The Designer’s International Budget

Mangala Samaraweera presented his maiden budget but for Sri Lanka it was the 72nd budget ever presented. The analysis was that although Samaraweera had done considerably better than the businessman-politician Ravi Karunanayake. Of course that’s only appearances – we will need to monitor the actual passing of the budget and await any retractions as has happened in the past.

Some of the proposals rather beggars belief. That the Minister of Finance, a one time designer and perhaps aware of entrepreneurial spirit and encouragement, has done little for entrepreneurship. In fact some of the proposals hit at the heart of private enterprise. For example in an attempt at protecting the local made for TV production industry the previous Finance Minister had increased a levy on imported programmes from Rs 90,000 to Rs 150,000 per broadcast. This Minister of Finance had an opportunity to reverse or cancel out that hefty charge in the interest of removing protectionism and promoting a truly open economy.

Mobile operators and other users of transmission towers were also subject to a new tax – on top of the higher taxes imposed on them. A new levy was introduced on bulk SMS usage. Sri Lanka is fast becoming a place where telecom usage is expensive in the extreme, impinging on the need to close the digital divide and to encourage greater use of the products that make the world a smaller place. At the last count although availability of data covered more than 80 per cent of the island the usage was a paltry 25 per cent. There is a danger that telephony cost will become the principal impediment for growth of the industry.

The taxes on electric vehicles has been brought downwards but the answer to encouraging the use of these vehicles would have been to do away with all duties on such vehicles.

The proposal to provide three wheel drivers with training as tourist guides is laughable at best. For instead of policies designed to stop the youth entering this three wheel industry and focusing on providing the youth better and more vocational training programmes to fill the need for a greater skilled workforce, the government will now attempt to train the battalion of three wheel driver brigades to be in effect the ambassadors of our country for tourists in the guise as ‘tourist guides’.

The level of spoken English in Sri Lanka is at best abysmal. The investment in building hotels is very high – yet owners will find it hard pressed to recruit staff who speak any language other than Sinhala and Tamil. Hotel operators and the leisure industry as a whole would have welcomed concessions enabling them to undertake staff training. That would have been encouragement.

The tea and rubber industries could have done with incentives to make more investment in replanting and programmes to uplift their productivity. Instead Sri Lanka’s tea manufacturing sector continues to suffer from falling productivity making Ceylon Tea uncompetitive when looking at tea producer nations like Kenya fuelling calls by traders to be permitted to c

It is clear that the government are beholden to the International Monetary Fund as a result of the IMF loan granted in the currency of the ‘best Minister of Finance in South Asia’. That Minister has resigned and sits as a backbench Member of parliament – perhaps marking time before an ‘appropriate’ return to high office.

The governments’ efforts at combating corruption could well have done with investment for people and resources to combat the growing problem. The Court system is heavy with over 900,000 cases carried forward each year with no coherent plan to reduce these unacceptable ‘laws delays’. Proposals in this vein would have met with the publics’ approval – although it is debatable whether a harder line in terms of law and order will appeal during attempts to hold already delayed elections.

Instead it has become clear that matters such as the budget, have become exercises in short term political expediency. The big picture for the United National Party is not the present but sometime around 2020 when the elections for parliament and perhaps presidential appointment will be held. There are attempts to have the President appointed by parliament and with executive power vested in the Prime Minister – a sort of backdoor methodology for Ranil Wickremesinghe to take on the top job that has eluded him after 23 years as leader of the UNP and 40 years in parliament. In terms of successors there seems not to be even an inkling of a plan.

Mr Samaraweera has made a spirited effort but it is not much of a budget when there seems to be very little plan for growth and to address law and order concerns. The government has now started the ball rolling to permit the Bank of Ceylon and the Peoples Bank to raise capital and permit them to compete with the rest. Even this announcement failed to generate the excitement that such an announcement would be expected to create. Perhaps wannabe investors are put off by the arbitrary manner in which interest rates were hiked, brought down and the time honoured system of procuring monies via bonds and bills has been meddled with and resulted in a Presidential Commission of Inquiry. Investors look for stability on a number of fronts not just with energy but also in terms of policy and politics too.

As Sri Lanka traverses nay splutters towards 2020 the latest budget proposals are nothing more than mediocre at best.