A commendable Budget
commending the micro economic policies to develop small and medium
sector enterprises, SMEs and industries, the backbone of the economy, a
section of the business community expressed reservations on the move to
liberalize the lubricant market to encourage more players which could
Vice President, International Institute of Small and Medium
Enterprises, Nawaz Rajabdeen said the move proposed in the budget to
develop the small and medium sector enterprises, the backbone of the
economy is a step in the right direction and will help boost the SME
Managing Director and CEO, Chevron Lanka PLC, Kishu Gomes said the
2016 Budget offers a comprehensive coverage of all economic activities.
Setting up of industrial parks/zones in many regional markets will help
mobilize rural innovation and production.
Licences to import gold Duty-free will help develop the jewellery
industry. Permission to import tea and coconut will have its own
negative effects and benefits. Lifting the ban of leasing land to
foreigners will be welcomed by foreign investors. All governments have
neglected the SME sector which makes a salient contribution to the
They have provided incentives to large scale companies. The
incentives provided to SMEs will help revive and restructure many ailing
SME industries and contribute to economic growth, he said.
The new budget which plans to boost revenue by increasing taxes and
borrowing from domestic and international sources came under severe
criticism from the public.
American Chamber of Commerce President Asanka Ratnayake said, “We
welcome the many positive changes introduced to increase trade and
investment by the 2016 Budget.
The proposed state-of-the-art industrial parks and the setting up of
the ‘second home’ concept by relaxing regulations on foreign equity have
been brought in and that which could be borrowed within will encourage
The establishment of a payment security plan and the tax concessions
for foreign contractors who would work with local partners and the
setting up of a national digital identity platform, will further
encourage them by providing business security.
The training of skills for local work force in tourism through
private schools (which would receive tax concessions for their
services), the mandatory registration of all the hotels in the island
and removal of import duties on caravans, surfing and out door adventure
equipment will enhance the service provided and increase the foreign
The construction of a MICE triangle by PPP and the revision of import
tax on goods such as garments will help SL enhance its competitiveness
in the region.
The proposal of enhancing the cultural, environmental and medial
tourism industries and the its management by companies will uphold an
international standard while the allocation ofSstate land and the half
tax holidays will encourage foreigners to invest in these three
The establishment of the ‘Colombo International Financial Centre’,
the special ‘commercial court’, the call to criminalize ‘returned
cheques’, suggestion to monitor repatriation of monies by the Central
Bank while encouraging the public to carry bank drafts than monies while
also getting all the employers to open up separate bank accounts for
their employees and the government and setting up of a private CRI|B for
insurance are all aspects we see as a positive step towards increasing
trade and investment in Sri Lanka.
A. K. Perera said politicians who lead a luxurious life and waste
public funds on tamashas and overseas tours on public money should be
taxed first. He said public servants and professions such as doctors and
lawyers should be taxed.
A trishaw driver in Pettah, Saman Rajasinhe said all wholesale and
big businessmen in Pettah should be taxed. He said it is the low income
earner who has to pay for what he purchases and he feels the pinch more
than the affluent class.
The new government must learn from politicians in the West who lead a
simple life and at retirement as they are left only with the pension.
Our politicians amass wealth within a few years in office through
corrupt deals and their money is stashed in overseas bank accounts.
Chairman, SSI Shoe Company, Sarath Perera, a medium scale
entrepreneur, said, “The fifty percent tax relief granted to finance
companies which provide loans to small scale and medium scale
entrepreneurs will help develop the economy following the increased
inflow of foreign exchange as a result of accelerated exports. This is a
good Budget proposal.”
A farm owner of Badulla and businessman of agricultural implements in
Nugegoda, Nisantha Mahage said, “The Budget has provided tax relief for
the import of agricultural implements. Tax relief will be extended to
recultivate abandoned cultivable lands.
“Modern storage facilities would be made available for large scale
farmlands. Steps have been taken to permit farmers to obtain loans by
producing the receipts issued for paddy sales to the government.Adequate
relief has also been provided to paddy farmers and milk farmers. The
Budget is, therefore, commendable.”
A small retail shop owner in Galle said, “The Budget is unfair
because the people are finding it difficult to make ends meet, only the
rich have been given benefits to become more rich while the poor have to
suffer. After getting our vote is this how the government treats us?”
