Major changes in upcoming budget

[BackstageTop contributor]

Major changes in upcoming budget
2015-10-21

Taxes to broad base and simplify
Banking sector will be shaken up
Protectionist sectors to be opened for foreigners
New electronic system to monitor all transactions


By Chandeepa Wettasinghe
The upcoming budget in November will include major revisions to the entire existing economic system, the country’s Finance Minister said this week.

“We will have a very simple system going on. It will give new thinking to the process,” Ravi Karunanayake said at the ‘Sri Lanka 2020: Potential for Investment’ forum organized by the Ceylon Chamber of Commerce’s Malaysia Business Council.

He said that the taxes will be simplified and broad based to increase government revenue.

Taxes in 2014 amounted to Rs.1.05 trillion or 10.7 percent of the gross domestic product (GDP), falling from 11.6 percent in 2013. Advanced economies get around 36 percent of their revenue through taxes.

“At this particular moment, there are many people calling and asking ‘will that tax go off and will this tax come on?’ Yes, many will go off, some will come in. But that some will bring in more than the many that was there before,” Karunanayake said.

He noted that capital expenditure will be made in a responsible manner to derive income in the future, while re-strategizing failed investments of the past regime.

He added that the banking sector will be subjected to vast changes, but that this will not be done through repressive legislation but through friendly requests to ensure a business friendly environment.

“There will be unbelievable changes. The banking sector is one, which has been shielded constitutionally. They are a protected species. They must be made to play the role; to bank. To ensure that they take the risk and not pull out the umbrella only when the sun is shining,”

he said.

Karunananyake said that bankers should assist in the country’s development instead of just private sector balance sheet development.
He mentioned that industries, which were closed off for foreigners through various mechanisms will be removed as well.

“Even what is restricted now will be opened up,” he said.

He added that targeted subsidies will be provided to the agriculture sector to facilitate commercialization of the process, and that foreigners could look at investing there for fair returns. Currently 30 percent of the labour force is in agriculture contributing just 10 percent to GDP.

“Agriculture needs to be taken from 10 percent to around 14 percent through commercialization,” he said.

He added that the restricted land laws will be reviewed, with investors who bring in investments above a certain limit being granted freehold land.
Karunanayake added that the customs operations will be made convenient through a ‘single door’ operation with advanced scanning facilities in April 2016.

[Hybrid]

Major changes in upcoming budget
2015-10-21

    Taxes to broad base and simplify
    Banking sector will be shaken up
    Protectionist sectors to be opened for foreigners
    New electronic system to monitor all transactions

The upcoming budget in November will include major revisions to the entire existing economic system, the country’s Finance Minister said this week.


He said that the taxes will be simplified and broad based to increase government revenue.


He added that the banking sector will be subjected to vast changes, but that this will not be done through repressive legislation but through friendly requests to ensure a business friendly environment.

.

How to mitigate the risk of the new fiscal budget 2016?

- Watch out for your other sources of income
- Introduction of an increased VAT % from 12 to maybe 20 percent.
- Public Servants will also be taxed basis the private sector!
- CRIB to be used in a more meaningful way
- Professionals please invest your earnings in other sectors other than banking , CSE and Appartments.

[කිත්සිරි ද සිල්වාTop contributor]

Thanks Back.
Dreaming is not a crime but not achieving them is.
Words are hollow unless they are turned into deeds.
Let's give them a chance too (as we gave the biggest Looter and company a decade to bleed us almost to death).

[Future123Active Member]

Bad for the banking sector. There can be more taxes or compulsory lending to rural areas without any security.

Bad for protective sectors such as tiles and aluminium. Foreigners will be able to invest in tile factories. Bad for LWL, PARQ, TILE and RCL.

“There will be unbelievable changes. The banking sector is one, which has been shielded constitutionally. They are a protected species. They must be made to play the role; to bank. To ensure that they take the risk and not pull out the umbrella only when the sun is shining,”

"He mentioned that industries, which were closed off for foreigners through various mechanisms will be removed as well.

“Even what is restricted now will be opened up,” he said."

[mymoney]

Bad for the banking sector. There can be more taxes or compulsory lending to rural areas without any security.

Bad for protective sectors such as tiles and aluminium. Foreigners will be able to invest in tile factories. Bad for LWL, PARQ, TILE and RCL.

“There will be unbelievable changes. The banking sector is one, which has been shielded constitutionally. They are a protected species. They must be made to play the role; to bank. To ensure that they take the risk and not pull out the umbrella only when the sun is shining,”

"He mentioned that industries, which were closed off for foreigners through various mechanisms will be removed as well.

