Speaking on the sidelines of a discussion last week, Dr. Narayan, a former secretary to the Ministry of Finance in India, said that the sustained reforms in India, which took about three years to bear fruit, resulted in India moving 30 notches up into the top 100 in the 2018 rankings.
According to the World Bank’s ‘distance to frontier metric’, one of the key indicators in the Doing Business 2018 rankings, India’s score jumped 4.76 which meant that India improved its business regulations in absolute terms towards best practices in business regulation. Expressing a similar sentiment, Deputy Governor of the Central Bank of Sri Lanka Dr. P. Nandalal Weerasinghe said that Sri Lanka has successfully implemented three key structural reforms, the Value Added Tax (VAT) reforms, the Inland Revenue Act and the Foreign Exchange Management Act which will replace the Exchange Control Act.
He pointed out that this will not only help Sri Lanka take a jump in rankings per se but improve the overall environment to do business.
“In the last couple of years, there has been a track record of implementing economic reforms. Going forward, the other key legislative reforms will also come in place making it easier to do business and easier for both exports and FDIs to perform better,” the Deputy Governor highlighted addressing a post Budget seminar organized by KPMG Sri Lanka recently.
Dr. Weerasinghe noted that on the VAT reforms, the government is already seeing results in terms of improvement in revenue collection while the full impact of the recently enacted Inland Revenue Act will be known from next year. “The stability seen in exchange rates and the interest rates in recent times were due to the good performance of the government in terms of fiscal discipline. From the Central Bank’s point of view, this helped us to a great extent to manage the two rates,” the Deputy Governor emphasized.
Meanwhile, Chairman of the Institute of Policy Studies of Sri Lanka, Prof. Razeen Sally commended the many ‘pro-reform’ and liberalization policy measures announced in the Budget 2018.
“The removal of almost 1,200 para tariffs in the Budget and the government’s plans to abolish all the existing para-tariffs in three years, are definitely steps in the right direction.
These measures will help improve Sri Lanka’s trade competitiveness,” Dr. Sally, an Associate Professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. The government has announced that para-tariffs applicable on the tariff lines which do not at present carry any Customs duties will be abolished within the next three years.
“While we will be phasing out the para-tariffs, which are also in line with our WTO commitments, such action will be followed by way of a trade adjustment program in the interim period that will provide relief and support to the local private sector to adjust to this new system,” Finance Minister, Mangala Samaraweera proposed in his Budget speech.
According to the State Minister of Finance, Eran Wickramaratne, the list of legislations to be revamped includes the Customs Ordinance, Excise Ordinance, Rent Act, Education Ordinance, Labour Laws including Shop and Office Employees Act and bankruptcy laws.
“The key thinking behind the budget or the intention was to go down the liberalised agenda which is the vision we have for this country.
We are still at the lower end of the middle income spectrum and we have long way to go,” the State Minister, who delivered the keynote address at the KPMG Sri Lanka organized post-Budget seminar said.