BUDGET 2014
November 21, 2013, 12:00 pm
, the island
1.0 Introduction
1.1
Honourable Speaker, I am pleased to present the 9th Budget of the
United People’s Freedom Alliance Government having made use of the
previous 8 Budgets to bring about national security, peace and economic
progress to our nation. Our nation is proud today that our Government
has converted the once mined lands of the North and East into lands
that harvest the dividend of peace and prosperity. The consolidation of
the democratization process of the 30 year terrorist trapped North,
having institutionalized a Provincial Council and Local Authorities in
the province through free and fair elections, has further enriched the
pride of our nation.
1.2 Almost 2 months ago,
elections were held in 3 provinces that represent around one third of
the population. All political parties participated actively and
demonstrated how well the longstanding democratic process has advanced
in our country. Out of the 2.7 million votes total polled in three
distinctly different provinces, 1.5 million, which is 56 percent voted
for the People’s Alliance Government. Our Government is encouraged that
a substantial majority of our people continue to place their
confidence in "Mahinda Chintana- Vision for the Future" which,
is designed to create a proud future for their children. We were
further encouraged by the fact that in the North, an overwhelming
majority of people have placed their confidence in the democratic
process which was denied to them by the LTTE for 25 long years, and
proceeded to use the opportunity to elect its Provincial Council for
the first time.
Opposition Leader Ranil Wickremesinghe is leaving parliament before the presentation of Budget 2014.
(pix by Nimal Dayaratne and Kamal Bogoda)13
Honourable Speaker, this Budget is also presented soon after hosting
the 23rd and the first ever Commonwealth Heads of Government Meeting
held in South Asia. It is also the first ever global event that was held
in our country since the Non- Aligned Conference held in 1976. We
ought to be proud that we were able to restore the prestige of our
motherland by being able to mobilize 53 countries and giving them an
opportunity to see for themselves the turnaround we have made. The
conference also gave ample opportunities to the leaders who attended to
witness the economic progress we have made and the stable democracy
that prevails, which will convince them that the fabricated viewpoints
being aired by those who are campaigning against us are grossly wrong.
The rare opportunity we secured by hosting this summit to promote
investment opportunities for our country aiming both the vast external
markets in the Commonwealth countries as well as the connected global
markets, is our main economic benefit from this summit. By hosting this
summit 20 years after it was last held in an Asian country, Sri Lanka
while brining pride to the whole of Asia was also able to attract
global attention to our economy as one of the leading economies in
emerging Asia. This will also pave way to increase investments and
create employment opportunities. The successful conclusion of this
summit with the transfer of leadership of the Commonwealth to our nation
is a clear reflection of international recognition of our Government’s
foreign policy.
1.4 Despite the predictions
of dooms and glooms about the economy, we are humbly proud to note that
the poverty level has steadily declined to 6.4 percent in 2013 from
15.2 percent in 2006. This did not happen by accident. We took
electricity, which was available only to urban areas to almost the
entire population. We no longer remember the days of power- cuts.
Electricity for all and at all times, is now a reality. Other facilities
such as access to water, quality roads, irrigation systems for lands
in the dry zone, better schools, hospitals, housing, sanitation and
environment preservation have improved considerably and -continue to
expand all over the country. "Mahinda Chintana towards a new Sri Lanka" our Government’s mandate recognizes that these are basic needs of the people.
1.5
None of this could have been possible if our security forces did not
bring about peace and national security. Our committed farmers brought
about food security. Our people who work overseas brought valuable
foreign exchange to their motherland. Our teachers were committed to
provide quality education to our students and our health workers were
committed to improve health standards of our people. Our rural based
public servants worked hard to revive the rural economy. Our religious
leaders worked towards religious harmony. Reviving creative
initiatives, our artists brought back the values of our culture and
arts. Our labour force ensured a higher national income through
industrial peace and continued productivity improvements. Global
financial institutions and entrepreneurs placed confidence in our
economy. They all deserve a heartfelt appreciation for their
uncompromising commitment to promote peace, national reconciliation and
economic progress.
2.0 The Economy
2.1
Honourable Speaker, our economy continues to progress steadily. The
economic growth of 6.4 per cent registered last year amidst adjustments
made due to global instabilities and high oil prices and further
challenges due to the severe drought that was experienced, has increased
to 7.8 percent in the third quarter of this year. There is confidence
that the economic growth will exceed 7 percent this year and move
towards 7.5 - 8 percent during the medium term of 2014 - 16 maintaining
a growth in the real economy well in excess of the expected 5 - 6
percent inflation.
2.2 Agriculture, the
backbone of the livelihood of our rural community has bounced back from
the setback faced during the last two years due to unfavourable
climatic conditions. The 2013 Yala season has given us a paddy
harvest of 2 million MT, which is the highest in recent years. The
production of maize, soya, black gram, green gram, big onion, potatoes,
fruits, and vegetables has also .Strengthened the food supply. The
production of milk, dairy, poultry, meat, fish and eggs has also shown a
similar improvement. Rice, maize and poultry production is generating
surplus exports.
2.3 Increased paddy, maize and
soya bean production has boosted rice processing, flour milling and
vegetable oil production. The coconut production which, severely
suffered due to the prolonged drought in the coconut triangle, is
recovering with a favourable production trend. The production of tea,
rubber, cinnamon and other export crops has also shown an improvement
Remunerative farm gate prices, the fertilizer subsidy, price stabilizing
tax structure at the point of imports, provision of quality seeds and
planting material and better storage and marketing facilities have
helped our farmers to increase production through diversified crop
cultivation.
2.4 The tourism industry has
sustained its growth momentum with foreign tourist arrivals reaching
1.5 million and domestic tourism expanding to 3.5 million. Foreign
earnings from the industry during this year is expected to be around
US$ 1.5 billion and investments have expanded well over US $ 3 billion
to create new capacity in this sector to be able to accommodate 2.5
million foreign tourists and 5 million domestic tourists by 2015. The
use of local food, fabrics, furniture and equipment in the tourism
industry must be expanded to further enhance the economic contribution
of this industry.
2.5 The contribution of the
country’s construction industry now accounts for 10 percent of GDR.
This sector is growing at around 17 percent due to expanded investments
in infrastructure as well as higher private investments in urban
property development, housing construction, tourism facilities, new
factories and other logistics. This industry also contributes for the
development of a wide range of engineering and technical fields as well
as the building materials industry.
