Diversification of exports, crucial to boost revenue

By Lalin FERNANDOPULLE

Investors seek an investor-friendly, clear and simple facilitating process in the business environment, said Ceylon Chamber of Commerce (CCC) Import Section, Past Chairman and Director, Associated Motorways (Pvt) Ltd. Ranjan de Silva.

He was addressing a pre-budget seminar organised by the Import Section of the CCC on Friday. He said policy makers should take into account the number of new business ventures set up compared to those that closed last year.

The Government should support industries such as sugar, cement and export- driven sectors if it is to achieve the growth targets envisaged for the next few years.

“Recurrent losses due to poor management, corruption and waste in state-owned enterprises should be speedily addressed and mechanisms introduced to turn these loss- making institutions into profitable enterprises,” de Silva said.Exports have been dwindling this year.

The export sector should be turned into a vibrant industry, if the country is to achieve a higher economic growth rate.

Exports during the first seven months this year dropped 4.6 percent compared to the corresponding period last year and as a result the trade deficit has widened.“Diversification of exports and destinations is crucial to boost export revenue growth. Tourism has been on an upward trend since mid 2009 with the number of arrivals doubling to 854,000 last year,” de Silva said.

He said that a huge challenge faced by the private sector is the lack of a skilled workforce.

There is a mismatch between the skills sought by the private sector and the field of study pursued by undergraduates. Local students seeking overseas education is staggering resulting in the loss of foreign exchange is alarming.

“A vast majority of these students do not return to the country and contribute to the national economy. Instead they find greener pastures in other countries,” the past chairman said.

He said that women's participation in the labour force should increase and their welfare should be ensured. The Western Province still dominates in economic growth while others lag behind due to a lack of opportunities for people to contribute to the local economy.

The private sector should be encouraged to re-locate which will help boost regional economic growth.

Partner Ernst and Young, Duminda Hulangamuwa said that if the tax system is to be effective it has to be equitable, fair and affordable. If not many would evade paying tax and will not comply with the tax laws. The tax system should take into account the various income levels of the people.

He said the legislation on taxes should be precise and clear. There is a lack of clarity in tax laws. Consistency in import tariffs is vital for the motor industry, he said.

“No longer is tax used only as a means to generate revenue for the Government but is also used to develop the economy,” Hulangamuwa said.

University of Colombo, Head, Department of Economics, Dr. Sirimal Abeyratne said that the preparation of the 2013 Budget is a huge challenge due to revenue and expenditure issues. Sri Lanka is feeling the heat of the US and European economic crises.

The economic policies introduced by the Government in 2004 in the short term helped the economy to be resilient to external shocks.

“'Foreign Direct Investments and exports which are key sectors of the Balance of Payment, are weak. The country is unable to have a stable exchange rate due to the growing budget deficit,” Dr. Abeyratne said.

He said that tax rates in Sri Lanka are high when compared to the percentage of commercial profits of the country.