Will there be any new thinking in Budget 2012?

This will be a brief article, to convey only a single, simple thought that may of course extend to a wide variety of stakeholders of the nation.

As I reflect on the last two years since the day-to-day conflict ended, I look forward with expectation to something new and different in the upcoming Budget. Not necessarily giveaways and handouts, but something that may create a breath of fresh air.

A few days after the day-to-day conflict, through print and electronic media, I shared several thoughts. A few thoughts were aired over radio, each morning and evening, over two to three weeks. One of the statements I gave was ‘A new dawn is upon us, a new realisation must now awaken us’. Has that happened adequately?

Something of substance

I am looking for something that will, at least over time, bridge the income and opportunity divide, reasonably rapidly and more effectively, than successive Governments have been able to achieve in the past.

Something new and different which will endear all its people to the nation a lot better and generate a greater sense of belonging. Something of substance, which will attract not only direct and portfolio investment of a significant magnitude from credible and sustainable sources, but also sincere attention from the global community, who will begin to respect our nation rather than attempt to trifle with it.

Things have happened, but…

There have been several positive developments as well as many setbacks. Among the principal positive developments is investment in infrastructure. Among the negative developments are the law and order situation and the need to foster greater social cohesion and interracial harmony and to create an environment for all to think and feel as one. That has not happened yet.

Flashback – 1977 and 1989

In 1977, we broke free from the rest of South Asia and opened the economy. The architect of that was Prime Minister and later President J.R. Jayewardene. During the era of President Premadasa, many new initiatives were undertaken under the strategy for industrialisation of the Ministry of Industries in the 1989-1994 period, when the current Leader of the Opposition, Ranil Wickremesinghe was the Minister of Industries.

Many reforms and Incentives

Capital market reforms and a range of incentives such as stamp duty, wealth and capital gains tax exemptions; launch of unit trusts/mutual funds to broad-base share ownership; launch of venture capital/private equity companies and exemptions of capital gains tax for venture capital/private equity companies; incentives for pioneering ventures and modernisation and expansion; double deductions for research and development and overseas promotion; promotional privileges to provinces were all designed, implemented and made to happen.

Institutional reforms were the conversion of the GCEC to the BOI. These were only a few. But the war was still raging side by side.

The year 2002 Budget

It is useful to flashback to the time of the maiden 2002 Budget of the short-lived United National Party Government, which returned to office in 2001 December. It was a time of great expectation as well.

When the Cease Fire Agreement (CFA) was signed by the Ranil Wickremesinghe administration, tourist arrivals, room rates, per visitor expenditure, direct and indirect employment within the tourist industry, service charges (the highest service charge was paid in 2002 or 2003) all increased several fold.

Investment banks JP Morgan and Credit Lyonnais began writing positively about Sri Lanka, staking their reputations. While Credit Lyonnais titled their report ‘Peace Dividends, Reconciliation and Riches,’ with peace doves flying over Sri Lanka dropping bags with $ signs, JP Morgan said, ‘A New Asian Tiger in the Making’.

I yet recall sending both these reports to Japanese and South African investors. All this of course was an illusion, as we learned. Peace was short lived the Cease Fire Agreement had a very short expiry date and its architects soon reverted to opposition ranks.

Sky is the limit

Against this background, any stakeholder of the nation will have nothing less than great expectations about many things. I hope the Government and the Opposition will sooner than later converge their thinking, combine their thoughts and energies and usher in a new dawn which can soon be upon us.

Then we might be able to attract not simply FDI but Sri Lankan experts living overseas, just as Malaysia did in 2002.