Govt steered economy back to growth path - Mangala | Daily News
Budget 2019:

Govt steered economy back to growth path - Mangala

Minister Mangala Samaraweera entering the Parliament to present the 2019 Budget yesterday.  Picture by Sulochana Gamage
Minister Mangala Samaraweera entering the Parliament to present the 2019 Budget yesterday. Picture by Sulochana Gamage

We have been able to steer the economy back to a growth path after the turmoil at the end of the previous year,’ Minister Mangala Samaraweera said, presenting the 2019 Budget to Parliament yesterday.

He said the Government believed in a private sector led growth and they would increase allocations on Health and Education. He said the rupee had appreciated by 1.5 percent against the dollar. The Enterprise Sri Lanka program would be spread across the island, enabling the youth to become entrepreneurs, he said.

Not permitting foreign investors to bid for local construction projects, good move

Council Member Sri Lanka Institute of Architects and Managing Director Design Consortium, Migara Alwis said that the decision for not allowing foreign investors to bid for Government construction projects without forming joint ventures with local companies, would have a major positive impact on the industry.

“Earlier, the foreign investors were given a free hand, while local construction companies just have to idle. This move would enable local companies to form Joint Ventures with foreign companies. This would firstly give a much needed financial injection to the local industry. Secondly, it would help local companies to gain knowledge by working with their foreign counterparts.”

It would also help bring back some of the Sri Lankan labourers who are working in foreign countries as they would get higher wages in Sri Lanka.

He also said that the industry had made an appeal in this regard and the Minister had respected the timely suggestion.

Boost for rubber research

Rohana Galaboda, Chairman, Thuru Saviya Program, created to develop the Rubber Small Holders, said that the budgetary allocation of Rs 800 million to develop the rubber industry would help intensify Rubber Research and also help other sectors.

“We have also been promised an increased allocation which would help us to offer more services, such as offering manure and Agriculture utensils to the growers owning less than 50 acres.”

Rs 250 mn for export market welcome move

National Chamber of Exporters, CEO and Secretary General Shiham Marikar, said that the Rs. 250 million allocated for the export market access by the budget is a welcome move.

He said this amount would be offered to the SME sector who wishes to venture overseas and also find new markets. “By this amount, would be allocated for companies to visit Trade Fairs and gain access to new technology and also find new partners for Joint ventures.”

Through this fund, the SME sector would also get financial assistance via Export Development Board to upgrade in machinery and other assistance.

New export development zones boost for supply and materials management

The allocation of Rs.5 billion to initiate new export development zones at Bingiriya and Bagawatta is a commendable budget proposal which enhanced the growth and development of the country and increase more job opportunities in the field of supply chain management of SriLanka. As the national body of the supply and materials management in Sri Lanka the ISMM already understand the paradigm shift of the modern trends in the job market and already introduces supply chain management courses to Kurunegala, Ratnapura Galle and Jaffna. Therefore ISMM welcome this move as a right decision taken at the right time by the present government, said Nalin Silva from ISMM.

Sharp increase in vehicle taxes

Due to the proposed increase on import tax on vehicles ,the prices of all categories of vehicles will increase by from a minimum of Rs 250,000 upwards which will have a very negative impact on the vehicle industry, said Vehicle Importers Association of Lanka President Sampath Merenchige.

Rubber allocation fits master plan

Rohan Maskorala representing the Rubber ( SLAMERP) welcomed the proposed budget. He said the allocating of Rs 800 million for replanting and further Rs 500 million for research and development was a good move. Maskorala said he felt the allocation fits into the previously drafted master plan for rubber in 2016-17. As an exporter, he also welcomed the fast-tracking of certain reforms to the Customs Act. He noted that the yield in Sri Lanka lags behind peer countries and most of this difference is explained by the lack of investment in the sector.

Key points of the Budget 2019:

Budget to allocate Rs 48 billion for infrastructure needs through the ‘Gamperaliya’

Rs 800 million allocated to develop the rubber industry,

A Special Diri Saviya loan scheme to be introduced for poultry farmers,

Rs 113,000 million allocated for the construction of two new harbours at Pesalai and Mandaitivu.

Rs 250 million allocated for export market access, A scheme to amend the labour laws to ensure women are able to works from home.

Rs 250 million allocated for the export market access scheme In a bid to promote sports and tourism, the removal of Customs duty on go-carts, tyres for go-carts and cess to be reduced to 0.25 percent from 0.5 percent.

Foreign companies to be allowed to bid for projects in the local construction industry - without forming a joint venture with a Sri Lankan.

A special fund would be set up at the Finance Ministry for students who excel at the Advanced Level Examination, to study at top universities in the world, such as Oxford, Cambridge, MIT and so on. Rs 2,410 million has been allocated to complete the canal work of 7 major projects in 2019,

Rs 200 million allocated under the My Future Loan Scheme for students who don’t gain entry to local universities.

Para-tariffs on imports to be phased out over 5 years with some sectors to be phased out over three years.

Rs 600 million allocated to further develop the ‘Suva Sariya’, with another Rs 1,625 million allocated for emergency care for patients.

Rs 5,000 million for Light Railway transit system which would begin constructions in 2019

Rs 8,000 million for the Colombo Urban Rejuvenation program, while Rs. 3,000 million has been allocated for the Sukitha Purawera program.

Under the ‘Home Sweet Home’ program,’ newly married couples would be able to borrow up to Rs 20 million as a housing loan for a period of 25 years, with a low interest rate of 6 percent.

250 buses would also be added to the SLTB. 1,000 luxury buses would be added to the private fleet too.

