COYLE’s proposals to the President to resurrect economy
View(s):The Chamber of Young Lankan Entrepreneurs (COYLE) has made some ‘constructive’ suggestions to the President and the Government, for the recovery of business and the economy.
The following recommendations have been made by the Chairman of COYLE Chamath Kottage and its Committee of Management:
“For Phase 1, we would like to propose the following: Financial and tax moratorium relief programme that would help regain and revive the economy for small, medium, large and extra-large enterprises: It is imperative that all Sri Lankan enterprises irrespective of turnover are included and not left out of the financial moratorium reliefs. Reduce the interest rate to 4 per cent for all types of working capital loans for a period of two years with effect from March 1, 2020. Bank charges and penal interest should be waived off or refunded if accumulated on or after March 1. Due to the pandemic, the present regulations on export proceeds with DP and DA terms may experience delay in remitting proceeds. Therefore export proceeds should be extended to six months.
“Tax policy amendments and recommendations: Thin capitalization provisions applicable under section 18 of the Inland Revenue Act should be removed with retrospective effect from January 1, 2019 and thereafter. This is not bearable in the present situation and companies cannot survive without borrowing in the present context or pay taxes for the past excess borrowings. It is not practical to disallow a portion of interest and impose income tax on such expenditure incurred by a person.
“Financial policy amendments and recommendations: Reduce AWPLR to 7 per cent for the next two years to develop the production-based economy and this will benefit state borrowing and moratoriums as well. Lending interest rates should be AWPLR +1.5 per cent maximum. Overdue loan interest must be limited to a maximum of AWPLR + 3 per cent. Guarantees and bond charges must be maintained at maximum 1.5 per cent per annum. LC commissions must be maintained at maximum of 0.125 per cent per quarter. All potential legal actions and default actions resulting from the predicament should, at present, be held over for the next two years to find a resolution. Additional working capital and term loans should be provided to local production, exports and export-supported services.
“General recommendations: Re-establish state-owned development banks and venture capital companies to enhance and bring back the focus on SME and develop entrepreneurship. Credit cards dues to be converted to a loan at very low interest to be paid back across a 2-year period. Housing loans, vehicle loans to be restructured with a grace period of 12 months.”