purpose: 

To examine all avenues available to find appropriate avenues to address the current foreign reserves crisis with the help of a ready resource of foreign earners as expats for a long-term relationship beneficial to the country and individuals who are a strength that has not been tapped while many possibilities have been overlooked or not explored.

II.              Problem to address:

The current situation with foreign reserves of Sri Lanka is in dire straits. There are options that can be considered beyond borrowing with long term burden on Sri Lanka.  Borrowings for immediate relief with further plans for long term solutions is a need that must be considered for long term.

With the large expatriate population living and earning foreign currency income overseas in professions and even at middle level in stable employment overseas enjoying disposable income that can be rewarded will benefit Sri Lanka if the right approach is taken.  Access to their participation under the appropriate checks and balances to win the confidence of expats will be of immense benefit to the country.  However, there are many factors to consider between countries, international regulations, and permissions.  The most critical condition is the confidence provided to investors with transparent, corruption free security of funds.

Sri Lanka’s decision makers need to acquaint themselves with systems and processes in other countries beyond country-to-country macroeconomic solutions.  The Government must have links to various well-informed representatives of developed countries who can acquaint the government with systems in place that can factor into solutions for Sri Lanka.  Sri Lankan expat groups can provide sources to help the government.  They do not encourage rules and regulations put into effect with lack of subject matter knowledge.

This document is written with respect to possibilities in the USA.  However, a modification of the recommendations made can be explored for other developed nations where Sri Lankan earners can be reached.

III.           Participants:

Participants can be retirees earning foreign currency pensions living overseas with or without dual citizenship and in addition it can consider younger citizens of Sri Lankan birth to park part of their savings in secure foreign currency accounts in Sri Lanka.

Offering benefits to younger Sri Lankan expats will benefit the country with a pool of qualified intellectuals among them who will be encouraged to contribute to informed decision making that is seriously lacking in Sri Lanka.  There is a perception that knowledge is not given importance and proper fact finding, data collection of this population does not take place.

It must be remembered that in the USA as is the case in most developed countries that do not experience shortfall in foreign reserves, the encouragement for savings accounts earning interest is very low.  For example, in the USA, it is 1% or less return on savings investment.

This may be attributed to the larger interest and dependence on investing in stock trading and in the case of employer offered retirement plans referred to as 401K plans that are incentives to reduce and defer lumpsum taxes paid on earnings by contributing to tax deferred plans for later years.

Also, all employees contribute to Social Security and Medicare that are mandated by government throughout their working life.  At the end of 40 quarters or ten years of employment paying this tax, at age 62 or 65 any qualified employee gets a guaranteed pension that can be subsidized with employer retirement plans or other tax deferred tools available.  That part of tax deferred income that does not sit parked in savings can be worked out by the Government exploring international banks that can be permitted to park foreign currency of expat Sri Lankan Born account holders with other conditions as stipulated.

Current Status:  It must also be noted that currently, among foreign nationals of Sri Lankan origin, only those with dual citizenship can open NRFC accounts as it requires an NIC number after obtaining dual citizenship. Dual citizenship takes too long. The NIC card is not an automatic inclusion in the Dual Citizenship process, and it takes a further time interval extending longer than a year as reported by those who have tried.

 A very small population of Sri Lankans who had NIC prior to immigration and taking a foreign citizenship retained their bank credentials using their NIC number prior to converting to a foreign nationality.  For example, in the USA, a permanent resident of US status is retained for 5 years with a Sri Lanka Passport that could provide an NIC for holder prior to completion of 5 years as a PR and gaining US citizenship.  The need to have Dual citizenship for those who accepted US Citizenship cuts out a large portion of the immigrants from opening Non-Resident Foreign Currency Accounts (NRFC).  In such cases requiring dual citizenship acts as a deterrent that also serves no purpose without the NIC.  The large fee is also a deterrent that serves the country no purpose in a rupee fee.

IV.          Foreign Citizens and their Fears:

With the dual citizenship requirement to park foreign earnings in Sri Lanka, there is a remote possibility that prosperous countries may at some point ask for a single citizenship.  This has been expressed as a reluctance to take dual citizenship with Sri Lanka. An open Non-Resident Foreign National type of status with unlimited stay, spending foreign income pensions or transferring savings accounts parked in Sri Lanka is far more feasible.  Expats have many fears even donating to causes due to their inability to assume transparency.

However, pensions earned through Social Security at retirement in the USA, provides an advantage to recipients to enjoy a better standard of life overseas, as in this case in Sri Lanka. It is however insufficient to meet costs in the USA unless qualified concessions can be obtained or other investments/assets are available.   The Social Security pension is a contributory pension that the US Government cannot restrict regardless of where the Sri Lankan born citizen with a US citizenship decides to live. This pension is owned by the citizen as it is a contributory pension.  This was confirmed by informed US authorities.  Even with direct deposit to US bank accounts, they can make electronic transfers from any location if Sri Lanka provides foreign currency accounts that are freely accessible.

It is now established that Sri Lankan immigrants to the US count four generations beyond the first-generation immigrants.  This keeps growing and not all generations will be Sri Lankan born but they can be provided some concessions if they have interest in parking savings in Sri Lanka.  This is a decision to be cleared by the government.

