Review of Sri Lanka's 2016 Budget with regard to the Transport and Logistics Industry. Submitted for the module "Macroeconomics" during the 2nd semester of the Transport and Logistics Management Degree Program at University of Moratuwa.

1. REVIEW OF THE SRI LANKA’S BUDGET, 2016 WITH
REGARD TO THE TRANSPORT INDUSTRY
HASHAN RAHUBADDHA
141456 X

2. ROAD TRANSPORTATION
PROPOSAL NO 1
PROPOSAL Honorable Speaker, at present the Sri Lanka Transport Board (SLTB) spends at least Rs.
4.5 million On the purchase of a bus. However, the old chassis of SLTB are presently sold as
scrap which could be used to manufacture buses which I understand could be done at a
fraction of the cost spent otherwise on purchasing buses, thus generating savings.
Therefore, I urge the SLTB to explore the possibility of partnering with local companies that
has the capacity to build road worthy buses. This process will save around Rs. 1.5 million per
bus and we expect to save Rs. 10,000 million per annum.
GOVERNMENT
OBJECTIVE
1. Refraining importing busses will save money and as a result BOP will increase.
2. Manufacturing busses at factories will create jobs for the locals which eventually results
in less UNEMPLOYMENT
3. Eventually this will result in increasing the GDP

3. PROPOSAL NO 2
PROPOSAL I also propose that the all state sector agencies dispose of their unutilized dilapidated vehicles
through the tendering system to ensure that public assets are not wasted.
GOVERNMENT
OBJECTIVE
1. By dilapidated vehicles through tendering system will result in income for the
government eventually end up in less budget deficit.

4. PROPOSAL NO 3
PROPOSAL Honorable Speaker, almost every day we hear of accidents involving three wheelers. Three
wheelers have contributed to improving mobility in the country, but I believe that it is time
that we also encourage upgrading the vehicles to four wheelers with 280 cc capacity.
GOVERNMENT
OBJECTIVE
1. This initiative leads to better living standards of the community which will increase the
BALANCE OF EQUITY.

5. PROPOSAL NO 4
PROPOSAL Honourable Speaker, to save energy and minimize environmental pollution, I encourage the
three wheeler owners to convert their vehicles from fuel to electricity. Therefore, I propose to
make available a concessional loan of Rs 150,000 for the conversion purpose, for fare metered
three wheelers. I propose to allocate Rs. 50 million for this purpose.
GOVERNMENT
OBJECTIVE
1. Government spending will go high resulting higher GDP levels.
2. Will improve the living conditions of the community as the air pollution will decrease thus
will increase the BALANCE OF EQUITY.
3. Fuel consumption will go down resulting less importing and a positive trade account and
a better balance of payment.

6. PROPOSAL NO 5
PROPOSAL I also propose to install a traffic encoder free of charge into every registered vehicle in the
country. This will help better management of traffic, deter theft and improve security. As such
I propose to allocate a sum of Rs.500 million for this purpose.
GOVERNMENT
OBJECTIVE
1. Government spending goes high resulting higher GDP level.

7. Railways
PROPOSAL NO 6
PROPOSAL Honorable Speaker, we have 1,567 km of railway lines in the country. Of this on a considerable
length of railways during a day, only a few trains will travel for the entire day.
As such, it is proposed to allow railway track sharing with the private sector to use the railway
tracks at a fee for the purpose of transporting goods and for tourism. The revenue generated from
this will be utilized to strengthen the management of railways and upgrade its infrastructure.
Honorable Speaker, the Railways is endowed with a significant amount of assets that are not
optimally utilized. As such, I propose to establish a "Railways
Development Council" comprising of 5 members appointed by the Government to identify
strategies to improve the yield of the underutilized assets.
GOVERNMENT
OBJECTIVE
1. Involvement of private sector to use the railway tracks and PPPs to share the rail tracks
will improve the private investment in the country which will result in higher GDP.
2. Government expenditure will increase as the infrastructure is being developed and thus
again the GDP will increase.

