Allaying all fears and doubts in the minds of people of various strata of life due to misinterpretations and negative propaganda by those with vested interest, the UFPA Government's maiden budget was highly commended by top businessmen, professionals and others.

A budget, which has been presented with the understanding of the pulse of nation and finding solutions to the problems of the people, is the catalyst in this budget and such action by the Government has recognised the peoples' mandate that they have given to the UFPA.

Finance and Planning Minister Dr.Sarath Amunugama, with his wide knowledge and experience as an academic, professional, administrator and politician has touched the vital points in the economy allowing the sectors to boost production and earn income to benefit the masses.

The down to earth budget which had addressed the current issues of both the haves and have-nots has facilitated them to go ahead with their economic projects to thrive in business and better livelihood was the consensus of most of them whom we interviewed yesterday on Budget 2005.

The following is a cross section of views:

SME Bank to fund projects

Small and Medium Entrepreneurs' Lanka Organisation, Chairman G.W. Muhandiramge said that he is grateful to the UPFA Government for paying attention to the needs of the SME sector by proposing to set up the Jathika Vyavasayaka Bankuwa (SME) bank and other measures taken for the well-being of this sector in the 2005 budget.

The proposed SME Bank is with a capital base of Rs. 5,000 million. It will provide direct funds, credit guarantee schemes, equity and debt capital, restructuring aid etc, to the SME sector. The Bank will commence operations in January 2005.

In addition to the SME Bank, the Government will establish a SME authority modelled on the lines of the EDB and BOI to function as the apex body for SME development. The budget has allocated Rs. 100 million for this authority to commence work in January 2005.

Muhandiramge said that this is the realisation of one of his dreams, which he had been striving to achieve for nearly a decade.

"In 1994 our organisation first highlighted the need of a formal body to strengthen the SME sector and brought it to the attention of the President. By 2001 we were able to get the Government to set up a task force to look into the grievances of the SME sector.

However, the relevant Ministers of the former Government only mislead us and we were on the verge of abandoning our efforts.

However, we are now very happy that the UPFA Government as promised earlier has taken this important decision which would prove to be a tremendous boost to the economy in the future," Muhandiramge said.

The Minister also said in his budget proposals that the SME Bank will provide financial assistance to promote the local textile industry. The bank will give loans to small and medium entrepreneurs to set up factories and to purchase fabric.

Budget would boost Bourse

Hasitha Premaratne of HNB Stockbrokers said Budget 2005 was a mixed budget and investors have little to complain, when looking at what they were expecting prior to the budget speech yesterday.

"Instead of a 15 percent tax on capital gain a 0.2 tax is implemented on transaction value. It reduces complication in the tax collection process. However, for investors who either make a profit or loss this tax is still applicable," Premaratne said.

He said there were hardly any changes in corporate taxes as speculated by investors which was a healthy sign.

He expressed confidence that today's stock market will respond positively to Budget 2005.

"The market was not doing too well during the last few days as people were expecting tax on trading. But now we can expect enthusiasm on the part of the investors, which would boost the Colombo Bourse," Premaratne said.

Stock Brokers happy

Financial Controller Connaissance Group and a leading fund manager, Nimal Perera said that the proposal not to implement the Capital gain tax, which was proposed by the previous government, would have a positive impact on investments, stock market and the overall economy. He said that the entire Brokering community is happy over this move.

Mini hydropower encouraged

The Chairman Grid Connected Small Hydro Power Development Association Dr. Nishantha Nanayakkara said that they appreciate the bold decision taken by the government for the first time in history to develop mini hydro power generation.

An incentive of six US cents per unit has been given to accomplish the mission with 300 megawatts by 2008.

The people will take the challenge given by the government to become self-reliant in power. This will enhance the economy of the country. By 2008 we will have 20 per cent of power generation which is only 5 per cent at present.

No soft options only hard choices

Dr. K. Kuhathasan, CEO, Centre for Leadership Excellence and Personality Development said the Budget has proved the fact that there are no soft options opened before us. We have to take hard choices in an era of rising expectations from all sectors of the economy.Everyone has something to benefit from the Budget.

But no one has gained anything substantial. The modest salary increase to Public Servants will go a long way to ease their suffering. Massive unemployment in the rural areas can be solved only through uplifting the rural economy. The Budget has carried this philosophy forward.

The thrust on the physical as well as social infrastructure developments on the rural areas is commendable. The expenditure proposals highlight the fact that the country depends on rural support for economic advancement.

The positive developments in the rural sector must be supported by prudent financial discipline and proper implementation strategy. The issue here is not mere proposals but proper implementation. The test lies in its implementation if returns are expected.

In addition, the Budget has provided a comprehensive vision to continue economic reforms with a human face to attract foreign investments. The Garment industry will definitely get a boost through various incentives.

Overall, the budget has addressed structural as well as development issues and provides a basis for balanced growth with a distinctively rural orientation.

