COYLE makes constructive suggestions to President on relief measures for business sector

The Chamber of Young Lankan Entrepreneurs (COYLE) in statement yesterday listed a host of recommendations to President Gotabaya Rajapaksa as relief measures for businesses impacted by the outbreak of and resultant mitigation measured against novel coronavirus (COVID-10).

In its statement COYLE conveyed its gratitude at this moment for the necessary initiatives taken by the President and the Government, to contain the contagious COVID-19 virus and manage the situation in a profound manner.

As a Chamber that collectively employs over 200,000 citizens, it is determined to weather the economic storm and continue its contribution to the economy.

COYLE unanimously agrees that the highest priority and attention should be to secure the people and the society. In the meantime, as a front-line Chamber, it has evaluated the impact on many economic sectors with the intention of adapting to the current situation to restore the economy and social standards, and wishes to forward crucial factors to be considered.

The following recommendations are spearheaded by COYLE Chairman Chamath Kottage together with the Committee of Management:

For Phase 1 we would like to propose the following: Financial and tax moratorium relief programs that would help regain and revive the economy for small, medium, large and extra-large enterprises: It is imperative that all Sri Lankan enterprises irrespective of turnover are included and not left out of the financial moratorium reliefs. Reduce the interest rate to 4% for all types of working capital loans for a period of two years with effect from 1 March. Bank charges and penal interest should be waived off or refunded if accumulated on or after 1 March. 

Due to the pandemic, the present regulations on export proceeds with DP and DA terms may experience delayed remitting proceeds. Therefore, export proceeds should be extended to six months.  

Tax policy amendments and recommendations: Thin capitalisation provisions applicable under section 18 of the Inland Revenue Act should be removed with retrospective effect from 1 January 2019 and thereafter. This is not bearable in the present situation and companies cannot survive without borrowing at present context or pay taxes for the past excess borrowings. It is not practical to dis-allow a portion of interest and impose Income Tax on such expenditure incurred by a person.

Financial policy amendments and recommendations: Reduce AWPLR to 7%% for next two years to develop the production-based economy and this will benefit Government borrowing and moratoriums as well. Lending interest rates should be AWPLR +1.5% maximum. Overdue loan interest must be limited to maximum of AWPLR + 3%. Guarantees and bond charges must be maintained at maximum 1.5% per Annum.  LC commissions must be maintained at maximum of 0.125% per quarter. All potential legal actions and default actions resulting from the predicament should, at present, be held over for the next two years to find a resolution. Additional working capital and term loans should be provided to local production, exports and export-supported services.  

General recommendations: Re-establish state-owned development banks and venture capital companies to enhance and bring back the focus on SME and develop entrepreneurship. Credit cards dues to be converted to a loan at very low interest to be paid back across a two-year period. Housing loans, Vehicle loans to be restructured with a grace period of 12 months.

We believe that with a good understanding of the factors stated above, the President and the Government will proceed with a proper plan of action to bring back the economy and society to its normal intensity despite the pandemic.