Budget 2013:

Investment oriented: concessions for investors, farmers

Budget targets US $ 100 billion GDP by 2016:

Daily News Business Desk

President Mahinda Rajapaksa presented the 66th Budget for 2013 in Parliament yesterday. This is President Mahinda Rajapaks's 8th Budget in his capacity as the Minister of Finance and Planning.

The budget targets a US $ 100 billion GDP by 2016 to make the country a middle income country and takes it even closer to being the Wonder of Asia. The budget has also focused on providing more concessions to the agricultural sector making it more attractive for both investors and farmers.

National Chamber of Exporters of Sri Lanka Immediate Past President Sarath De Silva hailed the government decision to grant 25,000 hectares of unused plantation land to 12,500 youth across the country and he stressed this would help increase crop yields as well as food security of the country.

The 2013 budget has given the to develop the agriculture, SME and Aqua culture sectors. In addition, guaranteed price for paddy has also been increased to Rs 35 and Rs 37 per kg and interest on loans obtained by farmers in the drought stricken areas has been fully abolished.

To popularize organic fertilizer, the government has taken a decision to purchase fertilizer from local producers at Rs 400 per bag and duty on items used for organic fertilizer has also been removed.

An official of a renowned local bank said that waiving of farmers’ loans will not have a negative impact on the bank. “There were many disasters last year and giving them a concession of this nature is praiseworthy and it will benefit the farmers. This however will not affect the banks since it is only a very small percentage who have taken loans of thia nature thus it would not be a substantial loss,” he said.

Meanwhile commenting on the tax imposed on the imports of milk, an official of Nestle Lanka said that it will not affect their company much as they are not solely dependent on milk imports.

Commenting on the budget 2013, Caltex Lubricants Managing Director Kishu Gomes said that there were no big changes to policies to change current expenditure or revenue. The government has been careful not to increase any taxes in the short term.

Economic analyst Rohantha Athukorala said the budget proposal to set up a National Wage Policy by a new wage commision is timely, especially in the tea industry. He said that the current acreage collective agreement modality does not take into account in practice, the market dynamix or the inflationary data, which drives down the competitiveness of the tea industry.

“I hope justice can be done to this budget proposal in the coming year, so that the supply side challenge on this key issue of the escalating wage rate can be addressed in the tea industry,” he said.

This will indirectly support the Global advertising campaign that is to be launched in the near future for Ceylon Tea brand, Athukorala said.

Accountant N.R. Gajendran commenting on the budget said this budget was a consolidation of last three years budgets, which has no major significant change in the fiscal policies. He also said that imposition of the Value Added Tax and the Nation Building Tax for major super market is a new development. President of the former Women’s Chamber of Industry and Commerce, Vindyani Hettigoda hailing the budget proposals said it has given many concessions for women in the SME sector.

“These reliefs would go a long way for women to play an even bigger role in the SME sector and contribute more to the Sri Lankan economy,” she added. The Immediate Past President of the Hotels Association of Sri Lanka, Anura Lokuhetty hailing the budget proposals said that it has lot of focus on the infrastructure development and improvement towards employment and development for youth as well.

There was also a lot of attention in terms of tourism and that in turn would help encourage people to get into the tourism business as they are targeting to receive 2.5 million tourists by 2016. “We are aiming to obtain revenue of $ one billion from their target of one million tourists by the end of 2012.”

“We were very keen to obtain a kind of unified taxing procedure as there were charges of different taxes for the hotel area and we were also being hassled by local authorities due to the lack of a proper system. So, this is a great incentive for the entire term that would encourage domestic investors, create employment and help in developing Sri Lanka’s economy. This is an advantage for other industries as it is a good persuasion for the SME sector as many countries in the world have 80 % of their businesses in the SME sector. Even though contribution is small, there is a good sustainability as a strong SME sector is a good encouragement and that would restrict imports, in turn encouraging people to make use of our resources in our country.”

Budget 2013: Key points at a glance

*Interest on loans obtained by farmers in the drought stricken areas will be fully abolished.

*Guaranteed price for paddy will be increased to Rs.35 and Rs.37 per kg.

*To popularize organic fertilizer the government will purchase organic fertilizer from local producers at Rs 400 per bag and duty on items used for organic fertilizer will be removed.

*Fallow paddy land will not be allowed to be reclaimed and if the owners do not engage in production, it will be given for cultivation under a govi scheme.

*Subsidy to tea small holders will be increased from Rs.300,000 to Rs.350,000 per hectare. Subsidy for new plantation will also be increased.

*To increase the coconut and rubber productivity, plants will be given free of charge for replanting on lands up to 5 acres.

*The existing tax on imported milk powder will continue.

*Selling lands to foreigners will be completely prohibited.

*Dairy farmers will be paid Rs 50 per liter of milk.

*Sri Lankans working abroad to get a Rs 250,000 housing loan at 10 % interest.

*Supermarkets with a revenue over Rs 50 million annually will be imposed NBT and VAT taxes.

*Airport tax and online visa tax will be increased by 10 % and 5 % respectively.

*All financial firms to pay 1% of their profits to National Insurance Fund.

*Monthly allowance of minimum Rs 1,500 will be paid to every public servant, of which Rs 750 will be paid as CoL allowance.