8. PROPOSAL NO 7
PROPOSAL I propose Sri Lanka Railways too to follow the same procedure that SLTB adopts for reusing
of bus-chassis, for its old railway carriages. The rolling stocks savings from conversion of
condemned scrap to carriages amount almost Rs. 6,000 million per annum.
Further, this will save foreign currency as this will be an import substitution and also create
a new local industry.
GOVERNMENT
OBJECTIVE 1. Refraining importing train carriages will save money going out of the country and as a
result it will have a positive impact on the BOP and trade account.
2. Repairing of train carriages at factories will create jobs for the locals which eventually
results in less UNEMPLOYMENT

9. PROPOSAL NO 8
PROPOSAL Considering the demographics, the Kelani Valley line will be modernized where the speed and
the carrying capacity will be increased for which I propose to allocate a sum of Rs.1,500
million.
GOVERNMENT
OBJECTIVE
1. Allocation of money from the government for infrastructure will increase the government
spending resulting less unemployment and government Investment which eventually
result in higher levels of GDP.

10. PROPOSAL NO 9
PROPOSAL Honourable Speaker, "Park and Ride" facilities attached to both railway stations and bus
stations will enable better traffic management and also facilitate the commuters in the country in
terms of comfort and cost. As such I propose to allocate Rs. 1,000 million to the
Ministry of Transport to engage in the improvement of the railways, bus transport in selected
towns such as Jaela, Avissawella, Panadura, Kadawatha and Piliyandala. When the
concept of "Park and Ride" is established the vehicles coming to the city will be required to
carry a minimum of 4 passengers and any vehicle that does not will be imposed a fee. This
mechanism will be implemented before the end of September 2016.
GOVERNMENT
OBJECTIVE
1. Government expenditure and investment on the infrastructure will result in higher
employment and GDP level.
2. By penalizing the vehicles entering in to city center, will increase the government income
will go up resulting lesser budget deficit.
3. Park and Ride will be resulted in lower congestion on road that will lead to lower energy
consumption, time consumption increasing social welfare.

11. PROPOSAL NO 10
PROPOSAL At the same time we encourage freight transport by railways which will reduce
the cost of transport.
GOVERNMENT
OBJECTIVE
1. By transporting freight by rail which is also the cost effective it can be expected to lower
the traffic congestion created due to the container lorries in the road again leading to
lower energy consumption and lower congestion on the road leading to better economic
conditions within the country.

12. PROPOSAL NO 11
PROPOSAL Honourable Speaker, I also propose to improve the speed of the Jaffna Railway
line from Maho to Vavuniya for which I propose to allocate a sum of Rs. 200
million.
GOVERNMENT
OBJECTIVE
1. By improving the status of the current transport structure the government look forward
to increase the employment level and the GDP level of the country.
2. Since railway is much cheaper than any of the public transport means this will increase
the social benefit

13. PROPOSAL NO 12
PROPOSAL
Monorail - I also propose to encourage the public sector to partner the private sector to
build and operate monorail projects connecting Negombo- Katunayake- Colombo and
Colombo- Kaduwela.
GOVERNMENT
OBJECTIVE
1. By again investing in the infrastructure of the country the government expects to increase
the Government expenditure that will result in higher employment rate and GDP level.
2. This might also lead to increasing of the PPP’s investment in the country which will
directly affect the GDP levels positively.

14. Transportation on Waterways
PROPOSAL NO 13, 14 & 15
PROPOSAL 13. Honourable Speaker, given the availability of waterways specially in Colombo, I invite the
private sector to initiate transportation options utilizing such resources.
14. Given that the necessity to diversify and supplement activities for tourists, the private sector
is encouraged to introduce hovercrafts and other water based sports options into the country.
Such crafts could be operated from Chilaw to Colombo, Colombo to Galle and tanks such as
Parakrama Samudraya.
15. To improve water transport in the country, I propose to allocate Rs. 250 million.
GOVERNMENT
OBJECTIVE
1. By improving the status of the current water transport sector and utilizing the canals
already being there might help to create new livelihoods for the people decreasing the
unemployment levels of the nation.
2. Improvement of the tourism industry will not only create more jobs for the local but also
it will also have a positive impact on the income account of the country making a positive
BOP.
3. By again investing in the infrastructure of the country the government expects to increase
the Government expenditure that will result in higher GDP level and the development of
the economy of the country.

