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We suggest that the

1. Focus of the budget be on:

(a) Reduction of budget deficit.

(b) Improvement of Productivity in all sectors, be it manufacturing, services and agriculture of Private Sector and Government.

(c) Promotion of Exports.

(d) Improvement of infrastructure.

Some of the areas that must be looked at are.

(i) The pruning down of all expenditure in the State Sector, cutting out wastage.

(ii) Rationalising government departments and corporations and closing down those that are unnecessary. We suggest a management review of the need and sizes and scope of Government Departments and Corporations. The earlier system of Treasury control on expansion and creation of new position etc. should be brought in.

(iii) Massive expenditure is incurred on Local Bodies, Provincial Councils, the Central Government. Work is often duplicated. A rationalisation of function must be examined. This will not only eliminate unnecessary expenditure but the people too will be able to get their work done faster.

2. We advocate targeting of welfare activities and elimination of waste and corruption.

3. Government officers must be held accountable for their acts of omission and commission.

4. Appoint Chamber representatives to Government Boards.

5. Policy directives for all State activities must be given to last for the next 4/5 years. Irregular changes in policy frustrates investment.

6. Holidays should be curtailed. Payment to the entire workforce must be based on performance.

7. Gear up the Port and Customs to ensure that goods are cleared within 24 hours. (In Dubai clearing is done in 4 hours). The Customs and Port must work together to achieve this. We feel that Colombo Port is losing opportunities to other Ports in the region.

8. Infrastructure is in a depleted state. Priority must be given to the improvement of roads, major highways and the railways. These must be developed to ease congestion. Target dates should be fixed for building and completing new highways. This can be done even with limited resources. We advocate that Railways gear itself on a priority basis to transport containers thereby easing congestion on the roads and increasing the revenue of the Railway.

9. Since environmental concerns have been cleared by the experts, the Norachcholai coal power plant must be built.

10. Purely trading activities must be done by local companies. Foreign firms must be restricted to manufacturing sector. This is the practice in many neighbouring countries.

11. On policies of the WTO all SAARC countries should get-together to ensure that our concerns are met.

12. The 40% surcharge on duties levied at present must continue in order to safeguard local industries.

13. Industries must be encouraged to relocate to industrial zones by the granting of tax incentives such as 100% capital allowance of relocation expenses. Industries based in rural and less developed areas be given tax and other incentives or special infrastructure subsidies to offset their additional operational cost. Provision of power supply at reduced cost is an example.

14. On government tenders a 20% preference granted by Financial Regulations to local manufacturers is not being complied with. This should be strictly followed. Government organizations must offer specific volumes or quantities of supplies to local industries or services at the lowest price of the foreign tender.

15. Present mechanism for the operation of Parate Execution is not satisfactory as it is weighted in favour of one party. Restructuring of enterprises must be examined by banks, etc., as is done in countries such as India and the USA. Provision for an appeal to an independent body is a necessity.

16. The local textile industry is in a state of collapse due to imported textiles being duty free. A measure of duty must be reintroduced to help the revival of the textile industry.

17. The concessions granted to BOI and non-BOI companies must be merged and the same concessions should apply for both sectors.

18. In order to encourage value addition Taxation must be linked to value addition.

19. Entry and Exit of production facilities and nature of businesses are now of shorter duration due to fast changing global trading. Thus enterprises must be able to avail of the capital allowance within one or two years.

20. Small Inner Core Cabinet must function to direct and monitor Exports. Exporters forum too should be reactivated.

21. Exports should be encouraged with all possible incentives. Incremental increases in exports must be encouraged by allowing incremental profits to be tax free.

22. The Investment Tax Allowance (commonly referred to as the ITA) which was introduced by the government in the budget proposals of 1997, should be reintroduced.

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