Govt. must maintain exchange rate – President

In most parts of the world, including Europe, the export industry pays the same rate of tax as the local industries opined President and Finance Minister Ranil Wickremesinghe.

“We want a competitive economy.” He noted that there might be time-bound concessional rates of tax to get industries started but that they would not continue indefinitely.

“Otherwise you become an export-oriented economy and you have less revenue than you do today.”

Wickremesinghe reiterated calls to follow the management of the exchange rate in line with that done under Former CBSL Governor Indrajit Coomaraswamy wherein the Central Bank is a very slight net buyer of foreign exchange in the open market with which it builds a buffer to prevent any untoward movement in the exchange rate.

He said, “The government has a duty to maintain the exchange rate. This is a time of transformation for all enterprises. We must ensure that industries are competitive and that they do not need long-term subsidies to survive.”

Wickremesinghe was speaking on 18th November at the MBA Alumni Association of the University of Colombo’s Post Budget Forum held at the Shangri La Colombo.Given the large-scale failure of the condominium sector in the country receiving tax subsidies, huge regulatory forbearance, credit rollover, and minimal scrutiny from the fiscal administration, monetary regulator, and banking system the sector shall likely face considerable reform.

Like with regulatory changes to the rental industry, allowing for quicker resolution of matters, it is expected that the government shall implement better land title registration shortly.

Further, it is expected that overreach by the Urban Development Authority on underserved or temporary settlements shall be reduced allowing for the upliftment of livelihoods, especially in the North and Western Provinces.

To push through reforms on the BOI the institute might face broader scrutiny on the issuance of previous tax concessions. To prevent a return to the previous system of unjustified tax handouts to connected parties to the BOI it is expected that the proposed Budget Office will have some oversight and audit on the tax concessions. (DP)