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Commence dialogue with all political parties on national plans which do not change with Governments and give priority to all major national issues, the Ceylon National Chamber of Industries (CNCI) has suggested to the Government in its budget proposals for 2004.

The CNCI in its communique to the Government, has also called for the resolution of ethnic issues through dialogue to ensure lasting peace and ethnic harmony in the country.

The Worsening Law and Order situation in the country be brought under control and the co-habitation problems between President Chandrika Bandaranaike Kumaratunga and Prime Minister Ranil Wickremesinghe be solved and the President, the Government and the Opposition work in unison towards national reconciliation and development, expenditure on Government Ministers, Members of Parliament, Provincial Councillors be curtailed and wastage and mismanagement at public sector organisations be arrested, the Chamber said.

The Chamber has congratulated the Government for the signs of economic recovery indicated during the first half of the year 2003, having achieved a peaceful environment ending near two decades of war.

The Chamber is of the view that the Government should make effective policy adjustments and major structural reforms wherever necessary towards achieving sustainable high growth and stability in the Sri Lankan economy. Private sector participation be considered in all ill-managed public sector enterprises. Whilst extending an unreserved support and the highest co-operation towards an era of prosperity we append below the following proposals for your consideration and necessary action in formulating the Budget 2004.

The CNCI has expressed concern over the slow pace in infrastructure development mainly in the following areas:

Low cost power supply

It is common knowledge that with the ever increasing demand for electricity we cannot depend on hydro power which itself is dependent on the country's weather patterns. With the ever increasing demand of power for industry and expanding rural electrification programs it is imperative that alternative and stable power generation is in place. While the proposed coal power generation is the answer, it would be necessary to implement it without further delay as for such a plant to be economically efficient it is estimated to take at least three to four years. However, the environmental factors also should be addressed.

If the local industry is to sustain its viability with the increasing threat of competition through cheaper imports, power at reasonable cost is imperative and it should be brought on par with the rates in the neighbouring countries.

Transport services

It is accepted without debate that an efficient transport service and communication systems are essential for faster economic development. Though Road Transportation showed marginal improvements in the recent years much is to be desired especially in the Rail Transport, it is proposed that the three main highway projects namely the Southern expressway, Colombo-Kandy expressway and Colombo-Katunayake expressway which have already commenced be given priority for completion on schedule or if possible ahead of schedule.

Steps also should be taken to improve and maintain the roads connecting the main cities and Provincial Road Network. Poor roadways with ever increasing vehicular traffic results in loss of man hours through traffic delays. Further it is proposed that Railway Reforms be urgently implemented to upgrade the rapidly deteriorating Railway infrastructure.

Railways also should be made use of for the transportation of containerised cargo thus easing the traffic on main roads. Rapid growth achieved in the telecommunication sector over the past six years, proves the private entrepreneur entry into the sector has made all the difference.

However, it is proposed that necessary reforms should be in place from time to time in order to maintain efficiency through healthy competition among the players.

Allocation of land for industrial use

It should be encouraged for the Industries to expand especially the export oriented Enterprises by allocating land on long lease in areas with required infrastructure facilities. Such expansion would eventually lead to the creation of Industrial estates mainly in underdeveloped areas, resulting in further development and maintenance of infrastructure facilities and also generate employment.

As proposed in our proposals for 2003 budget we reiterate the need to offer tax incentives such as substantial capital allowances on relocation costs. Initially such industries relocated in less developed areas be given special infrastructure subsidies to offset these additional operation costs.

Sri Lanka being a country with high Import/Export trade; the availability of modernised and efficient port facilities is essential. Therefore, it is proposed that the Colombo port be developed as a priority to be an efficient shipping centre with hub status attracting major shipping lines.

Port charges on import and export trade be reviewed in line with Singapore and other regional ports to gain a higher revenue from foreign users while allowing reasonable rates to local importers and exporters. Further automation of Sri Lanka Customs functions would certainly reduce the State costs and improve efficiency beneficial to both the importer and exporter.

The health sector has shown substantial improvements in the recent years mainly with the opening of private sector Hospitals.

However, the Government health sector reforms should continue at a quicker pace towards greater action is also necessary to resolve salary anomalies and other health sector employee grievances to avoid work stoppages which inconvenience the larger majority of the people who patronise the Government Hospitals. At present most private sector employees enjoy the benefits of Health Insurance schemes. It is proposed that this facility be expanded to cover all public sector workers as well.

The private sector is currently under intense pressure by the Government to provide employment especially to unemployed University graduates.

Whilst the private sector genuinely wish to respond to the Government's call, they too face constraints due to compatibility issues of the recruits in respective organisations due to lack of working knowledge in English, the media which most private sector organisations carry out their levels of job opportunities for this category of youth are scarce. The private sector is unable to employ them effectively due to the same reasons and the need to maintain high productivity.

Therefore it is proposed that whilst the Government concentrates on downscaling the unemployment problem in the country through public sector program as well as through the co-operation of the private sector, the education reforms should be given priority to introduce an English medium stream in all schools commencing with the National schools. The performance of the agricultural sector is mainly dependent on weather patterns and the annual output on major Agri products, tea, rubber, coconut and paddy would fluctuate heavily.

