Govt. grants tax incentives to port users, enterprises to boost exports

Daily Mirror - 31/07/2013

President Mahinda Rajapaksa who is also the country’s Finance Minister has declared Sri Lanka’s four main ports, Colombo, Hambantota, Trincomalee and Galle as ‘Free Ports’.

Additionally, the President declared the Mattala Rajapaksa International Airport, the Katunayake Export Processing Zone and Koggala Export Processing Zone as ‘Bonded Areas’.

The declaration entitles enterprises which are 65 percent foreign-owned and operating through the specified areas to wide tax exemptions including provisions under the Customs Ordinance and Exchange Control Act.


In the case of port users, with the exception of port handling, rent and lease charges, all additional levies will be waived.

The minimum investment for enterprises involved in import, minor processing and re-export stands at US$ 5 million with a further requirement of US$ 20 million in re-export turnover within a 5 year period.

Meanwhile, enterprises involved in export without manufacture or value addition in Sri Lanka, the management of finance supply chain and billing operations or front-end services to clients abroad were required to invest a minimum of US$ 1 million and achieve re-export revenues of US$ 10 per annum.

Enterprises involved in logistics services including bonded warehouses were given a US$ 3 million minimum investment and US$ 15 million p.a. minimum re-export revenue within a 5 year period.

While granting significant incentives to port users and enterprises, the Bonded Areas and Free Ports will deprive the government of significant revenue.

In that backdrop concerns have been raised as to whether or not gains generated through the fresh incentives are capable of offsetting extensive debt obligations tied to large scale developments embarked on.

Despite drawbacks, exports up in June: Mr. Bandula Egodage

Lanka Business Today - 30/07/2013

Despite the drawbacks of the anticipated economic recovery in the European Union and the United States not taking place and also the unsettled conditions in the Middle East, there has been a commendable increase in the country’s export earnings in June this year, said Bandula Egodage, Chairman and Chief Executive of the Sri Lanka Export Development Board .

Addressing the 16th annual general meeting of the Exporters’ Association of Sri Lanka as the guest of honour, Egodage said that according to provisional Customs data, Sri Lanka’s export earnings had recorded a commendable increase in June this year and exports to our key markets USA and EU, especially to the USA, had also shown a satisfactory increase in the same month.


“The export sector of Sri Lanka after showing strong growth in 2010 and 2011 experienced a setback in 2012 which continues to prevail even in this year. The setback is mainly due to the aggravated economic conditions in our key markets. The turmoil in these markets has lead to a drop in demand not only for our exports but also for exports of other developing and     emerging economies. Also there are supply side constraints in the domestic front,” said the EDB chief.

The anticipated economic recovery in EU and USA which absorb nearly 50% of our products had not taken place. According to international agencies such as the IMF it would take some time for growth to pick up in those regions. The unsettled conditions in the Middle East have further aggravated the situation, he added.

“The problems in our key markets suggest that we should focus on diversifying our markets to other regions. The Asian region comprising China and India have registered substantial economic growth. Accordingly, we are concentrating on diversifying our markets to these regions and other member countries in the BRICS group where the potential is high. This will be done while sustaining our market share in our key existing markets.

“We have already carried out promotional programmes in India and China and some more programmes are planned in the future to be carried out in these regions. We have also carried out market studies on Brazil and South Africa to ascertain the opportunities and barriers. The objective is to formulate suitable strategies to penetrate into these markets.

Expressing confidence that the Exporters’ Association could make a very positive contribution to these efforts using their close relationship with relevant stakeholders nationally and internationally, he said that utilizing those strong links the Exporters’ Association could facilitate to create healthy business relationships to enhance Sri Lanka’s exports.

The Exporters’ Association which represents about 80% of exporters in the country is the foremost body for exporters in Sri Lanka. The EDB highly appreciated the contribution of the Association towards the export development effort of the country. The export sector which contributes 17% to the GDP of the country, clearly played an important role in achieving that objective, said the EDB Chairman.

The EDB is the premier state organization entrusted with the task of developing and promoting exports from Sri Lanka. The EDB is geared towards promoting products and services of the country with the objective of making Sri Lanka the most sought after destination for global sourcing in identified product sectors.

Egodage also pointed out that the EDB strongly believed that the private/public partnership was very essential for the growth and the development of the sector. Private public partnership was not only essential for formulating successful export development strategies but also in implementing the same, he noted.

