Govt. expectations from private sector

Monday, 22 November 2010 00:20 - - {{hitsCtrl.values.hits}}

Whilst corporate and personal income tax cuts are expected from Budget 2011, Finance Ministry sources said that the private sector needs to change their mindsets to operate their businesses differently in post-war Sri Lanka.

It was pointed out that with the Government having invested substantially in fighting and winning the war, it cannot be expected to endlessly compensate private sector inefficiencies and deficiencies.

“There is an urgent need to improve productivity, technology, marketing as part of doing business differently and moving up in the value chain,” they said adding “This is critical as Sri Lanka prepares to meet future socio-economic challenges.”

It was pointed out that global recovery is still fragile as Europe and US remaining weak whilst upward pressure of oil prices being the other external challenge. However the only silver lining is growth and dynamism in Asia and this increases competition for Lankan products globally.

In the 2011 Budget the Government is expected to continue with its focus on improving infrastructure hence a higher public investment program is envisaged. This together with reforms is expected to further stimulate the enabling environment for private sector to do business better.

The Daily FT learns that the Government will also focus further reducing the cost of funding for the private sector and Budget 2011 is likely to have several proposals that will achieve this whilst the banking sector will also be expected to improve its own efficiencies and pricing. This push will be consolidated by pursuing a low and single digit inflation regime and a committed shift towards 5% Budget deficit in the medium term by the Government.

The second reading debate will be held from 22 - 27 November while the third reading is scheduled to be held from 29 November to 20 December.