CMA proposes “Made in Sri Lanka” Project in upcoming budget
View(s):The COVID 19 SME Development Committee of CMA Sri Lanka (Institute of Certified Management Accountants of Sri Lanka), has formulated a “Made in Sri Lanka” Project urging government support in Budget 2022 to focus on MSME development in the rural areas.
The proposal is intended for MSMEs (Micro, Small and Medium Enterprises) to produce goods and services using local raw materials and agricultural farming and linking them with the retail markets, big companies, government institutions, export houses, to provide support in marketing, improving quality, productivity, skill development, better education, bringing down the cost of doing business by producing goods, services and agricultural products to the domestic and export markets.
The “Made in Sri Lanka” Project while supporting MSMEs will generate 100,000 jobs in the rural sector and give a big boost to agriculture, handicrafts, horticulture, poultry, inland fishing, dairy farming, garment manufacture, IT services, food processing etc, CMA Sri Lanka said in a media release.
“The Budget 2022, it is hoped, will provide incentives such as tax holidays, lower tax rates, other infrastructure facilities and support to promote the MSMEs as well as the specialised institutions that will be set up to assist these organisations and contribute to the rural economy and contribute to the Sri Lankan economy,” the statement said.
MSME Development Act
It said an important and necessary proposal to the Budget 2022 is to formalise the support to MSMEs by incorporating a MSME Development Act to be enacted with an object of a definition of MSMEs, promotion, development and enhancing the competitiveness of MSMEs. This Act will provide for the establishment of a National Board for MSMEs, which is a statutory body having a high level forum for making policy decisions and programmes for development of MSME’s.
“Made in Sri Lanka” Project
CMA said the MSME sector is the backbone of the economy and is found in all sectors of the economy, accounts for 52 percent of the GDP and 45 percent of the total employment, whilst making up more than 75 percent of the total number of enterprises in the country.
The “Made in Sri Lanka” project will be undertaken throughout the country and will be applicable to all new projects and existing projects expanding their capacities. The products will include all industrial, handicraft, handloom, agricultural and services.
All projects registered under the “Made in Sri Lanka” Project will be given a distinctive number to be eligible for the special facilities provided under this project, CMA said.
All products of these MSMEs under the “Made in Sri Lanka” Project will be given the highest priority to market them to the private sector, ministries, state institutions, state corporations and retail trade and these institutions that purchase these products or services will be granted 50 percent waiver on the tax on the profits applicable to these items.
“All banks will have a separate Help Desk in all their branches to assist investors, entrepreneurs looking for financial and other assistance under the ‘Made in Sri Lanka’ project,” the CMA proposal divulged.
All chambers of commerce and industry and regional chambers will also be involved in the “Made in Sri Lanka” Project and will actively provide the linkages between the large companies and the MSME units. This will enable lower cost of production and enable the improvement of the quality of the products, provide raw materials etc and will market and buy back the products from MSMEs making them sustainable ventures. The companies that buy products from MSMEs will be granted a tax exemption or 50 percent of the normal tax as they are buying “Made in Sri Lanka” products and services from registered MSME projects and playing a major role in the development of the economy of Sri Lanka.
SME Credit Guarantee Institution
Another CMA proposal is for the government to take steps to expedite the commencement of the SME Credit Guarantee Institution to enable entrepreneurs and start-ups without collateral to obtain loan facilities from banks by providing guarantees based on their projects. This will accelerate economic growth, improve access to finance and address low private sector investment due to problems of collateral.
Export houses for MSME promotion and development
This project will also envisage the support under the Budget 2022 proposal to set up export houses for the promotion and development of the MSME sector. All institutions selling to export houses will be treated as indirect exporters and will enjoy the same benefits as export houses that do the direct exports. It is expected that with the implementation of the export houses concept the exports of MSMEs will be increased from the current 5 percent to 25 percent within a period of three years. The increased exports will bring in the valuable foreign exchange into the country. All export houses must be granted a 5-year tax holiday and the same to apply to indirect exporters also.
MSME consumer
products preparers
This Budget 2022 Proposal is for supporting the “Made in Sri Lanka” project by setting up MSME consumer products preparers who supply MSME agricultural / industrial consumer products to retail markets.
These MSME agricultural / industrial consumer products preparers will be part of the supply chain which will support SMEs by buying SMEs raw products and improve the quality, add value, process as necessary and supply to the retail market and once developed will be able to cater to the export market.
These institutions to be granted a 5-year tax holiday and the retail trade buying from these institutions will enjoy 50 percent of the normal tax on profits derived from such sales. These projects set up at village level will help the growth and development of rural agriculture and cottage industry.
With the thrust given to the MSME sector by the government in Budget 2022 with the active participation of the MSMEs combined with the private and public sectors, the Sri Lankan economy will be given a major boost and will provide a reawakening of the rural sector generating a minimum 100,000 new jobs with the launch of the “Made in Sri Lanka” Project, according to the CMA proposal.