PS support for Govt. push to ease red tape in biz

By Charumini de Silva

In the second leg of efforts to improve the ease of doing business, the Government yesterday held a lively discussion to obtain private sector stakeholder input to formulate policy revamps to uplift the country’s economy.  

The session provided a platform for the private sector representing a cross-section of industries to interact with relevant government institutions and seek responses to their queries. This was the second meeting held between Government institutions and the private sector to facilitate the ‘Ease of Doing Business’ forums organised by the Finance Ministry.

The key objectives of these meetings are to identify and address procedural and regulatory issues in doing business in the country. Many queries were directed to the Sri Lanka Ports Authority, Inland Revenue Department, Credit Information Bureau (CRIB), Foreign Exchange Control Department, Board of Investment (BoI), Urban Development Authority (UDA), and Colombo Municipality Council (CMC) from the private sector.

Key concerns the private sector brought to light were appeals to coordinate with inter-government institutions especially when it comes to certain projects, tax exemptions on VAT, special treatment for certain BOI companies at EPZs and certain levies that are affecting local industries.

In a view to encourage inward remittances from NRFCs, National Development Bank PLC (NDB) Director/Chief Executive Officer Rajendra Theagarajah suggested the Government should look at ways of improving the inflow of remittances into the country.

He said at present migrant workers or NRFC holders are not allowed to have a joint account with family members and pointed out this discourages families from remitting more money.

“As long as the Central Bank can track that money and ensure it legitimately came into the country there should be no issues. It will certainly encourage more foreign exchange inflows,” Theagarajah added.

Responding to this suggestion Finance Minister Ravi Karunanayake said the Government is definitely looking at this area and will give a proper solution at the next meeting.

“Certainly those are areas we are opening up,” he responded.

However, the Minister also pointed that to allow these kind of joint accounts the account holders have to at least meet a minimum balance. Theagarajah agreed to this suggestion.

There were also few companies which appreciated the Government’s efforts to improve the ‘doing business’ conditions and were satisfactory with the type of support some of the Government institutions provide under minimal facilities and resources. 

Raising concerns on behalf of the Ayurvedic medicine industry Hettigoda Group of Companies Managing Director, Asoka Hettigoda said that despite Government’s promise of helping the industry by way of exempting Ayurvedic medicine imports from VAT; this had still not been implemented.

“Although the VAT benefit is passed on to imports of western medicine, local industries that import Ayurvedic medicine still have not got that benefit,” he noted.

Few of the companies making comments on this series of meetings said that they would also help to ensure that efforts to improve Sri Lanka’s business environment is sustained.  

Commending the Government institutions’ efforts to help industries under tough conditions S-lon Technical Director Dr. Kirtivan Kotian said: “Despite Government institutions such as the Sri Lanka Standard Institution (SLSI) lacking facilities to carry out international standard evaluations on products, they still manage to provide a satisfactory service.”

Nevertheless, he pointed out that it was important for institutions like the SLSI to receive sufficient funding to facilitate and equip themselves.

“We are more focused on getting the right international standards for our products,” Dr. Kotian added.

According to a global survey by the International Finance Corporation (IFC) and World Bank comparing 189 countries Sri Lanka dropped 14 notches from its 85th place in 2014 and ranked at 99th out of 189 countries in the ‘2015 Doing Business Report: Going Beyond Efficiency’.

All economies in the region have taken steps to improve the business environment in areas measured by the report. India implemented the region’s largest number of regulatory reforms in that period, with 20, followed by Sri Lanka with 16. In the South Asian region Nepal ranked at 108th place, Maldives 116th, Pakistan at 128th, India at 142nd, and Bangladesh at 173rd place. 

Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Economies are ranked on their ease of doing business, from 1-189. 

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. Singapore ranked the easiest to do business in 2015 while New Zealand, Hong Kong, Denmark and South Korea rounded up the top five in that order. The United States ranked seventh.

Finance Minister Ravi Karunanayake, Industry and Commerce Minister Rishad Bathiudeen, Treasury Secretary Dr. R.H.S. Samarathunge, Senior Advisor to the Prime Minister R. Paskaralingam, Land Minister M.K.D.S Gunawardana, along with secretaries to several key ministries attended the session. The third session of the meeting will be held on 16 July.