CCC says budget is ‘Investment and Development oriented’

 
The Ceylon Chamber of Commerce (CCC) has welcomed Budget 2016 sayings its measures will boost private investment and promote inclusive economic growth.

In a statement issued on Sunday, the premier chamber said the budget has shown a commitment to enhancing private sector participation in the economy through PPPs, begin to rationalise state expenditure, undertake some much needed reforms in pensions, subsidies and welfare, and renew focus on the competitiveness of agriculture and small enterprises.

“One of the key features of the budget, which the chamber sees as a positive step, is the greater involvement of the private sector across a range of economic activities. This includes, inviting private sector participation in railway services for goods and tourism; a role for private investment in infrastructure projects; private management of Export Processing Zones (EPZs); and private investment in tertiary education and vocational training. These will open up new spaces for firms and bring in greater efficiencies to the economy, without burdening the state,” it said.

The removal of the tax on land leases by foreign nationals and allowing freehold if certain investment criteria are met, will encourage FDI.
“On the latter, however, careful attention must be paid to not allow discretion in granting of the freehold rights as discretion on the part of public officials on the size and type of investment could open up opportunities for rent-seeking,” it said.

The nature of the budget focus on the agriculture sector marks a distinct and important shift, the chamber said, adding that a significant move is the change of the fertilizer subsidy, which was not fraught with problems, and the granting of a direct cash grant to farmers to buy inputs of their choice.
The chamber drew attentions to some specific areas that will need a relook before implementation. Regarding the 50 licenses for duty free importation of gold, the chamber urged the government to auction these licenses to prevent corruption and discretion.
“Stipulating that banks must cease leasing activities within six months needs to be revisited in order to strike a better balance between government policy motives and industry realities. Meanwhile, in developing the Colombo International Finance Centre it is important to build expert capacity and international confidence in the country to make the project a success, and the timeline for implementation (1st April 2016) appears too ambitious,” it said.
The overall credibility of a budget, and the ability of a government to deliver on programmes announced in it, necessarily hinges on raising the required revenue. Therefore, it is vital that the government achieves the revenue increases envisaged; fiscal slippage will have serious macroeconomic implications and affect the business climate, the chamber said.