2019 National Budget Recognizes the Growth Potential of the Knowledge Solutions Industry

The Sri Lankan Association of Software and Services Companies (SLASSCOM) is pleased to see several concessions proposed in the 2019 National Budget to accelerate the revenue growth and increase capacity within the knowledge solutions industry. The IT/BPM industry is recognized as a thrust industry within the National Export Strategy (NES) and is promoted globally as the “Island of Ingenuity” for world-class knowledge solutions. The industry goal is to reach US$ 5 billion by 2022, powered by over 200,000 skilled jobs in the industry, along with a thriving ecosystem for startup companies.

SLASSCOM is keen to see the implementation of the Limited Liability Partnership (LLP) structures to be brought in during  2019 to further encourage investment in startup companies as this will provide the opportunity for investors to engage without the impact of double-taxation.

Jeevan Gnanam, Chairman SLASSCOM commented, “I’m grateful for the allowance for LLP structures and a revision of procurement rules for startups, this was one of our key initiatives within the Sri Lanka as a Startup Friendly Nation agenda. I’m glad to see the joint effort working and thank those who took the initiative to bring this need of the industry to attention of the policy makers. I would like to see this implemented in the legal framework in the months ahead to enable Sri Lanka to be a startup-friendly nation. I hope equal weight can be given to some of the other initiatives such as tax breaks for Angel investments, which are prevalent in most mature startup ecosystems”.

The industry is also pleased to see the removal of the fifty employee minimum threshold required to be eligible for the additional tax deduction, equal to 35% of the salary cost for companies engaged in exports. Unlike traditional manufacturing, the salary cost is the highest cost element for IT companies and this incentive can now be enjoyed by all companies in the IT/BPM export industry, regardless of size.

SLASSCOM is also delighted to see the focus on women empowerment and incentives provided for companies to engage more women in the workforce. These include the tax concessions for companies that grant three months of maternity leave and the financial assistance provided for companies to establish daycare centers for children. The proposed legislation to be introduced to enable flexible working hours and popularize ‘work from home’ alternatives to be adopted by the industry.

Ranil Rajapakse, Vice-Chairman SLASSCOM commented, “These incentives will enable many mid-sized IT companies to offer convenient and flexible work arrangements to recruit staff and to also attract and retain more women in the workforce, especially those who have taken career-breaks”.

SLASSCOM is also appreciative of the LKR 300 million budget allocation to implement the “Arts to Science Internship” program, where the industry will train 1,000 unemployed graduates through internships for a period of 12 months. This concession will enable unemployed youth to make a successful transition to a career in the IT/BPM industry.

The industry also welcomes the emphasis on government procurement to have a 10% annual allocation for startup companies and small businesses to make it more feasible to access government contracts. The industry also is appreciative of the current student loan program and the increased emphasis to provide concessionary loans for students who do not enter university. The proposed 6% concessionary home-loan facilities for newlyweds repayable in 25 years, will also address a need of the industry to retain skilled talent within the country.

These proposals will continue to support the “IT Initiative” identified within the NES program. The industry has already launched multiple programs on capacity building, entrepreneurship, regional development and policy improvement. The industry is also delighted to see the launch last week of the “Champion Builder” program, to support and enable aspiring companies in the industry to realize exponential growth.

Rukshanie Vidyaratne, Assistant Director – Policy & Strategic Planning – EDB attached to the National Export Strategy Monitoring Unit (NESMU) commented, “The IT/BPM sector has recorded the most significant progress in the past few months of operations with the National Export Strategy. This sector has shown keen interest in moving forward on the IT initiative while initiating multiple donor-funded projects to develop the industry. It’s great to see the effort and the dedication of IT professionals in reaching the global markets with their innovative products and services as the Island of Ingenuity”.

For more information and to register for the Champion Builder program, please visit www.islandofingenuity.com/champion