The need to change the negative perception about the island in the West, Sri Lanka’s main export market, was emphasized by an IT professional.
“When one speaks of Sri Lanka in the West, it’s associated with horror stories,” Madu Ratnayake, General Secretary SLASSCOM and Vice President
Virtusa, a software exporting firm with overseas branches told this reporter.
He spoke in the context of trying to make Sri Lanka an investment destination for global IT and BPO (business process outsourcing) companies, complemented by the setting up of an IT park with Government investments in Colombo or in the suburbs (a budget proposition of the industry to the Government) to accommodate such investments.
SLASSCOM (Sri Lanka Association of Software and Service Companies) is the umbrella body encompassing Sri Lanka’s IT and BPO industries.
The industry’s main markets are Europe, followed by the USA.
Other areas of support the ICT industry has asked the Government from “Budget 2011” due to be presented in Parliament on November 22 are the continuation of tax breaks even if catering to the local industry and financial support for international promotional work.
The Tax Commission which recently submitted its report to President Mahinda Rajapaksa, in the light of falling tax revenue, has, among other things advised the Government to limit BoI tax breaks only to companies that invest a minimum of US$ 10 million in the economy and also to halt giving tax holidays to companies catering to the local industry.
Government’s new tax policy is expected to be known when “Budget 2011” is presented to Parliament.
But a number of local software companies, which, under the present BoI law enjoy five year tax holidays, began small, not matching up to the minimum US$ 10 million investment requirement proposed by the Tax Commission to qualify for BoI tax breaks.
“I started with three employees from a US$ 10,000 investment, and have since grown to employing 300,” said Dinesh B. Saparamadu, Founder & CEO hSenid, a software firm catering to both the local and export software markets, and with offices in overseas markets as well.
Saparamadu who is also the chairman of the Sri Lanka Association of Software and Service Companies (SLASSCOM) is also opposed to the move of not providing tax breaks to software companies catering to the local market, saying that he first grew by catering to the domestic industry.
Similar sentiments were expressed by Ratnayake who said that Virtusa started with a mere 10 employees.
“Ours is not a capital intensive industry,” said Saparamadu.
The Government has identified ICT as a thrust industry and in its Mahinda Chinthana policy document aims at making Sri Lanka a knowledge hub, for which ICT plays an integral role.
The local IT/BPO industry is expected to earn a revenue of US$ 390 million this year, and is said to be the country’s fifth highest export revenue earner.
The industry is expected to grow by 20% year on year this year and projects to be a US$ one billion industry in five years time. At present it provides employment to 35,000; of whom 21,000 are in the software industry and 14,000 in the BPO industry.
Bad publicity by the international media is the cause for the negative mindset in the West about the island, a US businessman of Indian origin told this newspaper.
Ram Sareen, head coach Tukatech, a virtual fashion designing company for the international garment industry said that the foreign media tends to exaggerate events.
Similar sentiments were expressed by Don Laguardia, a US fund manager at a seminar in Colombo recently. (See The Sunday Leader business pages of October 31, 2010).
However Sareen said that the local hotels were flooded with businessmen, which augured well for the future.