Srilanka - Chambers in mixed reactions over the budget

Sri Lanka’s chambers of commerce expressed mixed reactions on the 2008 budget claiming that it has no significant, positive or negative developments. President of the Federation of Chamber of Commerce and Industry (FCCISL) Nawaz Rajabdeen said that budget 2008 would bring long term development to the country as it provides more incentives to improve infrastructure facilities especially in the Eastern province.

Welcoming the proposal to grant tax concessions and five year tax holidays for substantial private investments in the Eastern Province he added that his chamber will encourage its membership to enter into public –private sector partnerships to launch infrastructure development projects in the province.

He pointed out that concessions granted to dairy farming and cattle imports as well as abolishing of VAT on rice based products and increase in the price of liquor cigarettes and vehicle imports, were very encouraging. Rajabdeen noted that the Federation of Chamber of Commerce and Industry (FCCISL) is suggesting to the government to abolish the VAT refunding system as it deprives a sizable income to the state and it involves lot of corruption.

Chairman of Ceylon Chamber of Commerce Mahen Dayananda asserted that budget 2008 was satisfactory although there were no significant positive developments. The main challenge before the government is to contain the actual budget deficit of 7.2 percent of GDP and the revenue surplus is set to increase by 38 billion rupees, he said. Dayananda expressed the belief that the budget deficit could be contained with pragmatic monetary measures. He noted that his chamber welcomes the government’s undertaking of massive development initiative at regional level giving priority to Eastern province and its efforts to reduce unemployment rate to 6.2 percent.

The shipping and export sectors will be given a boost with the implementation of specific proposals in 2008 budget he claimed.

President of the Chamber of Commerce & Industry, Central Province Anuruddha W. Warnakula told The Sunday Times FT that they appreciate the partial removal of VAT on Petrol, the tax relief given for Corporative Societies and widening of the tax net beyond business organizations, since only 4% of the Sri Lankan population pay taxes.

He claimed that the new types of tax relief offered for fertilizer, scholarships, and jobs for graduates, increase of salaries will have a negative effect on the budget deficit and consequently will need additional tax revenue, thus increasing the tax burden of business enterprises. He added that as a business chamber they cannot agree on the introduction of new taxes such as Environment Conservation Levy which will finally increase the cost of living.

President of the Hambantota District Chamber of Commerce K. Liyanarachchi said that their Chamber welcomes concessions granted from the budget 2008 for, rural development projects, high technology machinery and incentives provided to upgrade the infrastructure facilities especially in rural areas in the country. He added that they appreciate the loan scheme for the Small and Medium Enterprises and agriculture sector. Liyanarachchi said the plan of the budget to control government expenditure was a far reaching step towards the development of the country.

Thilak de Silva, Managing Director of Laugfs Holdings said, "Generally we feel this budget is a long term development oriented budget," and added; "The carbon fund will be very beneficial to our company as we engage in LPG conversion." He also hailed the revision of cess on imports which have local substitutes.