Financial Times

Sri Lanka’s leasing industry expects Rs.55 billion turnover
By Duruthu Edirimuni
Sri Lanka's leasing industry is hoping for a Rs. 55 billion turnover this year, provided the tax laws don't change. Leasing Association Chairman Dr. Dilanjan Soysa said the industry would secure a 30 percent increase this year from the Rs. 41 billion turnover last year. "The 2003 figures were possible due to the growth in the small and medium enterprise (SMEs), now our main customers," he said.

The industry is to have a transfer tax imposed by the 2004 budget, on assets at the end of the lease and reduction on capital allowances on machinery, which has been a concern for companies in the trade. Soysa said that industry representations have been made to the relevant ministries and they are awaiting redress.

Meanwhile, the Financial Sector Cluster (FSC), functioning under the Central Bank has drawn up a medium term plan to include securitisation of lease receivables in the Finance Leasing Act. "The Finance Leasing Act needs a legal amendment and the Central Bank after discussions with the relevant parties has drafted an Act and a Cabinet paper to be passed in parliament by the end of this year," Dr. Ranee Jayamaha, Deputy Governor, Central Bank said.

Soysa said that this step is very essential for the growth of the industry. "Incorporating securitisation for lease receivables make funding, which is a major constraint for the independent leasing companies easier to access." The leasing industry has contributed Rs. 3.5 billion by way of indirect taxes to the government. There are 58 leasing companies registered with the Central Bank.

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