2.6
Honourable Speaker, we have offered many incentives to encourage
imports competing industries such as cement, steel, tyres/rubber based
products, agricultural/ tea industry machinery, equipment/ spare parts,
power generation/ transmission machinery and equipment, building
material, furniture and boat/ship building. Similar encouragements have
been extended to increase new investments in food processing, sugar
and vegetable oil manufacturing, dairy and pharmaceutical products and
to increase the production of renewable energy and coal power. Many of
these activities have a potential to graduate to export markets in the
medium term. The Customs tariffs that will come into force tonight will
facilitate the expansion of such value creating and import competing
industries. Quality standards will be enforced on imports and exports.
2.7
Export industries which were confronted by depressed global markets,
have picked up showing a 2 percent growth. The apparel industry has
shown a 6 percent growth and is expected to generate US$ 4,000 million
export earnings this year. Value added tea, rubber and cinnamon
products adds around US$ 3,000 million to export earnings showing how
plantation crops could be translated into being high value manufactured
exports. Software, gem and jewelery, handlooms and confectionary
industries have gained momentum. Export earnings are expected to
generate US$. 10,000 million this year. The earnings from foreign
employment are expected to be around US$ 7,000 million.
3.0 Priorities of the External Trade Policy
President Mahinda Rajapaksa delivers the budget proposals for the financial year 20143.1
Our endeavor is to encourage our products to reach large markets such
as India, Japan, China, Australia, Saudi Arabia, United Arab Emirates,
Qatar, Russia, South Africa and Brazil in addition to American and
European markets, to create a new wave in export growth. We have shifted
our education system to equip our youth with the required skills for
these export industries and to improve their employment prospects with
high income and productivity. We also incentivize our producers to
develop skills of their employees so that the overall productivity of
our workforce will thereby improve. The Government has arranged Euro 90
million low cost funds to provide credit facilities at an interest
rate not exceeding 8 percent for manufacturing and SME industries to
modernize their factories with energy efficient technology to improve
international competitiveness.
3.2 Our banking
and financial institutions need to focus its lending towards production
and value creation industries and move away from traditional import
biasness in their operations. To further facilitate the export industry
growth, online facilities are in place with regard to port and customs
operations. Such facilities will be extended to cover imports as well.
We have already declared free ports and bonding facilities to promote
the value addition process and expand exports from our country. We have
set our exports target to be US$ 20 billion in 2020. Towards this end
the improvement in productivity is as important as maintaining a
flexible exchange rate regime.
3.3 Honourable
Speaker, our export economy need not be confined to goods. This country
has proved its potentials in exporting services such as business &
knowledge processing services, professional services, ports &
aviation services and banking & financial services. These services
too have grown remarkably during the last 5 years and are expected to
generate over US$ 5 billion earnings. As skilled and technical
categories are encouraged towards foreign employment, earnings from
such sources are projected to be around US$ 10 billion in 2016.
3.4
Our country is now well integrated with international financial
markets. The Government and banks have mobilized funds with 5 - 10 year
maturities through internationally traded bonds. This has improved
availability of foreign funds required for the financing of both
Government and private development expenditure. This has also provided a
good opportunity for our exporters, high income earning overseas
employees, commercial banks and local funds to put their investments
and diversify their earnings sources.
4.0 State Enterprises
4.1
Honourable Speaker, our Government will not privatize state
enterprises or state banks. I firmly believe that state enterprises
should have their presence in the economy for there to be a fair
balance between the public sector and the private sector to ensure
economic and social progress in our country. Similarly, we have
formulated laws to protect our land resources from outright transfers
to foreign ownership. From this year, foreigners can have access to
state and private land only through long-term lease arrangements. As
infrastructure development has improved the value of all lands, it is
necessary to implement a land lease tax structure to protect long-term
value of lands. Hence a 15 percent upfront tax will be imposed in the
event of lease of state or private lands to foreigners.
4.2
It is in this spirit that our Government has strengthened State Owned
Business Enterprises. The Government budget through its public
investment program has built up the asset base of Ceylon Electricity
Board (CEB), National Water Supply & Drainage Board, Airport &
Aviation Services and Sri Lanka Ports Authority to increase their long
term earning capacity. I propose to convert all previous loans granted
to them by the Treasury, to Government equity in order to further
strengthen their balance sheets, while also enabling them to pay annual
dividend to the Treasury.
4.3 The results from
our policies are now visible. The power generation capacity of hydro
power plants has improved considerably to 1,357 MW. This has also been
blessed with the addition of 300 MW from the first coal power plant,
thereby enabling the reduction of the use of expensive fuel based power
to 294 MW. Renewable energy generation has increased up to 422 MW.
Transmission losses of the CEB have reduced to 11 percent. This
together with the cost recovery pricing strategy that has been put in
place has helped the CEB to eliminate its last year’s loss of Rs. 61
billion. CEB has also commenced the reduction of its liabilities to
banks and the Ceylon Petroleum Corporation (CPC). The completion of two
other coal power plants with a further 600 MW of new generation
capacity by the end of this year, will further strengthen the balance
sheet of the CEB.
4.4 Public investments in new
water schemes in almost all provinces have made a stronger revenue
base for the National Water Supply & Drainage Board. An investment
of US$ 300 million has also been made to reduce revenue water to 20
percent by 2016. The completion of water supply schemes such as
Ruhunapura, Aththanagalle, Kurunegala, Matale, Hambantota, Ampara,
Anuradhapura, Jaffna, Batticaloa, Dambulla, Mahiyanganaya, Hali Ela,
Moneragala, Ratnapura to provide water connections to 1 million
households by 2016 will make National Water Supply & Drainage Board
stronger in its performance. I propose to establish a National
Community Water Supply Department to regulate and develop community
water supply schemes in order to ensure water quality standards and
proper maintenance of such projects. I propose to allocate Rs. 300
Killion for community water supply initiatives under this Department.
