YAHAPALANA AND THE ECONOMY Part 3
Posted on July 9th, 2017

KAMALIKA PIERIS

Yahapalana has put in place many measures to impoverish the public. This is a planned move to break the spirit of the nation. Welfare benefits have been removed.   Yahapalana has stopped the fertilizer subsidy, free school uniforms, elders and disabled benefits, observed Chandraprema.   Construction projects started by the earlier government have been stopped resulting in loss of jobs. Due to the stoppage of the Port city 5000 jobs were affected in 2016. In 2016, it was decided to extract rural people’s savings by amalgamating cooperative and rural banks. There is now a move to tax EPF at an unprecedented 28%,  14 % on EPF income and 14% withholding tax. Private sector workers were solely dependent on their EPF after retirement.  There is also a move to amalgamate EPF and ETF funds. Private pension schemes have also been proposed.

Yahapalana supports the issuing of loans and expanding micro credit. It plans to entrench loans and financing in every aspect of people’s daily lives, complained critics.  Yahapalana has tightened up on loans. Yahapalana   plans to expand the draconian Debt Recoveries Act. The provision of giving loans to EPF members for housing projects was withdrawn by Ravi Karunanayake, Finance Minister, saying that the EPF members would get a depleted amount when they retire.  Poor families which were given Rs 2,500 each to improve their houses by President Rajapakse have been ordered to repay the money. The money given to Samurdhi beneficiaries during the 2015 Presidential election of 2015 has been recalled. This was a loan said Yahapalana,   it must be repaid. Samurdhi funds have decreased and they have to recover this money.

Yahapalana is crushing small enterprises in several ways.  Under the guise of social concern, school canteens and wayside caterers will be inspected by the Health Ministry. Reports will be called every two weeks from the wayside stalls which cater to bus passengers.  Legal action will be taken under the relevant laws. The fine for long distance buses plying without valid permits has been increased from Rs.10,000  to Rs.200,000.  Mannar- Colombo luxury bus  was stopped for overloading and fined 30,000 in March 2017.  The driver, conductor and passengers objected. Other buses also joined and the protest lasted over three hours. The driver told  Derana television,  he  is unable to work as a farmer, now. If  ‘ this is also stopped’ what is he to do? The government must introduce more buses.

Small businesses have been hit hard by the policies adopted by this government, said critics. Micro enterprises account for 91.8% of the total business establishments in the island and employ 44.6% of the total labor force.  The tax on vehicles has made it difficult, if not impossible, for the small business man to buy a vehicle. The tax of Rs 1 million imposed on the import of vehicles, in 2017,   increased the duty threefold.  The selling price of mini trucks jumped from Rs 1 million to around Rs 1.8 million. The loan-to-value  ratio on a three-wheeler was capped at 25%, making the initial down payment jump from Rs 200,000 to Rs 485,000. Mini trucks and three-wheelers were among the worst hit. The purchase of mini trucks, crashed to 298 from around 1,400 units a month, and three-wheeler registrations crashed from around 6,000 a month to 900 in February 2017.

Mini trucks and three-wheelers were mainly used by micro enterprises like small retail stores, garages and bakeries. The worst affected were micro enterprises of less than 5 people, observed Murtaza Jafferjee. It is they who use a basic utilitarian vehicle like a three-wheeler or mini truck. A baker who has access to a mobile retailing unit through a modified three-wheeler or mini truck enjoys much greater sales, carrying and displaying capacity is greater, radius of travel is 10 times more.  The alternator can charge the battery that can power a fan or food warmer. A tradesman can fit out a truck as a mobile workshop permitting him to carry a larger range of tools, spares, material for the job, and power his electrical tools, he said. A farmer growing vegetables can carry his product to the wholesale market before spoilage. Making mini trucks unaffordable prevented these persons from rising economically. Also the individual who bought a truck before the budget was significantly better off than one who did not.

The goal should be to increase the output of the butcher, the baker, the plumber, the shop keeper, the farmer. Even in the most advanced of economies,   the majority of the population is in low productivity manufacturing and service jobs, said an observer who seemed unaware of the real motive of Yahapalana  Large businesses are provided with concessions and tax holidays in 2017 budget  but it has no help for farmers, fishermen and small enterprise owners, concluded Jafferjee.

Government is offering financial support under Swashakthi, for startups, as part of the one million jobs programme. The offer is a  mere 2 lakhs at 5.5.% and an additional Rs 10,000. The businesses selected are small time domestic ones, fruit and vegetable procession, plant and nursery development,  dairy, poultry, aquaculture, beauty culture, motor cycle repairs, electrical  repairs landscaping.    Garments, welding, concrete work, leather, painting, masonry and carpentry,  gem cutting are also included.