“Our approach is based on the principle that the public sector plays the facilitator role in developing the export sector while the exporters drive the sector,” said Egodage.

The public private partnership is also enshrined in the EDB Act. The enactment has provisions for establishment of Advisory Committees that are oriented towards the development and promotion of specific products as well as functional aspects of export trade.

In July this year the EDB had established 26 new Advisory Committees comprising 400 members. These members represent both the private and public sector. This will enable EDB to work together to identify the problems confronted by the export sector and find suitable solutions to such problems. The EDB has already scheduled the inaugural meetings of these committees and it expects the full participation of all members.

“Sri Lanka has today become an ideal location for international buyers, to source a wide range of highly quality products and services. But our competitive advantage has been deteriorating over the years due to a number of factors,” observed the EDB Chairman adding that the government had maintained inflation rate at a single digit level which was a positive factor.

“The energy cost is a major component in the cost structure. The government has offered tax concessions for industries adopting alternative energy sources. It is very important that we improve our productivity to regain and sustain our competitive advantage. The government has also offered tax incentives for upgrading technology and acquisition of new technology.

Improvement in technology is very essential to produce innovative products and reduce cost of production. This would lead to improved productivity and competitiveness,” said Egodage.

The EDB is also focusing on branding as a strategy to increase popularity of our products and enhance export earnings.

The strategic plan prepared by the EDB in consultation with the Advisory Committees have been updated to cover the period 2012 – 2016. It contains several programmes aimed at developing and adopting products and services to meet international market requirements, assisting exporters to identify new markets, facilitate supply chain efficiencies and promoting export oriented SMEs, etc.

Pointing out that the EDB intended to implement those programmes for the benefit of the export sector, Egodage said that, “I would request you to have a close rapport with the EDB to discuss any issues or constraints which require our attention.”

The Chairman and Chief Executive of Hayleys Group, Mohan Pandithage was the Chief Guest and the keynote speaker at the AGM. Rohan P, Daluwatte, Senior Manager - Operations & Logistics, Tea Tang Ltd assumed responsibility as Chairman for EASL whilst Sarada De Silva, Chairman and Managing Director of Intercom Limited was elected as 1st Vice Chairman and Fazal Mushin, Director – Export & Business Development, Link Natural Products (Pvt) Ltd was elected the 2nd Vice Chairman respectively. Mrs. Dawn Austin, Managing Director of Nidro Supply (Pvt) Ltd, stepped down as the chairperson of the EASL after serving in the committee in the said capacity for two years.

FACETS Sri Lanka to take centre stage for 23rd year

Lanka Business Today - 25/07/2013

FACETS Sri Lanka 2013, the International Gem and Jewellery Show that showcases hundreds of local and foreign exhibitors, will be held from August 29 to September 1 at the Sirimavo Bandaranaike Memorial Exhibition Centre. This year’s exhibition will comprise over 150 booths with a variety of gem and jewellery that include precious and semi-precious gems.

Organized by the Sri Lanka Gem and Jewellery Association (SLGJA), FACETS Sri Lanka enables all gem and jewellery traders to display market collections and also help create awareness about the importance of the gem and jewellery industry in Sri Lanka. Additionally, the event will consist a seminar on 'Gem and Jewellery in Sri Lanka' conducted by an expert panel of local and International panelists.

FACETS Sri Lanka 2013 encompasses individual exhibitor pavilions from Myanmar, The National Gem and Jewellery Authority (NGJA) and an SME pavilion from the Sri Lanka Export Development Board (EDB) . In addition, buyer delegations from USA, China, Russia and India will also be arriving. Stall holders from Singapore, Dubai, Myanmar and India will be participating at the event.

Speaking about the event, Juzar Adamaly, Chairman of FACETS Sri Lanka 2013 said, “Over the past 22 years, this exhibition has steadily grown to become a world-renowned show with active participation by Gem & Jewellery importers, wholesalers, manufacturers, retailers and collectors worldwide.”

He added that buyers looked forward to purchasing some of the world’s finest gems and jewellery directly from the source at this event. “This year we are expecting a record number of exhibitors and visitors as well,” Adamaly added. “With the industry looking at reaching US$ 1 Billion by the year 2015, this exhibition will continue to boost local sales and improve the brand of Sri Lankan Gem and Jewellery globally,” he further stated.