4.5 In terms of the ongoing capitalization to strengthen the two airlines, a further US$ 150 million will be provided to Sri Lankan Airlines and US$ 50 million to Mihin Lanka in 2014. The Treasury has made arrangements to take over the shares acquired in SriLankan
by the state banks from the foreign shareholder so that state banks
could be relieved of this burden. In order to strengthen the bus fleet
of Sri Lanka Transport Board (SLTB) with a further 2,000 buses,
Rs.1,000 million has been provided to SLTB in support of its capital
investments. In addition, I propose to provide Rs. 500 Killion to
bridge its revenue shortfall.
4.6 Ceylon
Petroleum Corporation (CPC) has also made a significant turnaround. It
has contained its losses and has also reduced its debt to banks. A
Government Guarantee will be provided to the CPC to enable the raising
of long term capital to restore its depleted pipeline network, storage
facilities and the refinery. I am pleased to inform this august Assembly
that, out of the 54 State Owned Business Enterprises, 47 have been
turned around to be profitable entities. I value the contribution made
by the Committee on Public Enterprises (COPE) through its Parliamentary
oversight functions towards the improvement of governance and
accountability of these enterprises.
5.0 State of the Budget
5.1
Honourable Speaker, I wish to remind our fiscal experts in the
opposition that our fiscal policy framework has performed better than
those followed by them prior to 2005. All post 1977 Governments prior
to us operated higher budget deficits than the deficits that, prevailed
during our time. The Government during 2002 - 2004 removed pension
rights of public servants and also imposed a recruitment freeze to the
public sector. At that time, no alternative to privatization was
considered and public investments were reduced, while keeping a deficit
in excess of 8 percent and debt over 100 percent of GDP. This is the
reality associated with our fiscal legacy.
5.2
Our Government, in fact got back some of the already privatized
enterprises and certain others that failed after privatization to
rescue them and put back in business. Gas Company, Sri Lankan, Sri Lanka
Telecom, Pelwatte and Sevanagala Sugar companies, Colombo Hilton etc.
are now government owned and many of them have already paid dividend
income to the Treasury. Our budgetary policy enabled us to accommodate
expenditure on high public investments, increased salaries and pension
payments, Samurdhi benefits, fertilizer and seed subsidies.
Budgetary allocations were made for the recruitment of teachers,
doctors, nurses, other public sector employees and around 100,000
unemployed graduates to various positions in the public service.
5.3
Further, funds were also provided for the liberation of the country
from terrorists, to demine a large area of 1,557 sq km of land, resettle
nearly 300,000 displaced persons and to develop livelihood avenues for
them. The budgetary provisions were also used for the restoration of
security, peace and development. Provisions were increased to implement
the recommendations of Lessons Leant and Reconciliation Commission and
to popularize the usage of bilingual practices to promote national
reconciliation. We have also been able to provide a Living Allowance to
all parents of our three forces, disabled soldiers and those who
unfairly lost their livelihood simply because they rose against the
labour repression in 1980 July. The development expenditure for rural
development is unprecedented.
5.4 Honourable
Speaker, with all these, the budget deficit has been reduced to 5.8
percent of GDP this year. We target a budget deficit of 5.2 percent of
GDP in 2014 and 4.5 percent in 2015. We are determined to bring down
the budget deficit to 3.8 percent by 2016 and reduce our Debt /GDP ratio
to 65 percent. That is the legacy we propose to leave behind for our
future generations.
6.0 Government Revenue
6.1
The Government revenue this year is likely to be around Rs. 1,100
billion. Revenue from Income tax, VAT and NBT on domestic activities has
increased by 14 percent and is on a buoyant growth path.
Revenue
from taxes imposed at the point of Customs remained sluggish due to
the reduction in motor vehicle imports. Revenue from Excise taxes on
liquor and cigarettes has moderated.
6.2
Honourable Speaker, we need to strengthen the Government revenue
efforts in view of high commitments of the Government to provide a wide
range of public services, welfare programs and public investments. The
Government has introduced several measures to prevent leakages
associated with tax on liquor, motor vehicle imports under
concessionary duty schemes, under invoicing in the importation of used
motor vehicles, steel, tyres and motor spare parts. Accordingly motor
vehicle deprecation schedule applied at the point of import for the
calculation of Customs based taxes will be revised to prevent under
valuation.
6.3 It is proposed to extend the 2
percent NBT applicable to the banking sector to all banks and financial
institutions to provide equal treatment to the banking and non-banking
sectors and to expand the tax base. It is also proposed to fix the
tax-free threshold applicable for VAT on supermarket scale retail trade
at Rs. 250 million per quarter. In order to prevent manipulations on
the computation of turnover through exempted items, I propose to fix a
limit of 25 percent of the total turnover as exempted value from VAT in
relation to such business. Telecommunication Levy will be fixed at 25
percent
6.4 The Inland Revenue Department (IRD)
is being computerized to make tax administration efficient and tax
payment simple. A new Revenue Administration Management Information
System (RAMIS) is being introduced to automate the processes of IRD and
eventually link the IRD with Sri Lanka Customs, Department of the
Registrar of Companies, Department of Motor Traffic, the Land
Commissioner General’s Department and the Ministry of Finance and
Planning. The new system will enable the use of a Personal
Identification Number to coordinate all transactions and will also to
facilitate online tax payments etc.
7.0 The Current Expenditure
7.1
The Government current expenditure at around Rs. 1,200 billion remains
higher than Government Revenue. The payments of salaries and
allowances to public servants for the provision of education, health,
rural development, administrative and extension services and national
security total Rs. 390 billion. A further Rs. 125 billion is spent on
pensions. Fertilizer subsidy, pharmaceutical drugs and a wide range of
welfare expenditure takes another Rs. 100 billion. These expenditures
must be secured. The total interest cost of Rs. 445 billion of which,
domestic interest payments amount to Rs. 360 billion needs to be
managed. However, the reduction of interest rates must be done
gradually in order to protect both the savers as well as borrowers.
Further, it is necessary to maintain development expenditure at the same
scale of 6 percent of GDP to be able to expand economic activities.
7.2
The proper coordination of development programs in each sector in
terms of economic priorities is necessary to maximize benefits from
public expenditure when foreign loans and grants are utilized in
addition to taxes and domestic borrowings. Therefore, I recommend that
all grant-aided projects should also to be channeled only through the
Consolidated Fund and the National Budget, like foreign loan funded
projects having to follow the applicable planning procedure. To ensure
consistency and to avoid duplicity in the implementation of the
national development process, all expenditure of the private sector and
Development Partners that will qualify for social responsibility
related tax exemptions, will be implemented having aligned with
national development programs. Since grants do not create a debt and
hence has no bearing on the deficit, I propose to create additional
provisions in the Budget, on account of such grant assistance.
