FCCISL sends govt. long list of required concessions and relief

• SME illiquidity highlighted as key issue 
• Stresses need for govt. to suspend past VAT, income tax for three years
• Says good time for country to attract investments from global multinationals

The government was presented with a long list of issues faced by the local business communities last week with the Federation of Chambers of Commerce and Industry Sri Lanka (FCCISL) highlighting the plight of its member associations due to the pandemic that has crippled operations and trimmed revenue.

While no segment of the national economy has been spared by the ongoing global health emergency, businesses, the retail sector in particular, has witnessed a sharp decline in cash flow due to the low purchasing power of the working class, loss of employment, and increase in price levels of commodities, the FCCISL highlighted in its 14-page letter to President Gotabaya Rajapaksa. 

A key issue that was brought to light was that the majority of SMEs are “highly” illiquid due to the loss of sales, and the delay in revival is likely to increase unemployment in the country. 
To provide assistance, the chamber requested for the government to explore the option of suspending for a period of three years the loans of businesses impacted by the pandemic so that they have some room for improvement. The government was also asked to extend a presidential decree to all banks to stop auctioning properties mortgaged by customers, and exclude the special clause in the letter of settlement agreement that empowers financial institutions to enter and auction in case of failure to settle the facility by financiers. Despite the country grappling with low tax revenues, the FCCSL stressed the need to suspend past VAT and income tax for three years to allow room for revival. The granting of tax amnesty for cash and cash equivalents were requested for a period of one year to strengthen cash flow.

Special tax concessions were also requested for investors in the areas listed in the National Export Strategy. 

Pointing out that the major barriers which prevent more exports from Sri Lanka to the world are high production cost and lack of productivity in many industries, the chamber said it will be “tactful move” to grant subsidies to Sri Lankan exports and export prospects for a period of two years.

“This could be followed by a major productivity drive across all major industries to offset inefficiencies of production processes making Sri Lankan products more competitive in overseas markets,” the FCCISL said. 

In addition to the series of concessions, the chamber also asked the government for a loan scheme and grant to promote sectors identified by national export strategy.

In terms of recovery, the chamber asked to extend the time limit for recovery of the businesses sector wise and according to the country’s situation. Financial institutions were also called on to write off the trade and finance losses according to the provisions if the conditions for write-off are met.

According to the chamber, the fastest solution to Sri Lanka’s current economic problem is to encourage investments. “This is a good time for the country to attract investment from global multinationals looking to diversify their manufacturing bases; as well as to kick start large scale infrastructure projects that are on hold, by mobilising private capital,” it said.