Some form of a tax relief on incremental exports is the least that could be granted by the government from the upcoming budget given its fiscal constraints to incentivise exporters who continuously strive to add more capacity and bring foreign exchange at this critical juncture, according to the Export Development Board (EDB) .
Speaking at a pre-budget forum held recently, EDB Chairman Suresh de Mel said this proposal had been there on the cards for some time and would prove very useful if it could be implementedin earnest.
“There are some things we can do that is not going to cost that much. One of them is to give some sort of a tax relief on incremental exports,” de Mel told a webinar organized by the Institute of Chartered Professional Managers of Sri Lanka.
At present, export incomes are taxed at 14 percent compared to 24 percent charged elsewhere for corporate income tax purposes. Although not linked to taxes, a year ago, the EDB proposed an Export Development Reward Scheme with the intention of encouraging export volumes by way of paying an additional 2% and 3.5% on their incremental export earnings for large and small and medium sized exporters respectively.
After a brief setback suffered in April and May this year due to the virus resurgence, Sri Lanka’s exports earnings have continued to exceed a billion dollars in the three consecutive months through August.
EDB chief said the export earnings are on course to achieve the year-end target.
Speaking further de Mel said the current suspension of fresh recruitments into the State sector due to fiscal challenges could not have come at a better time when the private sector is grappling with a persistent labour shortage, which has forced companies to operate below capacity.
“The private sector has a big labour shortage and I think this will give the private sector some labour that would otherwise be working for the government. So, I think again this is not a cost but a saving, and might give the export sector the workforce for their expansion and exports increases”, de Mel added.
Speaking on the way forward for exports, he emphasised on the need for developing exportable quality products via continuous value addition and tapping niche markets for durable success as Sri Lanka is not a major manufacturing powerhouse.
In this backdrop, he called for budgetary support for the expansion of EDB’s ongoing Export Production Villages programme, establishment of Export Houses, which functions as intermediaries in the exports supply chain, and in marketing and promotional endeavours including the emerging social commerce, which has gained more traction as a result of the pandemic.
‘Dollar reserves in SL plummet drastically, putting the economy in jeopardy‘
By Steve A. Morrell
Sri Lanka’s dollar reserves have declined from $ 7.15 billion in 2019 to $ 2.8 billion currently. The President conceded economic failures although reasons for such failure were not explained, chairman, National Chamber of Industries (CNCI) Canisius Fernando said.
Fernando added recently at a forum: “Forex reserves are insufficient to expedite payment of import bills. More so that cost incurred on container traffic for imports and or exports was on a rising spiral. In comparison to cost of container shipping recorded at $ 2,800 earlier, it is now $ 12,000, indicating a rise in multiples of 250.
“Additionally, the Generalized System of Preferences (GSP +) affecting our trade with EU countries, placed Sri Lanka’s reputation at a risk, meaning that countries could veer away from Sri Lanka prompted by a possible inability to honor our trade commitments. The clear example being trade with the US. Rather than await goods and services transactions with Sri Lanka, that could invariably take three months, US economists and their trade sector opted to transact trade with countries in close proximity to US shores.
“Dearth of container traffic and rising cost for on- loading and off- loading of cargo seriously affect trade imbalances. Consequently, the credit worthiness of the Sri Lankan economy is affected, which in turn seriously affects the GDP.
“Worker wages which were static because of trade shut- downs caused demands for increased wages. Wage demands of Rs 1,500 from employees became a major phenomenon in most sectors. The question at issue was the hypothetical position of business establishments of about 4000 employees demanding increased wages. This would cause closure of those companies resulting in unemployment.
“The proverbial domino effect of such repercussions would cause further chaos in the economy.
“There was no proper policy in most sectors. Suspension of the import of fertilizer and consequent confusion would, in the short run, result in famine and food shortages. Already this was evident in the public panic caused by having to stand in line to purchase essentials. That the crisis is upon us and the question of a quick solution is not feasible in the current context of the economy.
“Foreign investors are lured by the possibility of cheap labour in Sri Lanka to establish their businesses here, but in this instance too, this is only a hypothetical situation but not the reality.”
Supuni Products gives back by way of welfare initiative, helps to uplift the needy patients with chronic illnesses
Supuni Products first started in 2016 when the business proprietor, Supuni Lakmalie along with her husband only had Rs. 150 as investment. With that small amount, they purchased kollu (lentils) and kurakkan and ground them using a grindstone. This was the beginning for them and today, Supuni Products is a booming enterprise that specializes in ground spices and cereal, operating from the town of Nildandahinna, Walapane. Their products are of very high quality and 100% natural and consists of 15 different spice and cereal products including chilli, coriander, turmeric, pepper, curry powder, kurakkan, lentil (kollu) etc.
In 2018, Supuni Products received the opportunity to supply kurakkan flour and cereal to be included into the Poshana Malla, which is a nutrition package prepared for pregnant women, instigated by the government. The success of their business was such that they were able to gain an equity of over Rs. Four million during the past three years.
As part of a welfare initiative, they have also pledged to allocate one rupee for every kilogram of product sold, towards supporting patients with financial difficulties and require emergency surgery and for those with chronic diseases. While having had to run a business in the confines of their own home, the grant offering they received from the enterprise project allowed them to complete construction work of their new factory. She now hopes to expand the business, improve their supply chain, and create new employment opportunities.
Dialog Enterprise offers Dell Technologies Cloud IaaS in Sri Lanka
Dialog Enterprise, the corporate solutions arm of Dialog Axiata PLC, is working with Dell Technologies Cloud Solution Provider (CSP) in Sri Lanka to offer Dell Technologies Cloud Infrastructure-as-a-Service (IaaS) solutions to customers to innovate and scale rapidly, reduce costs and increase performance of business-critical infrastructure.
“Together, with our combined forces, we bring the only hybrid multi-cloud partnership in the country, giving access to private clouds as well as to our existing public cloud, and for on-premises infrastructure, robustly powered by Dell Technologies and VMWare. Envisioning a one-stop multiservice solution for all enterprise requirements, we strive continuously to keep to the changing landscape strengthening the cloud play in the arena,” said Navin Pieris, the Vice President – Enterprise Business and Large Enterprise Sales, Dialog Axiata PLC.
Rather than making capital investments in hardware, storage and servers to maintain them, enterprises can harness and scale IaaS resources when needed, paying only for infrastructure services they consume. Mitigating and allowing for any threat of data loss, the cloud partnership also offers cyber recovery as a service with a guaranteed uptime of 99.95%, end-to-end management of data centers and 24×7 support with zero operational burden on the customer. Ensuring the same standardization, self-service, automation and analytics capabilities that exist in the public cloud, the partnership facilitates secure private clouds for customers along with servers, storage and customized enterprise, private and/or public cloud solutions as required by enterprises.
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