COYLE makes suggestions on relief measures for businesses

Sri Lanka’s Chamber of Young Lankan Entrepreneurs (COYLE) seeks key financial policy and tax policy amendments with financial and tax moratorium relief programmes for the revival of the country’s businesses, which faces adverse impacts stemming from the coronavirus pandemic.

“COYLE unanimously agrees that the highest priority and attention should be to secure the people and the society. In the meantime, as a front-line Chamber, we have evaluated the impact on many economic sectors with the intention of adapting to the current situation to restore the economy and social standards, and wish to forward crucial factors to be considered,” the Chamber stated in a press release yesterday. 

COYLE urges the government to design and implement financial and tax moratorium relief programmes that would help revive the economy for small, medium, large and extra-large enterprises, immediately. 

“It is imperative that all Sri Lankan enterprises irrespective of the turnover are included and not left out of financial moratorium reliefs,” the Chamber said. 

Accordingly, it was proposed to reduce the interest rate to 4 percent for all types of working capital loans for a period of 2 years with effect from 1st of March 2020. 

Further, bank charges and penal interest are recommended to be waived off or refunded if accumulated on or after 1st March 2020. 

It is also seeking to extend the export proceeds to six months as the present regulations on export proceeds with DP and DA terms may experience delayed remitting proceeds due to the pandemic.

In terms of tax policy, COYLE is encouraging the government to remove the capitalization provisions applicable under section 18 of the Inland Revenue Act with retrospective effect from 1st January 2019 and thereafter.
“This is not bearable in the present situation and companies cannot survive without borrowing in the present context or pay taxes for the past excess borrowings. It is not practical to dis-allow a portion of interest and impose Income Tax on such expenditure incurred by a person,” the Chamber pointed out.

COYLE also propose the authorities to reduce AWPLR to 7 percent for next two years to develop the production-based economy.

“This will benefit government borrowing and moratoriums as well. Lending interest rates should be AWPLR plus 1.5 percent maximum,” it stated. 

In addition, the overdue loan interest is also urged to be limited to maximum of AWPLR plus 3 percent. Guarantees with bond charges caps at maximum 1.5 percent per annum.

“LC commissions must be maintained at maximum of 0.125 percent per quarter. All potential legal action and default action resulting from the predicament should, at present, be held over for the next two years to find a resolution. Additional working capital and term loans should be provided to local production, exports and export-supported services,” the Chamber urged.

Meanwhile, the COYLE proposed to re-establish State-owned development banks and venture capital companies to enhance and bring back the focus on SME and develop entrepreneurship. 

It is also seeking State intervention to restructure credit card dues to be paid back in a stretched timeline while restructuring housing loans and vehicle loans with one year grace period. 

“We believe that with a good understanding of the factors stated above, His Excellency and the government will proceed with a proper plan of action to bring back the economy and society to its normal intensity despite the pandemic,” the Chamber said. 

The membership of COYLE provides employment for over 200,000 people in the country at the moment.