Business aspirations largely met - Chamber
The Ceylon Chamber of Commerce has praised the budget as one in the right
direction, particularly in the context of a difficult local and global
environment.
The budget proposals taken together with the key initiatives of the
government to date, address the following priority issues identified by
the chamber, to usher prosperity to the people through sustained economic
development, peace via resolution of the north east conflict, effective
law, order and internal security, reforms and deregulation, infrastructure
development and good governance.
However, a chamber statement said it believed that insufficient emphasis
has been placed on reforms in tertiary education, re-introduction of English
as a medium of instruction, information technology, public sector reforms,
pension reforms and commitment to coal power plants to bridge the gap between
demand and supply whilst maintaining electricity tariffs at competitive
levels.
The Chamber said it was also concerned that significantly lower budgetary
allocations have been made for much needed capital investments, as this
may have detrimental effects on long term growth. We trust, however, that
any benefits arising from the peace dividend, including international aid
commitments, revenue increases from growth and savings in recurrent expenditure,
will be directed towards capital development programmes.
The chamber said it looked forward to being a partner in the formulation
of the three-year Strategic Development Programme to be presented in May
2002 and the detailed implementation plans to be made available in August-September
of this year.
The Chamber welcomed proposals to rationalise indirect taxes with the
abolition of the G.S.T. and the NSL and the introduction a VAT, extension
of the VAT to the retail trade, effective April 2003, abolition of the
corporate tax surcharge, advanced company tax, stamp duty and capital gains
tax., introduction of a Permanent Tariff Commission with representation
from the public and private sectors, reduction of the 40% import duty surcharge
to 20%, balancing the needs of the farming community and consumers through
import duty protection, reduction of import duties on selected raw materials
to promote local industries, initiatives to support capital market development,
relief to small and medium sector corporates, tax relief to middle income
earners, garment sector incentives and incentives to the housing finance
and construction sectors.
The chamber said it was concerned that the government may have overly
stretched the fiscal targets given the current economic environment. Achievement
of these targets will require commitment with accountability, effective
planning and participation of all stakeholders. The chamber said it hoped
that the possible peace dividend may contribute towards realising some
of these targets.
"Legislation may also be required in terms of the 13th Amendment of
the Constitution to accommodate the removal of stamp duty on property transfers
and the extension of VAT to the retail trade," it said.
Private sector can't expect a better budget
The private sector cannot expect a better budget as it was prepared under
difficult circumstances, Dr Saman Kelegama, an economist at the Institute
of Policy Studies said last week.
Given the extremely difficult times, the Budget 2002 was very positive,
he told a seminar organised by the Ceylon National Chamber of Industries.
The ball was now very much in the private sector's court to take advantage
of incentives in the budget and to grow, he said.
''It was a growth and development-oriented budget presented at a time
when the country has gone through a difficult period," he said.
"The private sector cannot ask for a better budget as it is a private
sector-friendly budget," he added. "It has laid the foundation for the
removal of bureaucratic controls and is likely to improve macro-economic
stability."
The budget targets could be achieved if proposals are implemented efficiently
and effectively, in order to achieve economic growth, he said.
Industries Ministry secretary Ranjith Fernando told the seminar that
this budget was a departure from previous populist budgets because the
new government was serious about putting place the fundamentals for growth.
"In the past we have lived beyond our means," he said. "We have been trying
to distribute wealth before producing it. The Budget 2002 has looked at
creating the macro-economic climate conducive for growth."
Chairman of Singer Sri Lanka, Hemaka Amarasuriya speaking at a National
Chamber of Commerce budget seminar said that the target of nine percent
inflation and a fiscal deficit of 8.5 percent were realistic. The removal
of stamp duty and capital gains tax will develop the capital market, he
said.
But having VAT on a two-tiered basis will produce negative effects as
goods such as TV sets are subject to 20 percent tax, he added. KPMG Ford
Rhodes and Thornton Partner Rajan Asirwatham said that direct taxation
has been a failure in Sri Lanka as evident by the fact that there are only
355,412 tax files.
Paski promises deregulation
The budget 2002 is oriented towards growth with the private sector given
a greater opportunity to spearhead the revival of the economy, R. Paskaralingam,
former secretary to the Treasury, said.
He told a seminar organised by National Chamber of Commerce that he
can assure the private sector the government will take more measure to
deregulate the economy. Infrastructure development work would be announced
in the next few months, Paskaralingam said.
Rienzie T. Wijetileka, Managing Director of Hatton National Bank, said
that he hoped the new government would ensure effective implementation
of its proposals.
Budgets generally contain a wish list and ever year the private sector
and the nation live on hope, he said.
Commercial Bank Chairman Mahendra Amarasuriya said since it was an ad
hoc budget there would be greater pressure on the government and other
share holders to deliver results.
Dr. A.G. Karunasena, Director of economic research a the Central Bank
said that reducing the fiscal deficit to 8.5 per cent of G.D.P. was a challenging
task but was achievable if the far-reaching measures announced in the budget
are implemented.
Small industries worried over reduced import duties
The Foundation for the Development of Small and Medium Industries, while
complimenting the new government on an excellent budget presented last
week, has expressed concern over a proposal to reduce the surcharge on
Import Duty introduced by the previous government.
Though the surcharge pushed the prices of imported goods up, it served
as a restriction on the free flow of several imported finished goods which
was a major threat to the local industry, a statement from foundation patron
Rohan Fernando said.
