{"id":109374,"date":"2020-12-05T16:31:13","date_gmt":"2020-12-05T23:31:13","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=109374"},"modified":"2020-12-05T16:31:13","modified_gmt":"2020-12-05T23:31:13","slug":"jvps-myopic-budget-criticisms-trashed-part-ii","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/12\/05\/jvps-myopic-budget-criticisms-trashed-part-ii\/","title":{"rendered":"JVP\u2019s myopic Budget criticisms trashed \u2013 Part II"},"content":{"rendered":"

By : A.A.M.NIZAM – MATARA<\/strong><\/em><\/span><\/h2>\n\n\n

Despite arrogant and nincompoop JVP leader the alleged Goni-Billa and Ranil\/Sajith\u2019s dhobi and stooge and his cohorts\u2019 myopic criticisms of 2021 budget and thereby displaying their impotent nature on budgets and financial matters the government has received many accolades from business magnates and professionals in the IT and digital field nd have expressed their commitment and capability and willingness to achieve the anticipated goals of the Budget.\u00a0 Their valid views and opinions continue:<\/p>\n\n\n\n

Before proceeding further, I would like to divert attention to the matter confirming that dispelling the denial made by Anura Kumara Dissanayak(AKD) about being a member of the committee guiding the FCID unit to institute political victimization, parliamentarian Mohammed Muzammil presented the approved Cabinet Paper submitted by Ranil Wickremasinghe on 21st<\/sup> January, 2015 naming alleged Goni Billa AKD as a member of the said committee.\u00a0 MP Vijitha Herath who participated in the relevant Hiru TV programme remained (bakam nilaagene) silent without any comment.\u00a0 Text of the relevant Cabinet Paper will be included in the book Ravages of 2015\u201d being written by me in the Chapter relating to JVP servility to Yamapalana. <\/p>\n\n\n\n

Hayleys Group Executive Director Sarath Ganegoda pointed out that there is still significant potential even in traditional sectors and room for growth across all sectors of business. He said exports have fared well despite the challenges of COVID-19 are fuelling sectors such as hospitality which have been greatly impacted. There is a global shift in supply chains and as people look at new destinations for manufacturing, Sri Lanka must take advantage of them, he added.\u00a0

However, there are a few impediments, especially for manufacturing facilities outside zones due to the lack of a comprehensive plan by authorities, he noted. As a result, Hayleys has decided going forward all its manufacturing operations will be restricted to industrial zones. But there is a lack of facilities with adequate water supplies and affluent treatment and disposal, he pointed out, with Katunayake and Biyagama the only areas with adequate industrial water and treatments facilities. We are addressing all these with authorities, and I hope these could be fast tracked. We welcome the low interest rate regime and these are encouraging for investments,\u201d he noted.\u00a0

Ganegoda also remarked on the need to enhance export credit insurance, as what was said in the Budget is very vague. It\u2019s a thorny issue,\u201d he said and with new customers around the globe it becomes increasingly difficult and these must be removed.\u00a0<\/p>\n\n\n\n

Commenting on the Government\u2019s proposal to increase\nwages of estate workers to Rs. 1,000 a day, Ganegoda averred: I don\u2019t see a\ngap between what Government wants to achieve and what we want. We are more than\nhappy to do so, and they should earn more than Rs. 1,000 in today\u2019s context. If\nwe are talking about getting out of this middle-income trap and all that, what\nis this $ 5.5 a day and they should earn more? The issue is not that. The issue\nis cost per kilogramme for the industry. We will have to balance this. We will\nsupport the Government; we will talk to them and we will have to find a\nmechanism to balance both sides and have a win-win. If you look at\nproductivity, Sri Lanka is 18kg per plucker per day, whereas Kenya is 60kg and\nIndia is 36kg per day. So, if you could agree on a mechanism to drive\nproductivity and if you focus from our side on cost per kilogramme for plucked\nleaves, even if they were to get Rs. 2,000 we have no qualm and they should\nearn that. Without reaching productivity and you just make it a wage, then\nthere are problems.\u201d <\/p>\n\n\n\n

