'Budget proposals investor friendly'

Ramani KANGARAARACHCHI

This year's budget proposals are investor friendly and have given a sense of direction to the society about the future growth trajectory of the country prioritising importance for export oriented or import substitute industries which saves foreign exchange, Association of Leasing Industry Sri Lanka Chairman Nishaman Karunapala told Daily News Business.

He said the leasing industry being the catalyst of capital formation for the SME sector, welcomes the budget proposals.

As the annual disbursements of the industry exceed Rs 200 billion the leasing industry has become systematically important. The budget proposals are conducive for the industry and he hoped that the leasing industry will excel in the coming year too despite the predicted marginal upward trend in interest rates and inflation due to the depreciation of the Rupee.

He appreciated the removal of taxes on machinery, increased capital allowance and implementation of Secured Transaction Register by the CRIB which will derive a captive segment for the leasing industry.

The untapped machinery leasing market is around Rs.200 billion. With the envisaged concessions along with expected economic growth, market potential for machinery financing would supersede Rs.200 billion.

The major contributor for this assumption is the tax holidays proposed for start-ups and expansion of existing business in selected segments. The leasing industry has been facilitating all these segments throughout the past.

As per the proposed budget there are enormous opportunities to expand tourism.

When the tourism sector expands one of the major requirements would be the convenience of transport. So there will be a captive market for the leasing industry. Even under difficult conditions the leasing industry continuously facilitated this sector having understood the economic value created by this segment.

Karunapala said the government has taken a good initiative to offer special concessions for specific bank branches which are exclusively funding projects.

As a nation it is necessary to fund more projects which create value addition to the economy. Specialised Leasing Companies (SLCs) and Registered Finance Companies (RFCs) also have been encouraging entrepreneurs and helping them right throughout. He hoped that the policy-makers would extend the same concessions for SLCs and RFCs considering the contribution made by these institutions for the developing entrepreneurs to the economy.

The leasing industry is the main force behind the growth of the transport sector. The efficient transport system will minimise wastage of human capital and minimise wastage of perishable food crops. Due to inefficiencies in the transport system costs of essential goods have increased.

Therefore, an efficient transport system is key to economic development and social welfare. Therefore, policy-makers have drawn their attention to the importance of developing the road network and infrastructure of the country.

To solve identified issues they have facilitated the transport industry further by proposing to offer concessions for lorries and buses by way of removing VAT and reduction of customs duty. This will directly contribute to the increase in the leasing industry as a major facilitator of such assets.