8.0 Agrarian, Livelihood and Irrigation Development
8.1
Honourable Speaker, we consider that our rural centric development
strategy must focus on agriculture for food security, traditional
healthy living, bio diversity, a clean environment and a higher income
to the rural people. Budget consultations with the farmer community
representing all districts in the country, expressed confidence in the
Government’s agricultural policy and development strategy. They did not
ask for any handouts and wanted the Government to concentrate on
improving irrigation, providing quality drinking water and protection
from wild animals. Therefore, the 2014 - 16 medium term Budget will
give priority to these areas. Accordingly the 2014 Budget has allocated
Rs. 1,700 million for downstream and livelihood development activities
associated with the recently developed major reservoirs such as
Weheragala, Rambaken Oya, Deduru Oya. I propose to increase the
irrigation budget by a further Rs. 14,000 million for the early
completion of Yan Ova, Uma Oya and Moragahakanda development programs,
as they will help to improve irrigation and drinking water facilities
to several difficult areas in the south and north and also enable power
generation.
8.2 The farmers on their own
suggested the need to reduce the usage of chemical fertilizer and
pesticides to reduce their harmful effects on food, water quality,
health, animals and the soil. Since such a shift would take some time, I
propose to continue with the fertilizer subsidy scheme to provide all
varieties of fertilizer at Rs. 350/per 50 kg bag for paddy cultivation
during both the Yala and Maha seasons. A subsidized price
of Rs. 1,250 per 50/kg bag will also be continued for all other crops. I
propose to allocate a further Rs. 300 million in 2014 to encourage
interested farmers and seeds farms, to produce quality planting and
seed material and make them available in the market under a registered
trademark recognized by the Agriculture Department. Purchasing centers
of Divi Neguma agrarian services linked to Lak Sathosa will
be set up so as to ensure that farmers will be able to secure
guaranteed producer prices for potato, onion, dried chilies and grain
varieties.
8.3 The Government has recruited
qualified field level officers to the Agriculture Department and the
Agrarian Development Department to strengthen extension services. Funds
will be allocated to modernize all 300 Agrarian Development Centers to
be able to meet farmer needs. I propose to implement a three-year
rehabilitation program to restore abandoned paddy land and put them
back to productive use by cultivating paddy, fruits, vegetables and
also for floriculture, using organic fertilizer. I propose to allocate
Rs. 2,300 million in 2014 for the rehabilitation of tanks, minor
irrigation schemes and abandoned paddy lands. I propose to grant a
monthly allowance of Rs. 300 to field level officers in agricultural
extension services,’ veterinary services, irrigation and wildlife. I
propose to provide motorcycles on five-year lease basis, to all such
field level officers to improve their regular availability at field
level and also to pave way for them to own an asset at the end of the
lease term.
9.0 Partnership with the World Food Program
9.1
Honourable Speaker, the United Nations World Food Program has assisted
our nation in the past to feed displaced people affected by terrorist
attacks, the Tsunami and various other natural disasters. In
appreciation of this assistance, our country is now in a position to
provide food for the needy people who are faced with similar situations
in other countries. Therefore, I propose to donate 50,000 MT of rice
to the World Food Program of which 10,000 MT will be given to World
Food Program office in Sri Lanka. The Government has requested ‘that
Sri Lanka be registered as a supplier nation to the World Food Program
so that our farmers can grow rice to be supplied to external markets
while also serving a worthy cause. I consider that the revival of
agriculture is a reflection of being able to restore the traditional
pride of our farmer community. Hence, I propose to setup a Revolving
Fund of Rs. 300 Mn. under each District Secretary in the major grain
producing districts, to streamline related production and marketing
activities.
10.0 Smallholder Plantations
10.1
Honourable Speaker, smallholder plantations also play a significant
role in our economy. The Government provides assistance to these
cultivations by subsidizing planting material, replanting, new planting
and fertilizer. In order to be able to get best results from the
prevailing subsidies I propose to grant Rs. 5,000 per acre, once a year
subsidy, to all tea smallholders to improve the conditions of their
lands through water and soil conservation.
10.2
I also propose to support land preparation towards water retention,
soil conservation and to increase the use of organic fertilizer for
smallholder coconut cultivation. The prevailing high taxes on edible oil
at the point of Customs will be maintained to increase long-term
cultivation interests. It is proposed to restrict the importation of
coconut oil and palm cornel and remove Nation Building Tax on coconut
oil millers for 3 years to strengthen the coconut industry. A new
incentive scheme will be implemented to encourage manufacturers of coir
products for export in recognition of their value addition in foreign
exchange. The CESS applicable on the export of tea, rubber, coconut,
cinnamon and pepper in primary form will be further strengthened to
channel such revenue to encourage value added exports made out of these
primary products.
11.0 Large Scale Plantations
11.1
Large-scale plantations were privatized in 1992 on 50-year lease
arrangements. However, some of these plantation companies are lagging
behind. I propose to undertake a comprehensive assessment of the under
performing plantation companies. Similarly, the best performing
plantation companies that have increased their productivity,
application of bio fertilizer, and engaged in worker welfare, brand
promotion and investments to promote high value tea exports should be
encouraged. Therefore each plantation company will be required to
submit a report on their performance with development plans and
targets, before March 31, 2014 to enable the Golden Shareholder being
the Government to make appropriate decisions for the development of
plantations under each company. I propose to implement a credit scheme
with 8 year maturity and 6 percent interest to every company that has
so far performed well, provided they - commit to replant an agreed
extent, are committed to ensure social development of its plantation
workers and increase the volume of its value added tea exports. I
propose that banking institutions will earmark around Rs. 500 million
for this development loan scheme in 2014. Provisions of existing leases
will be suitably amended incorporating new conditions necessary to
ensure the development of this important sector.
12.0 Farmer Pension Scheme and Crop Insurance Scheme
12.1
1 propose to implement a pension scheme to provide a minimum of Rs.
