“We will not ask for GSP”: Dr. PB

Wednesday, 17 July 2013 00:02 - - {{hitsCtrl.values.hits}}

Says asking for export concessions only leaves the country as a subsistence economy
Opines CB is first class in management of rupee, but slams chambers
Govt. rationalising tax, a bonus for industry and exporters
I keep notes for post-retirement writing

Sri Lanka’s macro challenges have changed and asking for export concessions only leaves the country as a subsistence economy. “The biggest block we had for our development, the war, is over. In the post conflict era, the biggest beneficiary is the private sector and today’s

challenges are different. New challenges are wage rate hikes, worker unrest and even lack of workers. Also, we will not ask for GSP. We should not grow markets on the basis of subsidies. Then the country will become vulnerable,” said Dr, PB Jayasundara, Secretary, Ministry of Finance and Planning yesterday. Secretary Jayasundara was addressing a forum on ‘Government Strategy for Industrial Development of Sri Lanka’ held at the Ministry of Industry and Commerce in the presence of 95 leading exporters, businessmen and industrialists, Minister of Industry and Commerce Rishad Bathiudeen, Secretary, Ministry of Industry and Commerce Anura Siriwardena and top officials of the Ministry of Industry and Commerce. In addition to clearly portraying Secretary Jayasundara’s views to the crucial industry and export community, the two hour long, in-depth forum, also successfully resolved several sector specific issues raised by various industry sectoral reps present at the session. Speaking on taxes, Secretary Jayasundara said: “Under the vision of President Mahinda Rajapaksa, you all have got a bonus. He took a policy decision to rationalise tax. On the other hand, I ask exporters if you can’t pay 12% export tax, then why export? Our taxes for SMEs are 12% so it is for the tourism sector, at 12%. You need to get your (export) products in good shape and make Sri Lanka the wonder of Asia.” Speaking on recent moves, Secretary Jayasundara said: “The Government is criticised by many people on recent policy decisions but we took painful decisions and manage to keep the balance in the economic system and we will not ask for GSP. We should not grow markets on the basis of subsidies. Then the country will become vulnerable. Also, our economy is strong. The Bank of Ceylon raised $ 500 million on short notice and the Central Bank has done a first class job with the rupee. For the fourth consecutive year, we have a declining budget deficit, last being 6.8%. The long term signal of this trend is that more ‘good money’ will come to you and I am very optimistic about how Sri Lanka’s environment will turn out. But I am not sympathetic on change in rates of taxable computed profits. Taxes should be paid. Please help us to protect this tax regime since the Government needs money to provide facilities. Countries will prosper, if tax rates prosper and the country will slide, if taxes fall.” Stressing that the economy still has issues to be resolved, Secretary Jayasundara said: “Much more improvements are needed in the Doing Business Index. Our established main export markets do very quality products. We have to look for markets elsewhere. The strategy of President Mahinda Rajapaksa is to ask for markets. Don’t worry about competing there once you get there. First, ask for unrestricted market access from trade partners he said. We simply met Chinese and showed our product list, that’s all. China has responded to us very positively under the Mahinda Chinthana. We need to give Sri Lanka a brand identity in the sense that a few products are coming only from Sri Lanka. This is the kind of vision that we all should share.” With regard to export strategies, Secretary Jayasundara said: “You can continue to talk theories on exports as well as on export competitiveness but as practitioners, you should understand that exports not always need to be aimed at lucrative markets only. For example, there is a food import need in several African countries through the UN or WHO due to famine etc. Also, I believe that we need to deepen our economic ties with both India and Pakistan. These two markets provide unlimited potential if you are ready.” When industrialists raised the issue of brain drain, Secretary Jayasundara said: “Unless you overcome your productivity, you have a problem in overcoming these new challenges. Industrialists must objectively debate as to how labour markets work. We cannot stop brain drain simply because it is an individual freedom of choice. I blame our chambers for this. They need to educate the industries but this is not happening. I am sympathetic to consider royalty payments on brand promotions. I shall recommend this to President Mahinda Rajapaksa so that it is proposed in the next budget. Also take a long term view on products you select to manufacture, rather than a stop and go method, which will lead our country to become an assembly plant.” Secretary Jayasundara added: “I keep notes for my post retirement writing. I hope we got it right!”