Unwarranted taxes and ambiguous policies:

Business community disheartened with Govt

by Lalin Fernandopulle

The business community is displeased with the Government's business policies incorporated in the interim Budget and the negative image it has created about the country to foreign direct investors.

The Super Gains Tax imposed on large companies with retrospective effect has stirred a hornet's nest among big corporates which accuses the government of being unfair when certain companies made large undue profits under the Rajapaksa regime.

The 25 percent tax imposed on companies that have made a profit exceeding Rs. 2 billion during the 2013-14 financial year has raised many eye brows. The tax on telecommunication companies too have a negative bearing on the industry.

Besides, the failure to punish the culprits of the previous regime and creating a national government with those who were branded as ace rogues by people have created suspicion in the business community of the government's commitment to tackle corruption and promote good governance.

The recent controversial Treasury Bond issue by the new Governor appointed by the UNP has made a serious dent on the confidence businessmen had on the government.

Former Chairman and CEO of a large number of public sector corporates engaged in the construction industry, Dakshitha Thalagodapitiya said that the track record of the government and parastatal agencies in relation to procurement had been dismal in the recent past.

The procurement of goods and services by the government has been associated with corruption. “We are happy that the government has recognised the need to improve the procurement procedures and set up a national procurement commission," he said.

"People would argue that such regulatory measures could jeopardise development. Nevertheless my personal belief is that a higher degree of regulation is needed for public procurement. We have allowed corruption to go unchecked. Corruption has been rampant in the recent past," Thalagodapitiya said.

"Let us set up a clean public sector procurement process and stop the entertainment of unsolicited bids.

There is a need to improve government procurement procedures and set up a dedicated regulatory authority,” he said. Hatton National Bank Former Chairman Rienzie Wijetilleke questioned why don't the elected leader and the appointed leader together have all 225 legislators as Ministers and form a permanent National Government. Chevron Lanka PLC Managing Director Kishu Gomes said, "We are awaiting clarity around policies governing investment by the private sector."

While there has not been any statements undermining the importance of the private sector there has not been any policy statement by the new government.

Super gain tax imposed on companies that made a bottom-line of over Rs 2 billion in 2014 raises several questions. Will the government bring back such arbitrary taxes when it is short of cash to run the government.

Most companies that are affected are into overseas operations bringing in profits from overseas markets. What is the government policy for local companies crossing borders to create wealth for the country?

Companies merge to form conglomerates for synergy and competitiveness. But this move discourages the companies to consolidate and be large enough to compete effectively.

"Look at the implications on share prices of the large companies. Who would confidently invest in such companies when the tax policy is arbitrary?," he queried.

Shippers’ Academy CEO Rohan Masakorala quoting Henry Ford said, ‘coming together is a beginning, keeping together is progress, working together is success’. This is what is needed to sustain business.

Business needs a stable government, direction and fast tracked policy implementation and monitoring to achieve growth, Masakorala said.

Senior Deputy President of the National Chamber of Commerce, Sujeiva Samaraweera said the 24-hour Customs operation is a step towards achieving efficiency.

The 24-hour operation should not be only done by the Customs but financial institutions and departments connected to approvals should also follow the same regulations.

"We are still waiting to witness the improved efficiency of the Ports Authority and the Shipping Corporation," he said.

"It is critical that the government should continue to improve infrastructure such as airports," Samaraweera said.

The government should proceed based on national policies rather than people centric or political centric actions.

"Therefore, we believe that the implementation of viable projects should continue as the money spent on these projects belong to the citizens.

"It is the responsibility of the Government to implement business-friendly policies without delay to benefit the business community. While appreciating the level playing field created by the government to carry out business activities, it would be too premature to comment on efficiency at present," he said.

Heladiv Group, Chairman Rohan Fernando said that people elected President Maithripala Sirisena primarily on three main issues, to bring about change to the draconian and overbearing Presidential powers, to have a President responsible to the people through the Parliament, arrest the vast scale misuse of State funds and authority and bring to book crooks and bribe takers and set up the independent commissions on police, judiciary, elections and bribery and corruption.

It now appears the Government is lost within the 100-day program. Crowd pleasing policies on the economic front is not helping to attract FDIs and investments from the private sector, he said.

The handling of Chinese investments to appease India is not helping us either. The Port City project is good for Sri Lanka.

Instead the GOSL must sit with the Chinese to address any issue on over-payment or commissions and take measures urgently to continue with the projects.

The lack of direction in policy planning is also not conducive for a healthy economic environment.

However, the forming of a national government gives a ray of hope in achieving the three main issues before dissolving Parliament.

Distillery companies have taken umbrage over the Government introducing a monthly tax of Rs. 200 million on each local distillery through its interim Budget. Company heads said that they would be forced to close down.

The Supreme Court issued a stay order on the Gazette notification issued by the Government imposing a Rs. 200 million monthly tax on liquor and beer distilleries.