Budget\nbenefits through ICTs<\/strong><\/p>\n\n\n\n

T<\/strong>his\nGovernment places great emphasis on technology, specifically on Information and\nCommunication Technology (ICT). Amidst the Budget debate, a new Ministry of\nTechnology grouping together ICT related agencies and companies was created\nwith the President as Minister. The Secretary has yet to be named but the\nnewly-absolved Senior Advisor to the President, Lalith Weeratunga, is likely to\nplay a significant role. 
\n
\nA budget speech is an important indicator of Government priorities. Talk is\ncheap, but talk backed up by financial commitment is less cheap. That is why\nbudgets are taken seriously. 
\n
\nWhat are the likely benefits from the perspective of the people? What\ninvestments will be made, and what barriers will be removed by the Government\nto facilitate greater access to ICTs? What taxes will be raised from ICT\nservices used by the people and from companies in the sector? What jobs will be\ncreated in the software and IT enabled services sector? <\/p>\n\n\n\n

According to the Sinhala version of the speech, Rs. 15\nmillion from the Telecommunication Development Fund (TDF) is to be spent on\npushing out coverage of 4G and fibre. When we last looked, the TDF had Rs. 69\nbillion unspent (this was for 2015 and money kept being collected and not\nspent; so, the total is likely to be higher). Was the Government committing a\nmaximum of 0.02% of money collected from incoming and outgoing international\ncalls and lying unspent? 
\no, the English version was checked. It appears the actual amount may be Rs. 15\nbillion; the Sinhala version may be a typo. Even that is a maximum of 21% of\nfunds lying fallow. But because they have made it complicated, starting with a\nlow number is good. Half the money must be spent on local suppliers; import\nrestrictions are in place making quick deployment of vital equipment that is\nnot locally manufactured unlikely. If half the money is spent within a year, it\nwill be praiseworthy.<\/p>\n\n\n\n

The Budget speech commits to helping timely\nconstruction of towers and the laying of cables. This proposal is far superior\nto the (luckily unimplemented) proposals in previous budgets which imposed\npunitive taxes on towers and proposed all sorts of complicated structures for\nbuilding and managing towers. <\/p>\n\n\n\n

Because most land in this country is owned by the\nState, it is a good thing to make them available for telecom operators. One\nonly hopes that the proposal will be implemented and that we will not be\ntalking about this in the future tense next year.<\/p>\n\n\n\n

For long, telecom operators have served as tax\ncollectors. Every telecom bill includes taxes that are collected and handed\nover to the State. At present, for every Rs. 100 we pay for voice calls, we pay\nan additional Rs. 37.7 in taxes to the State; for every Rs. 100 we spend on\ndata, we give Rs. 19.7 to the State in taxes. The odd numbers are because these\nare multiple taxes layered on top of each other. In the Ravi Karunanayake years\nit was worse, but the rates were lowered in 2018.
\n
\nThe Budget speech says that a single tax (possibly with different rates for\ndifferent items) will replace the current tax-on-tax regime for alcohol,\ncigarettes, telecommunication, betting, gaming and vehicles by 1 January 2021.\nIt is disappointing that telecom is lumped together with all sorts of demerit\ngoods that the State taxes excessively to discourage consumption. It is\npuzzling because these kinds of changes require legislation and usually take\neffect in April, after the Budget is approved and Finance Act amendments are\napproved by Parliament. 
\n
\nThe quantum of the single tax for telecom services is not specified. But it may\nbe inferred that end users will pay more. The Government is expecting to\nincrease the revenues from taxes on goods and services (of which the\nabove-mentioned categories contribute around 50%) by 30%. It is unlikely that\nsuch a big increase can be achieved by keeping the burden on the end-user at\ncurrent levels or lower.<\/p>\n\n\n\n

