to revive key econ sectors
Don't expect too much relief, warns Bandula
The government will present a "development-oriented" budget
aimed at reviving key sectors such as agriculture, industry and
small enterprises and to create more jobs, Minister of Rural Economy
and Deputy Finance Minister Bandula Gunawardana said.
But he warned
that given the fiscal constraints and the heavy debt burden, the
government would find it difficult to give much relief in Wednesday's
"We will try not to heap more burdens on the people but at
the same time it is very difficult for the government to give much
relief to the people because of our huge debt service burden and
the lack of resources," he said.
budget would have provisions that would lead to the creation of
more jobs by the middle or end of next year, he said. The government
would consider incentives to selected sectors of the economy such
as agriculture, industry and small and medium enterprises, he added.
"By trying to give unnecessary relief or incentives we will
only end up in more difficulty, widening the budget deficit, which
in turn would fuel inflation and raise the cost of living,"
stockbrokers are hoping for an increase in capital expenditure,
especially spending on infrastructure which has been neglected for
"The government still faces the same constraints as it did
when presenting the March budget," said Dr. Dushni Weerakoon,
an economist at the Institute of Policy Studies.
has not improved significantly. There has been some economic recovery
but the government's finances are still pretty much the same."
Expenditure commitments such as interest payments on debt, public
sector wages and defence spending would take 40 percent of revenue
next year also, she said. "After all that there is very little
room to raise spending in other areas," she added. "But
I expect in this budget we'd see some increase in capital spending,
especially on infrastructure, which was cut in the last budget."
strategy would probably be to raise money with its rehabilitation
programme for the north and east and try and get donors to fund
some of that capital spending, she said. "The reality is that
the government simply does not have funds of its own to start infrastructure
projects to meet the demand built up over the last few years."
head of research at Asia Securities, said he too looks forward to
a focus on capital spending, especially on infrastructure, and a
reduction in defence spending which would help to bring down the
forecast budget deficit. "There's nothing much the government
can do in the short term to boost revenue other than to basically
lay the foundation for economic growth given the overall trend to
cut taxes," he said.
said that given the expected shortfall in revenue, it was unlikely
the government would meet the targeted budget deficit of 8.5 percent
of Gross Domestic Product. It was more likely the deficit would
be around 9.5 percent of GDP or even close to 10 percent.
will depend on how the economy performs next year in terms of revenue
generation," she said. "We need economic activity to increase
Weerakoon also said she hoped the budget would contain a more clear
and specific statement on the government's future economic programme.
is a need for some kind of policy continuity if the private sector
is to take advantage of the environment that is being offered for
them to start investing," she said. "Ultimately, domestic
investors must start investing before foreign ones."
Despite the slow growth of the economy, inflationary pressure will
remain high and much would depend on international oil prices, she
said. The current liquidity in the money markets would mean there
would not be much upward pressure on interest rates despite potentially
higher government borrowing from the domestic market to meet the
credit expansion to the private sector was lower than last year,"
she said. "This means investors are waiting before investing."
Business chambers have called for cuts in corporate and personal
tax, protection for local industry and the removal of red tape in
their proposals to government for the forthcoming budget.
The Ceylon Chamber
of Commerce, in its 2003 budget proposals, urged the government
to further reduce corporate and personal income tax and to simplify
direct taxes. The government should also improve the efficiency
of the bureaucracy and make the privatisation programme more transparent,
Chamber of Exporters asked for incentives for exporters of value-added
products and for profits on export earnings to be exempted from
This is to ensure such companies would be on a level playing field
on par with Board of Investment firms and to encourage exporters
to bring back foreign exchange earnings immediately after exporting.
It also called
on the government to expedite the introduction of anti-dumping laws
and for a special electricity tariff for all export industries in
keeping with electricity charges in other competing countries in
CSE chief's share deals being probed
The Securities and Exchange Commission, the financial market watchdog,
has launched an investigation into share transactions of Colombo
Stock Exchange Chairman Ajit Gunawardene, authoritative sources
traded in the conglomerate Aitken Spence have become the subject
of an inquiry by the SEC, the sources confirmed. Mr. Gunawar-dene
is also a senior director at John Keells Holdings. The inquiry into
the possibility of insider dealing has been referred to the Attorney
General's Department for an opinion.
The AG's Department's
opinion is usually sought before the SEC proceeds with legal action
in its inquiries. The investigation had not yet reached the stage
where the SEC records statements from the parties concerned, officials
said. SEC and AG's Department officials declined comment, saying
they had to maintain the confidentiality of any pending investigation.
is a criminal offence under the Securities and Exchange Commission
Act. The Commission is empowered to file a plaint in the Magistrate's
Asian Hotels heading for new management?
A trio of business professionals, responsible for driving the Colombo
bourse in the early 1990s with mega IPOs and the take over of hotels
like Trans Asia and the Oberoi, has returned to play a prominent
role in the future of Asian Hotels Corporation.
months ago, Viren Perera and Nick Clayton were appointed joint managing
directors at Crescat Developments along with former BOI chairman
Thilan Wijesinghe as a consultant. The trio is expected to play
a major role in the future of the Asian Hotels group which also
includes the Trans Asia and Oberoi hotels, the source said.
major shareholders are Malaysia's Tan Sri Azmi Hamzah, chairman
with a 38 percent stake, David Critchton Watts (7 percent), Linkt
Dhanja (10 percent with nominees) and UK-based Dr Sena Yaddehige
(6.5 percent). The public holds the balance shares.
Sri Lankan investor who moved the Colombo bourse with sizable buying
in Richard Peiris, Asia Capital and Asian Hotels, is temporarily
off the market due to court cases relating to his stake in Richard
Mundo comes to the rescue?
By Hiran Senewiratne
Closing the gap or inching closer? When Laugfs gas came into the
market a year ago, it proudly promised much lower prices than Shell.
A year later it is struggling to keep its promise - blaming the
Ceylon Petroleum Corporation (CPC) for unilaterally amending a joint
Daham Wimalasena said the CPC was compelled to amend its (gas supply)
agreement with Laugfs due to the prevailing financial crisis where
it is heavily in debt and cannot subsidise products.
W.K.H Wegapitiya said he grudgingly agreed to the amendment, a year
after he agreed to buy CPC gas at Rs 100 lower than the Shell price.
After the CPC subsidy ended and as a result of VAT being imposed
on gas, the gap between the two products is only 52 rupees and seen
So how does
new entrant Mundo fit into the price wars? Mundo chairman Ariyaseela
Wickramanayake wants to market his gas - hopefully from mid-November
- at Rs 100 less than the market price. But will he suffer the same
fate as Wegapitiya who had similar, grand plans of giving Shell
a run for their money? Only time can tell. For the moment Wickramanayake
wants to get his long-awaited operation off the ground.
While both Shell
and Laugfs talk of rising global prices due to tensions in the Middle
East, domestic and industrial consumers have to grin and bear and
hope Wickremanayake's promise of lower prices won't end up just
like the Laugfs affair and heaps of excuses.
look forward to planned new laws permitting the Department of Internal
Trade to order price revisions on essential goods considered "too
high". Ah! But there is a catch. The proposed laws won't cover
BOI firms and that goes for gas. Shell, Laugfs and Mundo are BOI