As I expected there were support for Plantations, Indigenous medicine,value added products and poultry areas from this budget. There were support for other sectors such as agriculture, human resource development, education and infrastructure etc as well. We need to study further.
22. Indigenous Medicine
22.1 I propose to allocate Rs. 500 million for the rehabilitation of Ayurvedic Hospitals and promotion indigenous medical research. I also propose to grant a monthly allowance of Rs. 5,000 for indigenous medical doctors who serve in government Ayurvedic Hospitals. I propose to implement a loan scheme for indigenous medical practitioners be able to draw upto Rs.500,000 at 6 percent interest, to improve their dispensaries and to process required medicinal treatment.
0. Livestock and Poultry Industries
20.1 Local milk production has increased to 40 percent of local consumption requirements. Public sector and private sector dairy farms as well as small and medium enterprises have substantially increased their investment in this sector. Funds have been allocated for the expansion of the production of MILCO by doubling its capacity as well as to import 20,000 high quality cows to promote small and medium dairy farms as well as Government farms.
20.2 A special loan scheme is being implemented at a low interest rate, in support of SMEs to promote dairy farms, setup milk collection centers and procure equipment, increase animal feed production etc. A CESS of Rs. 150 per kilo on imported milk powder and the high CESS on the importation of butter, yoghurt and dairy products to be maintained, to further support this industry. I now propose to increase the guaranteed price of liquid milk to Rs. 60 per liter to increase local milk production and reduce the price of locally made milk powder by Rs. 100 per kilo and yoghurt by Rs. 5 per yoghurt, to popularize local products. I propose to increase allocations to Provincial Councils to assist small dairy farmers to promote cattle farms, and quality animal feed production at provincial level.
20.3 I propose to allocate Rs. 700 million to expand the capacity of training centers at Mahaberitenna, Thalpokuna, Kekunadura, Karandagolla, Sippikulama, Vavuniya, Vannigama, Kotadeniyawa, Udugoda, Uppuveli and Weeravila to increase training programs for field level officers as well as small and medium dairy farmers.
20.4 Poultry production has exceeded 155,000 MT eliminating the deficit production that prevailed few years back. The per capita consumption at 7.5 kg is almost double the consumption that prevailed 5 years ago. This industry has also entered export markets. In order to assist small poultry farms, I propose to introduce a supply mechanism to provide maize at Rs. 40 per kg and provide export incentives for chicken and eggs. I also propose to allocate Rs. 200 million to strengthen related veterinary services with modern facilities and equipment. I propose to recruit 500 Technical Assistants to the field of animal husbandry in 2015, to expand extension work.
Small Holder Plantation
13.1 Following the last year budget proposal, I propose to continue the Rs. 5,000 per acre grant assistance to support land preparation towards water retention, soil conservation, the use of organic fertilizer for smallholder tea cultivation to increase production. The subsidized price of Rs. 1,250 per 50/kg bag will also be continued for all these crops. The prevailing high taxes on edible oil, coconut oil and palm oil at the point of customs will be maintained in the long-term interest of coconut plantation. Financial and technical assistance will be provided for the development of Palmyrah and Kitul plantation and associatd industries. The CESS applicable on the export of tea, rubber, coconut, cinnamon and pepper in primary form will be further strengthened to channel such revenue to encourage cultivation and related improvements of these crop
14. Large Scale Plantations
14.2 I propose to implement a credit scheme with an 8-year maturity at 6 percent interest to all well performing companies that will commit, on an agreed area for planting and replanting, for social development of plantation workers and to increase the volume of value added tea exports. This facility will not be extended to plantation companies, which have not paid due lease rental value to the Government unless they pay such sum with arrears. Companies that have not paid their land lease rentals will not get this facility.
15. Professional Skills and Research for Plantation
15.1 I propose to set up a Plantation Academy to develop a new generation of professional planters and smallholder planters, to extend trining on best agricultural practices and technology skills. Public investments on Tea, Rubber and Coconut Research Institutes will be doubled to facilitate the private sector to fully benefit from triple deduction tax facility on research and development. I proposed to allocate Rs. 3,000 million to develop Tea Research Institute at Thalawakele and Rubber Research Institute at Agalawatta as state of the art research institutes.
