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Tuesday Nov 26, 2024
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opportunity to make a number of proposals and engage policymakers in various institutions. He summarised important initiatives taken under four key focus areas: industry competitiveness, economy, industrial policy and export development.
Samarasinghe concluded by committing that the IASL would continue to engage all stakeholders including the Government and policymakers, productively, to foster a suitable industrial policy environment and safeguard the interest of industries. Nilam Jayasinghe (Ceylon Biscuits Ltd.) and Dinesh Dharmadasa (Ceylon Tobacco Co Plc) were appointed Vice Chairmen and the other members of the Executive Committee were from Alpha Industries, Browns, Hettigoda Industries, National Development Bank, Piramal Glass, Singer Sri Lanka, Unilever Sri Lanka, Associated Motorways, Haycarb, Litro Gas Lanka, Nestle Lanka, Richard Pieris and Lion Brewery Ceylon.
Following are excerpts of his Samarasinghe’s speech:
Industry competiveness
The first area of focus was industry competiveness.
a. Energy cost: Promoting self generation and supply of electricity to group companies located within the same premises through wheeling and to the CEB under net metering were pursued. The latter has become a reality now. We also took up measures to reduce CEB’s cost of generating power including investment in coal power plants, improvements to the mix and utilisation patterns of different sources of power and the re-negotiation of pricing in PPA’s entered in to at very high rates.
b. Research and development and innovation: Our continued proposals to encourage research have paid off with triple reduction of R&D expenses being allowed to research carried out by private institutions as well.
c. Technology enhancement: We will keep lobbying for concessions for investment in advanced technology including the reduction of upfront levies associated with importing plant and machinery.
d. Relocation of industry: We have made proposals to encourage the re-location of industry from congested sites to areas outside the Western Province and thereby create economic activity and employment in lesser developed regions.
e. Labour reforms: We have been proposing flexibility for important work arrangements such as shortening the five and a half day working week with the same number of hours spread over five days and removing certain restrictions for night work for Women under the Shop & Office Employees Act, which will create a more enabling environment for employment generation and investment.
f. Property rates: We have made submissions for an affordable and uniform structure for property rates for SME and other industries. Currently varying assessments from 5% – 30% are levied by different Local Authorities. We are confident necessary laws will be enacted shortly.
g. Restriction on land ownership by foreigners: A number of our members and other large manufacturing companies in Sri Lanka are foreign owned. We were disturbed by the initial announcement of a ban on foreign ownership of land and the imposition of a 100% tax on leasing of land which would curtail expansion and entry of foreign owned manufacturing entities. Your association pro-actively canvassed against such guidelines and we are now pleased to note that certain exemptions have been granted to long established and listed companies and the envisaged land tax rate has been reduced.
We appeal to the Minister to prevail upon the authorities to also exempt BOI approved entities leasing premises in industrial zones from such land tax.
Economy
The second area of focus was the economy.
The sound management of the economy with consistent policies and maintaining an investor friendly environment is important to sustain economic growth and private sector investment.
a. We are very pleased with the taxation reforms introduced three years ago with greater rationalisation, simplification and reduction of taxes. Steps taken in the last budget by the Government to harmonise the BOI and Inland Revenue Department tax regimes are encouraging. These were areas we have continuously highlighted to create an even playing field.
b. We are also encouraged by the Government’s increased investment in infrastructure which helps build the foundation for economic development.
c. We, however, await more meaningful reforms to our education system to bring about a more demand driven talent pool.
d. Although we have enjoyed high and stable growth with low inflation for over 3 years, an area of concern has been the non-achievement of Government fiscal targets and the overshooting of State expenditure resulting in increased Government borrowings and more particularly foreign debt and the consequential external sector vulnerability.
e. Another important aspect highlighted by us to attract much needed investment and FDI to support the desired growth levels are investor confidence. Transparency, policy consistency, good governance and the upholding of Law and Order are important ingredients to build investor comfort.
Industry policy
The third area of focus was industry policy.
a. We are encouraged that the Government has initiated a number of programs and introduced a plethora of incentives to promote regional industrial development, industrial estates, SMEs and cottage-based industries as well as import substitution industries. These are very positive policy directions that your association had been advocating. We look forward to Government support for SMEs to have easier access to credit and facilitate forward linkages with larger industries who have better access to markets.
b. The lower inflow of FDI and investment into the industry sector is of concern. Although industry accounts for 30% of our GDP and the factory sub-sector has a major 17% share of this, manufacture grew only by 5% in 2012 down from 8% a year ago. It is important that suitable conditions are maintained for industry competitiveness and development.
We strongly believe the manufacture of actual tangible goods have true potential to create real value addition to the economy, employment generation to our work force and bring about a meaningful upliftment to our economy and living standards of our people. Hence, it is important that we nurture, protect and foster the growth of industry through the implementation of sound Industrial Policy.
Export development
The fourth area of focus was export development.
We strongly believe for us to have a healthy and well balanced economy with high sustainable growth the export sector is of vital importance. Today industry accounts for 75% of our exports, although its share to GDP has gradually declined over the last two decades. Further, our industrial export growth declined to 7% last year and has been negative this year with depressed North American and European markets.
Both the private and Government sector must play an important role in reviving our export industry. We must look at alternative markets in Asia and diversify our value added product portfolio.
We were pleased to read the commitment given by our Minister to double existing trade and boost trade with Pakistan to US$ 1 b and establish a joint Economic Commission to study avenues to do so. It is noteworthy to note that our exports to Pakistan currently are only a mere US$ 82 m.
At the same time, only 5% of our exports are to India. This large and fast growing market provides huge opportunities to our industrialists. Exporting branded and finished goods to the large consumer market and intermediary products and components to the growing manufacturing base in India should be aggressively pursued by our industrialists and we need continued State support to eradicate the unfair barriers for entry into India.
Last year your association entered into a MOU with the All India Association of Industries that represents almost all major manufacturing and service sectors nationally and at regional level. The main objective was to build closer relationships with Indian counterparts and gain easier entry into the Indian sub-continent where almost 23% of the world population lives. Our membership must take advantage of this partnership and request any assistance from the Secretariat.
