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Monday, 26 November 2018 00:00 - - {{hitsCtrl.values.hits}}
By Nuwan Senarathna
International Trade and Investment Minister of the Sirisena-Rajapaksa Cabinet MP Bandula Gunawardana yesterday acknowledged strengthening the rupee would be a long-term effort but said that measures would be taken to attract investments to Sri Lanka by giving a wide range of tax concessions to investors – especially those approved by the Finance Ministry – to bolster reserves. 
In an attempt to improve the exchange rate, the Ministry would introduce significant tax concessions and holidays for both local and foreign investors. As part of this effort, a special tax holiday of five years would be given to investments approved by the Finance Ministry with the policy to be introduced in the next Appropriations Bill, Gunawardana told reporters at the Prime Minister’s Office.
“We are aiming to keep the exchange rate at a steady level of Rs. 160 for the first year and reduce it to Rs. 140 in the following year,” he said, adding that measures would be taken to stabilise the exchange rates to create an investment-friendly environment in the country for local companies.
He noted that a national program would be introduced to promote export-oriented industries, while encouraging an increase in import substitution industries to reduce imports to the country, insisting import reduction would help to narrow the trade deficit.
“We will introduce an investment-promoting tax concession policy to promote import substitution goods and services as a way to protect reserves and reduce pressure on the rupee, which has been one of the biggest challenges to the country’s economy.”
He pointed out that special tax reductions would be given for projects that receive the approval of the Finance Ministry to attract more foreign investment, and a five-year tax holiday would also be offered to the investors.
“Most of the Sri Lankan businessmen and professionals did not reveal their income generated in foreign nations to avoid tax policies introduced by the Sirisena-Wickremesinghe Government. According to our calculations, more the $ 8 billion was not disclosed due to those tax policies.”
He also said that he would present a Cabinet paper to establish three free trade zones in Katunayake, Maharagama and Meegoda to facilitate the local apparel product market.
“Most tourists tend to buy apparel products in and around Colombo, which has been one of the largest ways of generating foreign exchange in Sri Lanka. Therefore, I expect new free trade zones would help to attract foreign tourists to buy more local apparel products,” he claimed.
He noted tax concessions would also be offered to imported raw materials for apparel products, including machinery, adding: “We are expecting a boost in the sector within one year to narrow down the deficit of the balance of payments.”
Meanwhile, Gunawardana claimed the United National Party’s (UNP) economic policies had been the root cause for the ongoing currency depreciation.