1,250 as a monthly pension for farmers over 63 years of age, from
January 2014.1 propose to use the proceeds of the Govi Setha
lottery along with a capital contribution of Rs. 1,000 million from the
Government to strengthen this contributory Pension Fund. The
introduction of a contribution from farmers, who use the fertilizer
subsidy scheme as announced in my last Budget, should provide a regular
flow of funds in support of payment of compensation for crop failures.
I propose to extend this to cover all smallholder farmers engaged in
all crops so that they could also be compensated in the event of such
causality. The Government is also in the process of securing Standby
Funds from the World Bank to compensate losses due to adverse climatic
conditions, without creating an unanticipated burden to the Budget.
13.0 Research and Food Technology
13.1
The Government has granted a wide range of incentives for research and
development as well as a Research Allowance to university lecturers
and other scientists. The Government and private sector partnership in
setting up of a science park for the promotion of nanotechnology in
manufacturing has confirmed how well the two sectors can work together
with mutual trust in furthering advanced technology and research We are
encouraged with the research initiatives undertaken by both private
and public sector institutions particularly in the field of
agriculture. Research initiatives of Sabaragamuwa, and Wayamba
universities in food technology and livestock and their active
involvement with such industries have produced results. Systems and
procedures required to be followed by research institutes will be
further simplified to encourage the active involvement of universities
and for research institutions to be able to meet market demands. I
propose to allocate Rs.500 million for research lab facilities,
equipment and research work by agricultural faculties in provincial
universities at field level together with successful ventures in dairy,
poultry, inland fisheries, animal husbandry and food technology.
14.0 Lead Export Industries
14.1
Sri Lanka’s high value tea, apparel and handlooms and rubber products
dominate country’s exports, employment and value chain activities. Our
Government’s vision is to raise export earnings of these three
industries to US$ 10 billion by 2016. In the case of apparel exports,
our vision is to position Sri Lanka among the top ten high quality
apparel manufacturing countries in the world by 2020. Therefore, in
support of further innovation in this industry, triple deductions will
be provided for research and innovation carried out within businesses,
while recognizing the cost of purchasing international intellectual
property rights and the cost of operations relating to such rights, for
tax deduction. Royalty income will be made tax free for a period of 7
years. Higher value added tea exporters securing prices in excess of
US$ 12 per kg., having established internationally reputed local brands
in packed form having used 75 percent home grown tea, will be permitted
to import any specialty tea, free from restrictions to facilitate
blending to meet market needs. High value tea and rubber product
exports will be encouraged through increased cultivation of these crops
and by maintaining a high level of CHESS on primary commodity exports.
Market access to Japan, India and China will be explored for these
commodities through Bilateral Trade Arrangements, in view of the high
trade deficit Sri Lanka runs with the three countries.
15.0 Fisheries Industry
15.1
Honourable Speaker, the development of fisheries harbors, anchorages,
landing centers, cold rooms and market facilities have expanded the
production capacity of the fisheries industry. During the last five
years, 2,524 multi day vessels, 3,743 one day vessels and 4,743 normal
vessels have been added to the industry. The fish harvest has doubled
in the last 5 years and has reached 500,000 MT. Production of inland
fishery has contributed to 20 percent of the total fish production.
15.2
The production of dried fish and sprats, maldive fish, canned fish and
fish food has increased, and has resulted in supporting livelihood
activities of the people engaged in this industry, while also reducing
related imports from 80,000 MT in 2010 to 70,000 MT by 2013. I propose
to maintain higher Custom based taxes on related imports to promote
local production of these activities. The incentives provided to small
and medium enterprises engaged in the exports of fish food and
ornamental fish will be further expanded.
15.3
Priority will be given for the rehabilitation of existing harbor
facilities, the early completion of Silawathura, Gurunagar, Gandara and
Kalametiya fishery harbours, the development of fishery harbours and
anchorages at Wennappuwa, Chilaw, Kapparathota, Dodandoowa, Hikkaduwa
and Negombo lagoon and also to further increase the number of fishing
boats during 2014. I propose to allocate Rs. 1,000 million for these
development activities. I propose to maintain a high tax structure on
fishing boats at the point of import, to promote the local boat
manufacturing industry.
16.0 Dairy, Livestock and Poultry Industries
16.1
Honourable Speaker, in our effort to reach self-sufficiency in milk,
the local milk production has increased and supplies 40 percent of
local consumption requirements. The importation of 4,500 high yielding
cows has contributed to improve the production of Government dairy
farms. Private sector dairy farms as well as small and medium
enterprises have substantially increased their investments in this
sector. Further, the Divi Neguma initiative encourages backyard
dairy farm activities. I propose to allocate funds to import a further
20,000 high quality cows to promote small and medium dairy farms in
order to increase the annual average yield in excess of 1,500 liters of
milk per cow. A special loan scheme at an interest rate of 8 percent
will be implemented in support of SMEs in the dairy sector to promote
dairy farms, collection centers and equipment, the development of
animal feed etc. A high CESS will be maintained on the importation of
butter, yoghurt and dairy products, to further support the dairy
industry.
16.2 Poultry production in 2013 has exceeded 153,000 MT eliminating the deficit production that prevailed in 2009. Divi Neguma
program has contributed to increase the informal market contribution
to 34 percent I propose to introduce a pricing formula based on the
cost structure in place of a price control on poultry to regulate
pricing and to safeguard both the consumer as well as the producer. I
also propose to introduce a grant scheme. to neutralize impact on
production costs due to taxes payable on inputs to encourage exports.
As this industry has witnessed a rapid expansion, I propose to allocate
Rs. 200 million to strengthen related veterinary services with modern
facilities, recruitment of veterinarians and to grant a monthly
allowance of Rs.7,500 for veterinarians.
17.0 Divi Neguma - Gama Neguma
17.1
Honourable Speaker, Divi Neguma initiative has nurtured several
backyard economic activities among households since it was first
launched in 2010 with the objective of setting up one million backyard
economies. It has now entered the 5th round. In this round, Divi Neguma
intends to develop 125,000 model home gardens, which will encourage the
production of seed and planting material suitable to targeted areas
based on climatic conditions. I propose to grant Rs. 10,000 each to the
5 best Divi Neguma backyard economies/ home gardens in each Grama Niladari
division to incentivize those who participate in this novel concept of
micro enterprise development with the participation of the entire
family. I request all banks and financial institutions to grant at
least 500 working capital loans of Rs. 25,000 at an interest rate of 6
percent without requiring any collateral to such winners, towards
developing greenhouse farms, poultry/ livestock /fish farms or
handloom/small industries so that Divi Neguma families could emerge as successful entrepreneurs.
