budget blow

Minister of Industry, Donville Inniss says he is cognisant that some of the budgetary proposals announced this week can result in the cost of locally manufactured products going up, and he is willing to meet with the sector and hopefully the Ministry of Finance to look into the matter.

He made the comments while delivering the feature address at the launch of the Barbados Manufacturers’ Exhibition (BMEX), held yesterday morning at the Lloyd Erskine Sandiford Centre. Inniss contended that in general Government needs to engage in consultation with the various stakeholders on all the proposed measures if they are to be successfully implemented.

“… If we do not do that we are prone to make mistakes, we are prone to spend a lot of time correcting errors, and certainly that will cause a lot of frustration in the business community and the wider society,” he said.

Inniss admitted that in particular the increase of the National Social Responsibility Levy (NSRL) from two to 10 per cent; the two per cent commission on all sales of foreign currency; and the excise tax on fuel could place added burden on the manufacturing sector. He said while Government’s aim is to close the gap between the revenue collected and its expenditure, and to ensure that there is enough foreign exchange on hand to provide the goods and services needed, the potential negative impact these measures can have on the sector, and by extension the wider community, cannot be ignored.

“My own view on the matter [NSRL] is that it will certainly land within the laps of the manufacturers, the issue of your ability to be very competitive. Whilst the National Social Responsibility Levy is not applicable to your inputs for the manufacturing sector, nor is it, I am told, applicable when you sell your finished manufactured goods to other manufacturers, it certainly is applicable when you sell on the retail end… But the harsh reality is that it can affect the competitiveness of our products here in Barbados and that is something we cannot run away from, so we will put our heads together, ascertain and determine ways in which we can counteract that,” he said.

Inniss noted that it will also present a challenge to manufacturers in respect of their sales, noting that the measure can also see a decrease in the disposable income of Barbadians, affecting their purchasing power.

“But let me say and remind you that our goal here is to close that gap between Government’s revenue and expenditure, while at the same time dampening the demand for our valuable foreign exchange,” he said.

Meanwhile, on the issue of the two per cent commission on foreign exchange transactions, Minister Inniss said he is mindful that manufacturers have to buy raw materials from abroad, which cannot be purchased with local currency, whether purchased with a credit card or wire transfer, and so this step by Government could also result in the overall cost of locally manufactured goods increasing.

“This two per cent commission on the purchase of foreign exchange will increase the cost of your raw materials you have to purchase as a manufacturer. Therefore, I believe that within the next four weeks, before it comes into being, that we have an opportunity to engage with the Ministry of Finance to see if there are any opportunities for us to provide some leeway for the manufacturing sector,” he said.

But, Minister Inniss told those gathered, he could not make any guarantees in relation to the outcome of those discussions if they take place.

“One of the difficulties of budgetary proposals lies in when we start to give carve outs and exemptions and then it becomes a very complex and confusing issue. But suffice to say, it is a real problem we have to address now,” he stated. (JRT)