15. SHIPPING
PROPOSAL NO 16
PROPOSAL
The business of trans-shipment and non-container related shipping has to be
increased to maintain a major trans-shipment hub. Hence, we need to set a
realistic target to be within the top 20 trans-shipment ports in the world by 2025.
The terminal operators will be dependent on the ship owners for this purpose
and the country will need the business to grow to recover the investments made
in the sector through public investments. The government will also encourage
ship financing, ship repairing, ship registry status, bunkering, arbitration and
allied services which would be governed by modern laws. The competition for
such business is increasing in the region.
GOVERNMENT
OBJECTIVE
1. By developing the shipping industry there’ll be positive effects on the capital and trade
accounts since the foreign investment and the services provided to the foreign ships. All
these will have a positive effect on the BOP of Srilanka.
2. Expansion of Terminal operations will create more jobs to Sri Lankans.

16. PROPOSAL NO 17
PROPOSAL Honourable Speaker, considering the country's geographical location, thee is
immense potential in engage in sea marshalling activities. In this regard, I
encourage the private sector to venture into suitable collaborations with Sri
Lanka Navy.
GOVERNMENT
OBJECTIVE
1. This will bring a huge amount of revenue from the foreign countries to Sri Lanka and will
help to increase BOP.
2. Sea marshalling will create new job opportunities for Sri Lankans with better payment
which will eventually lead to higher consumption levels and higher GDP levels.

17. LOGISTICS
PROPOSAL NO 18
PROPOSAL Government will remove restrictions on Global Logistics Companies, which
have the scale, capacity, capital and knowledge to expand services using Sri
Lanka as the hub, they should be able to invest, acquire and operate within a
reasonable tax regime where new capital, business and employment is generated
to the local economy via global trade. Also, regulation will be issued to stipulate
designated areas for logistics hub and these areas will be strictly outside the BOI
zones.
GOVERNMENT
OBJECTIVE
1. Removing restrictions on Global Companies will encourage such companies to invest in
Sri Lanka given the strategic position Sri Lanka is situated.
2. Since the foreign investors come to Sri lanka the FDI will go up. This will strengthen the
Capital account of Sri Lanka and will again help to increase its BOP.
3. The Unemployment rate also decrease due to the jobs created by FDI and the
consumption level will go high along with the GDP.

18. FREIGHT FORWARDING
PROPOSAL NO 19
PROPOSAL Entry into international freight forwarding will be liberalized so that foreign
participation could extend up to a maximum of 75 percent with a minimum
investment of USD 5 million.
But such companies should have at least 90 percent of local employment. Also I
propose the freight forwarding activities to be expanded to sea ports as well and
to operate jointly with the Sri Lanka Ports Authority. To encourage skills
development and training in shipping related activities, I propose to grant tax
concessions on training and related equipment.
GOVERNMENT
OBJECTIVE
1. This initiative clearly increases the FDI level in Sri Lanka and decrease the unemployment
rate within Sri Lanka due to new creation of jobs from which the 90% has been reserved
for the locals.
2. Due to tax concessions the economy will grow with achieving higher GDP levels.

19. PROPOSAL NO 20
PROPOSAL Honorable Speaker, it has been brought to my notice that the container vehicles
entering the Sri Lanka Ports Authority premises are subject to bureaucratic red
tape. I therefore propose to liberalize the vehicle movement activities and
introduce a license fee of Rs.100, 000/- per vehicle per year.
GOVERNMENT
OBJECTIVE
Introducing an annual license fee of Rs 100,000/- per vehicle for entering the port will
certainly have a negative impact on transporters as well as import/export trade in the
country as it will simply increase operating costs of all the stake holders for no justifiable
reason. (Daily Ft: 2015)
Although this help to increase the government revenue it might also have a negative
impact on the industry.

20. ROADS NETWORK
PROPOSAL NO 21
PROPOSAL 1. Honourable Speaker, you are aware that the Honourable Prime Minister laid the
foundation stone for the construction of the Central Highway in early this year. Work on
all 4 sections of the highway will start simultaneously with one section being allocated to
local contractors.
2. Honourable Speaker, I propose to allocate Rs. 15,000 million for the expansion of the
road network which includes the expansion of the Ruwanpura Expressway, extension of
Marine drive up to Panadura, extension of the Pamankada-Ratmalana Road, new bridge
construction over the Kelani River, reconstruction of 25 bridges and 3 flyovers etc.
3. We also plan to construct an elevated road from Cotta Road to Kaduwela on BOT basis.
also wish to commit a sum of Rs.10,000 million to be the government contribution.
4. We will be constructing a new access road from the Kelani Bridge to the Colombo Fort
improving access to Fort. I wish to allocate a sum of Rs.4,000 million to be utilized within
a period of 2 years.
GOVERNMENT
OBJECTIVE
1. By improving the status of the current infrastructure the government look forward to
increase the Government expenditure and the GDP level of the country.
2. All the infrastructure development will help to decrease the unemployment level of a
country and eventually will result in higher consumption level.