“Even what is restricted now will be opened up,” he said."

" />

[yellow knifeTop contributor]

Bad for the banking sector. There can be more taxes or compulsory lending to rural areas without any security.

Bad for protective sectors such as tiles and aluminium. Foreigners will be able to invest in tile factories. Bad for LWL, PARQ, TILE and RCL.

“There will be unbelievable changes. The banking sector is one, which has been shielded constitutionally. They are a protected species. They must be made to play the role; to bank. To ensure that they take the risk and not pull out the umbrella only when the sun is shining,”

"He mentioned that industries, which were closed off for foreigners through various mechanisms will be removed as well.

“Even what is restricted now will be opened up,” he said."

" />

This Yahapalana will leave the country one day after destroying Sri Lankan Manufacturing sector.

When JRJ took power it was a country where a bomb was not blasted during last five years ( yes we had 1971 insurrection ).

There were many Local manufacturers in steel, paper, dairy, etc.


But when JRJ handed over the country back it was a pond of blood oozing ... It was a play ground of MNCs..


So it is not surprising to see the attempt to re-do JRJ

[Market loverTop contributor]

So what you all saying is I'm not going to see the major bull run in my lifetime

[yellow knifeTop contributor]

Market Lover

get the best of the foolish government... Upto now Exporters are good... FMCG is upto now good..These gave super gains...

When foolish economist press one end of the balloon the other end inflate... find the areas the foolish economist press and see the reaction before and buy at bargain...

[HAL9000Top contributor]

In contrary to the political based pessimistic ideas of people like yellow knife and Future123, Things in the economic and investment front is getting more and more improving.
I'll give one example and few links
I think many of us remember after the post war euphoria period SL reported GDP growth rate 8 % for 2 consecutive years. Then some foreign investors showed interest specially in leisure sector. Shangri-La(China/Hong Kong based and Krish (India based) large projects were initiated, but later in the 2012 SL showing signs of becoming the next Libya with CJ sending home, Political bureaucracy, rottened foreign policy etc. those 2 investment firms went in to back foot giving various odd reasons as no one going to invest in next Libya. In last few years we failed to achieve our peanut FDI goals when countries like Vietnam getting FDIs of more than $ 8-10 billion.

However after the change in 2015 January 8, things are getting better, both of those projects re starting as signs of becoming Libya is fading away and move towards the next stage of development obviously with many challenges



In 2013 - http://www.sundaytimes.lk/130825/business-times/shangri-la-hotel-project-at-a-standstill-58702.html

In 2015- http://www.economynext.com/Shangri_La_starts_selling_Sri_Lanka_luxury_apartments-3-1896-4.html

http://www.sundaytimes.lk/151018/business-times/krrish-to-break-ground-for-mixed-development-project-soon-167930.html

http://www.lankabusinessonline.com/sri-lankas-vallibel-one-to-go-ahead-with-usd60mn-integrated-resort-project/


It is showed that investor confidence is all time high, with  improvement in areas like foreign policy, law and order etc.
Below are few links to get an idea for those who are receptive enough to accept the developing trends.

http://www.ft.lk/article/481043/Business-confidence-at-an-all-time-high--LMD

http://www.lankabusinessonline.com/sri-lanka-has-usd5-bn-fdi-in-pipeline-bois-upul-jayasuriya/

http://www.lankabusinessonline.com/germanys-bosch-commences-operations-in-sri-lanka-eyes-construction-boom/

http://www.lankabusinessonline.com/sri-lanka-boi-chief-says-land-policy-for-foreigners-will-be-corrected/



Implementation of law and order is a very important factor for a civilized state. Investments and sustainable development takes place in countries with law and order and not in countries like Libya

Expropriation bill-2012 Stupidity at best. Many local and foreign investors halted their investments after this act, actually the start of investment downfall
http://www.sundaytimes.lk/111120/BusinessTimes/bt07.html

Before 2015-
https://www.youtube.com/watch?v=Ewtbl7vo-78
https://www.youtube.com/watch?v=Z1Vr_x5eNvI - Behind the seen stories of disgraceful impeachment- Drunken henchmen at play

The fate of policemen who did his job
http://www.vivalanka.com/newspage/678734ai-police-constable-threatened-govt-politician-resigns

After 2015- http://www.dailymirror.lk/91817/remand


Another example related to CSE is Citrus Kalpitiya Saga, Those fellows played game hiding behind their political masters. Now at least the were warned and had to provide an alternative plan. A good lesson for future players like them.