A three-wheel mechanic, Udith Danushka of Matara said, “This Budget
seems to be useless and it has not considered providing any relief to
the masses. The prices of essential items have increased and we are not
in a position to live with our income.”
A lecturer at the University of Colombo said, “People expected more
from the yahapalana Government’s first Budget. The Budget was no
different to previous Budgets. He compared it to a wood-apple consumed
by an elephant because there was no relief for the poor.”
Consumers called for price reduction of 10 essential items from the
Budget to relieve the burden of the soaring cost of living aggravated by
the adverse weather. Prices of vegetables have skyrocketed due to the
destruction of crops.The government’s estimated expenditure for 2016 is
Rs. 1,941 billion of which Rs.1,314 billion will be recurrent
expenditure and Rs. 625 billion capital expenditure. The estimated
revenue at the rate structure and foreign grants is Rs. 1,789 billion.
A commendable feature of the 2016 Budget is the four-fold increase in
the allocation for education to six percent of the GDP from Rs. 47.6
billion in the previous year to over Rs. 185.9 billion. The allocation
for the health sector has been increased to three percent of the GDP
from 1.7 percent.
Another outstanding feature of the Budget is the slashing of the
expenditure for the President’s office compared to the previous regimes
expenditure which was staggeringly high. The allocation for the
President’s office is Rs. 2.3 billion, down from Rs. 9.6 billion
allocated in the 2015 Budget.
The allocation for defence for 2016 is Rs. 306 billion of which Rs.
257 billion is for recurrent expenditure and Rs. 48 billion for capital
Allocations for other major sectors are:
Ministry of Local Government and Provincial Councils - Rs. 237
billion, University Education and Highways - Rs.171billion, Public
Administration and Management - Rs. 156 billion, Finance and Planning -
Rs. 107 billion and Health, Nutrition and Indigenous Medicine - Rs. 174
The 2016 Budget has taken a radical shift in the tax policy with
change of the direct and indirect tax ratio to 60:40 from the 80:20
ratio. The farmer subsidy of Rs. 350 per 50 kg bag of fertilizer is
replaced with a cash voucher to purchase fertilizer from the market.
The Budget proposes to set up a committee to develop the SME sector
policy for micro, small and medium entrepreneurs to cover all issues,
Regulate the sector, Rs. 500 million rupee initial fund to protect
micro, small and medium scale sector, Micro, small and medium
entrepreneurs to get 50 percent discount on income tax from April 2016,
Selected lenders will finance micro, small and medium entrepreneurs
It proposes to make available venture capital for start-ups.
Incubators to be set up in mini industrial parks across the country and
private sector companies invited to operate in them. A tax reduction of
50 percent for three years to be granted.
Move to convert agriculture to agribusiness with Rs. 1,000 mn
allocated for a program to convert underutilized State lands to
agricultural lands. Companies that promote greenhouse technology and
drip irrigation to be provided 50 percent tax reduction to encourage the
production of high yielding seeds.
The maximum retail price of a 400g packet of local milk - reduced
from Rs. 325 to Rs. 295, Subsidy of Rs. 30 to producers of 400g milk
packets. Rs. 1,000 million to be used for the project.“Fish worth US $
150 million is exported annually. To encourage the local industry I
propose, a life insurance policy of Rs. 1 million for fishermen. We will
encourage tin fish production. Accordingly Rs. 300 million concession to
be given to Lak Sathosa to sell tin fish at Rs. 125.
Tea - Sri Lanka has less value-added tea in the market. More value
added tea based products are encouraged. An active Committee would be
set up to look over the tea industry. Measures taken to move towards
being a tea blending country.“To protect the ‘Ceylon Tea’ brand I
propose to look into labeling strictly. A two-year tax exemption for tea
and rubber growers, new economic zone in Vavniya to be setup, Rs. 750
million allocated for the development of Chilaw, Mirissa, Kalmunai,
Karainagar, Poornawella harbours and 50 permits to be provided through
the Central Bank to import gold.
The 70th and the maiden Budget of the new government was presented in
Parliament on November 20 by the Finance Minister Ravi Karunanayake.