Government accepts proposal by FITIS to enhance country’s ICT industry

THE Federation of Information Technology Industry Sri Lanka (FITIS) who has been the country’s representative body for ICT industry, that includes, software, hardware, IT education training and communication, recently submitted a proposal to the Ministry of Finance on the strategic development of the ICT industry in the country. The main purpose behind this proposal was FITIS’s mission of having it presented at this year’s budget. FITIS believed it would play a key role in lending a hand to the development of the ICT sector in Sri Lanka.

FITIS focused on key initiatives to be adopted to enhance the ICT sector that included, the IT literacy rate to be increased to 75% by the year 2016, Internet penetration to be increased by the year 2016, 80,000 new employment opporiunities to be created by the year 2016 and the ICT industry to achieve $ l billion export revenue mark by year 2016 from its current level of $ 600 million.

FITIS also recommended making Hambantota as the emerging ICT trading hub of South Asia with enhanced aviation network and business/ tourist arrivals that will maximize the emerging ports and aviation potential of Hambantota. This will also create over 3,000 new employment opportunities in the ICT sector in addition to maximizing tourism potential in Southern Sri Lanka.

Another recommendation by FITIS was that the software sector be recognized officially as an industry and a professional service .They also suggested that the current unit rate be adjusted, making the industry more competitive and resulting in greater software exports from Sri Lanka.

The Government endorsed some of these views by proposing to develop an ICT Zone at Hambantota as the emerging ICT Hub of South Asia, capitalizing on the newly built infrastructure such as the port, airport, expressway and the railway network, by promoting investments in this zone.

Another area outlined by FITIS was to encourage genuine importers to enter the ICT market in Sri Lanka by discouraging smuggling and illegal imports and Improving the National Readiness Index (NRI) which is currently at a lower level due to violation of Intellectual Property (IP) rights and piracy issues etc.

Speaking of challenges faced by the industry, FITIS Hardware Chapter President Chinthaka Wijewickrema noted: “We have seen that some IT related products are subjected to 12% VAT, 5% PAL AND 2% NBT. This has resulted in confusion, imbalance in the tax structure and the absence of a fair pricing policy amongst the imports with some of them charging VAT on bill whilst some of them did not.

“It has also led to the birth of a flourishing black market which controls the majority of the sales in the market. Since these imports are not counted in international and local statistics it does not show the local market growth. Instead there has been a negative impact as black market sales increase, while genuine imports have reduced. It has also resulted in unknowing consumer buys and numerous bad experiences. Therefore we suggested that such items should be exempt from these taxes.

“We are therefore extremely encouraged that the Government proposed to support this initiative by correcting the various anomalies in taxation pertaining to IT related items. The new Revenue Protection Order would provide a better classification for IT and related products under a single tariff band with reduced rates of import duty and the removal of VAT on hardware and software.”

FITIS Chairman Thamarajah Suresh commented: “FITIS has always played the role of being a negotiating body representing the industry with the Government and working towards formulating and maintaining codes of conduct to encourage high standards of performance.

“We are immensely motivated that our proposals have been accepted by the Government, which we believe will greatly contribute towards creating the right kind of awareness of the essential role played by the Sri Lankan ICT industry. We fully support the Government’s vision and will do our part in joining in their initiatives to help enhance our ICT industry to bring much needed revenue generation.”

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