Key suggestions from pre-Budget forum of Daily FT-Colombo Uni. MBA Alumni Association

Following are the brief key suggestions that came out at the groundbreaking pre-Budget 2012 brainstorming session held recently under a joint initiative by the Daily FT and the MBA Alumni Association of University of Colombo with Secretary to the Treasury Dr. P.B. Jayasundera as the Chief Guest

Apparel sector: Brandix CFO Hasitha Premaratne

• Apparel zones must be created in the north and east where a larger labour pool is available with infrastructure support

• Making Sri Lanka a hub for retail clothing, thereby diverting people in the region going to South East Asia for shopping

• Release scrap fabric to domestic village-level small scale players

Capital markets: Capital Alliance Managing Director Ajith Fernando

• Government funds must play a more active role in the corporate debt market

• Relaxation of restrictions on foreign funds

• Need to internationalise the stock market

Dairy industry: Kotmale Dairy CEO Jude Fernando

• A policy framework with one direct, common goal – to be self-sufficient in milk production. Provision of incentives and concessionary loans for farmers who are the backbone of the industry is essential; request to incentivise small scale farmers (fiscal and preferential incentives)

• Preferential rate for electricity required to enhance collection and processing (80% of cost of production)

• Levy on imported milk powder to support dairy farmers

Construction and engineering sector: Access Engineering Chairman Sumal Perera

• Support to boost skills and training

• Faster approval process especially for licenses to operate quarries

• Extending construction and guarantee fund benefits for development projects

Healthcare sector: Hemas Holdings Director Murtaza Esufally

• Reduction or deferment of VAT for new projects

• A more sophisticated public-private policy with Government outsourcing more healthcare opportunities to private sector via reduced premia for health insurance. State hospitals should serve the poorest of the poor

• Faster approvals for projects and minimum standards e.g. registration of nurses, etc.

Education sector: APIIT CEO Dr. Athula Pitigala Arachchi

• Higher State expenditure on education

• Exemption higher education from NBT; remove or relax property tax to draw FDI

• More support for students

SLASSCOM President and John Keells Holdings Vice President Sujiva Devaraja • Bring BPOs under industrial tariff for electricity from the present commercial tariff

• reduced telecom cost

• Credible ways to measure software exports

Auto industry: DIMO Chairman Ranjith Pandithage

• Support for skills development and training

• Encourage private sector cold rooms and ice plants for fishery and agriculture sectors

Plantations sector: Watawala Plantations CEO D. Seevratnam

• Support for skills development

• Encourage Long term funding for replanting

• Resolve legal hurdles for harvesting of timer plantations in estates

• Reconsider a 99-year lease period for plantations as current leases are for 52 years

Renewable energy sector: Hemas Power CEO Krishan Nanayakkara

• Grant permission to recover VAT cost on local development and operational cost fronts

• Request for capital allowances to be used in post-tax period (in current tariff system capital recovery is taken on a pre-tax income basis with a three to five year tax holiday which results in losses)

• Approvals process needs to be improved

Insurance sector: Janashakthi Insurance Managing Director Prakash Schaffter

• Exempt industry from being applicable for VAT on past reinsurance, recovery and commissions

• Speed up recovery process from Inland Revenue to assist smaller companies in particular

• Special relief on tax at the time of decoupling life and general insurance business

Logistics sector: Aitken Spence Shipping Chairman

Dr. Parakrama Dissanayake

• Government should direct policy towards targeting 20% freight by rail (currently 98% of freight is transported via road leading to congestion)

• Increase capacity of port of Colombo on an urgent basis to ensure there is a 4m TEU capacity

• Get private sector involved in the provision of quality public transport through PPP

Tea sector: Akbar Bros. Director Tyeb Akbarally

• Support for packaging machinery

Telecommunications sector: Dialog Axiata CEO Dr. Hans Wijayasuriya

• Highlighted that current 3% broadband penetration lags regional counterparts and this is a threat for Sri Lanka. Disparities in access to connectivity and broadband will lead to social and economic disparities

• Look to develop and facilitate broadband connectivity through centralisation of approvals and levies with Telecom Regulatory Commission; deployment of telecom infrastructure should be treated the same as utilities; speed of development needs to gather pace

• In terms of cost structure – broadband is seen as a vehicle through which multiple sectors can reach consumers – look at VAT exemptions in terms of key inputs with a futuristic view of the industry

• PAY TV subset – the growing prevalence of regional broadcasters is a concern – only legal importation of external network services should be permitted to protect the media sovereignty of Sri Lanka

Ceramics industry: Lanka Tiles Managing Director Mahendra Jayasekara

• In the granting of tax concessions, location of the industry should not be the primary criterion – it is more important for the government to look at the size and quality of the investor

• The ceramics industry is the largest LPG consumer in Sri Lanka – when granting energy concessions the type of industry should be taken into consideration

• CESS on imports – revisit and compare import/export prices

Hotels sector: Aitken Spence Head of Hotels Malin Hapugoda

• Image change required to have greater visibility in key markets

• Target the high-net worth segment/upmarket tourists

• Attract more world-renowned brands

• Tax issues need to be resolved e.g. limit on management fees and VAT on complimentary accommodation