About state owned enterprises- http://www.lankabusinessonline.com/srilankan-a-corrupted-airline-without-any-aircrafts-as-assets-pm/#comment-2362



Having said all above, There are many things that we can not be happy as well, but certainly plenty of things that we can be happy.

[mymoney]

Major changes in upcoming budget
2015-10-21

    Taxes to broad base and simplify
    Banking sector will be shaken up
    Protectionist sectors to be opened for foreigners
    New electronic system to monitor all transactions


By Chandeepa Wettasinghe
The upcoming budget in November will include major revisions to the entire existing economic system, the country’s Finance Minister said this week.

“We will have a very simple system going on. It will give new thinking to the process,” Ravi Karunanayake said at the ‘Sri Lanka 2020: Potential for Investment’ forum organized by the Ceylon Chamber of Commerce’s Malaysia Business Council.

He said that the taxes will be simplified and broad based to increase government revenue.

Taxes in 2014 amounted to Rs.1.05 trillion or 10.7 percent of the gross domestic product (GDP), falling from 11.6 percent in 2013. Advanced economies get around 36 percent of their revenue through taxes.

“At this particular moment, there are many people calling and asking ‘will that tax go off and will this tax come on?’ Yes, many will go off, some will come in. But that some will bring in more than the many that was there before,” Karunanayake said.

He noted that capital expenditure will be made in a responsible manner to derive income in the future, while re-strategizing failed investments of the past regime.

He added that the banking sector will be subjected to vast changes, but that this will not be done through repressive legislation but through friendly requests to ensure a business friendly environment.

“There will be unbelievable changes. The banking sector is one, which has been shielded constitutionally. They are a protected species. They must be made to play the role; to bank. To ensure that they take the risk and not pull out the umbrella only when the sun is shining,”

he said.

Karunananyake said that bankers should assist in the country’s development instead of just private sector balance sheet development.
He mentioned that industries, which were closed off for foreigners through various mechanisms will be removed as well.

“Even what is restricted now will be opened up,” he said.

He added that targeted subsidies will be provided to the agriculture sector to facilitate commercialization of the process, and that foreigners could look at investing there for fair returns. Currently 30 percent of the labour force is in agriculture contributing just 10 percent to GDP.

“Agriculture needs to be taken from 10 percent to around 14 percent through commercialization,” he said.

He added that the restricted land laws will be reviewed, with investors who bring in investments above a certain limit being granted freehold land.
Karunanayake added that the customs operations will be made convenient through a ‘single door’ operation with advanced scanning facilities in April 2016.

By reading this article, How do we say upcoming budget is so... bad for the investors ?

[HAL9000Top contributor]

By reading this article, How do we say upcoming budget is so... bad for the investors ?

Goebbels theory in action by Future 123

[කිත්සිරි ද සිල්වාTop contributor]

As I said before, let's give them a chance too (as we gave the biggest Looter and company a decade to bleed us almost to death).
But I am not so hopeful because NATO boys have no vision to take us to the next level.
They are only capable of coping things from some other places and try to implement them lock stock and barrel without considering the local customs, conditions etc.
Vengefulness signs shown in almost every action is killing most of the support they had before as well.  

[Future123Active Member]

As I said before, let's give them a chance too (as we gave the biggest Looter and company a decade to bleed us almost to death).
But I am not so hopeful because NATO boys have no vision to take us to the next level.
They are only capable of coping things from some other places and try to implement them lock stock and barrel without considering the local customs, conditions etc.
Vengefulness signs shown in almost every action is killing most of the support they had before as well.  

True that previous regime looted. The war victory made them think that they are the kings and that's why they lost the election. But at the same time they won the unwinnable war and developed the country. They certainly had a vision and Colombo was just turning to be a beautiful city. Small to big businesses were doing well and they did not have to impose unfair revengeful huge taxes on the businesses.

Even during the war period we didn't have these unfair taxes. Local businesses were given priority over the foreigners. ASPI appreciated from less than 1000 points to 7600 points within 5 years. If you analyze the ASPI, the best period was from 2009 to 2014. Everyone of us definitely made huge gains.

More than anything they gave us a country without war and bombs. That's the basic foundation for everything. If they hadn't done that, still we will be living in fear of bombs. Are we too ungrateful to forget the past?

[AdminAdmin]

Please stick to the budget and not go into politics.

Thank you

[Future123Active Member]

So what you all saying is I'm not going to see the major bull run in my lifetime

Market lover, don't worry for anything. CSE is full of opportunities. You can have many bull runs in your portfolio if you play intelligently. Though the entire market was red in September I had a super September. October is also good so far.

