Private sector stakeholders and independent analysts yesterday hailed the 2017 Budget proposals describing them as, “progressive, sensible, and reinforcing continuity,” as well as providing greater clarity on the Government’s policies.
Initial reactions to tax proposals were spare on the ground as many preferred to analyse the proposals more thoroughly before commenting but a select few welcomed the proposals while insisting that the focus would now be on implementation.
A breakdown of the views and reactions shared with Daily FT is given below.
The Hotels Association of Sri Lanka (THASL) President Sanath Ukwatte said it was a progressive Budget that was carefully planned to not only meet Government revenue targets but also place Sri Lanka tourism on the right track.
“We welcome Government stand to maintain the minimum room mechanism until 2018. This is a positive move and the Government has listened to hoteliers’ request. We look forward to working with the Government in developing a correct policy framework to attract much needed foreign direct investment (FDI) to develop the industry further, thereby creating employment opportunities and revenue for the Government. We also hope the much awaited country marketing campaign will come into effect this year in order to drive up real demand and to attract high spenders,” he added.
Colombo City Tourist Hotels Association (CCTHA) President M. Shanthikumar said he welcomes the budget proposals, specifically the subsidy for refurbishing hotels that are 10 years or older and as well the continuation of minimum rates for city hotels until 2018. He also welcomed the budget allocation for building convention centers for meetings, conferences, and events.
Economist Anushka Wijesinha said in the outset that it seems like there are sensible tax policy proposals, but again it would be up to implementation.
“Overall I was looking for serious revenue proposals that are not damaging to the economy. Last year several taxes were proposed but did not get implemented. The tax revenue to GDP ratio is higher compared to last year, which is a good thing, but again it all depends on implementation,” he noted.
Stating that there were some notable new revenue proposals, he said that the biggest revisions have come from the Corporate Income Tax. “There were some new investments in education including expansions of digital e-education. Some measures have been taken to widen the tax net and some exemptions have been removed.”
He also added that there were a number of proposals that were mentioned in last year’s budget, which has been included in this year’s budget too.
Wijesinha commended the proposal on Carbon Tax for motor vehicles which was introduced for the first time, noting it is going to be a new area of revenue for the Government. There are increased tax collection forecasts from recasts to withholding tax.
He pointed out that the Budget Proposals were more in the same direction as outlined by the Prime Minister, with direct taxes and more investments in education.
“There were quite a few proposals made on primary industries, but what we have to be careful is that these would be productive measures and not protective measures. It is good that there is focus on primary industries,” Wijesinha stated.
Chamber of Construction Industry (CCI) Secretary General/CEO Nissanka N. Wijeratne said the 2017 Budget has announced several proposals to attract private investments in addition to major development projects, adding that the total value of construction work during the period 2016-2020 is expected to be Rs. 6,500 b.
He said the establishment of an Exim Bank, announced in this Budget, was a proposal mooted by the Chamber of Construction Industry for several years.
The proposal to offer scholarships to youth to undertake vocational training at State training centres and a monthly stipend of Rs. 10,000 to those trained by companies was a welcome move, as there is an acute shortage of skilled construction workers from the construction industry.
In addition, he pointed out that proposal for the private sector to harvest, sieve and wash offshore sea sand for construction use to reduce the demand for river sand was encouraging. Another positive proposal is to provide loans to foreigner’s payable in foreign currency to buy apartments, which will further expand the construction activities.
“The proposal to construct 500,000 houses with loans provided at 7% interest payable over 25 years, will make Sri Lanka a house owning society,” Wijeratne stressed.
Frontier Research Lead Economist and Senior Product Head Shiran Fernando asserted that there were a lot of good varied expenditure proposals in the sectors of education, healthcare and some key industries.
“An initial look at some of the budget proposals seems like its expenditure proposals could match its revenue proposals. However, looking at some of the targets, backtracking on these proposals should not happen as it would be difficult to reach some of the deficit targets that are being talked about,” he pointed out.
He also highlighted that there wasn’t anything too negative to go against the economic statement made by the Prime Minister, noting that it was a step in the right direction compared to the policy statement last year. “There was nothing concrete to put it in line with the statement, but it was better than last year because last year the Budget was different to the policy statements.”
Tea Exporters Association (TEA) Chairman Jayantha Karunaratne said he welcome the Budget Proposals which are of very positive nature for enhancing tea export revenue and encouraging all stakeholders of the business.
“Many suggestions were made by the TEA have been accepted and incentives for growth of value of our exports will encourage exporters to meet the challenges globally to supply our products. Automation of Colombo Tea Auction is a way forward for speed and efficiency,” he noted.
Furthermore, he pointed that facilitating cut-tear-curl (CTC) imports to value added tea exports will enhance their position in the global tea market.
Karunaratne asserted that the removal of other fees will reduce the cost for exporters to be more competitive in international markets.
Ease of doing biz: govt. looks to jump 40 places in 2 years
Finance Minister Ravi Karunanayake yesterday said during his 2017 Budget presentation that the Government aims to leap up in the global ease of doing business rankings.
“We need to improve our savings and divert such resources to productive economic options to enhance our growth potential. Improving the investment climate is of much importance and needs urgent attention to sustain our investment targets,” he told Parliament.
He said an ambitious reform program to strengthen “ease of doing business” and to create the positive environment for upcoming entrepreneurs to invest and also making it conducive for enterprises to enter new markets, grow and create employment opportunities will be addressed.
“Our Government is committed to creating an enabling environment for businesses to operate and to do business with the minimum of red tape. Let me put this in context, we were ranked 110th in the Doing Business Index in 2015. There are at least 8 processes that a business must follow before registering in this country. This is above the average among peer countries. Our aim is to shorten this to 5 processes by 2020. This, together with several other measures, will enable us to improve our ranking to be within the top 70 nations by 2018,” he told Parliament.