CNCI submits requests to four Presidential candidates
The Ceylon National Chamber of Industries (CNCI), the oldest Industrial Chamber established in 1960, have made requests to four Presidential candidates, Ranil Wickremesinghe, Sajith Premadasa, Anura Kumara Dissanayaka, and Namal Rajapaksa to take necessary actions to move the country towards a better future says Chairman, CNCI, Kevin Edwards. (Pictured)
The proposals and suggestions: 1.The present import CESS that is imposed on certain products after careful study over a period of time to uphold local manufacturers should not be reduced or removed through Budget 2025 or beyond without consultation from local industry experts.2. Local industries which are having local value addition of more than 35% should be given protection when trade liberalisation programs are implemented. 3. Sri Lanka’s Gross Domestic Expenditure on R&D is only around 0.13% of GDP (China – 2.4%, Thailand – 1.3% and Malaysia – 1%). Triple reduction of R&D expenses including materials and salaries were allowed to be deducted from the profit and loss account prior to 2017. However, it was repealed by the Inland Revenue Act no 24 of 2017. Triple reduction of R&D expenses should be reintroduced to encourage the private sector to invest more in R&D to drive industrial innovation in the country. 4. Reduce corporate tax from 30% to 20% for export businesses and manufacturing industries – Sri Lanka’s present corporate tax of 30% is one of the highest in the region (China – 25%, Vietnam – 20%, Indonesia – 22%, Thailand – 20%, India 15%-30%) which makes Sri Lanka’s industries uncompetitive and also unattractive for export-oriented businesses. 5. Remove SSCL – SSCL is an indirect tax charged on turnover and thus has a cascading effect where tax on tax is paid on every step of the sale of a good or service with the final burden being felled squarely on the end consumer, at a much higher scale than what the tax percentage suggests. 6. Establish a State Development Bank to support the industrial sector, similar to how NDB and DFCC operated before they were privatized – Many countries successfully utilize Development Banks to support their local industrialists to obtain funds at very nominal interest rates without any/limited collateral (i.e Industrial Development Bank of India). 7. Concessionary Rates for Industrial Waste Incineration: Implement a state-owned facility with reasonable rates for the incineration of industrial waste to promote environmentally friendly practices and efficient waste management. 8. Fixed time period for approvals: Introducing a fixed timeline for the approval processes to enhance efficiency and predictability for importing raw material and other activities carried out by the relevant government institutions. 9. Develop a robust mechanism for screening imported goods to eliminate low-quality products entering the local market. i. At present Sri Lanka predominantly controls imports through tariff lines, which is a timeworn system and it has very limited impact due to unethical practices that take place at the point of importation.
As a safeguard measure, many countries now regulate imports by introducing compliances and strict quality control systems by imposing certifications from nominated testing institutions. ii. Sri Lanka also should develop a robust quality assurance mechanism for screening imported products in discussion with industry sector experts.
10. Sri Lanka has already signed FTAs with India, Pakistan, Singapore, and Thailand whilst the Government intends to sign FTAs with Bangladesh and China. As a country, we should explore the possibilities of signing bilateral trade agreements with developed economies to promote our products and services, as those countries do not directly compete with our local industries due to their high labour costs among other factors.
These higher costs in developed economies will allow us to continue some of our exports to those destinations.
The local industry sector experts should be consulted before entering into any negotiations on FTAs and bilateral agreements through a transparent mechanism.
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