Inconsistent policies and ad hoc taxes disrupting growth in Sri Lanka’s economy
While the government is dependent on the private sector and believes it to be the engine of growth, imposing taxes on anything and everything has made life and businesses miserable.
Arguments flowed to and fro between two of Sri Lanka’s top businessmen this week with one claiming that more taxes was not the right move that the government has made while the other defended that taxes are the earnings for the government and so it’s the right choice.
The disagreement was between Access Group Founder and Chairman, Sumal Perera (too much taxes) and Vallibel One Group Founder, Chairman and Managing Director, Dhammika Perera (taxes are inevitable) on Wednesday when the International Chamber of Commerce Sri Lanka together with the Chartered Institute of Management Accountants Sri Lanka and the Daily FT organised a ‘Fireside Chat’ with four other top businessmen in the country at the Hilton Colombo.
During the discussion, when a question was raised as to what can the private sector do towards the future of Sri Lanka instead of expecting the government to take measures, both Perera’s had different views. Sumal Perera was opposed to tax imposition whereas Dammika Perera was in line with the government’s move.
Sumal Perera said, “Engineering and construction was liable to 10 per cent tax (and I invested in) and then overnight the government increases it up to 28 per cent.
Then they introduce another 2 per cent NBT on turnover. Later they increase the dividend tax up to 14 per cent.” If the private sector is the engine of growth in this country, the government cannot use the private sector to make money to sustain the inefficient public sector, he argued.
In response, Dammika Perera’s position was that: “The government also needs money and it has to do these kind of adjustments to get their earning, otherwise this country cannot run.” In today’s situation without increasing the taxes there won’t be revenue to the government, he added.
Other panelists at the forum were Stassen Group Chairman and Managing Director, Harry Jayawardena, MJF Group Founder and Chairman, Merrill J. Fernando, Softlogic Holdings PLC Founder, Chairman and CEO, Ashok Pathirage, and Hirdaramani Group Director and former Chairman, Janak Hirdaramani.
All six top businessmen stressed on the need for consistency of policy. “We have so much of frustrations since we are not on the same page with the politicians,” stated Sumal Perera while Ashok Pathirage backed him by emphasising, “We are not inclined towards any political party. Execution is a problem in this country.” Adding to that Dammika Perera challenged to restructure the 40 ministries in the country with his knowledge and proposals. He also noted that implementation of policies in Sri Lanka is a problem while reiterating his unwillingness to contest for presidency (as proposed by one discussant) as it’s a major risk.
In terms of something they regret being able to do as Sri Lanka’s top businessmen and to be their legacy, all six panelists shared various thoughts. Sumal Perera regretted not being able to build a brand like Merrill J Fernando’s Dilmah. Janak Hirdaramani regretted not going to a business school. Dammika Perera regretted nothing “as he lives the present moment”.
Harry Jayawardena stressed on his career journey as the university of life, as he elaborated, “World is your market. Don’t copy another, don’t go backwards always move forward. In business you need to be smart and take proper decisions. Have faith in your employees and maintain discipline.” Lack of discipline is a curse in this country, he noted.
Coming from humble beginnings with the world renowned tea brand ‘Dilmah’, Merrill J. Fernando stressed that the government must motivate all sectors in the country to export locally manufactured products and services. “Our exports can bring billions of revenue into the country if they are properly managed. Today value and attitudes of people have gone nowhere,” he asserted.
Harry and Dammika were two extremes when it comes to family and business life. Dammika spends eight hours during a day with his team at his office while Harry spends more than 16 hours at work.
Sri Lanka is in the 111th position of business index from its previous position of 83rd in 2012, Dammika Perera pointed out. He said, “It takes three years to get all approvals to set up a business whereas other countries have improved ahead of Sri Lanka.” The country’s best opportunity is to allow China to invest in the country, added Sumal Perera.
When the question of how to eliminate corruption was asked, Janak Hirdaramani stated that government officials must be paid well in order to avoid corruption while Harry Jayawardena stressed that corruption has become a part of life in some uncertain scenarios.
As takeaways from the fireside chat forum all six businessmen expressed their views. Sumal Perera said that you don’t need a lot of capital for business. The biggest profit in your organisation is the trust between people. Sri Lanka has ample opportunities in the retail and IT sectors, but the country as a whole must make use of the opportunities, Janak Hirdaramani asserted.
Dammika Perera emphasised not to think about the country’s political situation and regret the past. The country will not be bankrupt, he noted.
Harry Jayawardena stressed, being honest, disciplined and determined and start something you are good at. Have confidence and you will achieve success, he added.
Sri Lankans are very talented, be humble don’t be proud. Think about the poor when you become rich, Merrill J Fernando noted.
Nothing is impossible, be positive and work hard, emphasised Ashok Pathirage.