Established in 1984 as the Sri Lanka Gem Traders Association, and changed its name to Sri Lanka Gem & Jewellery Association in 2002, the Sri Lanka Gem and Jewellery Association (SLGJA) is the apex private sector organisation representing the interests of all industry sub-sectors from mining to manufacturing, wholesale and retail. SLGJA was amalgamated with three of the industry's top trade associations: Sri Lanka Jewellery Manufacturing Exporters Association, Sri Lanka Lapidarists and Exporters Association and Sri Lanka Jewellers and Gem Merchants Federation.

In the 2003 Budget, the Government of Sri Lanka declared SLGJA as the Apex industry body and charged it with a leadership role to formulate industry-level strategies to increase productivity and competitiveness. Since then, the Association works closely with the government's National Gem & Jewellery Authority and the Sri Lanka Export Development Board to advocate national policy and give input for the industry's regulatory framework. Currently, SLGJA has over 350 members who together account for over 75 percent of the country's gem and jewellery exports.

Sri Lanka InfoTech, firms in fast growth: industry chamber

Lanka Business Online - 25/07/2013

Sri Lanka's information technology and business process outsourcing sector has tripled exports and doubled the workforce in a little over five years, an industry official said.

The Sri Lanka Association of Software and Services Companies (SLASSCOM) say export revenues grew 182 percent to an estimated 600 million US dollars in 2013 from 213 million US dollars in 2007.
Total employment in the industry rose 100 percent to 67,000 in 2013 from 33,000 in 2007, the chamber's newly elected chairman Madu Ratnayake, from Virtusa, an information technology company said.


Companies in the sector also grew from 170 to 220 over the same period.

"As an industry, we made significant progress over the last five years," Ratnayake, said in a statement.

"This is tremendous growth from any stretch of imagination and is a result of a concerted effort from industry, academia, government and many other stakeholders."

Members of SLASSCOM make up most of the larger players in the export IT and BPO industry.

The industry has elected Mano Sekaram, chief executive of 99x Technologies, Indaka Raigama, chief executive of Navantis Sri Lanka and Virendra Perera, chief operation officer of Brandix Mercury Asia (Pvt) Ltd to its governing board for the current year of 2013/2014.

The industry is targeting a billion US dollars in revenues and 80,000 employed by 2016.

Rathnayake said that the industry also has significantly improved its global brand position over the last five years.


Sri Lanka has been ranked among the top 25 in the industry by US based A T Kearney, a consultancy firm while Gartern another American information technology research and advisory firm has also ranked the island in 30th place.

Morocco looking for more trade, JVS with Sri Lanka

Daily Mirror - 24/07/2013

Morocco has shown keen interest to boost trade and industrial cooperation with Sri Lanka.

“We need to expand our bilateral trade as well as our industrial cooperation. Investors from both countries can also enter into joint ventures in many sectors; we are strong in rubber and fishery -technologies that Sri Lanka can benefit from us considerably,” said Moroccan Ambassador to Sri Lanka, Larbi Reffouch during his recent meeting with Industry and Commerce Minister Rishad Bathiudeen at the Export Development Board.

“Morocco is the second biggest apparel supplier in the North African region, helped by no less than our bilateral FTA with USA. We are also located very close to EU markets, only eight miles away from Spain and just one hour by ferry to Southern Spain,” Reffouch noted.

According to the Department of Commerce, Sri Lanka exported tea, coir products and rubber based products to Morocco while spices and precious stones have been imported in small quantities to Sri Lanka from Morocco.

For the past few years, Sri Lanka has been reporting a favourable trade balance in its bilateral trade with Morocco, and in 2012, the total trade volume stood at $ 2.06 million of which $ 1.71 million consisted of exports.

Minister Bathiudeen welcoming the envoy’s suggestions said, our bilateral trade standing at $ 2 million shows huge unrealised trade potentials in future that we can jointly explore.

“The government has taken several initiatives in export market diversification and as a result, we see new market potential in your country. In fact, we are virgin markets for each other.

I also invite capable Moroccan investors to Sri Lanka’s apparel sector for synergies; we are well known around the world for our high quality and you are the second biggest apparel power in North Africa. On the other hand, we are closer to East Asian hubs.

I also invite a strong Moroccan delegation for the forthcoming CHOGM trade fair in Colombo.”

