incentives for agriculture, shipping
The budget has drawn mixed reactions from the business community
which said some proposals benefited certain industries but that
others raised costs while the stock market showed a marked lack
of interest. The budget contained incentives for selected sectors
like agriculture, plantations, shipping and the dairy sector.
there’s nothing fantastic in the budget but there’s
nothing bad either,” said Rajan Yatawara, chairman of the
Hayleys conglomerate. “The government will have a monumental
task trying to monitor the implementation of these proposals.”
Vajira Premawardhana, Executive Director, Lanka Orix Securities
Company said the budget is a neutral one, but there are hardly any
concessions for the private sector.
budget is neither good nor bad, but the private sector, which is
driving the economy has not got any concessions. There are concessions
granted from farmers to tsunami babies and from artistes to cricketers,
but the private sector has not got any concessions.”
said the budget has some very good recommendations such as relocating
as well as setting up industries outside Colombo and Gampaha and
concessions to the small and medium industries.
Yatawara welcomed the removal of VAT on tea factories, a long-standing
demand of regional plantations companies and private tea factory
owners, but said the firms would not be able to recover past dues.
The proposals were favourable for the development of agriculture,
especially processing of agriculture products, as well as shipping.
Hayleys is extensively involved in the agriculture sector and in
recent years also got into ship owning which has proved profitable.
While the cut in taxes on ship agency profits was welcomed as encouraging
transhipment cargo through Colombo Port, ship owners were disappointed
over the budget’s failure to address key issues that discourage
The budget exempts ships registered under the Sri Lanka flag from
VAT, in keeping with international practice, and to encourage ship
However, shipping industry officials said the budget proposal did
not address more critical issues like ships being liable for other
taxes as they are considered imports.
The Lanka Ship Owners Association has been asking for an exemption
for ships registered in Sri Lanka from section 47 of the Customs
Ordinance to overcome the difficulties they faced because of the
import duty, Ports and Airport Levy and VAT.
“But the government has only looked at VAT,” said Mohamed
Reza, of the Lanka Ship Owners Association. VAT was not considered
a serious issue as it could be claimed. Of more concern to the shipping
industry is the sharp increase in the Port and Airport Levy, which
has been raised to 2.5 percent from 1.5 percent on items other than
costs a lot of money. Vessels calling at Colombo port and owned
by Sri Lankan ship owners are seen as imports - that’s the
main problem. Ships should not be considered as imports,”
said Stephan Kuehl, General Manager, Mercantile Shipping Company,
a ship owner listed on the Colombo Stock Exchange.
budget also halved to 15 percent income tax on shipping agents to
encourage container transshipment at Colombo port. “This is
a move in the right direction,” said Parakrama Dissanayake,
Chairman/Chief Executive Officer of Aitken Spence Shipping, which
is expanding it fleet of cargo ships. “With Colombo South
Port coming on stream, it will be more of an incentive to shipping
agents to attract more lines to Colombo.”
the stock market appeared to be not interested in the budget proposals
but was closely following the campaign for this Thursday’s
“There is nothing negative in the budget where the stock market
is concerned and the market has not reacted to this budget,”
Namal Kamalgoda, Chief Investment Officer, Eagle NDB Fund Management
he said that it is not clear how the government plans to fund its
highest recurring expenses, which are pensions and government salaries
for next year. Lanka Orix Securities Managing Director, Tushan Wickramasinghe
said there is concern as to how the public servant salary hikes
will be implemented and financed.
said that the corporate tax being increased in quoted firms from
30 to 33 1/3 percent will not affect the private sector. “It
has been increased by a very negligible amount and will not affect