Sri Lanka Trade Chambers Expect Business Friendly Budget 2011

17th October 2010, www.sundayobserver.lk, By Lalin Fernandopulle

Trade chambers in the country are anticipating a business and industry friendly budget for 2011 which is to be presented in parliament next month.

President, National Chamber of Commerce of Sri Lanka (NCCSL), Lal De Alwis said that the chamber has called upon the government to continue the tax holidays given to the agricultural sector.

“There is immense potential for agricultural development in the North and the East following the end of the conflict. Tax incentives will help increase investments in the agricultural sector which contributes a major share to the growth of the economy”, he said.

The government expenditure for 2011 is expected to increase to around Rs. 1.9 trillion from an estimated Rs.1.28 trillion this year following the need for more spending on post conflict development.

De Alwis said the tax system should be simplified and made people friendly to widen the tax base. The number of taxes should be reduced and those evading should be brought into the tax net.

The NCCSL has requested the government to introduce a special interest scheme for senior citizens who today do not get a reasonable return on their investments.

Bank interest rates have been slashed to a single digit tightening the belt on pensioners and low income earners who are already burdened with the staggering cost of living.

Chairman Ceylon National Chamber of Industries (CNCI), Sunil Liyanage said the CNCI has proposed that the duty rates for the footwear industry be maintained for the benefit of the industry which is fast developing.

A 30 percent duty or Rs. 1,000 per pair of imported shoes is levied.

The CNCI has requested that the import of raw material and machinery be made duty free. The chamber has called upon the government to abolish all levies to support the growth of the footwear industry.

“CNCI has requested the removal of cess on raw material used for the plastics industry. We have also requested a 25 percent depreciation on import of footwear industry machinery”, he said.

The chamber head said there should be a consistent national industrial policy for Sri Lanka and added that CNCI has requested the Ministry of Industries to set up a joint consultative body at the Ministry with the participation of chambers.

CNCI has proposed to set up a statistical unit to collect data on local industries.

President, Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL), Kosala Wickramanayake said the chamber expects a business friendly budget next year to expedite development in the country.

“FCCISL expects the recommendations of the Tax Commission to be implemented to create a people friendly tax culture in the country. The chamber hopes that there will be less taxes for the SME sector in the country”, Wickramanayake said.

The Finance Ministry is considering proposals to reduce tax rates on personal and corporate income and financial institutions to put an end to tax concessions that are not beneficial to the country.

Bridging the budget deficit, balance of trade, creating a people friendly tax system, increasing foreign direct investments and accelerating economic growth are some of the major challenges of the 2011 budget.

Chambers are expecting the 2011 budget to provide incentives for vocational training, SMEs, agriculture, industries, education and health.

Wickramanayake said bureaucracy and red tape in state institutions that delay approval of projects should be done away with to accelerate economic growth in the country.

“Land should be allocated for agriculture, tourism and industrial development”, he said.

President, Sri Lanka Chamber of Small Industry (SLCSI), Aloy Jayawardene said the chamber hopes that the next budget will focus on the SME sector which plays a pivotal role in the development of the country.

“The problems of the SME sector has not been properly addressed and as a result the sector is unable to compete and develop enterprises”, he said.

Jayawardene said the chamber expects a bail-out package for SMEs who are facing enormous difficulties due to the high bank interest rates. The Appropriation Bill for 2011 will be presented in parliament next week and the Budget on November 22 by the President.

Proposals from the National Chamber of Exporters (NCE), the premier chamber for exporters concentrate on the sectors of coconuts, rubber and payments on VAT.

In the sector of coconuts the NCE proposes reducing the duty on the import of vegetable oil by 15 percent or Rs. 20/= per Kg, whichever is higher, with all other levies in place or export rebates to be granted for all coconut kernel products.

* Proper utilisation of the rubber CESS fund, safeguards against unfair trade practices, removal of levies on synthetic rubber, removal of levies on natural rubber imports, needs of market information and marketing and distribution are proposed by the NCE to increase the contribution from rubber to the national economy.

NCE also proposes the payment of VAT for local service providers (sub contractors).