By Sanath Nanayakkare

Arguments and counter-arguments on tax breaks and incentives for the construction industry – the most vulnerable industry to a financial depression – are being renewed in the run up to Budget 2025 as was witnessed at the recent seminar hosted by the Chamber of Construction Industry in Colombo.

Suresh R.I. Perera -Principal – Tax and Regulatory KPMG Sri Lanka making his presentation titled, “Tax issues concerning construction industry” pointed out that providing tax breaks can incentivize property developers to invest in new projects, creating jobs and boosting local economies and stimulate economic growth.

He said that it can lead to an increase in housing supply.

“Reduced tax burdens can make housing more affordable, particularly for first-time buyers and middle-income earners. It can also attract foreign investment as preferential tax treatment can make a country more attractive to foreign investors, bringing in capital and expertise,” he said.

However, flipping the other side of the coin , he pointed out that providing tax breaks may primarily benefit wealthy developers and investors, potentially exacerbating income inequality and will reduce revenue to the government.

Elaborating on the matter he said,” Tax breaks can be susceptible to corruption and inefficiency, with benefits not always reaching intended recipients.”

“On the other hand, reduction of taxes can bring in more infrastructure development as large-scale developments often require significant infrastructure investment, which can benefit the wider community. The IMF Technical Assistance Report in May 2024 says that to improve neutrality and fairness, Sri Lanka’s VAT system should be aligned with international best practice, including by imposing tax on the first sale of all residential property.”

“Types of tax incentives around the globe for property developers include several tax breaks. These can include reduced corporate tax rates, exemptions from property taxes or accelerated depreciation allowances. Governments may offer tax credits or subsidies for investments in specific regions or projects as investment incentives.”

Meanwhile, stamp duty exemptions can reduce the upfront costs of property purchases, making it more attractive for developers to acquire land.”

“Some governments may offer favorable land use policies, such as zoning changes or expedited approvals, to encourage development in the form of land use concessions,” he said.

He expressed his preference to lobby for the industrial construction sub sector (i.e. building factories, warehouses, power plants, etc.) if that industry is seeking tax concessions.

In reference to the real estate development sub sector where cumulative taxes had an impact on the growth, he noted that real estate developers should utilize the immense benefits of tax concessions at the Colombo Port City and consider shifting to that locality.

Secretary General/ CEO/CCI, Eng. Nissanka Wijeratne spoke about the objectives of the seminar while the opening speech was delivered by President/CCI, Archt. Jayantha Perera.

The Bank of Ceylon (BOC) and Sri Lanka Post have entered a groundbreaking partnership to reshape the accessibility of banking services across Sri Lanka. By combining the banking expertise of BOC with Sri Lanka Post’s extensive network, initially with 100 post and sub-post offices, this initiative aims to bring essential financial services to the nation’s most underserved communities.

The official launch event in Colombo marked the beginning of this collaboration, featuring key dignitaries including the Governor of the Central Bank of Sri Lanka Dr. Nandalal Weerasinghe, Additional Secretary of the Ministry of Mass Media Ms. Deepa Liyanage, Postmaster General Ruwan Sathkumara, Deputy Postmaster Generals, senior officials from the Department of Postal, BOC Chairman Kavinda de Zoysa, and General Manager/CEO Russel Fonseka, and Corporate and Executive Management of the Bank of Ceylon. The signing of a Memorandum of Understanding (MOU) at the event symbolised the alignment of two long-standing institutions to address financial inclusion challenges in Sri Lanka.

The centerpiece of this initiative is BOC Connect, a forward-thinking agent banking model first introduced in 2021. Now integrated with Sri Lanka Post’s trusted network, it brings everyday banking, such as deposits, withdrawals, bill payments, and fund transfers, closer to people’s homes. This expansion significantly reduces travel time and costs for rural communities while offering an environmentally sustainable approach to financial transactions.

Speaking at the event, BOC Chairman Kavinda de Zoysa highlighted the broader impact of this partnership: “This collaboration between BOC and Sri Lanka Post marks an important step in addressing the challenges faced by rural communities. By uniting two of Sri Lanka’s most trusted institutions, we are creating a system that offers banking solutions with unmatched convenience and reliability, particularly for those who need them the most.”

By Ifham Nizam

Highlighting Switzerland’s role in driving Sri Lanka’s economic prosperity, ambassador for Switzerland in Sri Lanka and the Maldives, Dr. Siri Walt shared insights into the success of Switzerland’s dual educational system.