Government sector employees’ salaries to be increased by Rs 2,500 from July. Import tax on petrol vehicles below 800cc capacity increased by Rs 150,000 and vehicles below 1000 cc up by Rs 175,000 , import tax on petrol vehicles below 1,300 cc increased by Rs 500,000.

Import tax on 70 KV electric vehicles reduced by Rs 175,000

Import tax on hybrid petrol vehicles below 800 cc up by 250,000 and hybrid below 1,500cc by Rs 500,000

A 3.5 percent nation building tax on international credit card transactions has been proposed

License fees for casinos increased from Rs 200 mn to Rs 400 mn, an entrance fee of USD 540 to be charged per person.

There would also be an open forum, which would enable participants to ask questions and clarify matters pertaining to Budget 2019.


Boost for regional value chains and accessing markets

Budget 2019 has capitalized on trade agreements towards integrating the country into regional value chains and accessing markets.

Presenting Budget 2019 in Parliament, Finance Minister Mangala Samaraweera said that the acceleration of exports and other sources of foreign income are crucial to sustainable economic growth and debt service capability. “In the 2018 Budget, we announced the launch of the Export Market Access Scheme and the National Export Strategy. Support would continue this year with Rs.400 mn. allocated for the Export Market Access Program and Rs.250 Mn would be allocated for the National Export Strategy. The NES includes the implementation of the National Quality Infrastructure Strategy, which is a public-private collaboration that entails upgrading of technical facilities for export product development and import quality testing,” he said.

The Government is committed to the strategy of a network of trade agreements to link into regional value chains.

With the successful completion of the Singapore FTA, we will review progress in the on-going FTA negotiations with India, China and Thailand and build on learning from the Singapore FTA process.


Integration to global market: Trading Houses for priority sectors

A “Break into India” and “China Market Entry Strategy,” are being prepared, building on the success stories from Sri Lankan enterprises in those markets. “This would be further supported by establishing Trading Houses for priority sectors in collaboration with the private sector in key markets. These trading houses would support Sri Lankan firms in securing distribution networks, buyer linkages and other ground support.

As a measure to bring down the cost of living and improve economic competitiveness in last year’s Budget, it was proposed to phase-out all para-tariffs, starting with 1,200 para-tariffs that were removed in November 2017.

This process would continue in 2019, where all HS codes with an import Cess would be subjected to a phasing out. In order to allow more time for industry adjustment, it is proposed that the para-tariff phase-out takes place over a 5 year period.


Women on Corporate Boards to be mandatory

The Securities and Exchange Commission (SEC) will introduce a voluntary target of 30% of women in director boards of companies listed on the Colombo Stock Exchange (CSE), Finance Minister Mangala Samaraweera told Parliament yesterday. The proposal was aimed at encouraging on encouraging more women representation on corporate boards.

Presenting Budget 2019 he said, all listed companies ‘shall disclose the percentage of women on their boards in their Annual Report.

By December 31 2020 all listed companies that are unable to meet the 30% voluntary target will be required to disclose reasons for being unable to do so. By December 31 2022 all listed companies shall have at least 20% of board seats occupied by women. By December 31, 2024 all listed companies shall have at least 30% of board seats occupied by women.

 


Enterprise Innovation Programme to support biz sector

The government will launch an Enterprise Innovation Program, which would support the development of innovative new products and technology by Sri Lankan firms. The Programme would be implemented over three years, providing matching grants for proof of concept, prototyping, R&D and technology adoption.

In order to support financing for start-ups, it was proposed to introduce Limited Liability Partnership structures during the last Budget. The initial drafting has been completed and would be developed into legislation this year.


Govt to introduce script-less development bonds

Sri Lanka needs to develop capital markets beyond bank financing. The back-bone of a deep and liquid debt capital market is a robust government securities market. “We will introduce script-less Sri Lanka development bonds and enable coupon stripping of Treasury bonds,” Finance Minister Mangala Samaraweera said.

“We will work with the Central Bank to invest in the necessary infrastructure towards this end,” he said.

Whilst Sri Lanka achieved its best ever FDI in 2017 and 2018, it is essential to further expand investment into the country. Therefore, an incentive package to attract high value investments is proposed. This includes significant capital allowances of up to 150% of investment value and removal of up-front taxes for investments over US$ 50 Mn, US$ 100 Mn & US$ 1,000 Mn, the Minister said.

Ceylon Chamber Seminar to Analyze National Budget 2019 on March 7

The Ceylon Chamber of Commerce would organize its annual National Budget seminar on March 7, 2019. The Seminar would take place at the Ground Floor Auditorium of the Chamber, starting at 2.30 P.M. The Seminar will discuss the implications of key policy changes in Budget 2019 and if it would be positive towards enhancing investments to strengthen Sri Lanka’s economic future.

This seminar serves as an important opportunity for the business community to delve deeper into the national budget and gain understanding of it from expert panelists.

Eran Wickramaratne, State Minister of Finance would deliver the keynote address which would be followed by a presentation on the “Salient Features of the Government Budget 2019, from a tax perspective,” by Charmaine Tillekeratne, Director, PricewaterhouseCoopers(PwC) Lanka (Private) Limited.

Following the presentation, a panel discussion with Minister Eran Wickramaratne,, Ms. Charmaine Tillekeratne, Director, PwC, Deshal De Mel, Advisor to the Ministry of Finance and Mass Media and Nilanthi Sivapragasam, CFO, Aitken Spence Group, would take place where they will share their perspective on the National Budget. 


 

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