Business Times

CCI urges government to suspend withdrawal of tax incentives on foreign investment

The Chamber of Construction Industry Sri Lanka (CCI) on Friday expressed concern over the government’s decision to withdraw tax concessions granted to foreign investors. CCI President Surath Wickremasinghe said the recent announcement by the Central Bank that there will be no tax incentives in the future for foreign investors was very untimely.

The construction industry is marketing projects on the basis that BOI concessions will be provided for foreign investment and the main attraction to invest in Sri Lanka were tax concessions, he added. Sri Lanka will lose developers especially from India due to this reason.

Top officials powerless in
allocating state land

By Quintus Perera
Officials in various departments are powerless in allocating state-owned land to the private sector for development because today it is 'powerful ministers' who make such decisions, lamented, Surath Wickramasinghe, President, Chamber of Construction Industry of Sri Lanka (CCISL), who sits on a giant industry, but is gasping for breath.

He was responding to the media this week in Colombo at a press briefing about 'Excon 2010' - the construction industry exhibition currently on at the BMICH. Several members of the media were querying as to whether the major setbacks of the construction industry have been overcome. Mr Wickramasinghe said that the 28 highrise mega building projects that were stalled due to various constraints are yet to be completed.

He said that the largest land owner in Colombo is the government and for the housing and construction development projects in Colombo they need land from the government. Mr Wickramasinghe said that they are unable to obtain them readily as their foreign investors and collaborators need to move forward almost immediately.

He said that in this regard even though they have submitted various proposals to the relevant authorities and some have been accepted in principle, the most important ingredient - land - is not readily forthcoming and in this instance officials are powerless and the decisions would have to be made by powerful ministers.

Addressing the inauguration ceremony of EXCON 2010’ exhibition at BMICH in Colombo, Mr Wickremasinghe reiterated that the government should not withdraw these incentives for at least two years until the infrastructure in the country gets better and until the construction industry completes a few projects.

“If not, this will be another huge deterrent for foreign investment,” he said. Mr. Wickremasinghe revealed that the Secretary, Ministry of Defence under whom the Urban Development Authority (UDA) is at present offered the chamber membership to design and construct around 3000 housing units to re-locate persons living in tenements occupying prime land indicating that the unit cost per apartment of 500 sq ft, should not exceed to Rs.2.5 million.

This task was accepted by the membership and they have now prepared six prototypes for multi-storey housing in different locations. The financing of the project is to be through UDA debentures and bank loans, he said.

He said that the CCI has also drawn the attention of the Secretary, Ministry of Finance and Planning regarding the establishment of an Infrastructure Development Fund in Sri Lanka.

The Chamber has identified Infrastructure Development Fund Corporation (IDFC) Limited India to assist Sri Lanka towards this end. IDFC was responsible for setting up of a similar fund in India which has helped to transform the infrastructure in mega cities in India. This information has been conveyed to the Secretary and the CCI is expecting a prompt response from him, he added.

The CCI has also proposed to the UDA to outsource the preparation of Integrated Master Plans of the different towns and cities in Sri Lanka to the CCI with the membership able to assist the UDA.

This work will be coordinated by CCI and implemented through a Public-Private Partnership/or a similar arrangement with the UDA providing the Land, Planning Brief and the Monitoring.

When the Master Plans are accepted by the UDA, the payment to members could be obtained from the different developers/donors implementing projects in the different sectors, for e.g. banks, offices, commercial development, etc, he said.

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