Business

Budget has no solutions for deepening FOREX and economic crisis – Eran

Published

1 year ago

2021/11/21

Former State minister of Finance Eran Wickramaratne says the budget- 2022 presented by the Minister of Finance Basil Rajapaksa has an unrealistic dream of 8.8 % deficit as per their own estimation. However according to Fiscal Responsibility Act of 2003 the budget deficit cannot exceed 5 % of the GDP.

“As the responsible Opposition in parliament we cannot agree with the government seeking parliamentary approval for a budget proposals that violates the provisions of the Fiscal Responsibility Act of 2003,” said Opposition MP Wickramaratne speaking in the budget debate on its second reading stage.

“This is illegal. Are you asking the supreme legislature of the country, which makes these laws, to permit you to violate these laws? Do you mean to violate the law and sovereignty of the people and expect us to raise our hands in favour of this breach of law?” asked MP Wickramaratne

Speaking further he said that, when looking at the budget it is evident that the government has presented bloated statistics and overestimations of its unrealistic dreams. This government is going in reverse. The government had estimated revenue for 2021 at 2029 billion rupees, but it has estimated receipt of only 1561 billion rupees with a shortfall of 500 billion. Today, government revenue for 2022 is projected to be 2284 billion rupees. Does that mean that the revenue will be increased by around 45 % to Rs 800 billion within a year? Increasing it by a maximum of 10% or 12% would be more realistic. This government is constantly in the habit of lying and deceiving this House and the people. So naturally, this is a daydream presented as a revenue forecast.

When we came to power in 2014, government tax revenue as a percentage of GDP was 10% and we systematically increased it to 13%; it was methodically planned and implemented. Here we remember the former Finance Minister late Mangala Samaraweera who guided plans to increase government revenue. We had a vision and a programme for the development of the country via increasing the state revenue and the budgets we presented reflected this.

Before this government came to power there was a lie that they propagated. That is, that our government taxed everything and ran on taxes. The person who concocted these so-called slogans for Gotabhaya Rajapaksa’s 2019 campaign was, Basil Rajapaksa, his campaign manager.

I would like to next focus on increasing government revenue. There is an attempt to increase revenue through taxes in the budget for 2022. The budget has proposed a levy of a one-time 25% surcharge tax on companies or individuals who had a taxable income of over Rs 2,000 million in the years 2020/2021 while increasing the VAT from 15 % to 18 % for the banks and the financial services. In addition to VAT there is a proposal to introduce new GST and a Social Security Tax as well. Instead of one turnover tax, there will now be multiple turnover taxes.

These taxes will burden Small and Medium Enterprises too. Shouldn’t medium-sized businesses be encouraged to expand? Is this the manufacturing economy they envisaged? This is indeed a great tragedy. The problem is not really with levying of taxes. To protect social justice taxes must be levied systematically. There is no dispute about that. But there must be a consistent tax policy. In 23 years Sri Lanka amended VAT 11 times, and in contrast New Zealand in 23 years has revised it only twice. One off taxes are arbitrary and disturb private sector business plans. When those who do not know anything about managing an economy implement complicated tax structures, no investors will come to Sri Lanka. The private sector requires a predictable and consistent tax policies.

He also said that under the present economic and governing context only the Rajapaksa family and their cronies have the opportunity to carry out all kind of businesses. We are not surprised by this. Further, Wickramaratne recounted that the Mahinda Rajapaksa administration took over the airline in 2008 from Emirates Airlines investors, triggered by an incident where the presidential entourage were denied seats on a Commercial Flight. The airline had accumulated a loss of over 250 billion rupees just between 2008 and 2021. Who is bearing these costs? Innocent people who have never set a foot on a plane are the ones who are paying for this. When investors reflect on the manner in which emirates was treated, they will have reservations about Sri Lanka’s investment climate. In this context, Port City is also a dream which we have to tread carefully.

Not every investor resorts to means like paying commissions to establish businesses. In general, investors need confidence and trust in the host country. To this end we must have a friendly foreign policy and ensure the rule of law prevails and guarantee human rights. Investors are concerned about the protection of human rights and the way the country treats local businessmen. Moreover, these values have no place in this government’s overall policies.

All wrongs will end. We urge the government not to mislead the people through racist and divisive propaganda. Our foreign policy is extremely weak, as is the state of human rights. The risk of losing the export market opportunities has re-emerged. The European GSP plus concession and the American GSP concession are very important to us. Europe, America and the Middle East in particular are the largest segments of our export market. It is through this that the country gets dollar revenue. I urge the government not to jeopardize these avenues of revenue further. When the Rajapaksa regime in 2014 cost the country the GSP plus concession, our government got it back with great difficulty. If our export market shrinks further, the economic catastrophe that will befall this country will not be insignificant.