16. Farmer Pension and Crop Insurance Scheme
16.1 I implemented a pension scheme to provide a minimum of Rs. 1,250 as a monthly pension for farmers over 63 years of age, from January 2014. I have already made a capital contribution of Rs. 1,000 million by the Government to strengthen this contributory pension fund. This fund will also extend compensation for crop damag arising from the Crop Insurence Scheme that was introduced. Arrangements will be made to allow those who could not contribute to this pension scheme during the time it was inactive, to continue to contribute. I propose to extend farmer pension scheme to all smallholder farmers engaged in all crops to support their old age. Therefore, I propose to increase the capital contribution to the farmer pension scheme by Rs. 5,000 million, over next three years.
17. Export Industries
17.1 Manufacturers of exports are provided with a low income tax rate of 12 percent, a high depreciation provision for advanced machinery and Custom bonding and free port facilities. In order to further facilitate such exports, a onestop service center providing banking, quarantine, quality standards and other trade services through a computer network will be established at Customs. In order to encourage the modernization of export industries, I propose to grant accelerated depreciation provision and exemption from income tax on dividend provided they undertake over US$ 2 million investments on machinery and equipment. I also propose to implement a pension scheme for employees in the apparel industry to improve job attraction and security.
17.2 I also propose to expand triple deductions for expenditure on research, innovation and brand promotion for such industries. Export of high value products of tea, rubber, coconut, cinnamon and spices will be encouraged through increased cultivation of these crops and by maintaining a high level of CESS on primary commodity exports. I also propose to use 50 percent of the special CESS collected by the Tea Board to share with local tea producers to promote high value tea in global markets with a Sri Lankan identity and country image. In this regards, the Free trade agreement with China is expected be operational by mid 2015 that will provide a greater boost for country's exports. I also propose to reduce import taxes of packaging material required for exports suitably without affecting local industries that manufacture such material.
2.17 Our Government attaches special importance for the development of Human Resources.
The University Townships initiative has progressed well with each University having developed new facilities for expansion by providing new subjects for advanced studies. Hostel facilities for over 25,000 undergraduates are under construction to solve their accommodation problems. Salaries and research incentives of university lecturers have been increased by twofold.
2.18 Vocational education is another area that went through revival in recent years having targeted youth towards skills development. The construction of a new School of Business Management and an Institute of Technology at Malabe, an Advanced Technology Institute at Mulative, the expansion of the IT school and a Teacher Training Collage at Malabe and several advanced university colleges in which technical education could be pursued, are in progress. The establishment of an Ocean University was legislated to undertake skills education that is in demand with regard to fisheries and ocean resource management.
2.19 The Government ventured on a child friendly school development initiative to accommodate about 350,000 children entering schools every year. Facilities in 6,500 secondary schools are being upgraded and all other primary schools are being improved with the introduction of a more child friendly environment, sanitation and staff facilities. In order to promote English, Mathematics, IT and Science to all school going children, new Mahindodaya Labs have been completed in 1,000 schools all over the country. A school specific recruitment drive is in progress to fill teacher vacancies in distance schools. Conducting teacher training programs, providing teaching material, improving standards of examinations and extra curricular activities are in progress to extend greater benefits to children.
2.20 Due to these initiatives, the success rate of students of far away districts such as Hambantota, Killinochchi, Batticalo, Polonnaruwa, Badulla at the Ordinary Level Examination has increased from 46.6 percent in 2005 to 62.4 percent as of now. It is a matter of pride for all of us to hear that nine out of the top ten students who got highest marks in the Grade 5 Scholarship Examination this year, are from remote primary schools in the country which confirms the revival in education in rural areas. Pirivena education and Daham School education were given a boost through the last year Budget to promote the number of students attending such education.
2.21 What is most encouraging is the global recognition that we have received for promoting IT education at rural level through the setting up of 900 Nanasala Centers in rural areas and 26 Prajashakthi Technology Centers in planation areas. This has contributed to raise country's IT literacy to 45 percent this year from a negligible level in 2005. The World renowned Milinda and Bill Gates Foundation Award was awarded to Sri Lanka out of over 140 global applications, in recognition of the success of e-library Nanasala initiative.
2.22 Research undertaken by our scientists in areas such as food technology, non-communicable deceases, low cost construction technology, renewable energy, and indigenous medicine is encouraging. Private - Public Partnerships in Nano Technology initiatives have produced advanced results.
3. Strengthening State Business Enterprises
3.1 Ceylon Petroleum Corporation has contained its losses and has also reduced its debt to banks. The recent reduction of prices of petrol by Rs.5 per litre, diesel by Rs. 3 per liter and kerosene by Rs. 20 per liter, is a reflection of its improved financial position. Therefore the Government will convert Rs. 150 billion of CPC debt to equity and guarantee its financing to rebuild the pipeline network, storage facilities and capacity expansion of the oil refinery to 1,500 MT. The CPC will form a joint venture to protect its interest in the Trincomalee oil tank farm that had been sold to the Indian Oil Company, to develop storage facilities.