Justification exists for lowering the taxes levied on\ndata services in these pandemic times. It is illogical to make a big fuss about\nextending 4G and fibre connectivity to every nook and cranny of the country and\nthen make data plans unaffordable by excessive taxation. But in the current\ncircumstances, no one should be advocating for reducing State revenue. <\/p>\n\n\n\n

The Budget promises to exempt earnings from both\ndomestic and foreign sources by those engaged in businesses in software and IT\nenabled services from income taxes. The foreign earnings exemption has been in\nplace for persons directly receiving payments from foreign sources if they are\ndeposited in local accounts and declared. What this appears to allow is the\nexemption from taxes of all software and IT enabled service firms, which is\nrather radical. The test will be whether the definitions are clear, and\nimplementation is efficient. Again, a conclusion depends on the language of the\namendments. <\/p>\n\n\n\n

The larger question is whether anyone has modeled the\nrevenue loss from exempting most people in a sunrise industry from income tax.\nWhatever the loss is in 2021, it will be larger in 2022 and so on. Is there a\nreal need to exempt software engineers from income tax? <\/p>\n\n\n\n

The Government has allocated the rather large sum of\nRs. 10 billion for setting up five fully-fledged plug and play Techno Parks in\nGalle, Kurunegala, Anuradhapura, Kandy and Batticaloa Districts\u201d. Previous\nbudgets included such allocations for such parks by slightly different names,\nbut none were built. It appears the liking for these things comes from\nofficials rather than politicians.
\n
\nThe Malambe IT Zone was established under President Kumaratunga in the 1990s.\nIt was not easy to attract companies to that location which was considered too\nremote. We could not even persuade HSBC to locate its regional centre, which is\nnot a hive of creativity, in Malambe. They insisted on the present location on\nParliament Road. <\/p>\n\n\n\n

The value of the Malambe IT Zone has greatly increased\nnow with the Athurugiriya Interchange and would have skyrocketed had the now\naborted LRT been completed, but most of the land is already occupied, not\nnecessarily by IT firms. Still the early difficulties illustrate the challenges\nof setting up technology parks. <\/p>\n\n\n\n

They are fundamentally different from the industrial\nparks our officials are familiar with. The companies that locate in such parks\nplace a premium on attracting and holding employees. The people who work in\nsoftware firms and creative industries do not particularly like suburban or\nrural locations; they do not want to spend hours commuting. They like the\nbenefits of agglomeration. That is why Silicon Valley emerged around Stanford\nUniversity and why Bangalore and Gurgaon, with all their shortcomings, emerged\nas centres of IT. Coffee shops and bars play an important role in the success\nof IT parks.<\/p>\n\n\n\n

Artificially creating techno parks in the middle of\nnowhere is a recipe for failure. Government officials are incapable of\ndesigning and managing such parks. They should commission studies of what has\nworked here and abroad and encourage private firms to build and manage\ntechnology parks in locations that will attract companies and employees. <\/p>\n\n\n\n

On what basis were five districts picked for locating\nthe parks? It would be useful to understand what happened to the tender that\nwas floated by the Export Development Board in 2019 seeking to identify a\nsuitable building and operator for a tech park in Jaffna. Just because\nsomething was started under a different government, it should not be abandoned.\nBy most measures, including the quality of the educational system and the\nsuccess of initiatives such as Yarl IT Hub and Uki Coding School, Jaffna is an\nobvious candidate, though much remains to be done on the leisure and entertainment\nside. <\/p>\n\n\n\n

In conclusion with President Gotabhaya Rajapakdsa\u2019s\nardent desire to make Sri Lanka a digital technology nation, expeditious efforts\nare being initiated through 2021 Budget to achieve the President\u2019s\nobjectives.  <\/p>\n\n\n\n

