Exporters Association welcomes Budget 2017 but says it fell short of a major boost

Thursday, 24 November 2016 00:10 - - {{hitsCtrl.values.hits}}

The Exports Association of Sri Lanka (EASL) in a recent statement labelled this year’s Budget as being “corrective”, saying that while it did institute certain positive measures it fell short of enabling progress in the export industry.

The EASL, while understanding the current state of the economy, finds this Budget to be more corrective in its nature. It does not address the need for progress in the export industry.

Aspects such as improving the standards of education, encouraging the growth of competitiveness of SMEs, aiming to attract FDIs and setting up a system under PPP to monitor the implementation of the Budget, along with the proposal to establish KPIs for ministries are positives that need to be acknowledged.

However, the fact that taxes for exporters have been increased from 12% to 14%, the withdrawal of SVAT, which hugely minimised transaction costs, will in our view be a disincentive to increasing export values. Furthermore, the imposition of the Trade in Services Tax of 14%, which has negated the zero tax on Entrepot Trade could have a negative impact on this activity. CESS on rubber increased from Rs. 4 to Rs. 15 is a non-competitive measure and we will appeal that an even playing field between manufacturers and producers of rubber sheets, etc. be considered. The introduction of RAMIS is welcome but we would urge the Hon. Minister to withhold the suspension of SVAT until such time as RAMIS is fully operational.

ESC will have an impact on high value-small margin exporters and relief should be given to ease the burden of cash flows.

The rationale for extending incentives for branding , which has selectively been extended to only tea, should be extended for other agricultural exports viz a viz spices, fruits and vegetable sector, floriculture, etc. The 75% rebate on tax for exporters who achieve a 15% increase in foreign exchange between 2015/2016 and 2016/17 is welcome and encouraging but slightly unrealistic. However, to create an impetus for growth it needs to be effective for a longer period of perhaps five years.

We trust the Hon. Finance Minister will take our concerns on board.