According to the World Economic Forum, Morocco is the best performing economy in North Africa in 2013. It’s also the biggest holder of phosphate reserves in the world.

‘Start making use of benefits given to industries’- Minister Rishad Bathiudeen

The Island - 19/07/2013

Rishad Bathiudeen (Minister of Industry & Commerce-centre) and Dr PB Jayasundara, (Secretary, Ministry of Finance and Planning-right) at the Forum on ‘Government Strategy for Industrial Development of Sri Lanka’ on 16 July held at the Ministry of Industry and Commerce, Colombo 3.

Industrialists should make the maximum use of the many facilities and benefits given to them by the government. "To develop our industry sector, the government has given many facilities to our industries and industrialists should start making maximum use of them. As the facilitators of industry development of Sri Lanka, we thank Dr PB Jayasundara, the Secretary, Ministry of Finance and Planning for directly meeting our industrialists on 16 July and successfully explaining and updating them on the government policies on industries" said Rishad Bathiudeen, Minister of Industry and Commerce on 16 July in Colombo, as quoted in a press communiqués issued by the ministry.

Minister Bathiudeen was acknowledging the speech and the assistance of Finance and Planning Secretary Dr Jayasundara at the Forum on ‘Government Strategy for Industrial Development of Sri Lanka’ held on 16 July at the Ministry of Industry and Commerce, Colombo 3. The Forum was attended by more than 95 leading exporters, Chamber representatives and industrialists of Sri Lanka. In addition to clearly portraying Secretary Jayasundara’s views to the crucial industry and export community, the two hour long, in-depth forum, also successfully resolved several sector specific issues raised by various industry sectoral reps present at the session.

"There are many tax concessions given to the industries. Also recent budgetary measures by HE the President Mahinda Rajapaksa has resulted in many new industrial initiatives that our industrialists should explore. Dr Jayasundara illustrated these to the Industrialists well" Minister Bathiudeen added. "The biggest obstacle we had for our development, the war, is over. In post conflict era, the biggest beneficiary is the private sector. There no more security worries, long transport delays in checkpoints and the additional security related insurance costs that you were once burdened with" said Dr PB Jayasundara, at the 16 July Forum.

Speaking on Taxes, Secretary Jayasundara said: "Under the vision of President Mahinda Rajapaksa, you all have got a bonus. He took a policy decision to rationalise tax. On the other hand, I ask exporters-if you can’t pay 12% export tax, then why export? Our taxes for SMEs are 12%, so is for the tourism sector, at 12%. You need to get your (export) products in good shape and make Sri Lanka the wonder of Asia."

Speaking on recent economic growth, Secretary Jayasundara said: "The government is criticised by some people on recent policy decisions but we took painful decisions and managed to keep the balance in the economic system. Also, our economy is strong. The Bank of Ceylon raised $ 500 Mn at short notice. And the Central Bank has done a first class job with the Rupee. For the fourth consecutive year, we have a declining budget deficit, last being 5.8%. The long term signal of this trend is that more ‘good money’ will come to you. And I am very optimistic about how Sri Lanka’s environment will turn out. But I am not sympathetic on change in rates of taxable computed profits. Taxes should be paid. Please help us to protect this tax regime since the government needs money to provide facilities. Countries will prosper, if tax rates prosper, and country will slide, if taxes fall."

Stressing that the export competitiveness, Secretary Jayasundara said: "We have to look for export markets elsewhere. The strategy of President Mahinda Rajapaksa is to ask for markets. ‘Don’t worry about competing there once you get there. First, ask for unrestricted market access from trade partners’ he said. We simply met Chinese and showed our product list, that’s all. China has responded to us very positively. Under Mahinda Chinthana we need to give a Sri Lanka brand identity in the sense that a few products are coming ONLY from Sri Lanka. This is the kind of vision that we all should share. You can continue to talk theories on exports as well as on export competitiveness. But as practitioners, you should understand that exports need not always be aimed at only lucrative markets. For example, there is a food import need in several African countries through the UN or WHO due to famine etc. Also, I believe that we need to deepen our economic ties with both India and Pakistan. These two markets provide unlimited potential if you are ready."

Anura Siriwardena, Secretary of Ministry of Industry and Commerce, said: "We need to appreciate the support from the Treasury for their on-going initiatives to uplift our industries. Without the assistance of the Treasury, our industrial development could lag behind."

Presidential Export Awards - 2010 & 2011