By Mangala Samaraweera –
Let me, first of all, thank Ernst and Young for organizing this breakfast meeting today to discuss the salient features in the 2019 budget that was presented last evening under the theme “Enterprise Sri Lanka – Empowering the People, Nurturing the Poor”. Our deliberations on the management of national budget, without doubt, would be immensely useful to strengthen our common resolve to achieve Sri Lanka’s full potential.
I must say, this is a continuation of the thrust of my last budget, the intention of which was to shift from a culture of handouts to a culture of empowerment and independence. Towards that end, we initiated a number of steps in liberalizing the economy and driving entrepreneurship and private enterprise, while preserving the rights of the marginalized and the most vulnerable.
In this year’s budget, we expanded the Enterprise Sri Lanka loan schemes by enhancing further value additions. The Enterprise Sri Lanka programme has been successful in getting affordable capital into the hands of small business. Over Rs. 60 billion has been disbursed since the programme started last year, with capital flowing into the hands of emerging and deserving entrepreneurs. Since its inception, the Treasury has allocated over Rs. 9 billion in 2018 /19 to contribute as loan subsidies through the Enterprise Sri Lanka Programme.
We have also made allocations for a SME guarantee fund, which will enable qualifying entities to access finances with minimal collateral requirements. We are establishing a new institutional mechanism to link the Enterprise Sri Lanka participants with the relevant government agencies that facilitate product development and technology infusion, while interested private sector entities are involved to link them into larger value chains with a view to enhance exports.
Another important new initiative from last year was the Gampereliya Rapid rural Development Programme that will be continued, covering 160 electorates throughout the country with a total expenditure of Rs. 48 billion this year. We passed successive years of droughts, floods and other natural disasters that ravaged the rural agriculture sector, which resulted in depleted cash flows in the rural economy.
The Gampereliya programme commenced investment into rural infrastructure including roads, rural markets and small irrigation with a specific focus on community empowerment by successfully re-injecting cash into the rural economy.
In fact, the government has already taken further remedial action to address cash flow in the economy as the Treasury has released Rs. 60 billion to settle outstanding payments to contractors, while the Central Bank has relaxed the Statutory Reserve Requirements (SRR) on two occasions releasing a further Rs. 150 billion. Therefore, a total of over Rs. 270 billion has recently been injected into the system that includes the Enterprise Sri Lanka loans.
We are beginning to see the benefits of these interventions as consumption has been in an upward motion in the economy since the 4th quarter of 2018.
We have also identified a number of structural constraints, which the budget addresses upfront, that include significant investments to upgrade skills to align human resource capabilities to match work force demands. In this context, the government is supporting approaches such as apprenticeship and internship programmes managed by the private sector. Particularly in sectors such as health and IT, private sector driven skills development programmes will be supported in the form of stipends.
Through this approach, the training will be offered for exactly the type of skills required by the industry. In the IT sector for instance, graduates in non-technical subjects will be absorbed into the industry as trainee for whom the government will provide a monthly stipend of up to Rs. 25,000/- for each student. It will be replicated in the nursing sector and pharmaceutical industries, while we are supporting skills development in the construction sector led by CIDA.
We are investing Rs. 344 billion this year for the general education sector, with a major component for improvement of curricula and skills development to suite the modern economy. The budget is supporting greater participation of the non-state higher education entities, to fill the gap for students who qualify but find no placements at the Government Universities.
When you consider public infrastructure, the transport sector requires major investment to improve efficiency and service delivery. We have allocated significant resources to improve bus transport by enhanced technology such as GPS monitoring and digital route plans. We are also investing heavily in urban and national rail systems that include the Colombo city light rail project. This year, in total Rs. 79 billion has been allocated for investments in public transport, along with Rs. 194 billion for roads and highways.
Another impediment in the economy is the fact that participation of women in our labour force that remains at 34%. This is both an economic problem, as well as social unjust, which warrants state intervention. I have proposed that the government shares the costs of maternity benefits provided by the private sector to encourage more female employment.
Plans are afoot to introduce flexible working hours as well as other legislative provisions to facilitate greater participation of women in our workforce. We are of the view that more women deserve decision-making positions in the corporate sector for which we propose to enhance the number of women on boards of listed companies.
We are continuing our emphasis on the development of exports and inward FDI. In 2017 and 2018 we reached our best ever export and FDI figures, supported by our interventions to re-activate GSP + and renew engagement with global markets. We will support the ongoing programmes in this sector including the National Export Strategy and the Export Market Access Programme. Investments in the National Quality Infrastructure will also support companies to improve product quality and standards through enhanced local testing facilities.
The budget supports India and China Market Entry Strategy. Firms establishing in India, China and other key markets will be supported by proposed priority sector Trading Houses to our firms’ secure distribution networks, buyer linkages and other support in market penetration.
We have also identified a package of incentives to investments over US$ 50 million, with enhanced capital allowances, removal of upfront taxes, and other benefits with the expectation of achieving renewed investment interest that was seen in the recent years.
Apart from the efforts to drive economic growth and expansion of economic activity, we are cognizant of the need for a robust social safety net to protect the marginalized and vulnerable segments of society.
Some will say that this is a populist budget because it’s an election year. However, I like to think of Budget 2019 as a caring budget which empowers the people and nurtures the poor.
On one hand, the budget is about free trade, free enterprise and global markets. Empowering; The private sector and creating a new breed of entrepreneurs, recapturing Sri-Lankas’ past as a trading hub of the Indian Ocean.
However, this budget, like my last, is also about our values as a society. It’s about caring for our children, for our sick and elderly, the poor and the down trodden. Even the health of our animals must be taken into account and the state of excluded members of our society must also be taken into account. This is also about how our children get educated and our elderly taken care of.
The budget is about transforming our nation from a feudal myopic mindset to a modern, dynamic and a prosperous society based on the universal values of democracy, inclusivity and reconciliation.
The budget is about how we can unite in our diversity.
*Remarks made by Mangala Samaraweera, Minister of Finance at the Post Budget Breakfast Meeting organized by Ernst and Young on 06th March 2019