Let us look at how India became an Information\nTechnology giant within a short period.  Information Technology in India is an\nindustry consisting of two major components: IT services<\/a> and business process outsourcing<\/a> (BPO). The sector\nhas increased its contribution to India’s GDP<\/a> from 1.2% in 1998 to 7.7% in 2017.\nThe sector aggregated revenues of US$180 billion in 2019, with export revenue\nstanding at US$99 billion and domestic revenue at US$48 billion, growing by\nover 13%. As of 2020, India’s IT workforce accounts for 4.36 million employees.\nThe United States<\/a> accounts for two-thirds of India’s IT\nservices exports <\/p>\n\n\n\n

India’s IT Services industry was born in Mumbai<\/a> in 1967 with the\ncreation of Tata Consultancy\nServices<\/a> who in 1977 partnered with Burroughs which began\nIndia’s export of IT services. The first software export zone, SEEPZ<\/a> \u2013 the precursor to the modern-day\nIT park \u2013 was established in Mumbai in 1973. More than 80 percent of the\ncountry’s software exports were from SEEPZ in the 1980s.<\/p>\n\n\n\n

Within 90 days of its establishment, the Task Force\nproduced an extensive background report on the state of technology in India and\nan IT Action Plan with 108 recommendations. The Task Force could act quickly\nbecause it built upon the experience and frustrations of state governments,\ncentral government agencies, universities, and the software industry. Much of\nwhat it proposed was also consistent with the thinking and recommendations of\ninternational bodies like the World Trade\nOrganization<\/a> (WTO), International\nTelecommunications Union<\/a> (ITU), and World Bank<\/a>. In addition, the\nTask Force incorporated the experiences of Singapore<\/a> and other\nnations, which implemented similar programs. It was less a task of invention\nthan of sparking action on a consensus that had already evolved within the\nnetworking community and government.<\/p>\n\n\n\n

In 1991 the Department of Electronics creating a\ncorporation called Software\nTechnology Parks of India<\/a> (STPI) that, being owned by the\ngovernment, could provide VSAT communications without breaching its monopoly.\nSTPI set up software technology parks in different cities, each of which\nprovided satellite links to be used by firms; the local link was a wireless\nradio link. In 1993 the government began to allow individual companies their\nown dedicated links, which allowed work done in India to be transmitted abroad\ndirectly. Indian firms soon convinced their American customers that a satellite\nlink was as reliable as a team of programmers working in the clients\u2019 office.<\/p>\n\n\n\n

A joint EU-India group of scholars was formed on 23\nNovember 2001 to further promote joint research and development. On 25 June\n2002, India and the European Union<\/a> agreed to\nbilateral cooperation in the field of science and technology. India holds\nobserver status at CERN<\/a>, while\na joint India-EU Software Education and Development Center was located in Bangalore<\/a>. <\/p>\n\n\n\n

In the contemporary world economy, India is the\nlargest exporter of IT. Exports dominate the Indian IT industry and constitute\nabout 79% of the industry’s total revenue. However, the domestic market is also\nsignificant, with robust revenue growth. The industry’s share of total Indian\nexports (merchandise plus services) increased from less than 4% in FY1998 to\nabout 25% in FY2012. The technologically-inclined services sector in India\naccounts for 40% of the country’s GDP and 30% of export earnings as of 2006,\nwhile employing only 25% of its workforce. The “Top Five Indian IT\nServices Providers” are Tata Consultancy\nServices<\/a>, Infosys<\/a>, Wipro<\/a>, Tech Mahindra<\/a>, and HCL Technologies<\/a>. <\/p>\n\n\n\n

