Domestic producers to gain; defence spending on the rise
The Business for Peace Alliance (BPA), a network of 23 regional
business chambers, welcomes the budget proposals which include
strategies to develop rural and national infrastructure and incentives
for domestic producers.
However, given the increase in defence expenditure in the context of
the global financial crisis and the recessionary wave, it is doubtful
whether the expected benefits to producers and consumers can be reaped.
Though not as massive as last year, the increase in defence
expenditure is nonetheless likely to impose cut backs on proposed
development projects and social welfare.
The continued warfare is likely to inhibit the proposed development
projects, especially in the Eastern Province.
The BPA hails the proposed regional infrastructure development
projects and believes that such investments will lead to regional
inclusivity and empowerment in the process of economic development, a
cause that the BPA has been advocating since its inception in 2002.
In this sense, the development of Galle as a world heritage city is
commendable. It is hoped that the development of the Galle harbour will
benefit not only tourism but also inter-regional trade and commerce.
It is expected that the proposed increase in cess taxes on imported
items such as furniture, leather products, garments and ayurvedic
products will have a positive impact on domestic production, especially
the regional SMEs.
The removal of import taxes on raw material for leather and
handicraft industries is a positive move directed at encouraging
domestic production. However, the BPA emphasizes the need to make
appropriate technology, access to the market, and infrastructure
available for SMEs to yield the anticipated positive outcomes.
The reduction of VAT and the raising of tax brackets are seen as an
encouraging move towards the development of SMEs. On the other hand, the
BPA hopes that the moves proposed by the Government to encourage
domestic production do not signify a return to the contested import
substitution policies. |