Global recession is an opportunity: PB

Tuesday, 4 October 2011 00:34 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

With the Budget on the horizon, the Treasury Secretary Dr. P.B. Jayasundera yesterday said that prospects of a longer global recession were positive for Sri Lanka as it would provoke exporters to seek markets from emerging countries.

Addressing the National Chamber of Exporters as part of a consultative process to hear industry views ahead of the Budget 2012 due on 15 November, Dr. Jayasundera despite insisting at the onset that “the phase for keynote addresses is past,” he nonetheless continued to talk for about an hour afterwards, drawing forth various concerns of exporters.

Key among his points was that exporters should not ask for more concessions from the Government. He pointed out that the energy subsidy was substantial and continuously extended to industries, taxes have been simplified and 6% of the Budget has been allocated for public investment, reducing the need for extra support.

“An exporter can now keep 90% of profits. That is as good as 100% and all the savings that you make off not paying taxes should be used for investment,” he advocated, adding that the private sector had to stop looking for cheap labour.

“You must learn to take all problems as opportunities. It is my personal view that the best thing that happened to exporters is losing the GSP+. It made our apparel companies look for emerging markets, increase efficiency and learn to survive on its own. New markets are emerging opportunities.”

Moreover, a global recession could work in Sri Lanka’s favour by decreasing oil prices. Oil prices decreasing would save the country more foreign exchange than all the earnings collected by exporters. “We import about US$ 14 billion worth of goods and out of that, US$ 3.5 billion is for oil. Saving from lower oil prices would be higher than any export increase earnings,” he stressed.

Dr. Jayasundera went on to say that the members of the National Chamber of Exporters as well as other stakeholders should have consultations with each other regarding what would be the best tax and cess structure for the country. He commented on the fact that taxes were double-edged swords and what was good for exports could be bad for imports.

“Sri Lanka has a large amount of imports and now we must look at producing these goods ourselves. You must consult among yourselves and tell us how best to protect your industry, taking all other stakeholders into consideration, especially local industries. It is time we had this honest communication rather than these exhaustive consultations between industry and Government.”

He admitted that further simplifying of VAT would be needed but did not mention if it would be included in the upcoming Budget. He also urged top export companies to seek foreign funding and leave local funds for small businesses.

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