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The tea industry is divided over a proposal to form an umbrella body bringing together all sections and interest groups in the trade.
Some sections believe they need to form a 'tea federation' for the industry to speak with one voice while others oppose the idea because they feel existing arrangements are adequate.
"The tea federation is a very important need," said Mahendra Amarasuriya, chairman of the Planters' Association (PA). "The federation is important when the issues are complicated.
"Right now stakeholders have various associations with some pulling in different directions," Amarasuriya said. "So there's a need for an umbrella body to discuss all matters pertaining to the tea trade."
The Colombo Tea Traders' Association (CTTA) has expressed reservations about the idea of a federation.
"The CTTA has raised serious concern over certain articles of association of the proposed federation," said Mahen Dayananda, CTTA chairman. "We want a balanced situation like in the CTTA where five buyer members and five seller members are elected each year and they elect the chairman and vice chairman," he said. "So there is a perfect balance. The CTTA speaks for both buyers and sellers."
In the proposed tea federation the balance is heavily weighted in favour of sellers, Dayananda said.
The formation of a federation was proposed by a foreign consultant which did a study of the tea industry under an Asian Development Bank project.
Plantations Industries Minister Lakshman Kiriella supports the idea and has called on the industry to form a federation to bring together the different outfits which now represent different interest groups.
Amarasuriya said the CTTA represents mainly traders - buyers and sellers of tea. "Buyers and sellers have their own agenda."
He added: "It has representation from other associations but even the PA does not have voting membership.
It is very clear that the CTTA has never played the role of a federation - it is not an apex body. The CTTA does not represent the interests of plantations."
Dayananda said that in its 108-year history, the CTTA has never taken a vote, with decisions being arrived at by consensus.
The CTTA was now considering expanding the membership in its committee to include an even better representation of all stakeholders, he said.
The private sector and the markets welcomed the government's maiden budget last Friday saying it laid the foundation to revive the economy.
"Overall, the budget is positive for the capital markets," said Dushyanth Wijayasingha, head of research at Asia Securities. "There's a clear focus on liberalising the economy and reviving economic growth."
Asoka de Z. Gunasekera, president of the Ceylon National Chamber of Industries described it as a "very meaningful budget presented in very simple terms".
Incentives and changes in taxation announced by Finance Minister K.N. Choksy should help increase corporate investments and create a level playing field between local and foreign businesses, he said.
Radhika Jayasundera, assistant vice president of research at DFCC Stockbrokers said the budget seems "quite positive on the tax side".
"The government has done the best it could," she said. "However, I do not think the market is going to go through the roof. You might see a steady upward movement which is justifiable but you cannot expect a lot."
Choksy announced that the goods and services tax and the national security levy would be abolished and replaced with a value-added tax system that would be more equitable and increase government revenue.
Corporate tax rates are to be cut to 30 percent next year and 20 percent in 2004 while companies with a taxable income of less than Rs. 5 million are to be taxed at 20 percent.
The surcharge on customs duty is to be halved from 40 percent to 20 percent while protection would be given to specific agricultural goods as well as local industry.
Gunasekera said the reduction in company taxes was welcome. "The savings by companies would be ploughed back to development," he said.
Wijayasingha said the incentives in the poultry sector could benefit quoted companies such as Grain Elevators and those on housing loans the banking and the housing and construction sectors.
Jayasundera of DFCC Stockbrokers said the concessions on excise taxes may boost stocks like CTC and Distilleries.
"The introduction of VAT might probably mean a more efficient implementation of the tax system," she said. "The GST was not as efficient as they wanted it to be."
Measures to encourage black money back into the formal economy would be helpful, especially in prompting those keeping funds abroad to invest here, she said. It would help boost foreign reserves, she added.
Choksy announced several tax concessions on selected exports such as non-traditional agricultural products, information technology, electronics, food processing, and machine tool manufacturing as well as pioneering investments in designated areas in infrastructure.
Restricted sectors of the economy will also be opened up to foreign investors while a ceiling on domestic government borrowing should help reduce the debt burden, he said.
The message was clear - don't blame the government and the politicians all the time. Use your own initiative - drive, create and exert pressure.
It was like a symphony orchestra in action. It certainly looked that way on the opening day of the mega three-day financial reforms conference last week as IMF representative Dr. Nadeem Ul Haq and Economic Reforms Minister, Milinda Moragoda took centre stage.
Their main point was clear - don't blame the politicians for the failure in financial or economic reforms. Blame yourselves. It looked as if both had rehearsed their scripts and had their own brainstorming session on putting across a hard message to what some people may call - Sri Lanka's tax-relief and incentive-hungry business community.
In fact, it was only the other day that the Sri Lanka branch of the International Fiscal Association, in an interesting pre-budget statement, suggested the government cut back tax holidays and other incentives. "Scrap over-generous tax handouts to an over-pampered business community" was the message. Coming from an industry whose bread and butter is the private sector this was worth noting.
Sri Lanka's business community, as one top businessman at the meeting dryly commented, is "moribund". He said: "They always want incentives. Without incentives it would be a dead industry. Of course, reasons are given for these needs such as the war situation that is affecting sentiment, high interest rates and so on."
It was thus ironic to hear one of the speakers espousing the problems of fund managers and being absolutely critical of many issues and then saying "the industry needs tax breaks".
Like Oliver Twist asking for more, our industry is reliant on handouts and other sops. There are many examples of small entrepreneurs who have struggled without any government handouts or "godfathers" to look after them and succeeded through initiative, drive and perseverance. Some of them - often highlighted in The Sunday Times Business section - have competed successfully even against multinationals.
Tax concessions and incentives are important for industry to grow and prosper and in turn they create jobs and brings prosperity for the people. But if one goes through all the statements issued by chambers, business groups and private companies, one gets the feeling that if there are no incentives or tax concessions, the business community would sink.
There must be a balance in the equation. What one often sees is industry pleading for concessions to succeed, instead of striking a balance between concessions and initiative.
Moragoda made another interesting point. Sri Lankan professionals and others have succeeded abroad despite competition and the difficulties of adjusting to life in a new country. Hardly any of them were well known here - but they achieved success and hold high positions abroad. How and why was the question posed by Moragoda.
IMF's Ul Haq has also been talking about the brain drain from developing countries - the large number of talented professionals and entrepreneurs who don't have the opportunity to prosper in their own countries but achieve success abroad. He cited examples across South Asia. Is this due to lack of opportunities, motivation or lack of fiscal incentives?
The point is that Sri Lanka does possess a tremendous reservoir of talent. There's just one hitch - we don't know how to harness their creativity and skills. Most of these people would prefer to stay in Sri Lanka and work, given the right opportunity, the right environment and recognition.
There are Sri Lankan researchers here who have made a name for themselves abroad, coming up with path-breaking innovations. But often these efforts do not go beyond the presentation of papers or doing a thesis for a PhD. Our indigenous plants and medicinal herbs are spirited away and patented in the West and sold to Sri Lanka. Sri Lankans have shown little initiative and drive beyond completing research projects. We don't have a clue about marketing the research and making commercial use of it. Instead, we wait for handouts or use Western products that could have easily been made here using our own research.
Moragoda also made the point that although conference after conference is held little of practical value comes out of them. Recommendations emerging from such meetings, power lunches and high-class cocktails often are too impractical to implement.
Whether this latest conference meets with the same fate remains to be seen. Let's hope not.
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