Major information technology hubs[edit<\/a>]<\/p>\n\n\n\n

Bengaluru<\/a> is\nknown as the “Silicon Valley of India”. <\/p>\n\n\n\n

Hyderabad<\/a> \u2013 known for the HITEC City<\/a> or Cyberabad<\/a> \u2013 is a\nmajor global IT hub, and the largest bioinformatics<\/a> hub in India.\nHyderabad has emerged as the second largest city in the country for software\nexports beating competitors Chennai and Pune. As of 2020, the IT exports from\nHyderabad was US$15 billion and  the city\nhouses 1500 IT and ITES companies that provide 582,126 employment. Notable tech\nand pharma parks are HITEC City<\/a>, Genome Valley<\/a>, and Hyderabad Pharma City<\/a> <\/p>\n\n\n\n

Chandigarh<\/a> is also one of\nthe growing international IT services and outsourcing exporters. The next\nupcoming tech park will be world trade center. <\/p>\n\n\n\n

Kolkata<\/a> is the financial\nand business hub of Eastern India<\/a>. The\nmetro city has seen a significant rise in IT services. In August 2018, the West\nBengal Government announced that 200 acres of land in Rajarhat Newtown<\/a> will be used for\nthe development of Bengal Silicon Valley, similar to the California Silicon Valley<\/a> in San Francisco<\/a>, USA<\/a>. The\nmain intention of this project is to create a business-friendly environment for\nIT companies to set up their business in the city. Major IT Parks include\nSector V, DLF 1,2,Gitanjali Park SEZ, Ecospace SEZ.<\/p>\n\n\n\n

As of 2012[update]<\/sup><\/a>, Chennai<\/a> was India’s\nLargest exporter of information technology (IT) and business process outsourcing<\/a> (BPO) services. Tidel Park<\/a> in\nChennai was billed as Asia’s largest IT park when it was built. Notable tech\nparks are International\nTech Park<\/a>, DLF SEZ<\/a>, Mahindra\nWorld City<\/a>, SIPCOT IT Park<\/a>, Olympia Tech Park<\/a> and Ramanujan IT City<\/a>. City\nhas an expressway called as IT expressway<\/a> and a\npreferred location for IT industries. Major software companies have their\noffices set up here, with some of them making Chennai their largest base<\/p>\n\n\n\n

The Rajiv Gandhi Infotech Park in Hinjawadi<\/a> is a US$8.9\nbillion project by the Maharashtra\nIndustrial Development Corporation<\/a> (MIDC). The IT\nPark encompasses an area of about 2,800 acres and is home to over 800 IT\ncompanies of all sizes. Besides Hinjawadi, IT companies are also located at Magarpatta<\/a>, Kharadi<\/a> and several other\nparts of the city. As of 2017, the IT sector employs more than 300,000 people. <\/p>\n\n\n\n

In Thiruvananthapuram<\/a>, Technopark<\/a> was\nestablished for the development of electronics and information technology in\nthe State. It is India<\/a>‘s\nfirst industrial park<\/a> dedicated to electronics<\/a>, software<\/a>, and IT ventures.\nStarted 1995, the campus at Thiruvananthapuram<\/a> city\ncovers an area the 330 acres campus with 4,000,000 sq ft of built-up space available\ncurrently and another 2,000,000 more sq ft of built up space coming up, is now\nhome to over 260 companies. Over 35,000 IT professionals are working here.<\/p>\n\n\n\n

The Indian experiences indicate that with the\nadmirable initiatives taken in the 2021 budget to establish 5 IT parks covering\nall areas of Sri Lanka our future generations will have the opportunity of\nbecoming commendable world leaders. (end).<\/p>\n","protected":false},"excerpt":{"rendered":"

By : A.A.M.NIZAM – MATARA Despite arrogant and nincompoop JVP leader the alleged Goni-Billa and Ranil\/Sajith\u2019s dhobi and stooge and his cohorts\u2019 myopic criticisms of 2021 budget and thereby displaying their impotent nature on budgets and financial matters the government has received many accolades from business magnates and professionals in the IT and digital field […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":["post-109374","post","type-post","status-publish","format-standard","hentry","category-aamnizam"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/109374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=109374"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/109374\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=109374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=109374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=109374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}