Expanding the above to non-Sri Lankan born foreign citizens with careful thought: 

Exploring the privilege of investing private foreign currency for non-SriLankan will also be worthy of exploration

V.              Conditions to be met:

The Government of Sri Lanka needs to visit these possibilities. Provide for a category of Sri Lankan born foreign citizens to choose to return under a different category while retaining foreign nationality with unlimited time to live in Sri Lanka using foreign currency income.    

The long processing and cumbersome dual citizenship may not be attractive to most people.  Those who try are frustrated by the process and it may not bring a return on their investment.   If they can retain their foreign nationality if they abide by the financial requirements of Sri Lanka and do not engage in money laundering or misuse of their privileges another category will certainly be of benefit all round. Savings income in Sri Lanka will be attractive for retirees to return.   

Such a category should be permitted to stay for indefinite periods if they are not dual citizens.  In the current situation, those without dual citizenship, born in Sri Lanka or of Sri Lankan Heritage can live only 6 months at a time using a 5-year multiple visas.  Those who wish to live longer periods in retirement should be given the choice to do so.

VI.          Government Intervention Required:

The role of the government should be to investigate possibilities, collect data and evaluate the interest among expat Sri Lankans to seek their ideas.  It must however be completely under the control of the account holder and the government assurances must be watertight before people part with their hard-earned savings in full or part for a higher interest rate if parked in Sri Lanka.  These are US Taxpayers, and the Government can negotiate taxation terms to avoid double taxation of foreign nationals who are liable for taxes in their foreign national countries.

The Government must create a well thought out category that is different to the stringent long-drawn-out process of dual citizenship that takes too long for people who need to bring their foreign earnings back to Sri Lanka. If relocating to Sri Lanka, expats cannot wait for delays.  The process should be speedy with no undue hardship for participants trying to help the country.  Appreciation is key.

The Government must also study the use of secured technologies adopted in the USA to provide autonomy to account holders. This is easily done if those who make decisions understand and follow the global trends today.

There is a considerable transfer of funds direct from US$ to rupees in donations and to families and this can be taken into consideration and encompassed in the system to count as legitimate foreign currency coming into the country.   The possibility for large scale money laundering must be plugged and addressed accordingly with close monitoring.

VII.       Participant Expectations:

As referred to above, accounts must be secure, accessible online from global locations, ownership secured with appropriate security and clearly defined taxation implications because US citizens are mandated to file annual tax returns.

It will be an avenue for tax accountants between the two countries to tie up a practice to facilitate tax payments on interest earned and reporting structure set up so that double taxation is prevented. In any case, Sri Lankan banks require foreign passport holders to report funds in rupee accounts in Sri Lanka.

VIII.   Engaging Pre-retired Foreign Currency Earners Overseas:

If the above category is permitted for retirees to park foreign currency accounts and earn higher interest in Sri Lanka, this can be extrapolated to provide the same opportunity for others who are pre-retirement, and their savings will serve to benefit Sri Lanka and the higher interest will help those who are building their resources.

IX.          A transparent system of transfer to dependents in Sri Lanka:

Many Sri Lankans living overseas provide charitable donations to Sri Lanka and help with financial support for family members.  All these transactions can be provided through a system that is quick and convenient for the donor and recipients. Electronic transfers, cyber security for accounts and all the services at the highest level should be available to users.

X.              Encouraging Retirees to Return with foreign Pensions:

The Government must make a close study of the locked foreign assets potential of Sri Lankan born retirees living in the USA and other countries and provide an easy method for them to return with assets in exchange for contributing to foreign reserves.

They should be given the right assurances by making sure their input and expectations are listened to and fulfilled.  This is better for the country than paying for loans and interest at taxpayer’s expense.  These are time sensitive and if the government is serious, they need to work on a plan right away and provide a project plan to those who are entrusted with implementation.  This cannot take on the face of the long drawn-out dual citizenship that discourages most Sri Lankans from applying with long waits and the package of the NIC is another operation that impedes opening accounts with foreign currency.  This is a totally unproductive practice that is not at all beneficial to the country or the account holders.

With time, the benefits to individuals will be guaranteed with growing interest by depositors.  The key is an efficient, well-planned operation that is a lot to expect but a dire need.

XI.          Concessions to Patriotic Citizens helping Sri Lanka

As a note of appreciation for patriotic Sri Lankans of Foreign citizenship, a simplistic identification card provided by the government with their identity will be widely accepted. This is particularly as a courtesy card when those who visit Sri Lanka are treated with some courtesy that is lacking now.

Such a tool should be made known to immigration officers and front-line greeters of patriots who can report shabby treatment on entry to Sri Lanka.  Personal stories reveal experiences that have offended returning immigrants with their first encounters on entry.  With a card to distinguish those who help the country, this can be overcome.

Very little is done for those who live decades away from Sri Lanka but continue to serve their home country without reservations or rewards.  This has been ignored for decades and is a loss for the country. The opportunity to engage expats in productive ways that benefit them too will be appropriate to investigate.

Some concessions to live indefinite periods with foreign citizenship, enjoy the higher percentage interest on foreign currency savings accounts that can be opened on proving birth right is a simplistic beginning to an expanded advantage to Sri Lanka.

This is presented on behalf of the Executive Committee of the Sri Lankan American Action Coalition (SLAAC)