sri lankan president Archives

Zardari, MR agree to enhance economic, defence cooperation

Pakistan and Sri Lanka yesterday agreed to work towards enhancing economic and defence cooperation.

Diplomatic and government sources told The Island, that the decision had been taken during one-to one talks between the visiting Pakistan President Asif Ali Zardari and Sri Lankan President Mahinda Rajapaksa, in Colombo.

They said that Zardari’s four-day state visit, which commenced on Saturday, was aimed at further strengthening bilateral relations between the two countries which dated back to Buddhist civilisation.

Sources said that regional peace, stability, money laundering and the fight against militancy had also figured in the discussions between the two leaders.

“The other areas agreed on were connectivity and cultural exchanges. Tourist,educational, technology and media sector exchanges were also discussed. The Pakistan Presidents visit is part of a long tradition of high-level contacts between the two countries,” sources said.

Pakistani diplomatic sources said that Pakistan had stood by Sri Lanka in good and bad times and expected the same solidarity with Pakistan now.

“The security situation in Sri Lanka was never an issue for us to do business or visit there. We expect the same solidarity now. The situation in Pakistan is not so bad as it is made out to be by some media groups with vested interests,” they said.

External Affairs Minister Prof. G. L.Peiris, asked to comment on his discussions with Zardari on the question of regional peace stability and the fight against militancy, told The Island that no country could act in isolation and that SAARC had to adopt a joint approach on the issue.

Money laundering, he said, was an equally serious problem that had to be tackled together as it was fast spreading its tentacles.

Prof. Peiris said: “The important thing is that violence is behind us and there is a huge scope for economic and social development. We discussed political, economic, social and cultural cooperation. Broad agreement was reached on enhanced bilateral trade in tea, sugar, betel leaves, edible oils etc. President Zadari will have a meeting the Sri Lankan Chambers of Commerce tomorrow, where the specifics will be gone into.”

Sri Lanka-Pakistan bilateral trade has increased from US$ 150 million to around US$ 350 million since the Free Trade Agreement signed in 2002 became operational in 2005. The two countries are also exploring the possibility of establishing an Investment Bank.

Sri Lanka unveils tax reforms to boost post-war economy

Sri Lankan President Mahinda Rajapakse yesterday announced a major tax reform package aimed at boosting the economy of the island as it recovers from the civil war that ended last year, reports AFP.

Rajapakse, who is also finance minister, unveiled the new measures as he presented the annual budget for 2011 with the deficit predicted to fall to 6.8 per cent of gross domestic product from 8.0 per cent this year.
He slashed import taxes on many capital goods, including on vehicles and industrial machinery by 25 per cent, and also simplified taxes charged on imports and retail trade. “Having ended the war, and with vital infrastructure in place, we are now in a better position to engage in an accelerated development process within the next six years,” Rajapakse said.

As part of foreign exchange liberalisation, he said foreigners in future would be able to buy into companies through local investment funds.

He also announced plans to lower value added tax for banks from 20 per cent to 12 per cent, ease taxes on construction companies to 12 per cent and offer breaks on commodity exports like tea, rubber and spices.
Tax breaks for the fisheries, agriculture and construction sectors were among the schemes to boost economic activity in the island after the bloody conflict between government troops and Tamil separatists ended in May 2009.

“One of the main objectives of my government is to double per capita income to 4,000 dollars by 2016,” Rajapakse said. “But, that is not the only objective, I want real incomes to go up.” “A high per capita economy will help us to regain many opportunities we have lost during the war years.”

Rajapakse, who has a strong grip on power in Sri Lanka after overseeing the defeat of Tamil Tiger rebels, raised taxes on casinos, alcohol and international phone calls.
Charges for overseas calls have fallen to historic lows due to stiff competition among phone companies.

The president said he would cut income tax for tourism- related businesses, but added tax breaks would favour more expensive hotels in Sri Lanka in an attempt to push the island towards the luxury holiday market.