Minister Douglas meets industry chambers for pre-Budget finer details

The Minister of Traditional Industries and Small Enterprise Development by Douglas Devananda met with the key personalities of the private sector, industrialist and policy advisors to the Ministry for a finer points of the pre-budget meeting so that the most important aspects can be highlighted to the Ministry of Finance and Planning that is finalising the budget at this moment.

Minister chairs the meeting with the key industrialists and Chambers for Traditional and Small enterprises

Those present include the National Chamber of Commerce, National Chamber of Exporters, Small Medium Industries, Industrial Association and Federation of Chamber of Commerce and Industries and Institute of Policy Studies and Manufacturers Association and selected Academia and representatives of the Institute of Policy Studies Chamber of Commerce and Industries of Jaffna together with Deputy Minister  Weerakumara Dissanayake, Secretary Ministry of Traditional Industries and Small Enterprise Development V. Sivagnanasothy and the Senior Advisor Mrs. Jegarajasingham were present at the discussion.

Some of the key points highlighted were:  

Access to finance for SMIs and SMEs

It was revealed that under the current arrangements the banks both state and private are not fully geared to provide financial assistance and credit support to the Small Medium Industrialists. A special arrangement is required to strengthen financing SMEs and SMIs, even the credit ceilings imposed on Samurdhi Bank needs to be increased. Bank Managers tend to neglect financing SMIs. Central Bank should provide training to bank officers to evaluate loan applications of the SMIs with special consideration. The documentations are generally high for SMIs and need to be revisited. Further insistence on collaterals for micro and small enterprises creates   serious problems. The need to design a special scheme and credit guarantee schemes for SMIs has been proposed.

Upgrading industrial estates and infrastructure facilities

Many industrial estates currently intended to provide infrastructure and space for SMEs and SMIs are in poor condition. It is important to strengthen and upgrade the internal roads, water supply, electricity, sanitation and treatment facilities to ensure better services to the SMIs and SMEs.  The need to give concessionary rental was also emphasised.

Market oriented new design concept

The need to introduce new designs to meet the market requirements is fundamental for product development and marketing. The Industrial Development Board, National Crafts Council, National Design Centre,  Palmyrah Development Board and related institutions should be strengthen to introduce market oriented product designs, so that the product of SMIs can be locally and internationally competitive.

Development of entrepreneurship culture

Special training programmes and skills development initiatives should be undertaken at the school level as well as University level to create entrepreneurial culture. Youth should be trained in SME industries.  Universities should be supported with special funds to provide entrepreneurial training with practical business models to setup enterprises as experimental models for learning.  Moreover, training need to be tailored to the practical industrial requirements. Demand based sector towards training programmes to be developed.

Eg: Painters need Scientific Training  

Value addition and job creation be recognised

The Government should recognise the value addition aspect and also job creation. Export of non value added products and raw materials should be discouraged. In this regard, appropriate fiscal policy should be in place.

Writing off of taxes

Although the Budget proposal last year included proposal to write off tax arrears of SMIs, the industrial representatives felt that this has not been effectively communicated. The World Bank funding for restructuring SMEs affected by the previous conflict situation is exhausted and need to be extended and continued.  

Special assistance to SMIs affected by war in the North and East

Special fund for reestablishment of war affected SMIs and SMEs, Tax holiday for rebuilding the industry, concessionary interest rates for SME credits and lending, concessionary taxes on import on plant and machinery, electricity and other hotel school training were proposed by the Chamber of Commerce and Industry of Jaffna to strengthen the SMIs and SMEs.

Legal reforms

The SMIs are affected due to return of cheques and recovery of debts. Legal systems should be improved to address these practical problems.

 Raw materials

Raw material for SMIs be allowed to be imported with duty concessions. CESS fund should be utilised to import raw materials which are in short supply such as cane etc.

 Definition of micro, small and medium industries

The white paper on SMEs and the draft national policy on SMEs need to be revisited and finalised. The definition of SMIs should be agreed and a comprehensive survey on SMEs and SMIs should be undertaken for monitoring and policy making purposes.

Marketing and quality assurance

With regard to marketing SMI products, sub contracting and buyback arrangements should be strengthened and SMIs should be encouraged to produce quality products and quality assurance systems should be introduced. SMIs should be linked with export markets.   

Simplification of taxes

The tax system for SMIs should be simplified to enable them to calculate taxes on self assessment basis without seeking expensive external assistance.  Simplified tax guidelines should be circulated and may also be placed in the Industrial Development Board website and other related websites.

The Past President of Federation of Chamber of Com-merce Kosala Wickramanayaka thanked the minister for the  Initiative taken whilst the Secretary Ministry of Traditional Industry and Small Enterprise Development V. Sivagnanasothy said that development of Industrial Estates will be a key strategy in the year 2012.  Minister Devananda said that on a monthly basis he will initiate this dialogue give that 2012 will be focused to developing of SME’s and traditional industries and small enterprises in Sri Lanka.