Speaking at the launch of Cinnamon Hospitality Academy, a pioneering initiative by Cinnamon Hotels & Resorts and the Swiss Hotel Management Academy (SHMA), which officially commenced operations on Tuesday by welcoming its inaugural batch of 43 students, the ambassador outlined the importance of combining classroom education with hands-on training in the workplace.

This partnership is set to redefine hospitality education in Sri Lanka by offering the globally acclaimed Vocational Education and Training (VET) by Ecole hôtelière de Lausanne (EHL) Professional Diploma program. EHL, ranked as the world’s number one university for hospitality management, brings exceptional expertise to this collaborative initiative, to ensure students will gain a globally recognised qualification, said Deputy Chief Executive Officer and Chief Operating Officer of Cinnamon Hotels & Resorts, Hishan Singhawansa.

Speaking to a gathering of industry leaders and educators, the ambassador outlined the importance of combining classroom education with hands-on training in the workplace.

Walt said Switzerland’s dual education system is renowned for its effectiveness, with about two-thirds of Swiss youth opting for this pathway each year. “The system offers students an opportunity to acquire both theoretical knowledge and practical skills, making them well-prepared for careers in sectors such as healthcare, IT, and hospitality.”

The ambassador highlighted that businesses play an active role in this process, offering apprenticeships that provide students with real-world experience and the opportunity to hone their skills in actual work environments.

She added a key feature of the Swiss model is the collaboration between educational institutions and businesses. Vocational schools provide classroom-based education, while companies host students for on-the-job training. This integration ensures that students graduate with the competencies demanded by the job market, making the transition from education to employment seamless and efficient.

The ambassador noted that this approach has contributed to low youth unemployment rates, a highly skilled workforce and a strong, innovative economy.

“One of the key examples of the dual education system’s success is the renowned EHL Hospitality Business School in Lausanne. Founded in 1893, EHL has become the world’s leading hospitality school, combining academic excellence with rigorous industry training. Students not only learn hospitality management but also gain valuable internship experience that prepares them to lead and innovate in the global hospitality sector, she said.

Walt added that a notable initiative in Sri Lanka is the partnership between the Cinema and Hospitality Academy, the Swiss Hotel Management Academy, and the EHL Vocational Education and Training Programme. The ambassador praised this collaboration, which he believes will offer new learning opportunities for Sri Lankan youth and contribute to the development of a highly skilled workforce in the hospitality sector.

Speaking to The Island Financial Review Singhawansa said Sri Lanka’s hospitality industry is poised for growth, and local leaders are focusing on initiatives to drive sustainable development, attract investment, and empower a diverse workforce. “Central to this ambition is the Cinnamon Hospitality Academy, an initiative that is not only set to elevate the quality of Sri Lankan students but also aims to reshape the local tourism landscape,” he added.

`The academy, which was conceptualized nearly three years ago, was delayed due to the country’s economic crisis. However, with a strategic partnership with the prestigious École hôtelière de Lausanne (EHL), the project has gained traction over the past 12 months. Its focus is to address a pressing issue in the hospitality industry: the underrepresentation of women. With only 12% of women currently working in Sri Lanka’s hospitality sector, the academy aims to change the narrative by encouraging more women to join the industry and contribute to its growth,

He added that the Cinnamon Hospitality Academy’s vision extends beyond Sri Lanka. It hopes to attract students from neighboring regions, including India, Pakistan, and the Maldives, capitalizing on the growing interest in hospitality careers across the Indian subcontinent and the wider Arab market. The strategic goal is to create a sustainable pipeline of talent that can meet the increasing demand from the tourism sector.

Despite challenges such as the need for a clear countrywide policy framework for tourism promotion, he said that the government has recognized the importance of the tourism sector for Sri Lanka’s economic recovery.

“The tourism industry, seen as a low-hanging fruit for economic growth, is expected to play a vital role in boosting the country’s GDP and employment rates. The country aims to double its tourist arrivals from two million to four million, an increase that would necessitate major infrastructure investments, including the expansion of airport terminals and hotel room capacities.”

He also said that on the investment front, Cinnamon Life, a billion-dollar hotel investment, recently opened its doors in October, marking one of the largest private-sector investments in Sri Lanka’s hotel industry. “This investment aligns with Cinnamon’s broader strategy to grow its presence in Sri Lanka, with plans to expand from 12 to 16 properties in the near future.”