At a time when the local Small and Medium industrial sector is going
through a hard time, trying to benefit with a revival in peace hopes, the
sector should have been allowed a little more breathing space to win back
lost ground.
Fernando said they were planning to appeal to Prime Minister Ranil Wickreme-singhe
and other leaders to revise this proposal for the sake of the local industry
on which the new government is banking on for an economic revival and an
improved rate of development.
Apart from this, the foundation said the tax reform proposals were commendable
particularly the process of streamlining However it said a substantial
reduction in the tax burden is not possible since the existing turnover
based taxes would be replaced by VAT. "Except for a few essential articles
where the present 19% tax rate will be reduced to 10% the tax on a majority
of items would go up from 19% to 20%," the statement noted.
Business briefs
Lokuhetty joins Galle Face Hotel
Anura Lokuhetty, formerly from the Confifi group, has been appointed as
director operations and development at the historic Galle Face hotel, a
statement from the hotel said.
Lokuhetty is a hotelier with 24 years experience not only in the hospitality
industry but also in the specialized field of hotel refurbishment and last
served as director operations at Confifi Management Services and Managing
Director of Confifi Engineering where he was responsible for the refurbishment
of eight hotels which included the Queens in Kandy and the Holiday Inn
in Colombo.
Galle Hotel chairman Sanjeev Gardiner said Lokuhetty's experience would
be an asset to the hotel while the new Galle Face hotel employee said he
was looking forward to a challenging future.
Master Divers buys Pelwatte Sugar
Master Divers, owned by Ariyaseela Wickramanayake, last week bought a controlling
stake in Pelwatte Sugar Industries (Pvt) Ltd.
The shipping group bought the government's holding of 53.35 percent
(36,260,806 ordinary shares) of Pelwatte through the Colombo Stock Exchange.
IMSL celebrates 25th jubilee
The Institute of Management of Sri Lanka(IMSL) is celebrating its 25th
year this year. The institute was inaugurated on May 5, 1978.
A national management conference will be held on April 5 on the theme
'Beyond Competition- Successful Strategies for the 21st Century'. Its annual
general meeting will be held on May 22.
IMSL also will publish a special issue of the IMSL Journal Newsletter
to mark the occasion.
Video Image marks 10 years
Video Image Private Limited celebrates its tenth anniversary this year
in the fast-developing film and television business.
Owned and managed by Suren de Silva, Video Image, was begun in 1992
with just two editing machines and a staff of two, a company statement
said. Today, it consists of 25 full time employees and an additional 18
freelancers.
Video Image won national recognition when it received a Silver Award
for its achievements the very first year at the Sri Lanka Institute of
Marketing awards. At SLIM 2002 the company won 16 awards.
Kindai to expand cosmetics plant
By Hiran Senewiratne
Japanese cosmetic exports company Kindai Kagaku Lanka (Pvt) Ltd (KKLL)
plans to expand its factory in Horana with an investment of Rs. 100 million.
The company exports six shipments a month amounting to 16,000 tonnes,
KKLL Managing Director, Priyantha Perera, said.
Its products differ from other popular brands because they use less
preservatives, he told the "Sunday Times Business" in an interview.
KKLL, started in 1999, has a plant making cosmetics such as shampoos,
soaps and colour hair dye, on a five-acre site in Horana.
The firm, which once exclusively exported cosmetics only for the Japanese
professional hair dressing market, is now shipping products to other countries
in Europe and the Middle East as well, Perera said.
KKLL, being a Board of Investment approved company, is only allowed
to release 10 percent of its production to the local market. This, Perera
said, affected their ability to expand their business within the Sri Lankan
market.
Ship Suppliers' Association office bearers
The Sri Lanka Ship Suppliers' Association at their recent AGM held at the
Ceylon Port Services Ltd, elected the following uncontested as office bearers
for 2002:
Chairman: Mr. K. Jeyabalasingam (K. Jeyabalasingham & Co).
Vice Chairman: Mr. Mahinda Bandara (Oceaneeds (Pvt) Ltd).
Secretaries: Ms. Padmini Kumaratunga (General Manager, Ceylon Port Services
Ltd).
Board members: Air Inn, Hansa Marine Enterprises Ltd, M.Z.M. Niyaz and
Co Ltd, Metro Enterprises, Ocean Combine (Pvt) Ltd and Seacare Ship Services.
ATHWELA seminar on the new economy
ATHWELA, the Sinhala business magazine, is organising a seminar on "Investment
opportunities in the new economy" on April 5 in Colombo sponsored by the
Securities and Exchange Commission (SEC) and the DFCC Bank.
The objective of the seminar is to identify and highlight new investment
projects that will arise in the new economy through a series of presentations
by top professionals in construction, tourism, information technology,
agriculture and fisheries.
The speakers are Renton de Alwis, former Tourist Board chairman, Surath
Wickremasinghe, president of the Sri Lanka Chamber of Construction Industry,
Dr. D.B.T. Wijeratne, research and development director at the Agriculture
Ministry, G. Piyasena, director general of fisheries and Santhush Jayasuriya,
executive director at the Bureau of Infrastructure Investment.
Presentations will also be made by Nihal Fonseka, DFCC CEO, Sunil Wijesinghe,
Merchant Bank managing director, H. A. Ariyaratne, Venture Capital Association
president and Hiran Mendis, director general of the Colombo Stock Exchange. |