Introduce measures to control productive rubber cultivations and coconut cultivations being uprooted to make way for housing estates. Ensure reasonable guaranteed prices especially for paddy during good harvest.

The most recent situation where the country experienced a bumper paddy harvest, it was reported that there was no preparedness by the authorities to offer a reasonable guaranteed price to the farmer and surplus storage facilities or other alternative uses.

Restructuring costs still keeps escalating due to: Comparatively higher cost of power as against that of Regional Countries, productivity affected through man hours lost due to poor transportation conditions, poor road and railway network, traffic congestion etc.), comparatively higher port charges. Difficulty in obtaining Government Land on long lease for expansion/diversification. Accordingly, it is proposed that a special tariff on electricity be applied to the Industrial sector on par with the electricity cost in Regional Countries. Port charges be reviewed and revised in favour of the Industrial exporters/importers.

Directives be issued to the Urban Development Authority (UDA) to consider requests by the Industrial Sector for land allocation on long lease to allow zero duty on raw material on Industrial exports and reduced tariff on raw material on other industries.

The 20 percent surcharge on duty levied on foreign imports with high tariffs be continued to safeguard local industry. It may be removed from the imports coming within the low Tariff Bands.

Concessions granted to BOI companies should be extended to non BOI companies as well, at least on a case by case basis.

Capital allowance granted on investment on plant and machinery, computer equipment, be further enhanced to improve and modernise the Industrial Ventures to be competitive.

Standardisation measures for goods imported especially from regional countries where FTAs operate and from China be strictly enforced to avoid low quality goods coming into the country.

Dumping Laws be enacted early

The local textile industry is currently in a state of collapse due to their inability to compete with imported textiles which come into the country free of duty from the Regional countries and China in particular.The situation was further aggravated when the VAT on Textiles was reduced to 10% at the last budget while the VAT on Raw Material (Yarn, dyes and chemicals) remained unchanged.

The problem was compounded when the recent amendments to VAT Act restricted the input tax claim to 10% only forcing the industrialist to absorb the balance 10%, resulting in higher production costs. Therefore, it is proposed that these VAT amendments are reviewed in order to grant redress to this already troubled industry.

It is proposed that the imposition of Single Band Tariff structure be postponed. Whilst we express our satisfaction with several bilateral Trade Agreements that have come into operation in the recent past, we propose that Sri Lanka should not enter into FTAs with countries which compete with us on Agriculture or Industrial products.

Also it is proposed that quality testing and standardisation systems be strictly enforced to avoid low quality imported goods at cheaper prices competing with the locally manufactured goods of better quality. Effects of the lengthy lists should be scrutinised and monitored to get the best advantage on the FTA. With the onset of peaceful environment in the country over the past eighteen months, an upsurge in the tourist arrivals is seen.

The recent news items indicate that the country is not geared to cater to the influx of tourists due to shortage of Hotel Rooms (Total availability 15,419 rooms) and experienced food production personnel. (Chefs).

Sri Lanka is said to be the country with the highest number of public holidays (25) compared to other regional countries, Europe and United States which range between 7 and 25.

With the 52 weekends (104 days), a total of 129 days or more are non working days in Sri Lanka's holiday calendar (i.e.35% or one-third of the year). Therefore, it is proposed that two long stretches of holidays are introduced one in April to coincide with the Sinhala/Tamil New Year and other stretch in December to coincide with Christmas.

Such restructuring of the Holiday Calendar would certainly improve productivity levels in the public and private sector and also would be beneficial to the worker as against ad-hoc unplanned utilisation of leave by the working population.

It is observed that personal taxes contribute 5.5% (approx.) of the total Annual Revenue of the Government which comes mainly from the private sector employees. Though the wage structure of the private sector is higher than that of the public sector, the escalating cost of living and the PAYE deductions would negate the disparity in wages to a fair extent.

Bank charges and interest

Trade, Commerce and Industry, contributing much to the National economy, should be more flexible in extending credit especially to the industrial sector and the Interest and charges levied should be more reasonable. It is proposed that the Banks offer concessionary rates of interest on lending to the Industrial Sector and work towards a single digit rate as practised in other regional economies.

Also it is proposed that the Government seeks more credit lines from institutions such as IFC, ADB towards the development of Small and Medium Enterprises.

Welfare of senior citizens

Though the subject of the welfare of Senior Citizens is much talked about, the welfare measures which currently prevail are either negligible or non existent. The statistics reveal that the annual population growth in the country at around 1.4% is declining while the ageing population keeps increasing.

According to the latest available statistics at least 7% of the Sri Lankan population is over 65 years.Therefore, it is proposed that apart from specific welfare measures for ageing public such as Farmer Pension Schemes (Public and Private Sector employees enjoy EPF, ETF, pension.

Following general welfare measures be implemented:

Senior Citizens Health Insurance Schemes. Concessionary rail and bus travel. Priority services at Post Offices, Government Hospitals, Dispensaries, Railway and Bus Stations, etc.

Special investment schemes with banks to earn higher returns than normal. Issue of special personal identity cards.

Set up government maintained Endowment Fund exclusively for Senior Citizens (public and private sector) to invest their retirement benefits.

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