The country has lost a sense of enterprise and the traditions as a trading nation have been buried under an ever expanding role of the state coupled with a blanket of protectionism, said State Minister of Finance and Mass Media Eran Wickramaratne.
“As a result, over the years, trade has contracted, making the economy more vulnerable and Exports to GDP ratio which was 33% in 2000, had declined to around 12% by 2016.”
He was speaking at the National Chamber of Exporters (NCE) post-Budget Forum at the Kingsbury Hotel recently. He stated that it is time to change this narrative, which the Government has begun with this budget. “The programme “Enterprise Sri Lanka” will empower Sri Lankans and will enable them to take their future into their own hands.
As such, the objective of the Budget this year is to create a nation of entrepreneurs, where innovative business startups thrive in a competitive market economy.” He added that the government wants to bring that old glory back and make Sri Lanka a trading nation.
“For this purpose, the Government has made a number of proposals which include empowering SMEs to reach global markets, making export procedures smoother and less cumbersome, removal of para tariffs which hinder trade in certain sectors, removal of ownership restrictions of foreign entities in the shipping and logistics industries, etc.”
“Most of the reforms proposed are a part of the holistic idea of liberalization of the economy.
Liberalization increases competition, competition breeds success, tests limitations and forces innovation.”
He therefore emphasized that exporters should not be worried about the moves of the Government towards liberalization, including entering into free trade agreements with trading nations and removal of para tariffs.
The main presentation at the Forum was made by Suresh Perera, Principal Tax and Regulatory, and Director of Secretarial Services of KPMG who said that the revenue arising from taxation related to GDP was relatively very low in Sri Lanka compared to many other countries.
He added that that Budget 2018 has introduced four new taxes namely the debt repayment levy, carbon tax, levy related to cellular towers, and the levy on SMS advertising which has increased the number of taxes to 39.
“This factor could have contributed to the Doing Business Index of Sri Lanka declining from 109 to 111 while India has gained 23 positions in the ranking, probably due to consolidation of many existing taxes under the GST, among other factors.”
He further stated that expansion of coverage of VAT is a good move as in the case of most countries, since the objective and the effectiveness of the VAT scheme is diminished due to several exemptions provided hitherto.