The tax concessions augur well for the investor community which had been awaiting relief to boost investment in the capital market which is now on an upward growth trajectory said Colombo Stock Exchange Chairman Ray Abeywardhane at the bell ringing ceremony to mark two years of collaboration between the Colombo Stock Exchange (CSE) and the Global Reporting Initiative (GRI) last week. He said the fiscal stimuli package introduced recently comes at a very appropriate time for the CSE and added that the move will stimulate investments and boost the performance of the stock exchange. “Investors needed some relief from a host of taxes which discouraged them from entering the market. We hope to see a rally in the market with more trading in stocks and other investment instruments,” Abeywardhane said.
The Cabinet made a slew of tax amendments last week - among them are the reduction in Value Added Tax (VAT) from 15 to eight percent.
However, the tax reductions are also seen as a move that could widen the budget deficit which according to the finance Minister is expected to be around seven percent this year.
The fiscal stimulus package also comes amidst staggering external debt repayments amounting to over US$ 3 billion annually up to 2024, and a widening trade deficit.
“Sustainable investing has continued to gain momentum among financial market participants and Environment, Social and Governance (ESG) factors are vital determinants of investment decisions. As this requirement comes into the fore, it is vital that listed entities take steps to effectively measure and communicate ESG performance and impacts to its stakeholders,” Abeywardhane said.
CSE and GRI marks two years of collaboration focused on providing guidance to listed companies on ESG disclosures and enhance corporate transparency.
The collaboration has been successful in engaging Sri Lankan listed companies to understand their obligations on sustainability reporting and identify and deliver the technical assistance and capacity building needed to improve awareness on sustainability reporting.
GRI Chief Executive Tim Mohin in his message said the GRI Sustainability Reporting Standards help companies use transparency to create social, environmental and economic benefits for everyone.
The GRI is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.
First launched in 2000, GRI’s sustainability reporting framework is now widely used by multinational organizations, governments, small and medium enterprises (SME), NGOs and industry groups in more than 90 countries. In 2017, 63 percent of the largest 100 companies (N100), and 75 percent of the Global Fortune 250 (G250) reported applying the GRI reporting framework.
The Australian High Commission in Sri Lanka which has supported GRI and its activities in Sri Lanka has been a key stakeholder of the partnership between CSE and GRI.
The Australian High Commissioner David Holly said that while sustainability reporting also paves the way for companies here in Sri Lanka to demonstrate to the world a commitment to be a part of the solution to address climate change concerns.
Senior GRI coordinator for South Asia, Rubina Sen said, “Since 2018, GRI and CSE worked closely and has developed resource material such as the ESG guidance document to support listed companies in Sri Lanka.”