21. PROPOSAL NO 22
PROPOSAL Honorable Speaker, growth requires an integrated approach. As such, it is also
planned that industrial parks be created along the proposed expressways, thereby
adding value to the expressway. Accordingly, it is proposed to set up a Bio
Technology Park which will house pharmaceutical companies, a product design
engineering manufacturing park and an IT park and also agro and aqua culture
parks along the expressway.
GOVERNMENT
OBJECTIVE
1. By these proposals the express ways can be made as economically viable. This will
somehow cover the carrying cost of the express way and may contribute the country’s
economy as more investors will come to a country with a better infrastructure plan.
2. Thus the FDI will go high along with the BOP level and GDP level.

22. AVIATION
PROPOSAL NO 23
PROPOSAL
To improve the domestic air transportation, three new domestic
airports will be established at Digana, Badulla and Puttlam through a
PPP arrangement.
GOVERNMENT
OBJECTIVE
Establishment of new domestic airports will create employment opportunities for the
locals and because of that there will be a reduced unemployment. The proposal will
encourage foreign investments in the areas where domestic airports are proposed to be
built.
1. Unemployment Decrease
2. Balance of payment increase
3. GDP increase

23. PROPOSAL NO 24
PROPOSAL Honorable Speaker, there is considerable travel between Africa and East Asia
and it is estimated to grow substantially in the next 10 years. As such, I propose
to the Sri Lanka Tourism Promotional Bureau, together with the international
Airlines to create strategies to attract these tourists and entice them to stopover
in Sri Lanka in their travel from East to West.
GOVERNMENT
OBJECTIVE
1. This will directly improve the tourism industry in Srilanka which will attract many tourists
in to country having a positive impact on the trading account and the balance of
payment.
2. Because of the tourism there’ll be new business putting up and investment by the private
sector which will lead to higher GDP levels.

24. PROPOSAL NO 25
PROPOSAL With a view to promoting domestic tourism in the country, I propose to exempt
airlines using domestic airports from ground handling charges and other fees.
They will be liable to pay only a license fee of Rs.1.5 million per annum.
GOVERNMENT
OBJECTIVE
1. Domestic Airline charges will lessen. More tourists will use domestic airlines. Revenue
from domestic airlines will surge. Because of that GDP increase.
2. When local airline charges reduce, the tourist desirability to the country will rise. Foreign
exchange flows into the country. Balance of payment growths.

25. PROPOSAL NO 26
PROPOSAL Honourable Speaker, I propose to increase the over flying charges of
commercial planes by 20 percent from 01, January 2016.
GOVERNMENT
OBJECTIVE
1. The revenue from planes flying over the airspace of Sri Lanka will increase. GDP will
increase.
2. It will have a positive impact on trading account and hence this proposal increases
balance of payment increases.

26. SRILANKANAIRLINES
PROPOSAL NO 27
PROPOSAL
 Honorable Speaker, we will restructure and reposition SriLankan Airlines,
with professional management inclusive of local and foreign experts to be
a regional airline focused on profitable destinations.
 Ground handling and catering operations which at present are profitable
will be managed as separate institutions serving all airlines. They will
operate as independent entities running as common service provider to all
airlines.
GOVERNMENT
OBJECTIVE
1. Revamping Sri Lankan airlines to be profitable will make lessen the budget deficits which
will help the economy of the country.

27. MIHIN LANKA
PROPOSAL NO 28
PROPOSAL Honourable Speaker, Mihin Lanka is also another relic of the Rajapakse regime
that has become a drain on the state coffers. We have already initiated a
restructuring plan where, Mihin Lanka will be positioned as a “no frills” budget
airline. Mihin will concentrate its operations mainly on domestic routes and will
limit its operations to selected international routes.
GOVERNMENT
OBJECTIVE
1. Revamping Mihin Lanka to be profitable will make lessen the budget deficits which will
help the economy of the country.
2. Then that lost money can be put in to some other government expenditure which’ll
productive.

