By: Staff Writer

Colombo (LNW): Sri Lanka Customs has warned the Finance Ministry that it will fall short of its revenue targets for 2023 by at least Rs. 450 bn unless the government abolishes the ban on vehicle imports as well as restrictions on other imports immediately.

The top Customs management recently told the Sectoral Oversight Committee (SOC) on National Economic and Physical Plans that the Finance Ministry had been appraised of their inability to meet anticipated revenue targets.

Capital Alliance Group COO Kanishke Mannakkara on Saturday suggested that the Government should open up vehicle imports which could garner Rs. 450 billion in tax revenue.

Speaking at a pre-Budget webinar organised by the Daily FT and other stakeholders, the CAP official said that given the pent up demand, import of vehicles could garner higher taxation.

He insisted this approach was more meaningful than tinkering with other smaller revenue measures or resorting to unethical retrospective and super gain taxes.

Mannakkara said that in 2024 if allowed, vehicle imports could rise to $ 1 billion enabling the Government to raise Rs. 450 billion in taxes out of Rs. 3 trillion required.

He was of the view that higher imports in 2024 would increase income from levies and taxes.

It was pointed out that despite scepticism, the motor industry is an integral part of the economy.

Sri Lanka imposed a ban on vehicle imports in early 2020 due to a severe balance of payments crisis that ultimately led to declaration of bankruptcy in April 2022.

The SOC has been told that the maximum Customs could collect this year is Rs 783 bn under the present circumstances.

The all-party committee has also been informed that approximately 20 percent of Customs revenue was earned through taxes imposed on vehicle imports.

Therefore, the vital unit couldn’t be expected to succeed unless the government created the much needed requirement.

Customs, Inland Revenue and Excise Departments account for more than 90 % of government revenue.

Customs also pointed out that since 2014 they never collected revenue more than Rs 1,000 bn. During the 2014-2022 period, 2014 had been the best year with Customs revenue collection reaching Rs 923 bn mark at the time the late Mangala Samaraweera served as the Finance Minister.

Of this amount, Rs 194 bn had been collected as taxes imposed on vehicle imports, the parliament said. The statement issued by Parliament quoted Customs as having said that Rs 150 bn could be collected by the end of this year if ban on vehicle imports was done away with immediately.

By: Staff Writer

Colombo (LNW): Foreign and local companies are to be given state lands for mega agriculture projects with tax concessions in misconceived deals involving forest lands, especially forest reserves, official documents divulged.

The government is planning to hand over thousands of acres of forest lands to several local and foreign companies under a new cabinet decision misinterpreting its contents with the connivance of top officials. Several environmentalists and local community activists complained.

According to the circular, any allocation of forest lands for development activities requires the approval of a special review board which has not been followed since the circular is invalidated.

Cabinet of Ministers approved a proposal submitted by the ministry of wildlife and forest resources conservation on January 23, 2023 to resolve problems pertaining to forests coming under the purview of forest conservation department and wild life conservation department.

According to the cabinet approval, problems of villagers residing and cultivating land allotments in reserve forests for a long period will be solved subject to stipulated conditions.

Under the first phase of this initiative land allotments in Jaffna, Vavuniya, Mulaithivu Kilinochchi, Mannar, Trincomalee, Ampara, Anuradhapura, Polonnaruwa and Monaragala Districts are to be released to present occupants.

These community settlements were initiated by the then government after the end of North East war under its resettlement programme for displaced villagers.

Further the security forces have forcibly taken over forest lands in those areas to implement the national physical plan.

The ministry of wildlife and forest resources conservation making use of this situation is now releasing forest reserve lands for mega agri development projects of foreign and local companies, several leading environmentalists said. 

150 acres in Madu road Jaffna forest which was declared as a forest reserve on October10 2012 under the gazette notification No 1779/15 had been released for development activities by the ministry by issuing gazette notification No 2344/16.

In addition 29000 acres of land in Mulaithivu forest reserve, 25,000 acres in Wattegama -Kebiliththa forest reserve in the Monaragala District and over 100 acres in Rajawake forest are to be released by the ministry to private investors.

Thailand based Sutech Engineering company has invested US$ 400 million for its subsidiary  Sutech Sugar Industries Pvt Ltd to implement green field sugar development project taking over 600 acres forest land for sugar factory in the Vavuniya District  belonging to forest conservation department with the approval of the cabinet on June 26 2023.   

This company has given 7000 acres of forest land in the area for sugar cultivation under the same cabinet approval. 

Plans are under way to hand over 62,500 forest land for the Bibila sugar cultivation project in Monaragala, Badulla and Ampara Districts to IMS Holdings Pvt Ltd in accordance with the cabinet approval of February14, 2017.

By: Staff Writer

Colombo (LNW): At the time of the national budget 2024 presentation in parliament Sri Lanka is now knocking at the door of a balance of payments crisis and for all intents and purposes seems to have passed the point where the problem cannot be solved by only raising policy interest rates, several eminent economists and rating agencies said.

Moody’s Investors Service said that Pakistan and Sri Lanka are among the South Asian countries that are most vulnerable to balance of payments (BoP) crises.

The international credit ratings agency issued the report citing low exports and the lack of foreign direct investment.

Moody’s said India was the least vulnerable country to BoP crises due to its larger and more diversified export sector, adding that New Delhi also had better macroeconomic policy management in place.

In its latest report, Moody’s said, “Bangladesh, Pakistan and Sri Lanka have much weaker infrastructure compared with India, contributing to high costs to trade,” adding that the South Asian nations’ market access to other countries is limited on account of them having fewer trade agreements.

Sri Lanka’s balance of payments slipped deeper into deficit in September 2023, after recording a marginal gap in the month before, official data showed.

Sri Lanka balance of payments surplus steadily increased to 2,078 million US dollars up to July 2023 but fell in August.

In September the surplus fell to 1,863 million dollars indicating a deficit of 171 million US dollars.

Analysts have warned that IMF programs tend to fail in the second year as rate cuts are enforced with money printed through open market operations, on the claim that inflation is low, as private credit picks up, even as budget deficits fall in real or nominal terms.

The rupee then slides, energy and food prices go up, the entire reform program is discredited and the government in power is ousted.

Sri Lanka’s private credit is still weak, but in August the central bank injected large volumes of money on a net basis in August by cutting the reserve ratio.

If the printed money is used to give credit or buy Treasury bills which are then spent by their recipients on imports, the new money will create a BOP deficit as the exchange rate is defended.

If the exchange rate is not defended the currency will fall and the reforms are discredited. Exchange rate instability also discourages private inflows and may then trigger flight of any capital that has come.

Colombo (LNW): The Sri Lanka Rupee (LKR) indicates a slight appreciation against the US Dollar today (13) in comparison to last week’s Friday, at leading commercial banks in the country.

At Peoples Bank, the buying price of the US Dollar has dropped to Rs. 321.67 from Rs. 321.92, and the selling price to Rs. 331.23 from Rs. 333.14.

At Commercial Bank, the buying price of the US Dollar has dropped to Rs. 320.49 from Rs. 320.99, and the selling price to Rs. 331.50 from Rs. 332.

At Sampath Bank, the buying and selling prices of the US Dollar remain unchanged at Rs. 322 and price Rs. 332, respectively.