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| Sunday, 21 November 2004 |
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An ideal mix : Home-grown and development oriented by Surekha Galagoda and Chanuka Mannapperuma The maiden Budget of the UPFA government was presented in Parliament by Finance Minister Dr Sarath Amunugama last week. Most analysts welcomed the Budget as home grown, development - oriented with a major focus on Agriculture and Small and Medium scale Industries to drive the country forward although the Opposition tagged it a RobinHood Budget. The SundayObserver Business spoke to a cross section of business leaders and Chambers to get their views. The Budget is most welcome in a cash tight economy as it has not looked at a one-year period but addressed issues on a long-term basis. Chairman, Sri Lanka Institute of Information Technology Dr Lalith Gamage said: " Increasing the Reasearch and Development Budget from 0.8 to 1 percent will encourage new innovations while the setting up of the SME bank will give a boost to start-up companies to obtain loans as the established banks were not willing to take risks with start-up companies. Therefore developing the Incubator program was a problem earlier. The proposal to purchase software made by local companies too will boost the IT industry. The program to popularise IT in the rural sector is most welcome as IT is a key to growth and will help link the country globally. President Sri Lanka Fruits and Vegetable Producers Processors and Exporters Association Sarath de Silva said" A sincere attempt has been made by the government to address all issues but they are too much to address. The most welcoming aspect is that we were consulted at each stage and our Association is thankful the sector was recognised as a potential sector to devlop the economy. The EDB,BOI and we are ready to implement the model farm scheme. The only issue that has not been addressed relating to our industry is the high cost of transport which we thnk we can sort out in the future." Director, Department of textile industry, Vinitha Seneviratna said: "this is a fairly a good Budget because they have given several opportunities to the small and medium sector. She said earlier we had problems of obtaining credit, but now the government has taken a decision to set up a new bank for the SME sector. It is a great relief to the small and medium producers. Seneviratne said "the government has taken a great dicision to revive the textiles mills at Thulhiriya, Pugoda and Veyangoda. Again we can manufacture textile materials of export quality. This will also give employment to people who lost their jobs due to the closure of these factories,' she said. The duty applicable to handloom products has been removed while the shop at the Duty Free Shopping Complex will also be opened. This will give a boost to the SME sector as this will help them enter the export market, Seneviratne, said. Chairman- Blue Lagoon Aqua Culture Pvt Ltd- Mohan Fernando a large-scale prawn farmer said this Budget has given unpresidented advantages to the prawn farming industry. The 15% VAT has been removed from the prawn feed which is imported from other countries. He said it is a great relief for the prawn farmers. Another fact is that Rs 20 million has been allocated for a Infrastructure Development Fund. Fernando said " We can clean the Dutch Canal and also start a ferry service. This will earn an additional income as it will be a great tourist attraction. Managing Director of Chathura Products W.W. Wickremasinghe a large scale supplier of brass items to Laksala said"This Budget is very good for the Small and medium scale enterprises.I think we will be able to enter the export market in a big way ". Opening of a massive shopping complex and exhibition centre in Colombo is most welcome as this will help small timers like us to showcase our products and get orders. Shelton Pannila-owner of Pannila Batiks said at the moment we spend a lot on VAT when we import raw materials such as cloth and dye. "We are of the opinion that if VAT is excluded from the importation of raw materials it will be a great relief to our industry or else the raw materials should be manufactured in the country. "Any way the Budget is most welcome as it has provided a lot of incentives for the SME sector," he added. President Chamber of Construction Industry Sri Lanka, Surath Wickremasinghe said the Budget Proposals are construction-friendly. We are also pleased that most of the proposals submitted by our Chamber and its constituent National Construction Association of Sri Lanka have been accepted or accepted with minor amendments. We wish to further propose the following amendments. Economic Service Charge to be paid by the Construction Sector to be reduced to 0.25%, in view of the Construction Industry being a vulnerable sector, Customs Duty Exemptions to be granted for the import of new machinery by both new and existing companies investing over Rs. 2 Million. This would facilitate the flow of new Machinery and Technology to the country, Cess for the Construction Industry to be charged from the Contractors to be credited to a Special Construction Development Fund and not to the Construction Industry Guarantee Fund as stated in the proposals. This special fund should be allocated to the Institute for Construction Training and Development and managed by a Board which includes representatives of the Domestic Construction Industry. Cess should be deducted at source as an allowable expenditure, Tax Compliance- we note that Tax clearance should be made mandatory for Government tenders and in the case of large transactions. However, it is emphasized that both local and foreign Consultant and Contractors should be subjected to this requirement. To 'kick start' the economy and the Construction Industry, priority infrastructure projects of a mega scale have not been identified. For example Airports, Ports, Harbours, Expressways like Kandy-Colombo and the Outer Circular Expressway. Also, Commercial Agriculture and Urban Regeneration have been left out. If these projects are promoted through Public/Private Partnerships with attractive incentives at least, one million direct and indirect jobs could be created. |
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