28. MATTALA AIRPORT
PROPOSAL NO 29
PROPOSAL  Honourable Speaker, the Mattala Airport has become a white elephant. The country has
become indebted due to the loans taken for the construction of the Airport. Our
government is keen to turn around Mattala through a private public partnership, where
theairport will be utilized for pilot training, logistic aero warehouse activities, cargo
services etc.
 I also propose to utilize the Mattala airport as a cargo hub, especially for air freight. in
order to encourage these activities, I propose the throughput charges to be fixed at
USDfour (04) cents per kilogram me. I invite integrated courier companies to utilize
Mattala airport for their hub operations.
 I propose to encourage the private sector to set up flying training school and
Maintenance, Repairs and Overhaul (MRO) facilities within the Mattala Airport
GOVERNMENT
OBJECTIVE
1. Since Mattala air port is being already put up there you cannot just throw it away just
because the carrying cost is high. Though PPP the airport will be productive and
economically viable.
2. Leaving alone and making losses is not good for an expensive structure. So by starting a
air freight it will create job opportunities and better facilities. Unemployment rate will go
down. And GDP will go high.

29. REVISIONS TO MOTOR VEHICLE TAXES
PROPOSAL NO 30
PROPOSAL Honourable Speaker, due to the reports on revenue leakages from the under
valuation of motor vehicles for tax purposes, a new valuation system was
introduced recently taking full option manufactures price as the tax base. To
further strengthen this process of collecting the duly payable taxes, I propose to
introduce a simple unit rate of excise duty for the vehicles on the basis of cubic
centimeters. Duties on the percentage basis on certain vehicles will also be
revised.
GOVERNMENT
OBJECTIVE
1. With newly imposed taxes on vehicles people are less likely to buy a motor
vehicles(demand dcreased)
2. This will lead to lower congestion rate on the road although the living condition of the
citizens will go down quite a bit.
3. Since almost all the motor vehicles are imported ones the demand for the motor vehicles
decreasing means less likely to import vehicles from other countries which will stop
sending our money to other countries. This will have a positive impact on the trade
account of Srilanka.
4. But on the other hand the consumption rate will go down and because of that the GDP of
the country also will go down due to the higher motor vehicle prices.

30. PROPOSAL NO 31
TAX INCENTIVES FOR ENVIRONMENT FRIENDLY VEHICLES
PROPOSAL
Government is taking measures to improve a cleaner environment in
the country. For encouraging the use of environment friendly vehicles
with reduced emission, I propose to reduce Excise duty to 2.5 percent
for the vehicles which are run entirely on Solar, Hydrogen or Helium.
GOVERNMENT
OBJECTIVE
1. This initiative leads to less air pollution and environmental pollution increasing the living
conditions of the citizens.
2. But the last regime of promoted electric and hybrid cars yet this government is not giving
any tax concessions for electric and hybrid car which might lead to confusion in the
industry which will impact negatively and might lead to less consumption.

31. PROPOSAL NO 32
MOTOR VEHICLE ENTITLEMENT CERTIFICATE
PROPOSAL Honourable Speaker, in the interim budget presented on 29 January, this year, I proposed to
introduce motor vehicles import registration license fee for importers who import motor
vehicles for business purposes. However, it being a uniform fee, large scale vehicle
importers would have gained an undue advantage from this measure. In view of this, instead
of the said license fee, I propose to introduce a vehicle import fee to obtain a Vehicle
Entitlement Certificate for each vehicle. This certificate will be issued by the Department of
Inland Revenue and the certificate will be necessary for opening of Letter of Credit for
importing a vehicle. I propose a Vehicle Entitlement Certificate fee of Rs. 2,000 per Motor
Cycle and Three Wheeler, Rs.15,000/- for a Motor Car and Rs.10,000/- per vehicle for all
other vehicles.
GOVERNMENT
OBJECTIVE
1. Although the government revenue goes high due to higher tax for the commuters who
use the motor vehicles daily this might be a disappointing news. Because of this new law
the handling cost of motor vehicles become high.
2. So the consumption of the consumers go down and because of that the GDP also tend to
go down.