The Budget proposals represents a significant step towards attaining its goals of growth, stability and equity. While it does not please all, it certainly satisfies most of the stakeholders of the economy.

Steps to improve agro products lauded

The Sugarcane Research Institute's Chairman Dr. C.S. Weeraratne said that the first budget of the UPFA government has taken steps to promote people growing crops in the country. "It has concentrated largely on the importance of improving local food and milk production and it is commendable.

In addition the endeavour to promote top horticultural productivity is timely. Increasing the subsidies on rubber replanting will promote rubber production. Promoting value addition for cinnamon products will increase the income of cinnamon growers.

The proposal to increase infrastructure in Uva Wellassa and Rajarata will have a positive impact on crop production in these areas," he said.

Apparel sector delighted

Chairman, Joint Apparel Association Forum, Ashroff Omar said that the apparel sector is extremely appreciative of this Budget because all their submissions have been taken very seriously and granted approval and there will not be any problem for the apparel industry.

In short we are delighted with the budget said Secretary General JAAF M.P.T Cooray Ashroff Omar

Incentives for exporters

President CIMA Claude Perera said that it is a budget to develop the rural areas basically. It is mainly targeted towards the development and low income group.

Dr Sarath Amunugama has given consideration to things such as prawn farming which should have been done long ago. He has also allocated funds for employment of graduates but it is so far not clear how he is going to do it.

The proposal to widen the tax net is something we proposed and recognising tax payers is also very good. The incentives proposed for exporters and most of the subsidies for tea exporters were removed and if those subsidies are restored it would be very good.

On the removal of diesel subsidies he said it is too early to comment. Many incentives have been proposed but whether that will be enough is a question.

Balanced Budget

CEO, General Manager HNB Stockbrokers, Deva Ellepola said that the Budget appears to be a balanced one because it was not only pro poor but has also practically looked at the private sector as well.

SME Bank should remain

National Chamber of Exports of Sri Lanka (NCE) Chairman, Kingsley Bernard said that he is pleased to note that the government has considered the Chambers' proposals.

"Most proposals are very timely and praiseworthy. It has paid more attention to promote the SME sector and proposals on the export development too are welcomed by us," he said.

The garment industry is facing a critical year with the upcoming free quota era. (MFA) "The proposals by the government, such as zero rated tax on home manufacturing textiles to safeguard the industry too is very encouraging," he said.

Establishing a SME bank is encouraging. However, the proposed bank should be a steady and an active bank. "There were similar banks earlier but they have now been converted to commercial banks. This should not be repeated ,"he said.

No unfair tax on tourism industry

A leading hotelier and Manager Operations of a leading star hotel in Colombo said that they were happy that there had not been any unwanted taxes introduced to the hotel industry which would have discouraged future investments.

However he said that he was somewhat disappointed with the budget proposals since it has not given the anticipated incentives.

"All the hotels are undergoing major refurbishment programs and the industry was expecting some concessions in this area," he said. However, this area has not been addressed.

However, if there was a concession offered in this area it would help the industry to upgrade the hotels in a big way. He also said that they were expecting a budgetary allowance to market Sri Lanka globally and this too had not been done.

Cess on scrap praiseworthy

Construction Industry officials welcomed the move to strengthen the Construction Industry Guarantee Fund to Rs. 500 million.

The government would also contribute Rs. 250 million to strengthen this fund. In addition a cess would be charged from contractors to improve this fund.

Ms. Chamila Kotalawela, an architect said small contractors hardly get any chance to secure a major tender since they are not in a position to submit bid bonds and raise funds due to lack of proper securities.

With the government deciding to increase the Guarantee Fund we can obtain funds and secure tenders in the future," she said.

She also welcomed the move to set up a Construction Academy, which would help them to enhance their knowledge, as it is expensive to go overseas for higher studies. Government would invest Rs. 100 million towards this.

Marketing Director Tisara Engineering, Sanjeewa Goonewardene said that one major problem they face is the lack of raw material such as copper which is shipped to India.

It has been proposed to impose a cess of 25 percent on the export of ferrous and non-ferrous in the form of scrap. "The main exports are to India and many are exploiting the FTA," he said.

This is a timely move to safeguard local industrialists," he said.

Marketing should be introduced at grassroot level

Marketing and Management Consultant Prasanna Perera said: The Government's effort to develop small industries through SMEs especially in the rural area and increase production is commendable. However, such production should fetch a better price to benefit those who are involved in the process.

Therefore educating producers at the grassroot level of reaching local and international markets to fetch a higher price is vital.

At this juncture, the Government should coordinate with the private sector marketing strategists to give their service to the needy in the provinces.

Creating awareness on how to produce quality goods, as quality is the guiding factor to sell goods today should be within the reach of all small and medium manufacturers.

This should be implemented at macro level and support the SMEers to reach prospective markets, as there is no meaning of producing millions of goods without proper skills to market them.

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