What the chambers say …

Chairman of the Ceylon Chamber of Commerce (CCC), Mahen Dayananda said the CCC welcomes the focus given to infrastructure in the 2007 budget. "The commitment made to reduce the budget deficit, thereby lowering inflation, whilst sustaining growth, is reassuring," he said. His sentiments were also echoed by the Federation of Chambers of Commerce and Industry in Sri Lanka (FCCISL). "This is the first time there has actually been a budget for development," Nawaz Rajabdeen, FCCISL President told the Sunday Times FT. "Actual development never took place before. I hope the budget for infrastructure such as the development of roads and flyovers will take place." Rajabdeen hopes the priority given to infrastructure develop will alleviate the problems of congestion by vehicles.

According to Dayananda, another positive feature is the reference to target for inflation of around 9% by the end of 2007. "The growth target for 2007 has been indicated at around 7.5%, again a very positive feature." The CCC does have some concerns in relation to value added tax (VAT). "The budget has indicated a limitation of input credit at a maximum of 85% of the output credit. This is something we will have to contend with because it has a cost attached to the business sector."

"The reduction in the percentage of Economic Service Charge (ESC) applicable on a range of commodities and apparel is a very positive move in the correct direction," Dayananda continued. He also hopes that further initiatives in the area of value addition will be encouraged now that duty free imports of certain essential items of machinery have been allowed. "The budget also has a ten year development strategy which has been outlined with broad sectoral views. This again is very encouraging since the private sector will have an overall strategy within which we could make our own plans for the future."

According to Rajabdeen of the FCCISL, the budget addressed an essential issue in the relocation of shanties, in particular those lining the river beds. "About 100 acres of land are occupied by shanties in Colombo," he said. "This is valuable land which can be used for development and the implementation should be short."

The FCCISL also supports the three year grace period given to small and micro industries to settle arrears in the area of taxes. Rajabdeen said certain ad hoc policies implemented by the government do not foresee and take into account the hardships faced by these industries. "These companies find they are unable to pay the Inland Revenue due to the rising costs of overhead charges," said Rajabdeen.

Plantation and agriculture sectors are vital and its ventures should be accordingly supported, Rajabdeen said. "One good thing is that there are no incentives in the budget. People are living on subsidies and when you have subsidies, there is no way to bring about development." The subsidisation of food in particular is the main cause of the problem. Upgrading and increasing the standard of living is one way to alleviate its effects. "We are a small country so development can be done very easily. Politicians come to power by saying anything and are unable to deliver so welfare to displaced persons is welcome."

The FCCISL is calling for the immediate implementation of an insurance scheme for public servants to ensure proper healthcare coverage. "We must have state insurance to look after public servants and provide them with insurance cards." Rajabdeen also said the measures provided in the budget for reopening the over 200 closed factories are essential.