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Finance Ministry to set up separate unit to oversee private businesses

23 November 2015 03:05 am - 0     - {{hitsCtrl.values.hits}}

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A separate department is soon to be set up under the Finance Ministry (FM) consisting of top private sector Chief Executive Officers (CEOs), to create an enabling environment for the private sector, Finance Minister Ravi Karunanayake said.

He also said that ex-bankers would be appointed to run the proposed Colombo International Financial Centre to be set up in D. R. Wijewardena Mawatha.

Speaking at the post budget seminar organized by KPMG Sri Lanka, Karunanayake warned that the government would have to intervene unless the private sector capitalizes on the opportunities made available by the government. 

“We have given all the opportunities and a wake-up call. And if you do not get up now, please leave forever,” he told a packed house of private sector business leaders a day after the national unity government’s maiden budget was presented.According to the Minister, they have made Sri Lanka the lowest taxpaying country in the world as the budget 2016 reduced the personal income tax rate to a flat 15 percent from 16 percent removing all the slabs prevalent before while the corporate tax rate was structured under two tax rates – 15 percent and 30 percent, based on the type of the industry. 

“When we proposed this, people asked whether we were crazy because this was an easy tax which we could collect at source but we thought we were overtaxing our people,” said Karunanayake. 

Meanwhile, the Exchange Control Act No.24 of 1953 was also proposed to be repealed in order to provide flexibility in managing foreign exchange market while encouraging foreign inflows into the country channeled through the banking sector without investigating on how and where such moneys were coming from. 

 “Our intention was not to catch anybody down the line. We have taken out all those clauses and no questions are asked as long as the moneys come through the normal banking channel,” he remarked. 

The budget 2016 also proposed to abolish Securities Investment Account (SIA), currently used by the foreign investors to route the investments to Sri Lanka. However a new Act named, ‘Foreign Exchange Management Act’ will be introduced to facilitate foreign investments. 
Meanwhile, the Board of Investment’s (BOI) efficiency levels will also be enhanced where necessary approvals will be given for an investor within a maximum of 50 days. 

The public investments have been increased by 68 percent to Rs.868 billion, close to 7 percent of GDP; hence the government expects a multiplier effect of these investments through the active participation of the private sector.  

According to Karunanayake, the total revenue has increased from 13 percent of GDP to 15.6 percent of GDP while the tax revenue has increased from 11.4 percent to 13.6 percent of GDP in the budget 2016, but economists opined that there is scope for fiscal slippage as the revenue targets are ambitious because the total revenue is budgeted to increase by as much as 38 percent in a year. 
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