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Monday Nov 25, 2024
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covering the proposals per se, but the direction in which the Budget is going, the national impact, and how CIMA members can contribute to the vision presented by the President. One of the salient features this year is a consistency in the trend.
“There has been a general plan to take the country to another level particularly keeping with the aim of a $ 4000 per capita income. This is the point at which economies tend to take off. A look at the budget proposals shows that this is all a journey to get there.”
Mihular added that although the goal is to reach $ 4000 in 2016, the Central Bank Governor mentioned that he feels it may be achieved earlier.
He added: “The President spoke often about driving the national economy. While we may never be a major industrial nation, we can leverage on the high skill and literacy of our people to offer services and high-tech products using our knowledge base.
“Dr. Jayasundera said that outside the UK, we have the world’s highest population of accountants. While we cannot compete with India on BPOs, we can with KPOs – not just accounting but other professions too.”
Wrapping up his introduction, the CIMA Chairman took a look at the Government perspective, stating: “With this budget, the President is essentially saying don’t look inward, but out and take our rightful place on the global arena. Not via politics but by top-class value added products and services. CIMA’s syllabus and training is meant to provide a global view of the work done. Our members and professional accountants can and should play a significant role. We often ask what the Government can do for us, but it is time we take the ball and run.”
Policy framework and highlights
Ministry of Finance & Planning, Deputy Secretary to the Treasury Dr. B.M.S. Batagoda delivered his keynote address, sharing insights as to the policy framework of the 2014 Budget. He touched upon the Government’s long-term, mid and short-term objectives and their impact on industrial development, as well as the impact of the 2014 fiscal policies on long-term economic development goals, stating: “As mentioned in the Mahinda Chinthana policy document, the sectoral composition of GDP was projected for 2000, 2010 and 2020. As of 2020, the services sector was meant to increase from 2000’s 53% to 60%, whereas the agricultural sector was meant to move to just 13%.”
Dr. Batagoda’s presentation set out the strategies of the development policy framework, showing that the investment by 2016 would show about 7% of Government investment and 27-29% of private investments. Furthermore, there would be integration into the global economy via the ‘5 Hubs’ policy via infrastructure development and connection to emerging economies, the oil rich Middle East, Africa as well as the Western economies. Batagoda also touched upon the importance of empowering the rural economy in terms of the Maga Neguma structure. He discussed the diversification and growth of regional economies, ensuring urban rural connectivity and the revitalisation of agriculture, as well as the importance of inclusive growth, and environmentally friendly urban development. This was added to a knowledge-based economy and strategic re-orientation of state owned businesses. The plan is to implement these strategies in order to position Sri Lanka in the global arena as a strong upper middle income country.
He concluded his keynote stating: “My task is to break down how all of this will impact the industrial sector. The target is highly ambitious; to boost export promotion from 2012’s $ 7.3 billion to $ 15 billion in 2016. There is also the idea of import replacement, in order to save an additional $ 3 billion in foreign exchange annually. The idea is to create a revenue surplus.” KPMG Sri Lanka Tax & Regulatory Principal Suresh R.I. Perera then took over, bolstering Batagoda’s keynote by discussing the revenue proposals presented in the Budget and their impact on key industries.
Sustaining a stable business environment
Commercial Bank Chief Risk Officer Sanath Manatunge assessed the business implications of the Budget as well as the implications on the country’s competitiveness.
He said: “We need to dissect the plans and strategy behind the Budget figures. The context created by regulators in the past few years, we see interest rates reaching single digits, inflation mid-single digits and exchange rates stabilising in 2012.
“The budget creates future context for opportunities and challenges, in order to optimise benefits. The key challenge is whether the country can sustain a 7-8% growth via traditional activities alone. There is an expansion of exports, as the Government has redefined the capacity of exports, both professional and service-related.”
He added that the budget also looks at transforming the paradigm from cheap labour to skilled labour and stopping the brain drain and starting a brain gain.
This also includes food security, emphasis on exports, creating sustainable stability, consistency in policy, and simplification of processes.
He further stated: “With over $ 20 billion expected from exports by 2020, the Budget pushes toward exploring new international markets by modernising processes and facilities, and encouraging lending with credit facilities below 8% per annum for manufacturing and SMEs, with a 90 million euro funding line.”
Manatunge also added that in terms of the banking and finance areas, finance companies are to be consolidated with parent companies, with expenditure on acquisition qualifying for tax purposes. Development banks are also encouraged to merge with banks and NBFIs are to be liable for NBT at 2%.
Verite Research Executive Director Dr. Nishan de Mel then took the audience through the macro-economic impact to businesses expected from the budget proposals.
The speakers were followed by a panel discussion featuring insights from a variety of industry experts and government policy-makers.
The panel included SLASSCOM Executive Director Imran Furkhan, NDB Head of Business Planning Lasintha Fernando, Aitken Spence Director Dr. Rohan Fernando, and Department of Fiscal Policy Senior Advisor Dhammika Gunathilaka.