The budget proposed that 70% our energy requirement would renewable energy, but there are no provisions to support the policy. The compensation promised to be paid to those who incurred losses due to organic farming is another empty promise as there are no provision budgeted to meet this. Defense expenditures have been increased while education and health allocations have suffered. Health allocation was 255 billion and was increased to 301 billion in 2021. Despite being in a pandemic, the allocation for health in the 2022 budget is 234 billion, a drop of 67 billion from last year. 52% of the country’s population are women, and yet there has been no focus on increasing female labour force participation, allocations for maternity leave, equal pay and other issues that discriminate against women. Women issues not being represented at cabinet level is reflected in this budget.

Alarmingly but not surprisingly, about 2/3rds of the budget allocations are in the control of the members of the Rajapaksa family. Yesterday, November 16th, the whole country witnessed large scale protests.

“The application of “one country, one law” towards the government and opposition is in contrast. Our people are facing unprecedented economic hardships which may worsen in 2022. This is a blessed country. Despite the present misfortunes that the current government has heaped on us, we are ready to take up the challenge and responsibility of building this country for future generations, with the right vision, policies and a competent team,” MP Wickramaratne said.

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Business

Technical Certificates of Completion for 64 out of 74 plots of Port City Colombo SEZ

Published

21 hours ago

2023/03/23

Sahan Weerasooriya

Technical Certificates of Completion for 64 out of 74 plots of the Port City Colombo SEZ have been received by the Commission, a Colombo Port City Economic Commission semi-annual progress report for FY 2022 notes.

A press release by the Commssion said: ‘The Colombo Port City Economic Commission (the Commission), the Single Window Investment Facilitator authorised to assist investors, businesses, and residents in conducting their activities seamlessly and efficiently in Port City Colombo, is pleased to release its semi-annual progress report for FY 2022 from July to December 2022.

‘The Port City Colombo Special Economic Zone (SEZ) is designed to be a prestigious, strategically located city in the heart of South Asia, with sustainable high-quality public spaces and infrastructure, providing top-quality commercial, entertainment, medical, education and lifestyle. International destinations such as DIFC, DMCC, Labuan, Singapore, and Mauritius were studied for their regulatory frameworks, fiscal incentives, and operational efficiency to identify the most competitive processes and policies for Port City Colombo. The benchmarking study was done by global consultants such as Boston Consulting Group, PwC, KPMG, EY, Pinsent Masons, Zico Law, JLL, etc., for the SEZ’s thrust sectors, supported by market feedback on both fiscal and non-fiscal parameters.

‘Port City Colombo SEZ Regulations for the registration, licensing, authorisation and other approvals of Authorised Persons, were published by extraordinary gazette in September 2022, bearing number 2299/46. The SEZ’s Regulations for the registration and licensing of Authorised Person Fees, were also gazetted in September 2022, bearing number 2299/47. The registration of offshore company regulations were gazetted in the month of November 2022, bearing number 2306/54.

‘Agreements have been signed between the Commission and the Registrar General of Companies and Controller General of Immigration and Emigration in order to streamline services offered to Authorised Persons.

‘Sectoral Progress Highlights:

Banking – The Minister of Finance issued licences under the Colombo Port City Economic Commission Act to four (4) banks during the first half of 2022. The Commission has since received requests from three (3) more banks during 2022. Additionally, 10 Financial and Banking Regulations were also drafted under Sections 44 and Sections 45 of the Colombo Port City Economic Commission Act No. 11 of 2021 and are awaiting review with the Monetary Board of Sri Lanka.

Security – The Sri Lanka Police opened a Post on-site for visitor protection, with water access control and lifeguard services being handed to the Sri Lanka Navy. CCTV networks were also installed in public areas.

Social Infrastructure – In addition to an internationally-reputed hospital and school, the Commission has identified the need for a world-class university within Port City Colombo and modified the Master Plan accordingly.

Commercial Infrastructure – With the retail mall infrastructure complete, the commencement of the interior work has begun. The mall will showcase premium merchandise, with an array of cuisine options and entertainment, and is set to commence operations by Q2 of 2023.

Immigration and Visa Arrangements – In collaboration with the Department of Immigration and Emigration, the Commission has introduced three (3) new visa categories for Port City Colombo. These 3 visa categories are – the Investor visa for ten (10) years, the Employment visa for up to five (5) years, and the Resident visa for five (5) years. Port City Colombo visas allow supplementary benefits, such as visas for the spouse, kids, and other support staff members, which can be obtained under the primary visa applicant. The visa fee is USD 200 per year for each applicant. Visas are renewable as required and applicable only to Foreign Investors.

