Exporters welcome phasing out para tariffs | Sunday Observer

Exporters welcome phasing out para tariffs

17 March, 2019

Although the National Budget covers many areas of taxation and fiscal measures, the National Chamber of Exporters (NCE) which focusses on the export sector, and the exporter community has been conscious of the impact of the proposals on the export sector.

The objective of the post-budget forum conducted by the Chamber was to keep the exporter community updated of the impact on their businesses.

The forum was attended by a cross section of the exporter community of the NCE, invitees from the State sector and expert panellists.

The main presentation analysing the Budget Proposals was by Principal, Tax and Regulatory of KPMG, Suresh Perera.

President of the NCE Mrs. Ramya Weerakoon welcomed the Government’s move to pursue an export oriented economy by reducing barriers to trade, domestically, and internationally, by gradually phasing out para tariffs while improving market access for exports.

The NCE also commended the support by the Budget to the National Exports Strategy (NES), and the Export Market Access Program to increase and diversify exports and the policy to upgrade the quality infrastructure to ensure the Quality and Standards of products imported to Sri Lanka.

The Chamber also noted the focus of the Budget to integrate manufacturing activities of Sri Lanka into Regional Value Chains and the moves to negotiate Free Trade Agreements (FTAs) with China and Thailand among others, measures to overcome issues related to the FTAs with India and Singapore and implementation of the proposed ETCA with India.

The Chamber called on the Government to involve the private sector in the negotiating process, to ensure that local industries are strengthened to face the new challenges.

The Chamber also commended the measures to promote key exports sectors, such as fisheries, spices, gems and jewellery, IT/BPO and tourism, all potential growth sectors.

The Chamber was cognizant of the fallout of the proposed trade liberalisation, measures and the action that should be taken to minimise impact on export enterprise and employment. Another proposal welcomed by exporters is the setting up of a ‘Trade and Productivity Commission’, to formulate and implement the trade liberalisation assistance packages for the various products and services sectors, to enable them to adjust during the phasing out period of para tariffs. However, more could be done to facilitate trade through implementation of the proposed National Single Window (NSW).

The address by the President of the NCE was followed by a panel discussion moderated by Secretary General of the NCE, Shiham Marikar.

Chairperson of the EDB, Ms. Indira Malwatta commended the continuity of the 2019 Budget by the allocation of more funds for implementation of the National Exports Strategy (NES) and the Market Access Program, which was not the case in previous budgets, since Rs. 250 mn has been allocated to the NES and Rs. 400 mn to the Export Market Access program, to focus on six priority exports sector under the NES.

In response to a query by the Chamber related to concerns expressed by Exporters regarding imports in to the country of low quality, second hand boats, and electrical panel boards which affects the development of local companies, it was stated that they could be supported under the ‘Quality Infrastructure Improvement Program’.

Director Research of Vérite Research, Ms. Subhashini Abeysingha said Vérite Research continued to monitor the implementation of Budget proposals particularly tracking implementation of proposals of exceeding Rs. 1 bn.

The Chairperson of the EDB said that the EDB had used the full allocation in respect of the Budget for 2018. However, Vérite Research had not captured it, since they have focused only on expenditure items exceeding Rs. 1 bn. Secretary General of JAAF, Tuli Cooray responded to the query on the Budget proposal which constraints BOI companies in the garment sector, in regard to the supply of a limited percentage of their production to the local market, by increasing the tax that is payable.

Cooray said that this proposal has a minimal impact on the sector since the vast majority of the turnover of BOI Enterprises in the garment Sector was for direct exports. He added that the proposal will have a bearing on the ability of local consumers to enjoy the consumption of quality garment products, since they will be required to incur a higher expenditure.

Advisor to the Ministry of Finance, Deshal de Mel spoke of the reluctance of banks and financial institutions to disburse loans under the various loan categories of the Enterprise Development Program, since it is stated that the Treasury has not honoured payments of the interest subsidy components under the various categories of loans.

He said that this had arisen only in the case of the interest subsidy payable under the Senior Citizens Special Fixed Deposit Scheme, and will not arise in respect of the loan schemes under the Enterprise Development Program.

Senior Commissioner of the Inland Revenue Department, D. R. S. Hapuarachchi outlining the impact of the various taxation and fiscal proposals of the Budget on the export sector, urged exporters to analyse the implication of each of them, to benefit in an optimum manner, to develop their export businesses.

Suresh Perera analysed the implications of the various items related to Para Tariffs such as the Nation Building Tax (NBT), Value Added Tax (VAT), Economic Service Charge (ESC), Port and Airport Levy (PAL) and cess charges, outlining how best exporters could make use of each of them related to their businesses, particularly, in regard to their reduction on investments related machinery and equipment. 

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