17.2
Villages situated in difficult geographic locations are unable to
fully benefit from mainstream development activities primarily due to
lack of proper transportation. In order to resolve this problem, the
Government recently implemented a program to construct bridges in such
areas to establish connectivity for transportation. I propose to
accelerate this initiative by completing the construction of 1,000 such
bridges in 2014. This is expected to connect 500,000 such lagging
villages and provide such villages easy access to community water,
education, health and livelihood activities through the Gama Neguma initiative
for which I propose to allocate Rs. 4,500 million. I propose to
allocate Rs. 300 million to provide small buses to these areas to
improve transportation. I also propose to grant an allowance of Rs.
15,000 to District Secretaries, Rs. 5,000 to Divisional Secretaries and
Rs. 3,000 to Planning Directors and Chief Accountants attached to
District Secretariats to incentivize them to coordinate rural centric
work and to promote better expenditure management and supervision at
district level.
18.0 Child Nutrition
18.1
Honourable Speaker, special initiatives must be undertaken to reduce
malnutrition in pregnant and lactating women and in children. I propose
to engage family health services to provide greater attention towards
promoting breastfeeding, use of nutritious food for children while also
ensuring them better health care. Divineguma/Samurdi programs
will be used to popularize the consumption of homegrown vegetables,
milk and eggs towards promoting better nutrition. I propose to allocate
the required funds and employ nutrition specialists in each district,
teach the importance of proper nutrition to school children, and carry
out community level mobile clinics to promote balanced nutrition. I
also propose to impose regulatory restrictions relating to food related
advertisement by permitting to advertise only foodstuff with
reasonable nutritional values. I propose to work with the World Food
Program, UNICEF and Food and Agriculture Organization to collectively
implement a nationwide accelerated nutrition initiative to reduce
malnutrition and get maximum productivity from annual expenditure of
around Rs. 7,000 million incurred by the Government on various programs
to increase nutritional levels.
19.0 Women Enterprises
19.1
A large number of women are engaged in successful micro enterprises
involving a wide range of high quality products while generating a good
source of family income and creating employment opportunities for our
people. These entrepreneurs explained to us that their business
environment is constraint by a variety of payments imposed on land and
buildings, inadequate working capital, complicated title related
levies, insistence of traditional securities for small loans,
administrative rigidities and lack of sensitivity to their businesses
by financial institutions and Government service providers.
19.2
1 propose to implement a Women Micro Enterprise Credit Guarantee
Scheme against which Regional Development Banks and SME Banking Units
of Commercial Banks will provide working capital loans up to Rs. 250,000
without requiring security. Age limit to be eligible for such loans
will be extended up to 68 years. Beyond that age, a designated family
member could be nominated to qualify to obtain further facilities. I
propose to dedicate 2014 — 2015 for Women Enterprise Development, to be
facilitated by Regional Development Banks.
20.0 Small Businesses and the Economy of the Self-employed
20.1
Honourable Speaker, small scale shops, tea shops, repairing stations,
restaurants, tailor shops, saloons, small groceries in commercial
centers, small trade outlets on pavements and weekly fairs etc. provide
self-employment opportunities to a substantial number of people. A
large number of consumers also benefit from these widespread service
providers. I propose to issue Divi Neguma entitlement cards to
small entrepreneurs subject to a payment of Rs. 500 to exempt them from
having to pay multiple payments to local authorities. I also propose
to reduce the annual lease rental of land leased by state agencies to
such cardholders to Rs.1,000 if the extent is less than half an acre.
This facility will also be extended to Samurdhi beneficiaries,
who are already eligible for several other benefits. I propose to
simplify the provisions in long term leases given by state agencies to
small entrepreneurs for commercial purposes and in the case of any such
lease that has already gone on for over 10 years, the lessee will be
given the option to convert the arrangement to a 50 year long term
lease. I propose that 50 percent of investment savings of Divi Neguma and Samurdhi beneficiaries
and small time traders in banks, be used to give small loans to them
at a low rate of interest, on the basis of a group security to be given
by such borrowers. I propose to exempt small traders engaged in
businesses with a monthly turnover less than Rs.50,000 from all levies
imposed by local authorities. Arrangements will be made to provide
suitable space to payment hawkers and small traders involved in mobile
businesses along new roads, in trade centers and weekly fairs in
metropolitan areas.
20.2 I propose to set up a
Revolving Fund to provide credit against confirmed supply orders from
reputed buyers to promote small craftsmen engaged in the manufacturing
of unique artifacts, home decor, designer fabrics, embroidery work,
pottery and production of items using precious metals. I propose to
restrict the importation of household and office furniture and remove
prevailing restrictions on the transportation of furniture within the
country to encourage the local furniture industry. Hotel and property
developers are encouraged to use locally manufactured furniture to the
maximum extent possible.
21.0 Social Services
21.1
The government has expanded welfare support for the elderly, the
differently abled and low-income families under various initiatives. In
the 2013 Budget, I granted a Rs. 1,000 monthly allowance to the
elderly. Almost 221,000 elderly people have benefited from this scheme. A
Rs. 3,000 living allowance was extended to differently abled people.
Skills development training is given to them through vocational
training to empower them to be engaged in livelihood activities. I
propose to provide Rs. 100 million to modernize these vocational
training schools located all over the country to improve vocational
training facilities, including the provision of new equipment and the
introduction of new courses.
22.0 Child Abuse and Violence Against Women
22.1
Honourable Speaker, it is disappointing to note that our value-based
society nurtured with religion, culture and traditions has to witness
child abuse and violence against women. Sri Lanka Women’s Bureau, Child
Protection Authority and Sri Lanka Police have expanded many
initiatives to prevent these incidents. I propose to allocate Rs.300
million to engage field level officers at Divisional Secretariats to
facilitate to prevent such incidents. It is proposed to set up more
safe-houses for the benefit of such victims and expand the units set up
in police stations to be able to better deal with incidents of child
abuse or violence against women. It is important to expand awareness
programs in schools through parents - teachers societies and by
establishing a network with the involvement of Samurdhi societies
and community based organizations to Address these concerns and also
to promote volunteers to be engaged in family counseling.
