PM outlines economic reforms

Economic growthSri Lanka’s Prime Minister delivering the  medium term economic policy  in parliament outlined several measures to be taken by the government .

Key points: 

– 10 lakhs jobs to be created under third generation of reforms
– budget deficit to be reduced to 3.5 percent by 2020
– world economic environment will be tough next year
– steps to increase international trade with trade agreements with India, China, explore impact of TPP
– State Holding Corporation Limited to be created for public enterprises in line with Singapore’s Tamasek
– Public Enterprise Act to be enacted
– Special Purpose Vehicle for state enterprises with listing on CSE
– Non Strategic Enterprises to be divested to market such as 2-3 hotels, Lanka Hospitals
– International Trade Agency to be set up
– Merger of EPF and ETF with management outside of Central Bank
– National Pension Gratuity Fund to be set up
– Tea Industry Committee to improve the industry
– Sri Lanka to give freehold lands, houses to public
– Plans for a low tax regime
– Measures to be taken to plug exports to global value chains
– Exchange control responsibility to be removed from Central Bank
– Super Gains Tax to be discontinued
– Special Business Area in Colombo
– A central procurement secretariat under the cabinet
– New Acts on Investment, Trade Regulation
– Competition Tribunal for dealing with monopolies
– New council for small and medium scale enterprises
– Committee to look into the effects of TPP to Sri Lanka with benefits that might accrue to Vietnam
– Free Wi-Fi for universities, concessions (interest free loans) for laptops to university students
– Introducing gender budgeting in 2017
– Taxes on Books and sport equipment to be removed
– Go into territorial taxation
– economy to be digitalized
– create better environment for foreign investment
– BOI, Export development board and Tourism Authority to be restructured fully
– New agency for development

Prime Minister Ranil Wickremesinghe in Parliament outlined third-generation reforms of the new government to increase jobs, improve economic growth and international competitiveness of the island.

“After second world war the mentality was for greater state intervention. We know the impact this has had on the economy. This was changed after 1977,” he said.

Second generation reforms, led by President Ranasinghe Premadasa were characterized by development of the garments industry.

Sri Lanka which was the most open economy in South Asia is now called the most corrupt, he said. This is the challenge this government intends to overcome.

Sri Lanka’s government will present its budget on November 20 but faces a tough task of raising weak government revenue which has pushed up the budget deficit to 6.8 percent this year, up from previous estimates.

“More than the domestic market, we must enter the international market and create space for ourselves in the international market,” Wickremesinghe said.

“We cannot create 10 lakhs of new jobs without foreign investment,” he added.

Among his proposals were the creation of a State Holding Corporation for public enterprises in line with the model of Singapore’s Tamasek. The Public Enterprise Act will be passed for this purpose.

Non strategic enterprises, some of which the government owns without any necessity to, such as shares in hotels and Lanka Hospitals will be divested on the capital market, he said. (LBO)

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