New President of the National Chamber of Commerce of Sri Lanka (NCCSL) Asela De Livera commended the budget 2019 yesterday, commenting that “it was a very good job under the circumstances.”
He had a favorable view of Enterprise Sri Lanka and commended the proposal to allocate considerable amount of funds around Rs 15-20 billion for projects in the North and East.
He reminisced of years before the war wherein Jaffna was a centre of industrial and fisheries activity. In this regard, he hoped to see a revival and inferred that reconciliation was more than just espousing sentiment. He made these comments at the NCCSL press conference on Budget 2019 at the chamber auditorium. The conference was chaired by NCCSL president Asela De Livera while NCCSL members Nandika Buddhipala and N. R. Gajendran also spoke at the event.
Buddhipala began by summarizing the Chambers view. “It is imperative to further improve rankings on the Ease of Doing Business, Global Competitive Index, Index of Economic Freedom, and Global Corruption Perception Index,” exclaimed Buddhipala.
The NCC commended the budget for providing collateral to entrepreneurs along with the interest subsidy. Buddhipala suggested that this was essential “in the absence of development banking”. He went on to note “agricultural hardships” and problems with “liquidity for lower socio-economic groups.”
Buddhipala commenting on fiscal targets said that “unless they increase the tax net, revenue growth will remain a function of GDP growth.” He noted the “lack of huge reforms to increase the tax net” and therefore emphasized the importance of “the Inland Revenue Act for 2019 being fully effective”.
Commenting on Expenditure Buddhipala was of the view that “government interest payments are too high. This is a problem for the government. We have no faith in the government resolving this issue.”
Focusing on investment Buddhipala called for a “better legal framework. Businesses should be confident in their ability to enter and leave investments.” He suggested that investors would be happy with the recent agreement the government reached with the IMF.
On the monetary front, Buddhipala mentioned that they “expected monetary aggregates to remain within the target.” He called for “maintaining stability in the exchange rate.” On questioning, he outlined that the NCC “expects about a 4% depreciation of the currency.” He noted constraints in the local capital market for government financing.
Buddhipal raised concerns with regards to educational loans. “Educational loans have become a serious problem in the West. The mechanism is only effective if there is true value addition. It might be problematic to provide subsidy in this manner. We must focus on the results of these educational subsidies.”
Gajendran commended the budget for its consistency. He called for “political agreement on at least a few key issues.” He went on to explain that “Korea had a bipartisan trade policy which helped with continuity in policy in the face of political changes.”
Gajendran wanted the country to “leapfrog into higher middle-income status.” He raised the point that “70%-80% of businesses are sole proprietorships which don’t receive benefits from various preferential tax classifications.” The NCCSL has strongly urged the government to look into this.
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