- Technology infusion to be prioritised in economic development
- Exploiting potential with high-growth Asian markets led by India and China
“Irrespective of the economic standing of the country, irrespective of the challenges we are faced with, we must acknowledge that there is a paradigm shift in the world economy, which moved forward with industrialisation has now entered into a technology-driven economy. As policymakers, we must view this as a reason to move away from our outdated strategies, and in developing the agriculture, industry, and services sectors, technology infusion should be prioritised in accessing the integrated production and service processes.
“In preparing the economic development plan of our country, we must highlight that the country and the nation as one, which is rich in biodiversity, committed to eco-sensitive sustainable development with a unique identity, and equipped with a rich cultural history and legacy,” Rajapaksa said at the outset of the speech.
The Prime Minister, noting Sri Lanka’s growing significance in the Indian Ocean geopolitical landscape, also said: “We are at a time when many countries have realised the geopolitical significance of our country. I believe that our neighbouring India will be a powerful economy in the world in the next decade. I also believe China, together with several other Asian countries, will be amongst the five most powerful economies in the world. The high-growth neighbouring Asian market accounts for 60% of the global population and emerging economic zone.”
“We should formulate our national policies with a long-term strategic vision, protecting our sovereignty, to exploit the development opportunities that arise as a central hub, in the new economic order of the world, to both the conventional western advanced economies and the powerful emerging eastern economies. We must develop the Hambantota and Colombo Ports together with the airports to be a centre in the international commercial processes, expanding the domestic economic opportunities within a broad national vision,” he added.
The Prime Minister then noted the Government’s objectives of ensuring a free and improved health service to combat Covid-19 and non-communicable diseases in his budget speech.
He highlighted the need for the creation of a knowledge-based economy – the need to encourage sports, especially among the young generation.
The Prime Minister also noted that reforms in education are required to address issues, especially among unemployed youth.
He said that small-scale businessmen who have been affected by Covid-19 must be encouraged to contribute to national production, through which the current import-based economy can be changed.
The Prime Minister then noted that the government service must be encouraged and recommended action to reduce cost and improve productivity.
Rajapaksa also noted that the national debt, which is at 90%, must be reduced to 70%.
He further noted the need to alleviate poverty and increase social welfare measures.
The Prime Minister went on to say that government projects have been stalled due to the need to allocate funds to repay foreign debt, adding: “65% of foreign loans are to be utilised for development initiatives within the country, with the exception of technical developments.”
The budget proposals also noted that the current 8% VAT (Value-Added Tax) will continue for business, which earn a monthly income of more than Rs. 25 million.
The Government is to introduce a separate common tax for goods and services which contribute over 50% to the national tax revenue.
Prime Minister Rajapaksa noted that a special Court of Appeal to hear public complaints pertaining to tax is proposed to be established.
New laws to discourage and punish tax officers who aid in tabling fraudulent tax accounts are to be introduced, while changes to the Inland Revenue Department are to be made in a bid to encourage tax auditing.
A new loan scheme was proposed yesterday for Samurdhi beneficiaries on 7% interest.
The Prime Minister proposed to introduce a special goods and services tax on cigarettes, gaming, tele-communication, and motor vehicles which contribute more than 50% of tax revenue.
Sri Lankans living overseas are to be permitted to purchase luxury apartments with several new measures that would be introduced.
A commodity trading hub is to be implemented to aid activities at the Colombo and Hambantota Ports.
Rs. 750 million is to be allocated for housing, health, education, and entrepreneurship needs of retired, injured, or deceased military servants through the Ranaviru Seva Authority.
The Prime Minister said that an investment of Rs. 15,000 million will be allocated for the Telecom Development Fund and the project will be implemented in 2020-2022. Mobile and fixed broadband services are to be covered under this project islandwide and will support fibre installations required by service providers, and also focus on local industries when obtaining resources.
The Premier also proposed to allocate additional funds of Rs. 20,000 million to tri-forces to develop infrastructure and short-term machinery to assist their various tasks including disaster management.
Measures to improve the State Pharmaceutical Corporations’s (SPC) production capacity were also proposed yesterday.
A new investment zone is also to be introduced for local and foreign investors.
“Companies with more than 50 employees must introduce an insurance scheme for its workers. The contribution of the employer would be 0.25%,” the Prime Minister said.
Technical colleges of which the annual intake is presently at 100,000 are to increase the intake to 200,000 students per year.
The Government yesterday proposed to allocate additional funds of Rs. 3,000 million to initiate a scholarship programme to provide a Rs. 4,000 monthly allowance to students receiving vocational education based on their active participation.
The Government is to also introduce a loan of Rs. 500,000 as start-up capital with a grace period of five years to be introduced for entrepreneurs.
Prime Minister Rajapksa also said that new city universities will be established in each district to cater to students pursuing popular subjects.
After a half-an-hour break at around 3 p.m., the Prime Minister continued with the proposals to develop each of the key economic sectors in the country through the Government’s 2021 budget.