Nov 18, 2015 (LBO) – Sri Lanka’s business community is looking foward to budget proposals that support the rapidly changing dynamics of the economy and address the budget deficit, private sector officials said.
Restructuring the state sector is a key priority that should be addressed, although this requires decisive action by administrators, rather than budget proposals per se.
Sri Lanka’s budget deficit is expected to widen to 6.9 percent of GDP this year from 4.4 percent previously forecast amidst a drop in tax revenue and expenditure overruns.
“A lot of companies have outgrown the size and scale of the country, so we are hopeful there will be incentives that encourage them to seek opportunities outside Sri Lanka,” Sudarshan Ahangama, group finance director of MAS Holdings said.
This would be to support companies acquire brands or technology outside the country, Ahangama said.
Incentives to attract Sri Lankans living abroad would also be a plus, Ahangama added.
According to Finance Minister Ravi Karunanayake, areas that were “unknowingly or unprofessionally neglected” will be looked at to raise government revenues, but it won’t have a cost impact on the public.
It will be a capital-oriented budget aiming at higher revenue than recurrent expenditure, he said.
The government would look for a policy shift to change the ratio between indirect and direct taxes from the current 80-20 percentage to 60–40 by the year 2020.
Consistency and predictably of policies has been a constant call of the private sector, Prajeeth Balasubramanium, the managing director of Blue Ocean Ventures, said.
Clarity on land ownership is important, as this is a regular question of investors, he said.
As an angel investor, supporting venture capital investments and subsidies for incubator and accelerator programs in the country would also strengthen this sector, Balasubramanium added.
Prime Minister Ranil Wickremesinge recently outlined a series of “Third Generation Reforms” to spur the economy with regional development, in a statement in Parliament.
Proper implementation of these proposals will be a must, private sector officials said.
More comments collated by PricewaterhouseCoopers for the budget can be viewed below: