BUDGET SPEECH 2019

1. Honorable Speaker, it is my pleasure to present my second National Budget to this house.

2. I am happy to note that after a tumultuous end to 2018, the economy has stabilized and we are beginning to see an up-swing in growth. It has taken a great deal of hard work to bring us back to stability after 52 of the darkest days in Sri Lanka’s postindependence history.

3. In the lead up to 26th October 2018, the economy had been adversely affected by successive years of drought that decimated rural incomes and hurt the entire economy. Global oil prices had also doubled, and the US Federal Reserve was rapidly raising interest rates. In spite of these domestic and global challenges, our Government brought stability to the economy.

4. From the end of October 2018, global oil prices began to decline sharply, the Federal Reserve signaled lower rates, and consumption began to recover. Without any disruptions, Sri Lanka would have enjoyed a boost to the economy, leading up to 2019. Unfortunately, Sri Lanka was deprived of the opportunity to benefit from these tailwinds as we got engulfed in a debilitating political crisis

5. The resulting loss in confidence, spiraled into a wave of capital flight from our debt and equity markets – bleeding a billion dollars within those 52 days from our hard-earned foreign reserves. As a result, the currency depreciated to an all-time low, at a time when other emerging market currencies were recovering.

6. Sri Lanka’s credit ratings were down-graded, resulting in our external borrowing cost surging into double digit levels. The timing could not have been worse, since we had to re-finance US$ 5.9Bn of external debt repayments in 2019. Tourist arrivals stalled soon after Sri Lanka was adjudged the best travel destination by “Lonely Planet” and a new campaign had just been launched

7. It was in this context that we came back into power on 17thdecember 2018. We have now repaired the damage to our external sector, and markets have regained confidence in the last 2 months. Today our external borrowing costs have declined by over 200 basis points, foreign capital is now flowing back into the economy with Rs. 3,400 Mn inflows into Government Securities since January – and the Rupee has also appreciated 1.5% year to date.

8. Therefore, a lot of the damage from the coup has been addressed and the economy has again been stabilized. We now have the opportunity to continue the work we had done to rebuild the economy.

9. Fiscal management continues to improve. We achieved a primary surplus for the first time in 5 decades in 2017 and improved it to 0.6% of GDP. This was a major improvement from -2.9% in 2015. Inflation has been brought under control in spite of rising prices of key global commodities. In 2017, we achieved our best ever exports and FDI, and that momentum increased in 2018. This is exactly in line with the objective of this Government to re-orient the economy towards greater external inflows.

10. Mr. Speaker, we have achieved this economic stabilization and successful rebalancing, after having inherited an economy in 2015, that can only be described as a ‘ticking’ time bomb. The previous regime was characterized by wasteful expenditure, financed by expensive foreign debt, with no rational plan of repaying this debt. Tax revenue 3 had dwindled to 10% of GDP and exports had crashed to 14% of GDP in 2014. A dismal decline over two decades - in the year 2000 tax revenue was 15% of GDP and exports 30% of GDP. The economy was over-leveraged and distorted.

11. This Government believes in growth led by private enterprise. This is the concept of “Enterprise Sri Lanka” that was introduced in the previous “Blue Green Budget”. However, by private enterprise, what I mean is the genuine entrepreneur who uses his ingenuity to compete in a fair market, the small and mid-size businesses that embody the spirit of Sri Lankan trade and commerce, and the Sri Lankan companies that compete on the global stage and win.

12. There is also the other segment of the private sector, which is averse to competition and fair markets. The beneficiaries of a crony capitalism that thrived in a

kleptocracy, which enriched those connected to the previous regime. These companies grew rich on the rents from walls of tariff, protection by driving up costs for 20 million citizens. They benefited from inflated Government contracts, the costs of which are still being paid-off today. Some of these oligarchs yearn for the return of a dictatorship, which funneled so much wealth into their companies and private accounts. This is a small but powerful and influential segment of the private sector. This is not the private sector that we want to see as the engine of economic growth, but is a vestige of a bygone era.

13. We are creating a new breed of private enterprise, where success is through merit and the market operates on a rules-based level playing field. Sri Lanka needs a private sector free from the protectionist mindset that continues to hold back our country’s development and modernization. In last year’s Budget I presented a program of economic liberalization, buttressed by a robust safety net, and state intervention 4 to address market failures and ensure social justice. We will continue this framework and strengthen its key elements.

14. Our determination to pursue a liberal outward

oriented economy is more steadfast than ever. Towards this end, we are continuing the phasing out of para-tariffs and reducing barriers to trade. At the same time, we have built in safeguards with the passage of anti-dumping legislation and the creation of a Trade Adjustment Program, to support firms and workers, in meeting the challenges of competition.

15. We will also invest more in social infrastructure and a social safety net. Whilst committing more funds to education and health where the quality of that spending will take precedence. It is also time to revamp our social safety net, which have had a dismal track record in targeting and efficacy. The focus must shift to graduating beneficiaries into self-sufficient and empowered citizens.

16. The empowerment of our citizens has been a fundamental objective of our Government. This has been through political empowerment, social empowerment and economic empowerment. This year’s Budget, “Enterprise Sri Lanka -Empowering the People and Nurturing the Poor” is about creating a nation enriched by extending a helping hand to our people, to help themselves, while protecting and nurturing the poor and the weak, with a strong well targeted social safety net.

“GAMPERALIYA” – ACCELERATING VILLAGE DEVELOPMENT

17. The Gamperaliya Scheme was launched in June 2018, to address critical lacunas in infrastructure needs that have thus far, prevented our villages and cities from becoming the growth centres that they have the potential to be. This initiative was one of the first victims of the 52 day ‘Coup’, when the illegal Cabinet stopped the scheme at its very first “Gamperaliya” – Accelerating Village Development 5 Proposed Rs. 500 Mn meeting. However, this landmark project was revived by our Government in January this year. The allocation for 2019 has been increased from Rs.200mn to Rs.300mn per electorate. Towards this, Rs 48,000 Mn has been allocated for 2019. The scope has also been widened. For example, the allocation [Expl. Note III (a)10] for places of worship has been increased from Rs.500,000/= to Rs.1mn.

“ENTERPRISE SRI LANKA” TAKING-OFF

18. Mr. Speaker, we have also launched the “Enterprise Sri Lanka” Loan Schemes on an Island-wide basis in 2018, to create an entrepreneurial society, particularly amongst our youth, by providing access to capital at concessionary interest rates, based on projects that are presented to our Banks. This scheme has

been further expanded and deepened, and will be aggressively promoted through awareness and other programs Island-wide. National Youth Council certificate holders will be given preference for Enterprise Sri Lanka Loans.

19. Mr. Speaker, in the last few months, more than 30,000 entrepreneurs have benefitted from the “Enterprise Sri Lanka” Loan Schemes, with almost Rs.60,000 Mn. being disbursed. A full list of all these loan schemes with details, is annexed herewith

20. However, in spite of the Government bearing a significant portion of the interest of these loans of the “Enterprise Sri Lanka” Schemes, the small entrepreneurs are still faced with the challenge of providing collateral as demanded by the Banks. As such, I propose to establish a Fund under the Central Bank of Sri Lanka (CBSL) to provide guarantees to the SME Sector, for which necessary allocations will be made.

21. We also to get complaints of Bank officers discouraging new entrepreneurs. Therefore, we have also commissioned a Call Center – ‘1925’, to receive such complaints.

22. In addition to addressing costs of finance, “Enterprise Sri Lanka” will support start-ups and small businesses to connect with markets, in product development and business management. “Enterprise Sri Lanka” customers will be linked with relevant Government institutions such as ITI, ICTA, EDB, and the universities, along with larger private sector companies, to build capacity in these areas. “Enterprise Sri Lanka” would become a larger ecosystem for start-ups and small businesses to thrive.

23. As a further measure to support the growth of SMES and small businesses, it is necessary for Government procurement to provide better opportunities for SMES. I propose that all ministries and departments earmark at least 10% of the value of procurement to Sri Lankan SMES. The necessary amendments to procurement guidelines will be drafted. In addition, excise duties on small trucks will be reduced along with LTV which will be increased to enable better affordability for SMES.

GROWTH THROUGH SUPPORTING LIVELIHOOD DEVELOPMENT

24. Mr. Speaker, the performance of Agriculture, Fisheries and Plantation Sectors can increase their productivity with the infusion of technology and change in systems, which will result in higher yields and better quality of products.

25. Building on the success of Agriculture Technology, Demonstration Parks are now being established by the Agriculture Sector Modernization Project, which will support the linkage of farmers with Growth through Supporting Livelihood Development 7 Proposed Rs. 400 Mn agri-business value chains for the infusion of technology and developing high value crops. The program will be extended to 5 Districts – Hambantota, Kurunegala, Puttalam, Ratnapura, and Kegalle.

26. A key requirement in agriculture is effective storage and warehousing facilities to minimize postharvest losses. Following the completion of the first such establishment in Dambulla, the Government will invest in setting up modern climate-controlled warehousing facilities in Katunayake, Embilipitiya, Jaffna, and Keppetipola. Private enterprise will be invited to manage and operate these facilities. Additionally, private investment in climatecontrolled logistic facilities will be facilitated by removing up-front costs in establishing such facilities.

27. The “Diri Saviya” Loan Scheme [Expl. Note III(B)1.7] initially introduced to support poultry producers to expand their distribution network, will be extended to support those in small scale animal husbandry activities and the self-employed who engage in manufacturing activities.

28. The lack of latex has become an issue for the value added rubber-based industries, such as, tyre producers in the country. As such, to facilitate replanting and new planting of rubber, we have doubled the incentives given, for which Rs.800 Mn has already been allocated.

29. At present local tyre producers have no access to testing and prototyping in the country. As such, I propose, that the Export Development Board (EDB) facilitates the private sector, to establish a fullyfledged research facility.

30. While there are significant opportunities for value addition in the Coconut Industry, the regulatory framework has become a hindrance in facilitating entrepreneurs to invest in the industry. As such, the existing licensing mechanism for the processing of desiccated coconut, coconut chips, charcoal, etc., will be re-visited with a view to simplification.

31. The ceramic industry has faced similar issues in mining and transport of raw materials such as clay. It is proposed to review these regulations with a view to facilitating the industry whilst ensuring necessary environmental protections.

32. Ceylon Cinnamon, the finest in the world, is faced with many issues, compromising its competitive advantage in the global market. We will make it mandatory for all Cinnamon Exporters to be subjected to certified quality control testing, at the point of export. However, those who fail such certified tests, will be supported to improve their operations within 12 months, as part of the Export Market Access Program. EDB will facilitate.

33. The Cinnamon Training Academy at Kosgoda - Balapitiya, will be supported to be fully operationalized, which will address the lack of Cinnamon Peelers.

34. Ceylon Cinnamon will be supported to obtain and maintain Geographical Indications (GI), in line with the country’s policy to protect the identity of its products.

35. To support the Agriculture and the Plantation Sectors, in ensuring better water management, the work at the Moragahakanda – Kalu Ganga Multipurpose Development Project will be completed in 2020. Work will commence on the Wayamba Maha Ela, Minipe and NCP canals,which are expected to facilitate the movement of water from the Moragahakanda Reservoir to the water scarce regions, ensuring cultivation during both the Yala and the Maha seasons. To undertake these activities, we have already allocated Rs.12,000 Mn. Further, in order to urgently resolve the wage issue of the plantation workers, we will discuss an acceptable solution with the Tea Board and implement on an urgent basis.

36. I propose supporting the “Nangwamu Lanka” Micro and Small Enterprise Development Program.

37. Further Rs.2,410 Mn has been allocated to complete the canals and head works of 7 major projects in 2019, including the Deduru Oya Project, the Menik Ganga Reservoir Project and the Morana Reservoir Project, which will directly benefit almost 21,000 families engaging in Agriculture.

38. Mr. Speaker, with the European Union (EU) opening its markets to Sri Lanka’s Fisheries Products, the total sea food exports to EU alone, has increased by 14% to USD.290MN in 2018. The supply,however, remains constrained, mainly due to the inability to maintain the required standards in the products.

39. Rs.1,300mn has already been allocated to complete the on-going rehabilitation of harbors, anchorages & landing sites, and work will also commence at 2 new harbors at Point Pedro & Pesalai and an anchorage in Mandathivu.

40. The artisanal long liners and multi-day boats will be supported to improve their stowage facilities and safety standards. As such, the Government will bear 50% of such cost, while the “Ran Aswenna” Concessionary Loan of the “Enterprise Sri Lanka” Scheme, could be accessed to finance the balance

50% of the cost of acquiring and installing Chilled Sea Water (CSW) and Refrigerated Sea Water (RSW) Systems, thereby improving the quality of the catch and also safety devices, such as Vessel Monitoring Systems, Man-overboard Smart-finding Devices, Emergency Position Indicating Radio Beacons, etc.

A CARING SOCIETY

41. We will further support the primary school childrens’ nutrition effort by providing a free glass of milk to students in all rural schools in the country.

42. Mr. Speaker, in ensuring the rights of all, we recognize that especially the rights of the vulnerable and the marginalized, must be up-held. We must address the inequalities in our society that prevents economic freedom and empowerment of these people.

43. Mr. Speaker, in spite of the country reaching middle income status, and in spite of millions of rupees being invested in sophisticated expressway projects, city developments, etc., almost 260,000 houses in the country are without sanitary facilities. For example, the Hambantota district, which saw a splurge of mega projects in the form of California style Highways, Chinese style Conference Halls and Sports Stadiums, have over 15,000 people without even the most basic of sanitary facilities. As such, we will provide all such houses in the country with sanitation facilities within two years, benefitting almost 1 million of our citizens.

44. Many Bus Terminals and Railway Stations’ sanitary facilities are also in an atrocious condition. Therefore, funds will be allocated to improve them. Such facilities will be provided for men, women and those with special needs. Once built, the private sector will be invited to maintain these facilities.

45. Mr. Speaker, whilst we are proud that the female student population at our universities constitute almost 50% or more, women constitute only about 30% of the labour force, often making them financially dependent and thereby disempowered. The lack of child & elderly care facilities and inflexible labour laws have been identified to be the reasons that women leave the labour force or never enter it at all.

46. As such, I encourage commercial establishments with more than 250 employees, to provide child-care facilities. Also selected schools will be supported to establish After-school and Vacation Centres (ACVC) within the school itself, while the private sector will also be facilitated to establish child-care facilities, through the “Rekawarana” Concessionary Loan Schemes of “Enterprise Sri Lanka”.

47. The Ministry of Women and Child Affairs will issue the necessary guidelines and the regulations for establishment and operation of Childcare Centers, After-school & Vacationcarecenters, and similar facilities.

48. The limited participation of women in the workforce is a clearly identified growth constraint. We will encourage the private sector to support our working mothers, by allowing 50% of the salary cost of the mandatory 3 months maternity leave granted, as an additional deduction, in calculating their corporate taxation, subject to a maximum of Rs.20,000/= per employee per month. We will extend this to an additional deduction of 100%, for the 4th month of maternity leave, if so granted. The concession would apply for a 5 year period.

49. Whilst constituting over 50% of the population, the presence of women in senior positions in business is very limited. This has come about due to, numerous social structural and business practices, that result in the exclusion of women from important decisionmaking roles in society. As such, I propose a sequenced approach to enable greater participation of women in boards of listed companies. The Securities and Exchange Commission will be encouraged to implement this proposal.

50. I request this House to support amending the labor laws to allow parttime, flexi hours, home-working, etc., which will facilitate more women to be active participants in our economy.

51. Mr. Speaker, the quality of the elderly-care in the country varies sharply in the absence of a proper regulatory framework and the lack of an adequate supply of such services. As such, while strengthening the National Elders Secretariat (NSE), we urge the NSE to create a proper regulatory framework and we will also incentivize the private sector to invest in elder-care facilities by making available to them, the “Rakewarana”concessionary loans of “Enterprise Sri Lanka”.

52. At present, differently-abled individuals are paid an allowance of Rs.3,000/- per month. Whilst increasing the allowance to Rs.5,000/- per month, we will expand funding to accommodate almost the 72,000 eligible low-income individuals. Rs.4,320 Mn has been allocated for this. This allocation will enable us to eliminate the waiting list.

53. In order to encourage more inclusive employment, private entities that recruit at least 5 persons with disabilities, will be provided with a salary subsidy of 50% of the salary per person, up to an upper limit of Rs.15,000/- per person per month for a period of 24 months.

54. Also, at present, only 21,000 CKDU patients are paid an allowance of Rs.5,000/per month. We will expand the scheme to cover a further 5000 patients, thereby eliminating the waiting list, for which Rs.1,840 Mn is allocated.

55. Often, our prisons are inundated, not with the drug kingpins, but the innocent victims of the drug mafia, most of whom are less than 30 years of age. Putting them together with hardened criminals is not the best method of weaning them away from this dangerous addiction. To rehabilitate such inmates, 2 Kibbutz style farms, under the Prison Authorities, with the required facilities, will be established in Ambepussa and Weerawila. We encourage civil society/private sector to participate in these ventures.

56. Today, the prisons are also congested with women convicted for minor offences. Left alone, without any transformation, we will surely turn most of them into hardened criminals. As such, to ensure more humane conditions, it is proposed to identify a specified area in Dompe to establish a facility for training and development in spheres, such as arts & crafts, and other productive livelihood skills.

57. Mr. Speaker, during 2018, significant progress has been made in meeting the housing needs of the people. Our strategy has also been to address the issue of providing better housing for, specially the most vulnerable sectors of the society, including the low income groups in Urban, Rural and Estate sectors and the North and the East, mainly through the Urban Re-generation Project (URP) and Model Village Program, for which Rs.24,500 Mn. has already been allocated in 2019.

58. At the same time, work on 15,000 brick & mortar houses in the Northern and Eastern Provinces will commence in 2019, with an allocation of Rs.4,500mn being already made. A further Rs.5,500mn. will be made available for these initiatives. On-going work to address the issues of re-settlement of Muslims, who were once forcibly evicted from the North will continue and resources will be channeled accordingly.

59. Several middle-income housing projects, which are reasonably priced, have already been completed, while a few more are about to be completed or about to start work in 2019, in Wadduwa, Ragama, Yakkala, Kundasale, Borella, Pannipitiya, etc., by the NHDA and the UDA.

60. However, to support, especially the middle-income first-time home buyers, the Government will launch a concessionary loan up to Rs. 10 Mn, at a 6% interest rate with a repayment period of 25 years called “Home Sweet Home” Loan. This will be for young couples buying or building their first home. This “Enterprise Sri Lanka” loan scheme will be extended to also purchase mid-range apartments and houses built by private entities.

61. Our migrant workers are faced with significant issues in building a house. As such, we will introduce the “Sihina Maliga” loan scheme, in order to make their ‘dream home’ a reality, under “Enterprise Sri Lanka”. Migrant workers, registered with the Foreign Employment Bureau and currently working abroad, will be able to get a loan of Rs.10mn where the Government will bear 75% of the interest cost and where the tenure of the loan will be a maximum of 15 years, with a two year grace period.[expl. Note III (b)-1.17]. As a further measure to support families of migrant workers the International Telecommunication Levy will be removed.

INTEGRATION TO GLOBAL MARKETS – EXPORTS

62. The acceleration of exports and other sources of foreign income are crucial to sustainable economic growth and debt service capability. In the 2018 Budget, we announced the launch of the Export Market Access Scheme, and the National Export Strategy. Support will continue this year with Rs.400 Mn. allocated for the Export Market Access Program and Rs.250 Mn will be allocated for the National Export Strategy. The NES includes the implementation of the National Quality Infrastructure Strategy, which is a public-private collaboration that entails upgrading of technical facilities for export product development and import quality testing.

63. The Government is committed to the strategy of a network of trade agreements to link into regional value chains. With the successful completion of the Singapore FTA, we will review progress in, on-going FTA negotiations with India, China, & Thailand, and build on learning from the Singapore FTA process.

64. A “Break into India” and “China Market Entry Strategy” are being prepared, building on success stories from Sri Lankan enterprises in those markets. This will be further supported by establishing Trading Houses for priority sectors, in collaboration with the private sector in key markets. These trading houses will support Sri Lankan firms in securing distribution networks, buyer linkages, and other ground support.

65. As a measure to bring down cost of living and improve economic competitiveness, in last year’s Budget, it was proposed to phase-out all para-tariffs, starting with 1,200 para-tariffs that were removed in November 2017. This process will continue in 2019, where all HS codes with an import Cess will be subject to a phasing out. In order to allow more time for industry adjustment, it is proposed that the paratariff phase-out takes place over a 5 year period.

66. In order to reduce the up-front costs for business and investment, I propose to reduce the Ports and Airport Development Levy for machinery and equipment items (HS Code Chapters 84 and 85) to a maximum of 2.5%. I also propose an accelerated Cess reduction program for intermediate goods that drive up costs in sectors such as, the Construction Sector, Tourism, and Manufacturing. These items will have Cess phasedout over a 3 year period.

67. In this process it is essential to support domestic industries that will face greater competition from imports. Legislation on anti-dumping and safeguards has already been passed by this House. In addition, a Trade Adjustment Program has been formulated, which will provide vulnerable firms and workers with financial support to meet costs of upgrading technology and training, respectively. We will also ensure that 10% of all HS codes, considered to be sensitive items, will not be subject to a complete para-tariff phase-out. Necessary improvements to the National Quality Infrastructure are also being made in order to ensure quality standards of all products including imported products.

68. In order to make recommendations on implementing the Trade Adjustment Program, I propose to establish a Trade and Productivity Commission under the Ministry of Development Strategies and International Trade. I propose to allocate Rs.500 Mn over 2 years for the implementation of the Trade Adjustment Program.

69. We are launching the Enterprise Innovation Program, which will support the development of innovative new products and technology by Sri Lankan firms. The Program will be implemented over 3 years, providing matching grants for proof of concept, prototyping, R&D and technology adoption.

70. In order to support financing for start-ups, it was proposed to introduce Limited Liability Partnership structures in the last Budget. The initial drafting has been completed and this will be developed into legislation this year.

71. Sri Lanka needs to develop capital markets beyond bank financing. The back-bone of a deep and liquid debt capital market is a robust government securities market. We will introduce script-less Sri Lanka development bonds and enable coupon stripping of Treasury bonds. We will work with the CBSL to invest in the necessary infrastructure towards this end.

72. Whilst Sri Lanka achieved its best ever FDI in 2017 and 2018, it is essential to further expand investment into the country. Therefore, an incentive package to attract high value investments is proposed. This includes significant capital allowances of up to 150% of investment value and removal of up-front taxes for investments over USD 50 Mn, USD 100 Mn & USD 1,000 Mn.

73. Subsequent to consultations with the private sector, we propose to make some adjustments to the Inland Revenue Act to facilitate implementation and address some pertinent concerns of industry. These are outlined in the technical notes.

74. Work on the Bingiriya and Wagawatte Industrial Zones will be supported to further facilitate our export drive.

75. We will establish industrial estates under Industrial Development Board (IDB) in KKS, Manthai East, Paranthan, Kondachi, Kinniya, Samanthurai & Trincomalee.

76. The “IT Initiative” will be expanded to facilitate the “Arts to Science Internship” Program, where the industry will train 1,000 unemployed, mostly Arts Graduates through internships, for an year in IT-BPM, KPO firms, where 50% or up to a maximum of Rs.25,000/- of the monthly salary for a period of 12 months, will be borne by the Government. Rs.300mn has already been allocated.

77. We will remove the minimum employment requirement imposed on the companies predominantly engaged in the Information Technology Services, to be eligible for the special additional deduction of 35% on the salary expenses incurred.

78. We will introduce a Consolidated Border Control Unit that includes the Navy, Customs, Immigration, Quarantine and other National Quality Assurance entities such as ITI, SLSI & NARA. Customs will also re-establish the Marine Division in order to stamp-out illegal smuggling and the narcotics trade.

79. The Government is in the process of drafting a new Customs Act. However, in the interim, it is proposed to introduce some of the key amendments that are relevant to improving trade facilitation by enhancing transparency and consultation, developing appeals process and risk management. In the spirit of consultation that is espoused among these amendments, the proposed amendments will be subject to stake-holders consultation, prior to implementation.

80. A Revenue Intelligence Unit will be established at Ministry of Finance, to take steps to assist our main Revenue Collection Departments, such as, Customs, Inland Revenue and Excise, to broaden their revenue collection bases, increase total revenue collected and minimize leakages & evasion.

81. Customs will launch the Authorized Economic Operators (AEO) Program in 2019, which will provide expedited clearance for identified low risk traders and clearing agents. Risk-based clearance of this nature will enable Customs to focus resources on higher risk cargo, whilst facilitating compliant traders.

82. The Government has imposed administered prices for certain items for consumer protection. However, it is also necessary to enable reasonable price adjustments to ensure unhindered supply. Towards this end, the Government will introduce a mechanism to review administered prices on a quarterly basis, to take into account, exchange rate fluctuations and other variables.

83. The Gem and Jewellery Industry will be supported with the PAL and Customs Duty on the importation of machinery used in lapidaries and the PAL on the un-cut gems imported, will be reduced from 7.5% to 2.5%.

84. Tourism is a key sector with high potential to contribute to growth in the short term. Recognizing the costs inherent in the sector, Nation Building Tax (NBT) on foreign currency receipts by tourist hotels registered by the Sri Lanka Tourism Development Authority (SLTDA) will be removed.

5. It is proposed to make it mandatory for travel agents to remit funds to hotels in US Dollars when invoiced in US Dollars. The Central Bank will issue directions in this regard.

86. Mr. Speaker, the infusion of technology, especially in facilitating on-line hotel reservations, has changed the traditional hospitality industry with the informal sector growing and remaining unregulated.

87. In this regard, whilst we recognize the benefits of on-line reservation systems, we are mindful of the need to gradually integrate the SME tourism sector into the formal economy. As such, from 1stapril 2020, any online booking/reservation website, can register hotels and similar establishments offering more than 5 rooms per property, only if such establishments are registered with the Sri Lanka Tourism Development Authority (SLTDA). The registration process of the SLTDA will be further simplified to facilitate this.

88. At the same time, in keeping with our policy of supporting the industry to diversify into new frontiers, such as sports tourism, I encourage the private sector, together with the Sri Lanka Tourism Development Authority (SLTDA),TO promote Sri Lanka as a preferred destination in International Go Kart Racing. As such, I propose to remove Customs Import Duty (CID) and Cess on Go Karts and the tyres used in Go Karts.

89. Economic Service Charge (ESC) applicable for export sectors which are subject to Corporate Income Tax of 14%, will be reduced to 0.25% from 0.5%. This will be a major boost to exports, IT and tourism.

90. To support the refurbishment of hotels, the applicable Cess rates will be reduced on selected items.

91. The Central Cultural Fund will provide necessary funds to improve and establish common facilities including rest rooms, sign boards, security booths, information booths, etc., as tourist attractions, which are at present in a deplorable state.

92. The entrance fees at National Parks and Cultural Sites will be reduced by 50% for international tourists with student identification and those under 18 years of age, with effect from 1st June 2019.

93. To support the local construction companies, no foreign construction company will be allowed to tender for Government projects, unless the project is fully foreign financed, without forming a joint venture with a local construction or consultancy company. This will support the local companies to benefit from the transfer of technology.

94. The cost of construction will reduce with the proposed para-tariff revisions and the removal of NBT on the main construction contractor.

95. In order to further support the Property Development Sector, I propose to :

a. Grant residential visas for 3 years to foreign nationals who invest USD 400,000/= or more in condominiums. This process will be implemented this year. This residential visa will not be valid when the foreigner exits from this investment.

b. Cess on imported construction material will be reduced by 30%.

96. Sustainable Energy Authority will introduce minimum standards in energy, to be established for all commercial buildings in 2019, where existing commercial buildings will be given 5 years from 2019, to transit to be compliant with the minimum standards issued.

97. At the same time, Mr. Speaker, we do not have minimum standards imposed on many of the building materials used in the construction industry, giving rise to several negative impacts, including compromise in the stability and the sustainability of the buildings and other constructions undertaken. As such, the Sri Lanka Standards Institute will update and implement minimum standards on sanitary ware, taps, showers and pipes by April 2020. This will address major source of water wastage.

KNOWLEDGE DRIVEN SKILLED SOCIETY

98. Mr. Speaker, our investment strategy in the educational sector is driven by the twin objectives of ensuring the availability of infrastructure and creating opportunities for students to excel through improvements in the curricula and teacher training.

99. Our Government’s program of ensuring “13 years of Education” for every child will be further supported this year. As such, we have already allocated Rs.32,000 Mn. to improve the laboratories, class rooms, libraries, sanitary & water facilities, teachers’ quarters, etc.,

100. At the same time, the implementation of the Continuous Professional Development (CPD) in teachers, facilitated by the infusion of technology, will be supported using existing facilities. These courses will be conducted during school holidays.

101. Mr. Speaker, our curricula will be modernized with a focus on more analytical and creative learning, as opposed to rote learning. Our future investments will be guided by the STEM+A master plan, which is being finalized. This will allow students to pursue a combination of subjects such as Mathematics with Music or Biology with English.

102. Mr. Speaker, I am also delighted to announce the launch of the Scholarship for Educational Excellence - SEE Fund, to facilitate the country’s top performers at Physical Science, Biological Science, Technology, Commerce and Arts, at the Advanced Level Examinations held each year to pursue their undergraduate education at top universities, such as Harvard, MIT, Oxford, Cambridge, etc. The first batch will be chosen from the results of the 2019 ‘A’ Levels in August.

14 scholarships will be given this year to those who top their respective areas. Those selected will be required to return and serve at least 15 years in Sri Lanka. We will also expand the scholarships given in the coming years.

103. Investment in pre-school education has been neglected. We wish to encourage private investment in this sector, with the Government taking a more robust role as a regulator, by defining and ensuring compliance with minimum quality standards.

104. Towards this end the Government will introduce a legal framework for regulation and governance of pre-school education in Sri Lanka. A national curriculum framework for pre-school education will be implemented along with enhancement of teacher training and working conditions.

105. Those with the required qualifications will be facilitated to establish and repair Government registered pre-schools, for which, we will introduce a concessionary loan scheme “Singithi Pasala” under the “Enterprise Sri Lanka” Scheme, where the Government will bear a 50% interest subsidy.

106. Already Rs.25,000 Mn. has been allocated to meet the infrastructure gaps at our universities with investments, in Theatre Complexes, Professorial Units, Departmental Complexes, Libraries and Canteens. To complement the Medical Faculties at the Wayamba and Sabaragamuwa Universities, professorial units will be established at Kuliyapitiya and Ratnapura Hospitals, while a Faculty of Allied Health Science at the Ruhuna University will also be established, which will enable students to pursue careers in medical related services, which is an urgent requirement in our country. A “State of the Art” Laboratory for research in areas such as cancer, diabetes and infectious diseases will be set up at the Medical Faculty of the Sri Jayewardenepura University.

107. Mr. Speaker, only around 30,000 students enter universities from over 300,000 who sit for the ‘A’ Levels. We will introduce a loan scheme, “My Future” under “Enterprise Sri Lanka” which enables our students to pursue Undergraduate Education at Non-state Universities. A student can draw up to Rs.1.1 Mn. at zero interest, with the repayment starting only after 2 years of graduation, to be repaid over a period of 12 years. Rs.200 Mn has already been allocated to meet the interest subsidy.

SKILLS FOR WORK

108. Mr. Speaker, although the Government has been investing heavily into the vocational training sector, the industry demands remain largely unmet on two fronts – i.e. the inadequate number of skilled and self-reliant craftsmen, technicians and technologists, and the lack of necessary skills. Clearly an integrated solution led by the industry will be more effective. As such, the following are proposed:

109. Selected Vocational Training Institutions, where the resources are not fully utilized, will partner with selected industry associations in Information Technology, Construction, Tourism, etc., to conduct training as required by the industries themselves.

110. There is also a requirement to promote Tamil Medium Teacher Training as a matter of priority. I propose Rs.400mn to be provided to the Ministry of National Integration, Official Languages, Social Progress & Hindu Affairs.

111. We will support CIDA to train the required skilled and semi-skilled workers for the Construction Industry. Rs.300mn has already been allocated.

112. There is an urgent need to develop relevant skills in the healthcare sector. We encourage, the private sector to offer internationally accredited training courses for Nurses, where the Government will provide a stipend of Rs.10,000/- per month per trainee, for a period of 2 years. These qualified Nurses will be able to seek employment in nongovernmental institutions. A similar apprenticeship program will be encouraged for pharmaceutical professionals. Pharmaceutical companies will hire science graduate apprentices for a 1 year program, to be accredited by an appropriate institution, and the Government will provide a stipend of Rs 15,000/- per month per apprentice for that year. The success of such apprenticeship programs will enable replication for other industries going forward.

113. The Sri Lanka Army has come forward to support the Government’s drive to effectively train those interested, especially those from low income backgrounds in agriculture, animal husbandry, ornamental fish, use of heavy machines such as Backhoe’s, Motor Graders, Dozers and also undertake training of electricians, welders, air-conditioning technicians, catering assistants, stewards, carpenters, masons and plumbers. These training courses will be NVQ certified and the training will be undertaken at selected Army camps. The trainees will be given the stipend and the concessionary season ticket already made available to VTA trainees.

114. The Army will also train our youth in selected sports at their camps in different parts of the country.

A HEALTHY SOCIETY

115. Mr. Speaker, we have allocated Rs.24,750 Mn in improving the quality of infrastructure, with allocations being provided for the investments in new equipment, rehabilitation of buildings and other infrastructure at hospitals and other such facilities. This is an 38% increase in the provision compared to last year.

116. Rs.1,625 Mn. has been already allocated to strengthen the Primary Health-care Units, especially in the Uva, Sabaragamuwa Central and the North Central Provinces, with the introduction of systems to coordinate patient-care over time and through the referral networks, facilitating the ability to follow up on patients at risk, which will also support to avoid duplication between providers.

117. Our “Suwasariya” Ambulance Service has been a resounding success, bringing an essential service to our citizens. This service will be supported to expand Island-wide. Towards this end, 300 Base Stations will be set up in 2 years, at a cost of Rs.600 Mn. 100 Base Stations will be set up this year and I propose to allocate Rs.200 Mn for this in 2019.

118. Mr. Speaker, we continue to allocate resources to address the issues in CKDU. As such, we will provide Home Dialysis Machines, while also strengthening the Hemo-dialysis Centres in 45 hospitals, together with RO Water Plants.

119. Early detection through Door-step Screening will be further strengthened in the most CKDU vulnerable districts in the country.

120. The Rabies Control Program to eradicate Rabies from the country, will be strengthened by also engaging the Non-governmental Organizations, in this effort as well. A comprehensive sterilization program for stray dogs will be introduced by the Dept. of Animal Production and Health (DAPH). An allocation of Rs.100mn will be made.

121. The incidence of Non-communicable Diseases (NCDS) in particular, together with an ageing population, has given rise to the need for proper Palliative-care being introduced. As such, we will facilitate capacity building in Palliative-care for Doctors, Nurses and other medical professionals.

122. Mr. Speaker, Sports is an integral part of a healthy society and also builds leadership and team spirit. We have already allocated Rs.3800 Mn. towards sports. In addition, I propose:

123. The Bernard Aluwihare Sports Stadium in Matale, and the Weerasinghe Mallimarachchi Playground in Kolonnawa, will be upgraded to support our rural youth in sports. Towards this Rs.300mn each will be provided over 2 years.

124. The National Olympic Fund will be enhanced to support sports, such as Athletics, Volleyball, Table Tennis, etc.

CULTURE OF RESEARCH & DEVELOPMENT

125. While there are a number of research institutes, both state and non-state, in the country, most research has not been converted to applicable or commercial solutions, giving rise to questions about the effectiveness of the investments made thus far. As such, our approach in research and investments will be driven by results and also investments into futuristic sciences, so as to be prepared for the needs of the years to come.

126. We will introduce the “Science at Work” Challenge, where challenges in the following 5 themes will be posed to the Scientific Community to work on, and viable solutions will be supported to be implemented with the allocation of the required finances.

(a) Reducing post-harvest losses in agriculture and fisheries

(b) Creating global benchmark yields in Paddy and Minor crops

(c) Addressing Human-elephant conflict

(d) Create a 1,500 sq.ft. low-cost livable Housing Units

(e) Value addition to local medicinal plants and bioproducts to position them as Nutraceuticals.

127. Mr. Speaker, I am sure this House will agree that our Cities are slowly transforming themselves into citizen friendly, sustainable and socially equitable spaces. Colombo is now being called the “Garden City of Asia”.

128. Under the Urban Re-generation Project (URP), over 8,000 houses have already been completed and over 7,500 houses are being constructed, while another 5,000 houses will commence construction. Rs.8,000mn is allocated.

129. “Sukithapurawara” Township Development Program which covers all 9 Provinces is being implemented to enhance inclusive and sustainable urbanization in the country. Rs.3,000 Mn. has been already allocated. I propose to allocate a further Rs.2,000 Mn. to facilitate this Program.

130. “Beira Lake Cleaning”, a project that initially commenced in 2000 with US aid, will be completed in order to restore water quality.

131. Solid Waste Management that has been a key issue in the city of Colombo is now being addressed with Government investments in Aruwakkalu with an investment of almost Rs.7,600 Mn. in 2019. Private sector investments are also in progress.

132. Flood and Drainage Management, Enhancement of Drainage Capacity in the Colombo Water Basin, Beira Lake Linear Park & Beddagana Park and the Weras Ganga Projects are designed to mitigate floods within Colombo and the Greater Colombo areas, for which, Rs.10,900mn is already allocated.

133. Mr. Speaker, we have extended our investments beyond the Colombo City into Galle, Kandy and Jaffna Cities, which includes traffic management measures, rehabilitation of major drains & flood reduction measures, urban upgrading, restoration & adaptive re-use of historic & landmark buildings and coastal erosion reduction measures for selected areas. An allocation of Rs.9,225 Mn. has been made.

134. The iconic old Town Hall building in Jaffna was destroyed during the conflict. It is now a timely requirement to reconstruct the Jaffna Town Hall. I propose Rs.700mn for this effort.

135. Whilst safeguarding and protecting our hill country heritage, special attention will be paid to nurturing crafts, architecture, cultural aspects, traditions, indigenous medicine and places with historical value, inherent to the Hill country.

136. The Bogambara Prison – a heritage building – will be re-developed and re-positioned as a Public Space in 2 years. Rs.750mn will also be provided towards this work, this year.

137. Township Development work in Kalmunai, Valachanei, Thalai Mannar & Samanthurai will be further supported.

138. Mr. Speaker, all Government and Private commercial buildings in the country will be “Disability Friendly” by 2023. It is envisaged that this will be a mandatory requirement for new building approvals from 1st January 2020. All State buildings will be made “Disability Friendly” by 2022.

139. In line with the objective of increasing the reach of pipe-borne water at least to 60% by 2020, we have undertaken Rs.45,000 Mn worth of water projects covering all Districts. We will extend our support further, through community-based Water Supply Schemes - “Praja Jala Abhiman” – to cover 1,000 villages, where almost 200,000 families will benefit in the next 2 years.

140. Mr. Speaker, huge traffic jams have become the order of the day. Our transport sector is yet not meeting the needs of a middle-income county. Our public transport system needs urgent attention, with investments made in a more integrated manner.

141. The “Sahasara” Bus Modernization Program will get priority in the next 5 years to transform bus services across the country. Private Sector Bus Employees will now have better job security with EPF and ETF contributions being made and being eligible to get loan facilities as an incentive for better service towards passengers. A Revenue Support Fund will be established as a transitional arrangement to enable bus owners to be paid on a monthly basis for the kilometer operated, rather than the highly unsatisfactory competition that exists, causing inconvenience to the public, accidents and chaos on our roads. We also commit to introducing within the next few months, starting with the Central and the Western Provinces, pre-paid fare cards, electronic tracking of buses, using GPS and information on next bus and bus schedules, delivered to the palm of the passenger through mobile applications.

142. Modern multimodal passenger terminals will become a reality starting from Makumbura and will include Kandy, Kadawatha, Pettah and Moratuwa. We will ensure the 40% share of the SLTB market and improve efficiency of both the SLTB and private bus operations, by establishing a joint Bus Operation Control Centre connected to live digital data streams throughout the Country, so that bus transport will become an attractive option for the 21st Century. Rs.1,300mn has been allocated to support these investments.

143. SLTB’S fleet will be expanded with the addition of 250 buses with safety & user-friendly standards in the next 2 years. SLTB will also introduce buses that are more suited for those with special needs.

144. A concessionary loan “City Ride”, under “Enterprise Sri Lanka”, will be introduced, where the Government will bare 75% of the interest cost for private bus fleet owners to expand their fleets by a total of 1,000 luxury buses.

145. At the same time, Three-wheelers will be supported through a concessionary loan “Mini Taxi-electric Three Wheeler” under “Enterprise Sri Lanka” Loan Scheme to upgrade into electric three-wheelers and small cars that will be more environmentally friendly, safer and more comfortable. Government will bear 75% of the interest rate and the existing three-wheeler should be disposed.

146. Mr. Speaker, our railways are grossly underutilized. There is a significant demand for an improved railway service, which we believe can be better provided in conjunction with the private sector. In this regard, we will allow the private sector to lease/rent Sri Lanka Railway’s carriages, and improve their facilities in the 4 main lines.

147. Work on the Colombo City Light Rail Transit (LRT) will commence in 2019, connecting Malabe to Fort, for which Rs.5,000 Mn. is already allocated.

148. Mr. Speaker, the Southern Expressway’s extension and the Outer Circular Road will be completed in 2019, and work on the Central Expressway Section I and III will commence, while continuing work on Section II. To further improve connectivity, work on the Ruwanpura Expressway, connecting the Ratnapura District to the Southern Expressway, will commence in 2019.

149. “Ran Mawath” Program – Mr Speaker, The Government has invested a significant amount of resources to construct roads and expressways. Since 2015, we have spent around Rs.700,000 Mn. for roads alone. Despite the amounts spent, there are many more roads that need to be constructed. Under the “Gamperaliya” Program, provisions are allocated for rural road construction. Yet, considering the national importance of further rural and other road development, I propose to allocate a further Rs.10,000 Mn. for the maintenance and construction of, mainly rural roads, through the “Ran Mawath” Development Program.

PUBLIC SECTOR SERVICE DELIVERY

150. In 2016, our Government took steps to absorb the monthly Interim Allowance of Rs.10,000/- and the Special Allowance to the basic salary of the public sector employees in 5 phases, from 2016 to 2020, by maintaining the 1:4.07 ratio, which resulted to increase the public sector salary by 107% within the same period. In fact Rs. 40 billion has been allocated in the appropriation bill of 2019 for this purpose. As a result of this, the monthly salary of a lower grade government employee will increase from Rs. 11,730 in 2015 to Rs. 21,400 in 2020. Furthermore, the government will implement the report of the Special Salary Commission appointed by HE the President as soon as the technical committee recommendations are out. Therefore, I propose a monthly allowance of Rs. 2,500 with effect from July 1st 2019 as an interim messures.

151. There are around 560,000 pensioners, who have retired before 31st December 2015 and whose pensions are calculated based on the Public Administration Circular No. 06/2006. In addition to that, around 71,000 pensioners retired during the period of 1st January 2016 to 31st December 2018, and are drawing pensions based on their eligible basic salary at the time of retirement, based on the Public Administration Circular No. 03/2016. There is a disparity of pensions drawn by the pensioners, who have retired before 1st January 2016 and the ones who were entitled to different phases of the salary increases given by the Public Administration Circular No. 03/2016. Therefore, I propose a pension revision, having incorporated the first 2 phases of the Public Administration Circular 03/2016 to the basic salary obtained by the pensioner, at the time of retirement with effect from 1st July 2019. I propose to allocate an additional sum of Rs.12,000 Mn for that revision this year, to rectify the pension anomalies. This will benefit around 585,000 affected pensioners. For an example, a lower grade government employee’s pension will increase by at least Rs.1,600/- per month. A Grade I teacher will have a Rs 4,600/= increase in the monthly pension and the pension of a Secretary to a Ministry will increase by Rs.12,000/per month. This is based on 25 years’ service and retirement prior to 31st December 2015.

152. In 2017 and 2018, allowances of the Police Department were increased. However, Commando Allowance, Uniform Allowance, Rent Allowance and the Good Conduct Allowance of the Armed Forces, where some have not been increased in some instances, for over 20 years, will be increased from 1st July 2019.

153. Mr. Speaker, we need to enhance the quality and productivity of our public sector through technology and modernization. I propose to continue to support this process.

154. The Commission to Investigate the Allegations of Bribery or Corruption, will be strengthened, especially to engage in Awareness programs amongst the Public.

155. Mr. Speaker, the digitalization of Government procedures has already begun and will continue into 2019 as well, with focus on e-governmental Digital Document Management, towards a society with better Governance and Accountability and over Rs.800mn has been allocated to implement these activities.

156. Entrepreneurs in “Gramashakthi” Production Villages will also be further assisted through access to technology.

157. Youth empowerment through enhancement of skills will be further supported by the ‘Smart Sri Lanka” project.

158. The Fiscal Management (Responsibility) Act No.3 of 2003 will be amended, with a view to strengthening Fiscal Rules with legally binding Fiscal Targets, a clearly defined escape clause and correction mechanisms, in case of a target breach.

159. The new Monetary Law Act as proposed in the last Budget has been drafted. This is a landmark legislation that will introduce disciplines to help eliminate the monetary and fiscal profligacy that has plagued our country for decades.

160. Gender Based Budgeting – the Government is committed to gender responsive budgeting and initial steps have already been taken by issuing an addendum to the budget call of 2018 with the objective of improving the participation of women in the workforce. 12 key performance indicators have been identified and action will be initiated to achieve this. I also propose to establish a focal point on gender perspectives under each ministry, to aggregate relevant data.

SOCIAL SAFETY NET

161. Unfortunately, Sri Lanka’s Apex Welfare System – “Samurdhi”, which was established in 1994 to facilitate the poor graduate to a higher income level, has failed to, not only protect the vulnerable, but also to strengthen and support them. It has now become politicized to such an extent that many “Samurdhi” officials are strongly affiliated to a certain political party.

162. As such, this has resulted in the deserving, not benefitting from this scheme, while those who do not deserve, mostly card carrying members of a particular political party, continue to enjoy these free subsidies for merely supporting the politics of the day, resulting in the “poor remaining poor”. This has severely compromised the economic freedom of our weakest. Therefore, I propose to develop an objective, transparent and measurable criteria, to streamline the “Samurdhi” Program in a more effective manner, which will actually facilitate the addition of around 600,000 deserving households. Rs.10,000 Mn. Has been allocated for this. Many deserving families have been left out, merely because of their loyalty to other political parties.

163. Mr. Speaker, “Samurdhi” beneficiaries have accumulated significant funds in the “Samurdhi” and other Banks. They have got minimal returns on this investment, with no recourse to any withdrawals. This is their money. Therefore, I propose to allow all Samurdhi beneficiaries to withdraw up to Rs. 30,000/= each from their “Samurdhi” Compulsory Savings in banks, in two instalments in April and November this year, as a dividend for the Sinhala/ Tamil New Year and Christmas.

164. Sri Lanka faces a growing challenge due to its ageing population. To address this issue in a holistic manner, the Government will take steps to introduce a National Pension Plan with a sustainable financing structure.

CLEAN, GREEN AND A SUSTAINABLE ENVIRONMENT

165. Conservation and Protection will only be effective if society is an active part of this endeavour. As such, community-based “Green Clubs” will be established in every Divisional Secretariat, consisting of volunteers, especially students. These Clubs will be engaged, especially to expedite the planting of 2.5 million trees, cleaning beaches, separation of waste, etc.

166. We will continue investments in creating “Green & Clean” Public Spaces such as, “Haritha Udyana” (eco-friendly parks), which will enable the greening of our cities and villages, whilst facilitating stronger bonds in communities. We will partner the Colombo Municipal Council in its ‘City Beautification’ endeavour. Rs.1000mn. has already been allocated.

167. Further, the “Nilwala Eliya” Model Park and Mega Zone will also be completed in 2019. Rs.1,000 Mn has already been allocated.

168. Mangroves are eco-systems that stabilize coastlines, provide critical habitats for many animals and sequester more carbondioxide than other kinds of forests, making them indispensable in combating climate change. However, our mangroves are fast receding and as such, we will support the replanting of mangroves, where nurseries will be established at the first stage.

169. Rs.2,000mn will be channelled to facilitate the rehabilitation of houses and other infrastructure facilities affected by disasters, while also introducing disaster resilient houses in selected high-risk districts.

170. Mr. Speaker, in the recent past, we have experienced the impact of droughts and floods resulting in the loss of lives, loss of income and property. The victims of such disasters, both individuals and corporate, will have to be compensated immediately and to mitigate the impact of the loss and to facilitate a more efficient and effective method of doing so, we will allocate Rs.20,000 Mn. over the medium-term as a Disaster Management Contingency Fund.

171. Sri Lanka has been categorized by the NFORM Global Risk Index as a high-risk country, prone to natural disasters. In the past few years we have seen that, while one part of the country was faced with severe droughts, other parts of the country experienced heavy floods, during the same period of the year. Hence, it has become a timely need to take proactive measures to allocate resources to mitigate both the vulnerability of natural disasters and to compensate the affected people and properties. Therefore, it is required to strengthen the natural disaster insurance scheme that the Government introduced in 2016, by allocating an additional Rs.1,000 Mn. from this year, to increase the Annual Government Premium from Rs.500 Mn. to Rs.1,500 Mn.

172. The Ministry of Women, Child Affairs and Dry Zone Development will be allocated Rs.250mn to enhance initiatives to develop the dry zones, in addition to the “Gamperaliya” and other development initiatives, already in place and proposed.

173. The proliferation of single use plastic products, including plastic bags, packaging, plastic bottles, lunch sheets, have led to significant environmental costs. As a first step in introducing appropriate regulation for this sector, it will be mandatory for any entity, manufacturing or importing single use plastics (as defined by the Central Environment Authority) to register with the Ministry of Industry and Commerce before the 1st of September 2019.

174. Sri Lanka will develop a consolidated plan for Marine Conservation to protect and sustainably manage its marine resources. We will progress towards declaring the Exclusive Economic Zone of Sri Lanka as a Marine Conservation Area, entailing measures to sustainably manage marine biodiversity, to enhance socio-economic benefits to the country.

RELIGION, ARTS AND CULTURE

175. We recognize the unique contribution of artists, writers and musicians, towards enriching our society and enhancing Sri Lanka’s cultural value. Thus, our Government has continually supported the development of culture and arts in Sri Lanka. We will also introduce and implement a fair scheme of royalty payments for our artists, so that they continue to benefit from their creations, when such creations are aired/telecast or otherwise publicized. This will protect their creations and provide them with a continuous income source. To further support this initiative, we have made royalty income up to Rs.50,000/- per month, exempt from withholding tax.

176. Mr. Speaker, we have undertaken the Rehabilitation of Buddhist Temples and other religious places of worship, under the “Gamperaliya” Scheme and for the year 2019, we have increased the allocation to Rs.1mn from Rs.500,000/- per place of worship.

177. Solar Power will also be provided under “Gamperaliya” for places of worship to further mitigate their energy costs and relieve the burden on our national electricity grid.

178. The infrastructure facilities at the Madhu Church will also be improved.rs.200mn has been provided for this purpose.

179. The renovation work at the John De Silva Theatre will be completed by 2020, with the installation of ‘State of the Art’ equipment.

180. The National Art Gallery will be modernized and a new wing for Modern Art will be established.

181. Work on the world-class Performance Centre in Moratuwa will commence in 2019.

RECONCILIATION THROUGH ECONOMIC EMPOWERMENT

182. Mr. Speaker, last year we initiated a multipronged strategy to address the key issues faced, in particular, by our people in the North and the East. Our strategy was driven by the objective of creating sustainable livelihoods, including assisting those heavily indebted and assisting the marginalized. This will also be complemented by the Government’s commitment to ensuring a framework, where there is justice for all stakeholders, ensuring that the violence of the past will not recur again.

We have just launched the Economic Development Framework for the Northern Province, along with stakeholders and the Central Bank of Sri Lanka (CBSL). Steps are now being taken to convert this into a concrete work plan, which will benefit all the citizens in the North. We will extend this framework to other similarly affected districts in the country. Office of National Unity & Reconciliation (ONUR) will be requested to participate in this national effort.

183. Communicating our reconciliation efforts in a stronger and more meaningful manner is critical for sustainability of all our endeavours in this area. Towards this end, I propose to allocate Rs.200mn to the Secretariat for Coordinating Reconciliation Mechanisms (SCRM), which comes under the Hon Prime Minister’s Office, for Communication and Awareness programs in this regard.