However, Yahapalana is not  deeply interested in supporting local industries. Prime Minister Ranil Wickremasinghe only speaks of foreign factories, not local enterprises.      BOI Chairman Upul Jayasuriya, had, it appears,  had ‘run down’ Sri Lanka’s only car assembly company Micro and its  Chairman Dr. Lawrence Perera in an interview with the press. This is a very sad stance taken by the BOI Chairman,”  said  the Ceylon Motor Trader’s Association. Why was the government offering concessions to a new second hand car assembly plant without promoting Micro.

Lanka Confectionary manufacturers Association issue a press release stating their difficulties. Our products are good. We export to over 55 countries. We employ over 50,000 direct and 500,00  in indirect employment. Government has  increased the import levies of confectionery fats from 60% to 160% in its 2016 Budget.. This increases  the cost and price and will also  lead to a reduction in the small pack sizes. Cheap, inferior import will now  flood the market, they said.

Small and medium industries are badly affected by Yahapalana. In 2017, the government  increased the salaries of workers  by Rs. 2,500  with a grace period of two years. Factories having over 800 workers will face inevitable closure if this salary increase is granted, said critics.  In addition the factories  have to pay VAT at 15%,  this was not imposed on the exporters earlier. These taxes are for local factories, not for  factories that foreigners will bring in, critics observed.

Yahapalana loves foreigners. In 2015, Yahapalana Government  removed taxes on leasing of land to  foreigners and removed all restrictions on ownership of investments.  Critics observe that this will help small and medium Indian companies to get entrenched in Sri Lanka and to eventually force out the local small and medium industries from the      competition, using the concessions provided by the  2015 budget.  The 2017 Budget offered Five year multiple visas    to foreign investors and their labor.  Tax concessions and visa  extensions would be offered to those who invest over USD 1.5 million. This would help attract more foreign investments and create employment, said Yahapalana .

In 2017, Yahapalana government will pass a  ‘Special Deposit Account Act.’ A foreign national who maintains a deposit account  of USD 500,000  will be eligible to obtain residency visa up to a period of 10 years. The spouse and the minor children are also eligible for the residency visas. The  equivalent amount could be deposited in other foreign currencies such as  Australian, Singapore, Canadian, Euro, British, Japanese  or Swiss . A  foreign national who makes such a deposit  can also use it for investment in Sri Lanka. The Bill  is silent  on the authority that will  monitor  such investments, observed critics. (Continued)

4 Responses to “YAHAPALANA AND THE ECONOMY Part 3”

  1. Fran Diaz Says:

    Kamalika,
    Our grateful Thanks for your efforts here to expose the truth.

    ———

    Seems to us that Yahap is on a fast track toward a Fascist style “Crash & Sell” program ?

    Who benefits ? Certainly not the local entrepreneur or the People of Lanka.

  2. Cerberus Says:

    RW follows the script from failed pure capitalist ideas from the International powers. Most of Europe including U.K follow Socialist Systems of Governance. RW after losing elections 29 times keeps coming like the Terminator in the film. Both Ranil and CBK are like the walking dead in the film Zombies since their hearts are dead. The body and head keep going on a set program.

    We need to measure the success of the economy by PQLI (Physical Quality of Life Index which is a composite number to measure Life expectancy, literacy, infant mortality etc). Not by GDP. The only solution is for all the good well-meaning people in the country, the intellectuals, the workers, the priests and the forces to rise up against this life defeating systems and bring lasting change and prosperity for the ordinary people not the few at the top.

    Sri Lanka is the Socialist Republic. Not a Capitalist Paradise for vermin from abroad to creep in and spoil our land and culture. The purely Capitalist countries have destroyed their countries and parts of the world and are now looking for new fresh lands to conquer and plunder and rape.

  3. Hiranthe Says:

    Cerberus,

    Fantastic… no doubt, he is the Terminator coming to get Mother Lanka… In his form, you get all forces waiting to destroy Mother Lanka. CIA, RAW, LieTTE, Norway, France, UK, Canada, Tamilnadu, Qatar, Vatican, South Africa…. and what not??

    We need to find our John Conner to get rid of all the forms of this Terminator…

  4. RohanJay Says:

    Hiranthe if only real life mirrored the plots and happy endings of famous and very popular American movies from the 1980s.

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