Amalgamation of similar taxes and statutory payments could help enhance efficiency and simplify clerical work in the public sector, opined Chairman and Group Managing Director of DSI Samson Group (Pvt) Ltd, Kulatunga Rajapaksa.
Rajapaksa saw the complexity of the tax system as a problem to small business and advocated the amalgamation of VAT and NBT. He based his recommendation on his experience with companies to which he subcontracts work. Speaking at the SME Engine Conference organized by the West End Law center at the Organisation for Professional Associations (OPA) on Wednesday, he said, “Why are there two funds - EPF and ETF? The only difference in these two funds is - to fill two sets of forms. You have two workers and three people in the office doing all this clerical work.”
He added, “We have 250 companies working as subcontractors under our group. We follow the Japanese model of subcontracting. Toyota doesn’t manufacture cars; they only assemble parts. All the parts are manufactured by the SME sector.”
Rajapaksa called for import protection. “When we started in 1962 even though we had lots of hurdles we had no difficulty in marketing.”
In India the SME sector is recognized in government procurement programs there are certain products restricted only to the SME sector. There are so many items restricted to the SME sector such as bed linen for hospitals, safety matches and handles.”
Explaining the difficulties the SMEs are going through, Rajapaksa said there were shortcomings in the banking sector in the country. “Do we have a correct definition of SMEs in Sri Lanka? For instance, the government has one definition and the banks have another definition. If you open up a company today, no bank will come to support you. But there will be two people who would visit you the following day- they are from the Labor Department and the Inland Revenue.”
He added, “We have been the dumping ground for many imported products. We as industrialists need a consistent policy. Tomorrow in the morning I don’t know what has been removed from the duty structure. In any country, there is protection for industries. Even in Japan there is protection.
You can’t export a single kilogram of rice to Japan. They have a lot of restrictions not by way of duty but by way of quality.”
Rajapaksa called for the separation of the Ministry of Industry and Commerce into separate ministries for industry and commerce respectively. He added, “Right now we have government servants for every 15 citizens for any other country they have one for every 200. It is unfortunate that we have so many three wheel drivers. The SME sector is facing a serious shortage of human capital to do their work. Our company employs more than 10,000 and we have a vacancy of more than 2,000. They prefer independent jobs like three wheelers where they have no hard work. This is the kind of environment created by the government.” He said, “The 200 garment factories that the late president R. Premadasa had started were one of the best things that we have done.
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