184. The Office for Reparations Bill was passed by this House and work will begin in 2019. We will provide the required resources for the office to be set and staffed adequately.

185. The Office of the Missing Persons (OMP) will be adequately resourced to support families of all missing persons island-wide, including the MIA’S of the Armed forces and the Police, who have obtained Certificates of Absence. They will be provided Rs.6,000/per month, until the Office of Reparation is established and their cases are resolved. These families will also be given preferential access to relevant “Enterprise Sri Lanka” Loan Schemes and will be required to join the livelihood programs coordinated by (ONUR).

186. Mr. Speaker, to fast track development in the North and the East, we will establish the “Palmyrah Fund”, with an investment of Rs.5,000 Mn spread over 2 years. We invite well-wishers, philanthropists, especially in the Diaspora, to also contribute to this Fund, which will be administered by the Treasury. The funds will be routed through the Government Agents for development activities in the war affected areas. In addition to these development activities, the fund will also channel resources towards programs that addresses alcoholism, drug abuse, youth unemployment, civil society-initiated counseling and support programs.

187. In 2018, significant investment in producer co-operatives sought to urgently create jobs and decent incomes by initiating 50 small industries in the rural economy. The groundwork laid last year, allows us to scale up this program rapidly with another 50 co-operative small industries and take existing industries to the next stage of development. Tech Ceylon Social Ventures, a non-profit company of mainly young Sri Lankan engineering and technology graduates, have provided voluntary technical services driving our flagship small industries producer co-operatives program in the North. This support has been invaluable for successful Government investment, and I hope youngprofessionals in other regions will also make a similar contribution to our national economy.

188. The Debt Relief Scheme will be continued through the Cooperative Rural Banks and Thrift and Credit Cooperative Societies.

189. An Integrated Project to create Industrial Scale production of Toddy Bottling and production of Jaggery will be set up in the Northern Province, in collaboration with relevant Co-operative Societies.

190. To facilitate more efficient trade links between farmers and the market, 10 Satellite Economic Centres connected to a Central Economic Centre will be established in the Northern Province.

191. The Giant Tank will be rehabilitated, facilitating Agriculture, especially in Mannar.

192. Rs.2,000 Mn. has been allocated to provide facilities such as Water, Electricity, etc., for the already built houses and to support for partly built or destroyed houses in the North and the East.

193. We have provided debt relief to around 45,000 women who are residents of the drought affected districts of Trincomalee, Ampara, Batticaloa, Jaffna, Mulaitivu, Kilinochchi, Vauvuniya, Mannar, Kurunegala, Puttalam, Anuradhapura and Polonnaruwa, who have availed themselves of microfinance loans, up to a maximum of Rs.100,000 (initial capital) and outstanding for at least 3 consecutive months, since June 2018. This initial step will be followed up with concessionary loans from the “Enterprise Sri Lanka” program and the Cooperative movement, in order that this situation is mitigated in the future.

194. Our efforts to ensure reconciliation and provide a sustainable livelihood in the Northern Province, will be further strengthened through the work undertaken by ONUR, including “Sahodara Pasal”, “Heal the Past – Build the Future”, “Viruliya Shakthi”a Programme for Military Widows, Programmes for Peace through Arts & Culture and the Integrated Village Development Program. ONUR will be further supported to carry out and enhance these programs and design and implement new ones.

REVENUE

195. Mr. Speaker, Sri Lanka’s tax-to–gdp ratio fell to one of the lowest in the world and the nation’s tax efficiency ratio is also below that of peer countries. In this context, I propose the following revenue proposals to enhance the fiscal revenue in the year 2019, and also to address certain anomalies in the taxation system.

196. Revision of Excise duty on Cigarettes effective from 6th March 2019 and introduction of Nation Building Tax on manufacturer of Cigarettes effective from 1st June 2019. Accordingly, Excise duty on Cigarettes, which are more than 60 mm, will be increased by 12%, resulting in an increase of Rs.5 per stick on average. Excise duty on cigarettes will now be based on indexation with a minimum annual duty increase capturing annual inflation and GDP growth. This will ensure revenue protection and control affordability.

197. Revision of Excise duty and implementation of luxury tax on motor vehicles effective from 6th March 2019. The revision of the excise duty will have a minimal impact on smaller personal vehicles. In addition, the 200% cash margin requirements on motor vehicle imports will be removed in the near future.

198. Revision of Cess duty on importation of Tendu Leaves (Beedie Leaves) from Rs. 2,500 to Rs. 3,500 per Kg, effective from 6th March 2019.

199. Revision of Embarkation Fee by USD 10 per person. This increased embarkation fee shall be credited to the Consolidated Fund effective from 1st April 2019.

200. Introduction of 3.5% of Nation Building Tax in place of existing Stamp duty, on all foreign payments made by using any Credit Cards and Debit Cards. This will be made effective from 1st June 2019. This proposal will also help address taxation of off-shore digital services.

201. Revision of fee on alteration of passports and issuance of passports effective from 1st April 2019.

202. Revision of the price of special number plates for motor vehicles, issued by the Department of Motor Traffic, effective from 1st June 2019.

203. Revision of Excise duty on liquor manufactured locally will be based on indexation, effective from 6th March 2019, where the minimum annual duty increase is according to an index capturing annual inflation and GDP growth. Increase of Excise duty on hard liquor manufactured locally by 08% (Excise duty on Special Arrack remains without change) and maltliquor by 12% will be done based on indexation effective from March 06, 2019 where the minimum annual duty increase is according to an index capturing annual inflation and income growth (GDP change).

204. Peice based VAT rate on disposal of garments by BOI approved enterprises will be revised from Rs. 75 to Rs. 100 on the basis of inflation indexation, effective from 1st June 2019.

205. 15% increase of all fees and charges which have not been revised since 2016.

206. Increase of toll on expressways by Rs.100 during peak hours effective from 1st April 2019.

207. Increase of license fee of casino’s from Rs. 200 MN to Rs. 400 MN per annum and rudjino games to Rs. 1,000,000 per annum. The casino turnover levy will be charged at 15%. These new charges will be effective from 1st April 2019

208. A casino entrance fee of USD 50 per person, will be charged, effective from 1st June 2019.

209. Revision of economic service charge (ESC) on selected imported goods.

210. Revision of unit rate based custom import duty on selected goods including fruit drink, liqour and tobacco effective from 6th of March 2019.

211. Mr. Speaker, the details of the Revenue and Expenditure proposals are described in the technical note.

212. The relevant amendments to the Borrowing Limit for the 2019 Appropriation Bill for the financial year 2019, is presented in Annexure III. The Revenue Proposals are presented in Annexure I. Further the underlying Fiscal Framework is presented in Annexure IV. Considering the administrative processes that needs to be followed in executing the mandated work, I propose a saving of 10% to 15% from Capital and Goods and Services expenditure. The document under the FMR Act No. 03 of 2003, which has to be submitted along with the second reading of the Budget, is also tabled.

213. Mr. Speaker, I wish to thank H.E. the President and the Hon. Prime Minister for the guidance given. I wish to thank my State Minister - Hon. Eran Wickramaratne for his support. I wish to also thank all those who sent in their Proposals, which guided this Budget. I am grateful to my colleagues at the Cabinet and all Members of Parliament for the support extended. Last but not the least, I wish to thank the Secretary to the Treasury and all the officials who worked hard in preparing this Budget. Mr. Speaker, often times, our Economic Policies have been guided by short termism, which has created uncertainty and chaos in our systems. This has prevented the country from reaping the benefits of its true potential. In fact, our people have had a raw deal. We, in this House, has the power to change this and create a new paradigm that will enable the people that we represent to be prosperous.