3.2 I propose to convert previous loans and interest payments of the Water Supply and Drainage Board to the Treasury amounting to Rs.60 billion to government equity, to strengthen operational profits and service their own project financing arrangements. I propose to reduce water charges for households consumption up to 25 units by 10 percent. Following my budget proposal last year, a National Community Water Supply Department has been established to regulate and develop community water supply schemes. I propose to allocate Rs. 750 million for the rehabilitation of community water supply schemes and develop new schemes under this Department with particular emphasis on villages affected by kidney and waterborne diseses.
3.3 Following the Budget proposal to improve rural transport services, arrangement has been made to deploy 400 small buses. I propose to import further 500 small buses to expand these rural services. In order to strengthen the bus fleet of Sri Lanka Transport Board with a further 2,000 buses, a public investment of Rs.1,000 million has also been provided to SLTB. Salaries of CTB employees were raised to equalize minimum salaries of the public service salary structure. I also propose to allocate Rs. 10 billion over 2015 -17 to rehabilitate the national airports at Rathmalana, Trincomalee, Anuradhapura, Palali, Batticaloa and set up new airports at Kandy and Nuwaraeliya to promote domestic travel and tourism and to ease traffic conjestion.
3.4 The government owned Kurunegala and Chillaw plantation companies have performed well and paid dividends to the Treasury. On this success, I propose to set up a separate government owned Planation Company to develop all JEDB and SLPC plantation lands with a capital infusion of Rs. 1,000 million. In order to strengthen state construction companies, I propose to allocate Rs. 3,000 million to provide the capital contribution to State Engineering Corporation, Central Engineering Consultancy Bureau and State Development and Construction Company. The sugar plantation industry, which had been neglected and used largely to manufacture liquor was taken over by the Government in 2012 and has been revived to increase sugar production. Further, it also helps about 25,000 families in Uva and Eastern Provinces to improve their livelihood earnings. Therefore, I also propose to allocate Rs. 5,000 million to build modern sugar manufacturing plants at Kantale, Hugurana and Pelawatta and develop smallholder plantation under Sri Lanka Sugar Company during 2015-16. I propose to increase the farmgate price of sugar cane to provide a greater incentive to be involved in sugar cultivation, to Rs. 4,500 per MT.
04. Strengthening Banking and Financial Institutions
4.1 Honourable Speaker, the capitalization of the Central Bank with Rs.50 billion this year laid a solid foundation for the financial system stability in this country. Similarly following the last year budget proposal, consolidation of finance companies has witnessed progress. As part of financial sector strengthening, the two Development Banks are also being merged to create a strong development bank in the country, next year. I also propose to provide Rs. 10 billion capital to strengthen the Bank of Ceylon. In order to provide greater security to deposit holders of the banks, I also propose to increase deposit insurance by 50 percent.
4.2 The Central Bank manages the Employees Provident Fund, which has an asset base of Rs. 1 trillion. Central Bank in recent years has invested about 10 percent of its assets in income earning commercial assets, which has gained capital appreciation of around Rs. 10 billion this year. I therefore propose to distribute dividend to members of Provident Fund who has over 10 years of active accounts. This is the first ever dividend distribution by the EPF and I see this as a special benefit to members. In addition, the Fund has got stronger to pay all members of the fund an interest income in excess of 10 percent each year.
4.3 Sri Lanka has membership in the IMF, the World Bank and the ADB. This year, we supported the initiative taken by the Peoples Republic of China to set up an Asian Infrastructure Investment Bank to meet infrastructure financing needs of Asia. I am pleased to inform this house that today we signed as a founder member of AIIB with several other member countries to set up this Bank.
05. Equity and Debt Market
5.1 Following the incentives in the 2013 Budget to promote equity and debt market, the market capitalization has surpassed Rs. 3 trillion. Net Foreign inflows have reached nearly Rs. 100 billion. The value of unit trust has increased beyond Rs. 70 billion. Many companies have also listed their debt and total value now stands at around Rs. 100 Billion showing that the market has become a low cost source of raising money for capital formation. In the context of low interest rate regime that we have restored, I am sure that more equity and debt finance will be raised by our business community, for their business development.
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