You don't necessarily need a bull market to gain. As you know this government is unfortunately very much anti investor friendly government and they are angry with many businesses. The ASPI came down from 7600 to 7000 during this period. They don't like big local businesses. Ranil and Ravi openly said this many times. Eg: JKH, Dialog and bluechips, big hotels and banks. Therefore, please avoid them.


Unfortunately, RW and RK don't like CSE too and they will create lots of policies to damage CSE but there will be a loophole as Yellow knife said. You have to be tuned 360 degrees and just grab every opportunity. They will create some opportunity unknowingly.

At present the government is against 90% of the CSE listed companies but 10% you need to find and invest. You have to be bit patient to get amazing returns.
Eg: Look at REXP. What a return within 3 months. Almost 50% return. Where on earth you can get like this?

Secondly, you will have to monitor the political and economic developments continuously. Eg 1: BFL is very good at present conditions and the next quarter also they will report amazing profits. If maize prices go up rapidly or chicken prices come down you will have to re-assess the situation
Eg2: ACL and APLA are expected to report excellent profit for 2nd Quarter since rubber and copper prices are cheap. When copper goes up or rupee depreciates heavily you will have to re-assess.

RW and RK don't like local businesses making good profits and that's why RK said banks are giving importance in having healthy balance sheets. You get a clue from that and avoid banks until budget. That means banks will be punished for making big profits.

Before investing in any share just ask a question. Whether RK and RW like that company? Will they destroy that company or industry? If the answer is yes forget about that. This is what I do now.

[yellow knifeTop contributor]

First of all I thank Hal for balancing the discussion and Admin for re-directing to the topic.

Whatever happens to overall economy there are many counters that will pay for investing...

[HAL9000Top contributor]

.  
[/size]

True that previous regime looted. The war victory made them think that they are the kings and that's why they lost the election. But at the same time they won the unwinnable war and developed the country. They certainly had a vision and Colombo was just turning to be a beautiful city. Small to big businesses were doing well and they did not have to impose unfair revengeful huge taxes on the businesses.

Even during the war period we didn't have these unfair taxes. Local businesses were given priority over the foreigners. ASPI appreciated from less than 1000 points to 7600 points within 5 years. If you analyze the ASPI, the best period was from 2009 to 2014. Everyone of us definitely made huge gains.

More than anything they gave us a country without war and bombs. That's the basic foundation for everything. If they hadn't done that, still we will be living in fear of bombs. Are we too ungrateful to forget the past?

KOHEDA YANNE ? MALLE POL !

[yellow knifeTop contributor]

Being an investor this is what I find interesting.

Many companies performance was raised a slab high as a result of ending war. Many historical data analysis prove that. Many Sri Lankan manufacturers, food and beverage sector, construction sector, finance, vehicles all got the benefit.

For the last ten months no direction and and economic interval.

Getting export oriented shares up was not a result of deliberation by an accident of sheer economic mis-management since Jan 2015.

What we need now is not economic intervals but a programme to raise the performance another slab high.

Following is to highlight what I say. However when I talked about individual shares I rarely touch politics. Since the thread itself is political oriented let me submit this chart from Hari.N to highlight my thinking.

[yellow knifeTop contributor]

Pre and post war era on another share's performance.. PLC.N

[yellow knifeTop contributor]

This represent the performance increased by a slab in Tangerine Hotel.

[yellow knifeTop contributor]

Same Story with HDFC bank

[yellow knifeTop contributor]

Above performance of Hotel, Housing, Leasing, and FMCG all prove that after ending war the economic decisions like lowering lending rate, lowering inflation, and safeguarding local entreprenuer gave results.

At the moment we all hope another slab higher in economic performance. I am not a believer in FDIs but local strength (let me continue with S.Korea and Malaysia and other country analysis) .

What I state is that upcoming budget should provide and economic direction.

[yaka]

YK I respect the way you think...

HAL have suffered with a conflict of interest and have always taken wrong decisions....

https://en.wikipedia.org/wiki/HAL_9000

[yellow knifeTop contributor]

Well Yaka

If all of us think in the same pattern , then nothing innovative will happen

I sometimes pause and rethink when I have to face resistance like the statements from Hal above.

I am thankful for Hal, Jiggy and many others when they force me to think otherwise...

If we cant  tolerate opposite views , if we want no challenges to the way we think this forum will be just one way traffic..

[HAL9000Top contributor]

YK I respect the way you think...

HAL have suffered with a conflict of interest and have always taken wrong decisions....

https://en.wikipedia.org/wiki/HAL_9000