23.0 Empowering Pradeshiya Sabhas
23.1 Community infrastructure facilities associated with Sathi polas,
waste management, drainage systems, access roads, children’s parks,
public sanitation facilities etc. have not been improved as Pradeshiya Sabhas have
not generated adequate income to be able to purchase basic machinery
and equipment required to upgrade and maintain them. Hence, I propose
to provide capital equipment such as tractors, small construction tools
and machinery to every Pradeshiya Sabha in 2014. I also propose to provide Rs. 1 million per month to every Pradeshiya Sabha
to supplement their working capital so that community infrastructure
facilities could be maintained and rehabilitated in an orderly manner.
24.0 Wildlife Protection and Conservation
24.1
During Budget consultations, it was revealed that the cultivation of
animal fodder in reserved areas and the rehabilitation of water tanks
and such other facilities are essential to prevent animals from entering
villages. I propose an allocation of Rs. 10 million to each relevant
Divisional Secretariat to develop Wildlife Conservation and Community
Protection Schemes taking into consideration the specific needs of each
such Divisional Secretariat area. I propose to allocate Rs. 200
million to the Wildlife Department to purchase required utility
vehicles and equipment. I also propose to extend the insurance scheme
introduced in the 2013 Budget to compensate losses to human life and
property to cover crop damages as well, from 2014.
25.0 Health Services
25.1
Honourable Speaker, as our people are now confronted with new
challenges with the increase of non-communicable diseases such as
cancer, stroke, heart attacks, kidney failure etc. we need to make a
concerted effort to take control of the situation. Work is already in
progress to transform Maharagama Cancer Hospital to be able to manage
an increased number of indoor and outdoor patients. I also propose to
set up radioiodine treatment and radiotherapy units at Jaffna, Kandy,
Kurunegala, Badulla, Anuradhapura and Galle hospitals to reduce the
waiting list of patients for such treatment at the Maharagama Cancer
Hospital from three and a half years to less than six months. These
modern centers will have facilities for preventive examinations and
early detection as well as cost effective treatment using modern
machinery and equipment. National Stroke Center of Sri Lanka will be
set up to manage stroke related medicare. Facilities to provide
medicare to kidney patients availing sufficient doctors and medicine
will also be provided on an accelerated basis. Preventive care against
kidney diseases will also be taken through the provision of safe
drinking water to all on an urgent basis, through awareness champagnes
to prompt farmers to move away from the use of chemical fertilizer and
pesticides and by promoting the consumption of unprocessed food more
favourable for consumption. I propose to allocate Rs. 900 million to
provide Reverse Osmosis (RO) water purification plants to villages in
the North Central Province in which access to quality pipe borne water
is not available in order to prevent waterborne diseases.
25.2
It has been planned to provide an additional allocation of Rs. 2,000
million in 2014 for the development of cost effective infrastructure
facilities to deal with non- communicable diseases during the 2014 -16
Medium Term Budget Framework. I propose to allocate Rs. 1,000 million
for the accelerated modernization of the two national children’s
hospitals as centers of excellence capable of providing the next 10
year pediatric care needs of our country and the related medical
research facilities. Colombo, Kalubovila and Ragama hospitals cater
daily to around 10,000 outdoor patients and 7,500 indoor patients.
Since a large number of patients from Colombo and the surrounding
districts rely on the services of these hospitals, the facilities in
them should be expanded and modernized. I am encouraged that the
People’s Republic of China has extended an outright grant to develop
the OPD treatment and ancillary facilities of these 3 hospitals at a
cost of around US$ 180 million. I propose to provide additional
provisions in 2014 and 2015 to accommodate this grant aid for the
development of health services in the country. I propose to increase the
annual Uniform Allowance for nurses, family health workers and other
staff by a further Rs. 500 - 1500 and the On-call Duty Allowance for
paramedical staff by Rs. 150 per month to encourage health sector
employees. I also propose to increase the Risk Allowance by Rs. 50 -100
for those in eligible risk categories. When even the richest nations
which charge for healthcare are struggling to finance such services to
their people, we all should be proud for not only providing
pharmaceutical drugs but also indoor and outdoor health care service
throughout the country, completely free of charge.
26.0 Arts and Culture
26.1
Honourable Speaker, with the widespread development witnessed across
regions it is necessary that the Government expands modern
infrastructure facilities for performing arts and culture currently
confined to Colombo. In this context, I have secured a grant aid of
around Rs. 3,000 million to set up two performing arts and cultural
centers in Kandy and Anuradhapura within the 2014-16 medium term budget
framework. Further, steps have been taken to modernize cultural
centers in Jaffna, Trincomalee and Galle. The modernization of the
Lionel Wendt Art Center, Lumbini Theater, and Galle Municipal
Council Theatre will also be commenced in 2014. I propose to channel
budgetary provisions to implement special projects to document our
heritage, culture and traditions and to popularize them among our new
generation.
27.0 Holiday Bungalows for Artists
27.1
1 propose to allocate land blocks and provide seed capital to build 5
holiday bungalows exclusively designed for artists. I request artists
to top-up the Government contribution through a fund raising campaign to
make them enthusiastic partners of this initiative and rally round Sri
Lankan tourism to project country’s performing arts and the film
industry. The performance of our multi talented artists at the opening
ceremony of the Commonwealth Heads of Government Meeting amply
demonstrated their capacity to take the massage of peace and
reconciliation through rich performing arts of our country.
28.0 Education
28.1
Honourable Speaker, the Budget estimates placed before this august
Assembly have provided Rs. 125 billion for general education. Rs. 80
billion is spent on teacher salaries and Rs. 10 billion to provide
textbooks, uniforms, mid day meals and transport subsidies. The
creation of a child-friendly school system, developing Mahindodaya
laboratories, teacher training, quality improvements of text books and
teaching material and the introduction of technology streams to
advanced classes are given priority in the public investment program in
the medium term. The development of 6,000 schools including 1,000 Mahindodaya
laboratories and the rehabilitation of rural schools will be completed
in 2014. An allocation of Rs. 1,000 million will be provided to
upgrade sanitation and other facilities in rural schools. A further Rs.
