National Chamber of Commerce has its say on 2017 Budget

The National Chamber of Commerce, in a recent statement, conveyed its approval of several of the Government’s budget proposals.

The following is the National Chamber of Commerce’s full statement. 

The National Chamber of Commerce, with broad representation of local SMEs of the country, welcomes the allocation of seed capital for an SME credit guarantee scheme, the allocation of funds for an interest subsidy for specific SME sectors depending on revenue and employment generation capacity and infrastructure development and training for the textile and handloom industry. We appreciate the provision of over Rs. 2 billion for the revival and diversification of the fisheries industry with a view to harnessing opportunities after lifting the fisheries export ban by the EU. 

We believe the initiatives taken to uplift the exports industry such as the establishment of the EXIM Bank with the allocation of Rs. 10 billion, the provision of land, electricity and water supply to private free trade zones and meaningful trade promotional activities would be conducive to the development of the sector. The National Chamber commends the Government’s efforts in phasing out para-tariffs in the tax system with a view of making Sri Lanka a better place for investment and introducing anti-dumping and countervailing measures to facilitate a level playing field for domestic companies as we have strongly suggested in our budget proposals to the Government.

The importance of skill development has been one of the major concerns of the membership of the National Chamber and budget proposals for providing scholarships to follow vocational training, allocation of funds to facilitate 10,000 youth in priority sectors such as the apparel, healthcare, hospitality and construction industries through the private sector, the upliftment of German Training School and Hotel Training School are broadly in line with our suggestions. 

We further appreciate initiatives taken for vocational and technical training institutions to expand the curriculum to include certain specific courses at the NVQ level and sincerely expect that the Government will further explore the possibilities of obtaining mutual recognition for such qualifications at an international level.  

However, it is our observation that the Government is expected to expand the revenue through an increase in taxes on Goods and Services and taxes on External Trade which will have an inflationary impact and the reduction of the purchasing power of the people. 

We believe measures such as the provision of a 50% interest subsidy to farmers, the private sector investing in the outgoing systems, to establish floriculture nurseries, etc. and an interest subsidy loan scheme for improving mechanisation of agriculture, implementation of SME Credit Guarantee Scheme, allocation of Rs. 750 million for a concessionary loan scheme to SMEs, the establishment of incubators in five districts to support start-ups, an interest subsidy loan scheme for tourist hotels and an allocation of Rs. 7 billion to be provided to selected youth with interest-free loans will encourage entrepreneurship and domestic investments in the economy rather than creating a consumption boom. 

The proposed increase in public investments in infrastructure, education and health and the expected implementation of such projects through PPP will generate a trickledown effect of the benefits to the people in the domestic economy. 

However, the success of the expected efforts of the Government will be heavily dependent on the meticulous implementation of the mammoth number of projects, which may be difficult to complete during the short time span of one fiscal year, clearing ambiguities in certain revenue proposals and the support extended by the private sector.