By Shabiya Ali Ahlam
The National Chamber of Commerce of Sri Lanka (NCCSL) yesterday welcomed Budget 2015 and described it as being “future-oriented and inclusive.”
“It is inclusive since it has looked at not just the industries and business communities, but also health, education and benefits for students and pensioners. I say it is future-oriented because some of the initiatives that taken are really looking at the 2020 scenario, a time at which the world will be a different place,” NCCSL President Sunil Wijesinha told journalists at a briefing.
Pointing out that incorporated in the 2015 Budget were a number of proposals put forward by the NCCSL, the institution commended the proposal to fast track 100,000 diploma and certificate holders in employable fields and the proposals to incentivise the SME sector.
Noting consumption will stand as one of the significant components of the growth trajectory of the economy despite its slow development in the recent past, the NCCSL said specific proposals such as increase of minimum salary in the public sector, pension and insurance schemes, import of motor vehicles for foreign employed locals at concessionary duty, reduction of water bill by 10%, and reduction of electric charges by 25% for domestic consumers are well received.
“We are of the view that incentives of this nature and magnitude can drive significantly the demand side of the economy,” NCCSL said.
Proposals identified to bring in a positive impact to the supply side of the economy are the incentives introduced to SME and agriculture sectors such as creating different tariff bands for electricity charges for SMEs and other industries.
According to the NCCSL, the supply side will also receive a fresh boost with the replanting subsidies proposed to small tea holders, coconut cultivation and minor export crops, extension of credit facilities at 6% for selected planting, replanting, social development of plantation workers and increase of value added tea exports.
While much of the Budget was highly-commended, the NCCSL highlighted a few areas of concern that would impact the macroeconomic environment.
“We could like to raise a word of caution with regard to inflationary trends that can emerge if uninterrupted flow of imports coming down to the economy with improvements of disposable income of the people through various incentives introduced by the Budget proposals,” the chamber said.
The NCCSL is of the view that there is a lagged effect on the supply side of the local economy responding to stimulus extended through the Budget if the incentives are taken up effectively by SMEs.
“Even though inflation stands at a moderate level at present, careful management of the situation is of paramount importance,” it emphasised.
Furthermore, the Chamber said it would have welcomed improvement in the macro level reforms in order to create a conducive environment for effective conversion of FDIs to manufacturing and other sectors of the economy.
Observing there is a 15% increase in Government expenditure compared to last year, NCCSL asserted that the raise through the 2015 Budget will pose significant importance to Government revenue since the budget deficit is expected to improve to 4.6% of GDP in 2015 from the expected 5% for the current year.