750 million will be allocated to develop Maharagama Teacher Training
College as a well-equipped training center on all subjects, while
facilities in all other teacher training colleges in the country will
also be upgraded. Furthermore, steps will be taken to implement the
recommendations of the committee appointed to resolve the remaining
problems of Sri Lanka Teachers Service, Sri Lanka Principals Service,
Sri Lanka Educationists Service and Sri Lanka Education Administrative
Service and to improve the quality of education.
29.0 Pirivena Education
29.1 The 2014 -16 Medium Term Pirivena Education Strategy aims at raising the student population associated with Pirivena education by 25 percent by 2016. Towards achieving this target, the teacher participation in Pirivena education also needs to be increased by 25 percent. I propose to provide Rs. 500,000 to each Pirivena to improve classrooms, libraries, computer labs, furniture and equipment in order to upgrade Pirivena education facilities. I also propose to extend facilities such as distress loans, property loans, the Agrahara Insurance Scheme benefits and railway warrants to Pirivena
teachers. Similarly, I propose to increase the Student Allowance for
monks to Rs. 15 per day and other students to Rs. 5 per day.
30.0 Skills Education
30.1
Honourable Speaker, our country needs to implement a fast-track skills
development program to meet market demands by gearing our youth to be
able to secure high paid jobs and also to improve productivity in
industries and services in the next decade. The Government has therefore
secured around US$ 350 million budget support from the World Bank and
the Asian Development Bank to supplement Government expenditure on
skills education. Accordingly, expenditure on skills development and
youth affairs has been increased to Rs. 12,105 million in 2014 to be
shared with external funding facilities to accelerate skills education
in the country in the next 2 years. A diploma awarding Technical
College that is affiliated to the Moratuwa University will be setup in
Homagama.
30.2 The 2014 - 2020 Vocational
Education Strategy consists of rehabilitation and construction of
Technical Colleges and Vocational Training Centers, development of
training material and the provision of equipment, staff training and
professional development. These program will target extending technical
competencies in agriculture, IT, accounting, irrigation, construction,
ship and boat building, ocean technology, tourism, beauty care and high
tech competencies required for overseas skilled employment I propose
to increase the allowances given to lecturers and students to
incentivize skills education and increase Diploma Holders with National
Vocational Qualification (NVQ) Standards. The aim of skills education
is to develop 50,000 diploma holders and 50,000 certificate holders in
different skills with NVQ Standards by 2015.
31.0 University Housing, Townships & Facilities for Advanced Studies and Research
31.1
Honourable Speaker, our universities have implemented a program to
transform our university township environment to facilitate to upgrade
the university education of our country. We have given high priority to
resolve accommodation constraints of our university students. We have
implemented a hostel construction program in 15 universities for 15,000
students at a cost of Rs. 15,000 million. This will completely solve
the accommodation problems of first year and final year university
students. Incentives will be provided to those who provide further
accommodation facilities from the surrounding university township
environment. I propose to increase the Academic Allowance of university
lecturers by 5 percent of the basic salary in accordance with our
commitment to provide attractive remuneration over the medium term.
31.2
The medium term development programs include the establishment of an
Engineering and Technology Faculty in the Sri Jayewardenepura
University, Information Technology Center in the Kelaniya University,
an Advanced Medical Faculty in the Peradeniya University and an
Electronics, Petroleum and Aeronautical Engineering Faculty in the
Moratuwa University. The capacity expansion of management, food
technology, veterinary science and agriculture faculties of Colombo,
Wayamba, Jaffna, Rajarata, Eastern, Uvawellassa, Sabaragamuwa and
Ruhuna universities and the expansion of advanced degrees in indigenous
medicine and Ayurvedic teaching hospitals are also recognized as
priorities of the medium term. Along with these, the planned
improvements in the quality of higher education are expected to require
an estimated additional sum of Rs. 9,000 million over the medium term. I
propose to top up the 2014 allocations by 2,000 million to accelerate
these initiatives.
32.0 Sri Lanka as a Regional Medical Hub
32.1
Honourable Speaker, we have increased the number of medical
specialists to 1,500 through an increase in the number of doctors and
medical researchers with postgraduate qualifications. Our strategy is
to double the number, so that every 100,000 of the population will have
11 Specialist Doctors. This will provide 15,000 more doctors
graduating from medical schools, with postgraduate opportunities. It
will also enable a higher number of specialist doctors to be deployed
to District Hospitals and to be attached to private hospitals.
32.2
The Ministry of Health has formulated a National Drug Policy Act for
the regulation of drug use, clinical trials and research activities in
specialized hospitals. Time has also come to recognize the urgent need
for a proper Regulatory setup on food quality. Parallel to these
developments, we propose to expand the subject areas of the Postgraduate
Institute of Medicine, and to double the intake for postgraduate
studies in medicine. I propose an allocation of Rs. 2,500 million to
build a state-of-the-art Post Graduate Institute of Medicine over the
next 3 years. This new Post Graduate Institute will connect
neighbouring teaching hospitals, while also extending modern facilities
required for their postgraduate research and advanced studies. I also
proposed to setup a Centre of Medical Excellence to continue to obtain
the services of specialized medical professionals after the completion
of their service term and to broaden specialized medical services in
our country.
32.3 I propose to give priority to
increase medical specialists capable of treating kidney ailments,
malnutrition and similar contemporary challenges in our society. The
Government will seek international research and technology
collaboration for our universities focused towards improving the
quality of drinking water, particularly in rural areas. I also propose
to grant a monthly Intern Allowance of Rs.750 for medical interns
engaged in hospital services and a Research Allowance for medical
professionals to encourage them to engage in internationally recognized
research and professional development initiatives.
33.0 Professional Services Hub
33.1
Honourable Speaker, our country has made unprecedented progress in the
field of accountancy, commerce, finance, law, IT, engineering and
architecture. The number of people engaged in these professions has
increased considerably. Therefore, I propose to support internationally
reputed professional institutes to expand such professional and
technical programs at provincial level to increase the number of
qualified professionals and technical assistants in our country. I
encourage the formation of corporate entities to be engaged in Business
Process Outsourcing in human resource management, finance and
accounting, law and procurement etc. and deliver high quality services
to global customers. A 5-year half tax holiday will be given to promote
the formation of such new partnerships or firms to be engaged in
international