NCC commends budget proposals for industry growth; highlights tax hike impacts

The National Chamber of Commerce (NCC) with broad representation of local small and medium enterprises (SMEs) of the country, we welcome the allocation of seed capital for SME credit guarantee scheme, allocation of funds for interest subsidy for specific SME sectors depending on revenue and employment generation capacity and infrastructure development and training for textile and handloom industry. 
We appreciate the provision of over Rs.2 billion for the revival and diversification of the fisheries industry with a view to harnessing opportunities after lifting the fisheries export ban by the European Union (EU). 
We believe the initiatives taken to uplift the exports industry such as establishment of EXIM bank with allocation of Rs.10 billion, provision of land, electricity and water supply to private free trade zones and meaningful trade promotional activities would be conducive to the development of the sector. 
The NCC commends the government efforts in phasing out para-tariffs in the tax system with a view of making Sri Lanka a better place for investment and introduction of anti-dumping and countervailing measures to facilitate a level playing field for domestic companies as we have strongly suggested in our budget proposals to the government.
The importance of skill development has been one of the major concerns of the membership of the NCC and the budget proposals for providing scholarships to follow vocational training, allocation of funds to facilitate 10,000 youths in priority sectors such as apparel, healthcare, hospitality and construction industries through private sector, upliftment of German Training School and Hotel Training School are broadly in line with our suggestions. 
We further appreciate initiatives taken to vocational and technical training institutions to expand the curricular to include certain specific courses at the National Vocational Qualification (NVQ) level and sincerely expect that the government would further explore the possibilities of obtaining mutual recognition for such qualifications at international level. However, it is our observation that the government is expected to expand the revenue through increase in taxes on goods and services and taxes on external trade, which would have inflationary impact and reduction of the purchasing power of the people. We believe measures such as provision of 50 percent interest subsidy to farmers, private sector to invest in the outgoing systems, to establish floriculture nurseries, etc., and interest subsidy loan scheme for improving mechanization of agriculture, implementation of SME credit guarantee scheme, allocation of Rs.750 million for concessionary loan scheme to SMEs, establishment of incubators in five districts to support star-ups, interest subsidy loan scheme to tourist hotels and allocation of Rs.7 billion to be provided to selected youth with interest-free loans would encourage entrepreneurship and domestic investments in the economy rather than creating a consumption boom. 
The proposed increase in public investments in infrastructure and education and health and expected implementation of such projects through public private partnership (PPP) would generate trickledown effect of the benefits to the people in the domestic economy. However, the success of the expected efforts of the government will be heavily dependent on the meticulous implementation of the mammoth number of projects, which may be difficult to complete during a short time span of one fiscal year, clearing of ambiguities in certain revenue proposals and support extended by the private sector.