President Anura Kumara Dissanayake is scheduled to present the Budget Speech 2026 next week.

This is an important event that all sectors, especially the business community, are closely monitoring.

Coconut product exporters are among those keenly awaiting the budget, bringing a list of concerns and expecting the government to provide solutions and relief. Last year, export revenue from coconut and coconut-based products grew by about 21% to $855 million, compared to 2023. This year, the industry expects the figure to exceed $1 billion.

Despite the high expectations, the industry faces significant challenges, as stated by the Chairman of the Desiccated Coconut Millers' Association, Neomal Perera.

Perera stated the $1 billion export target can be met with the current market, but the introduction of the new Wholesale and Export Tax (WET) system is negatively affecting most traditional exporters. This change will certainly hurt the cash flow of all exporters and manufacturers. The issue is not paying taxes but the removal of the S- VAT which is causing substantial damage to traditional exports that are poised to contribute over $1 billion to the country's economy for the first time. The government has been repeatedly asked to at least maintain this benefit for direct manufacturers and traditional exporters; otherwise, the coming months will likely see a reduction in exports.

There is also disappointment over the government's failure to adopt the ASEAN Duty structure.

Perera noted that the industry is requesting the country adopt the ASEAN duty structure to improve access to ASEAN countries. Although those countries also manufacture the same product, Sri Lanka possesses a trade advantage with China and the ASEAN region because of empty containers heading to the East Coast.

This could give Sri Lanka a better advantage than Malaysia, Indonesia, or Vietnam for all coconut products. Perera mentioned that the government and the trade ministry were repeatedly asked to take action, and exporters are currently suffering because of additional taxes they face in accessing those markets.

He added that not a single new trade agreement has been implemented in the last several years. He attributes the current survival of Sri Lankan-manufactured products to them being competitively priced.

He further highlighted that research activity is insufficient to combat the various diseases that are damaging the coconut tree. He noted that the Coconut Research Institute (CRI) has not handled this properly and has not given enough priority to boosting the productivity of the coconut tree. The current productivity per palm is low. Perera stressed that if more coconuts were available, the industry could potentially earn more in dollars than tea exports. The manufacturing capacity is in place; the primary issue facing industrialists is the lack of raw material.

The Chairman also expressed disappointment that the government did not distribute the fertiliser provided free of charge by Russia.

Perera stated that while policy decisions are made, they are not implemented and distributed within the country, which is unfortunate to see in the trade sector.