Master Plan Implementation – A planning committee consisting of key stakeholders was created to expedite the approval of building plans submitted under the Development Control Regulations (DCRs) for each plot of the Port City Colombo SEZ. The DCRs provide a clear framework for the development of buildings, land use, green spaces, utility networks, and sustainability measures, among other factors.

Preliminary designs for the Marina Development and Villa Project have been submitted by two investors, with several more plots in the final stages of discussion for lease.

Business

New wealth tax proposals exert negative impact on shares

Published

21 hours ago

2023/03/23

Sahan Weerasooriya

By Hiran H. Senewiratne

CSE trading activities yesterday were somewhat negative because investors were worried about the impact of the IMF-inspired new wealth tax proposals on citizens, market analysts said.

Apart from profit- takings, the effects of the new direct tax system on citizens created some confusion for stock market investors, analysts said. This was also highlighted by President Ranil Wickremesinghe in Parliament yesterday.

Amid those developments both indices moved downward. The All Share Price Index went down by 77.4 points and S and P SL-20 declined by 24.6 points. Turnover stood at Rs 1.5 billion with one crossing. The crossing was reported in First Capital Holdings, which crossed one million shares to the tune of Rs 33 million; its shares traded at Rs 33.

In the retail market, top seven companies that mainly contributed to the turnover were; SLT Rs 428 million (4 million shares traded), Lanka IOC Rs 115 million (651,000 shares traded), Expolanka Holdings Rs 98.7 million (716000 shares traded), Lanka Hospitals Rs 57.2 million (440,000 shares traded), Browns Investments Rs 51million (7.5 million shares traded), Capital Alliance Rs 50.40 million (1.5 million shares traded) and First Capital Treasuries Rs 46.2 million (two million shares traded). During the day 69.9 million shares volumes changed hands in 21000 transactions.

Yesterday the rupee appreciated against the US dollar. The buying rate was Rs 312.61 and the selling rate Rs 330.16. Further, the price of gold also reduced due to the rupee appreciation.

Business

Dialog, Sri Lanka Air Force & EWIS provides digital education to Ravaneswaran Tamil School, Trincomalee

Published

21 hours ago

2023/03/23

Sahan Weerasooriya

Dialog Axiata PLC recently joined hands with the Sri Lanka Air Force and E-W Information Systems Ltd to re-furbish the computer laboratory of the Ravaneswaran Tamil School in Kanniya, Trincomalee and upgraded the facility with digital educational tools and equipment. This worthy cause was initiated and directed by the Commander of Sri Lanka Air Force (SLAF) and the Group Chief Executive of Dialog Axiata PLC.

Dialog provided Magicbit Pro units with full pluggable and sensor modules to explore creativity with technology. Magicbit is an innovation platform and a STEM tool made for Internet of Things (loT), Robotics, Electronics and Programming. Dialog, furthermore, provided Nenasa TV facility and a pledged support for fully paid student broadband facility. Nenasa TV is a Public-Private-Partnership with the Ministry of Education; an initiative to support grade 1 to 13 students through eight dedicated TV channels in Sinhalese and Tamil. The content aired on each channel is provided and strictly monitored by the Ministry of Education.

The Sri Lanka Air Force in China Bay swiftly provided the labour for all civil work and assisted in repairing computers which needed attention, in a span of a few days. E-W Information Systems Ltd provided brand new desktop computers and sourced some of the hardware required to restore the remaining machines, together with Dialog.

Thamotharampillai Sivanantham, Principal of Ravaneswaran Tamil School, expressed his views on this occasion “Our children had an IT laboratory, but with hardly any usable equipment. Still one of our students won the Regional ICT award in 2022. I am very positive our students will fully benefit from the new ICT equipment and internet services. Additionally, our facility was beautifully restored in just a few days. On behalf of the school administration, parents & students I would like to thank Dialog, Sri Lanka Airforce and EWIS for coming together and providing us this service”.

The students and the school administration were overwhelmed by this generosity, a need for many years. Dialog also offered teacher-student training in the use of the technology and will continue to provide service and support on connectivity and together with the SLAF and EWIS would continue to monitor the progress achieved by the school through the provided technology and pledged further assistance in time. This worthy cause was executed parallel to the 10th edition of the Commanders’ Cup golf tournament in Trincomalee, which was sponsored by Dialog Enterprise.