Industrial security firms want bar on foreign investment lifted

By Malik Gunetilleke

Sri Lankan security firms revealed that they were victimised under the previous Government, which brought about questionable regulations imposing restrictions on foreign investment in the industrial security sector.

Local firms are now crying out for positive changes in policies, regulations and standards pertaining to the industrial security sector which they believe would help it cope with the development taking place in the country. Security firms believe that foreign collaboration is needed to bring about a more sophisticated security environment and to provide a service on par with international standards.

However, a Gazette Notification No. 1737/9 of 20 December2011 bars local security companies from working in partnership with foreign entities. Companies set up in partnership with foreign collaborators prior to the notification were not affected by the regulation but local firms now believe that the regulations were brought about to protect a State-sponsored security entity set up under the previous government.

The Gazette Notification states that permission would be granted for the issue and transfer of shares in a company up to 100% of the issues capital of such company, to approved country funds, approved regional funds, corporate bodies incorporated outside Sri Lanka and individuals resident outside Sri Lanka subject to the exclusions of money lending, pawn brokering, retail trade with a capital less than $ 1 million, coastal fishing and provision of security services including security, consultancy to individuals or private organisations.

Local security firms have questioned these prohibitions, claiming that it is unfair treatment in the face of the flow of foreign investments into other industries in the private sector.



In a letter addressed to President Maithripala Sirisena, Security Consultants and Investigators International Chairman and Managing Director Nihal De Alwis requested the President to permit foreign participation in the industry stating that his company had been approached by a foreign company to invest a substantial sum of money as well as their expertise to enhance the standard of industrial security in the country.

The letter also highlighted the fact that some security companies in Sri Lanka were not enjoying the same benefits as others while claiming that certain foreign companies that had set up just before the Gazette Notification had been allowed to conduct their business for several years.

He cited that certain companies that were able to collaborate with foreign companies before the Gazette Notification was issued were fortunate but the rest of the industry was left helpless. Meanwhile, the Government under the previous regime also set up its own security firm called Rakna Arakshaka Lanka Ltd., which De Alwis believes is at the centre of the restrictions imposed by the previous regime.

De Alwis stated that after he had been advised by the Deputy Controller of Exchange to take his case up with the Ministry of Defence, he had been told by the Secretary of Defence that he had to consult the Chairman of Rakna Arakshaka Lanka before taking any decision on it. Puzzled by this revelation, he chose to write to the President.

“We want to bring about a reorganisation in industrial security. We want to upgrade the standards of industrial security and bring in foreign investment and many parties have shown interest in investing in Sri Lanka.”

Security Consultant and retired DIG Camillus Abeygunawardena told the Daily FT that this issue had to be dealt with soon, so that a level playing field could be created for the whole industry.

“Some of us believe that this was done with the sinister purpose of protecting certain security firms and to ensure that the other players can’t grow. All that is being asked for is equal opportunity to grow,” he stated.

He also alleged that even the basic uniform regulation that was imposed on all local security companies were not being adhered to by the security firm that was being protected by these regulations, suggesting that the previous Government had a clear agenda in mind to sideline the rest of the industry.

He said that the matter would be taken up at the Cabinet level following the election and that certain high-ranking officials had already shown interest in aiding this cause in order to solve a problem that was affecting the whole industry.