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| Sunday, 24 April 2005 |
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Business |  |
| News Business Features Editorial
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Call to
diversify leasing activities
by Hiran H. Senewiratne The overall performance of the leasing sector in Sri Lanka over the last five years has recorded a modest growth despite economic and industry specific problems, Deputy Governor of the Central Bank Dr. Rani Jayamaha said. On a sector basis as at end 2004, Sri Lanka's leasing businesses mainly concentrated only on transportation, Dr. Jayamaha told the Policy Makers' Conference organised by the Asian Centre for Lease Education (Pvt) Ltd. The theme of the event was "Leasing the Way Forward. "It is time to diversify the activities of leasing companies to other areas, which will contribute actively to the growing business and economic development of the country,"she said. She said that leasing can become an important financing technique for Small and Medium Enterprises (SMEs) which needs to improve access to finance especially for the SME sector to acquire capital equipment and application of new technology. There are significant opportunities emerging in the SME sector in the post tsunami reconstruction and development. It is worth consulting the newly established SMB Bank, Dr. Jayamaha said. Dr. Jayamaha said that the leasing industry should popularise potential growth sectors such as gems/jewellery, fruits/vegetables, IT, fisheries, light engineering goods, granite/chemicals, cement and value-added textile products. The supply of lease financing by leasing companies to firms exporting these products will reduce the market risk to a great extent. Therefore leasing companies are required to move out of the big cities and develop new clientele in the outstations, the Deputy Governor said. The commercial and specialised banks venturing into the leasing industry will enable them to provide facilities at lower rates to move forward the economy, she said. She said that for the purpose of regulating the leasing business, the Central Bank took the initiative of introducing the Finance Leasing Act of 2000 to facilitate smooth and orderly transactions in finance leasing, safeguard the interests of parties involved and to supervise and regulate the leasing industry. Chairman of the Leasing Association Dr. Dilanjan Soysa said that in the last few years the leasing industry recorded growth and it has transacted over Rs. 65 billion worth of equipment over the last five years. He said that increasing the VAT from 10 per cent to 15 per cent has created a major impact towards the leasing industry, which has resulted in a drop in government revenue, he said. He said that 95 per cent SME sector entities are not registered with VAT. Chairman and Chief Executive Officer Amembal and Associates Sudhir Amembal said that leasing is significant for the development of the economy of any country. Amembal, the world's foremost authority in lease education, consulting and publication, a consultant to the World Bank, said that Sri Lanka's leasing industry has room for development. He said that Sri Lanka's leasing companies only concentrate on a few areas and it needs to be expanded to other areas. |
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