-Jordan calls on sector to be more innovative
By Ramona Luthi
President of the Guyana Manufacturing Services Association (GMSA), Shyam Nokta on Thursday evening expressed the challenges being faced by the sector with regards to the implementation of several measures by Government which he believes is working against the competitiveness of the local manufacturers in both the domestic and overseas market.
Nokta was at the time addressing an audience which included Minister of Finance, Winston Jordan, Minister of Public Security, Khemraj Ramjattan, Minister of Business, Dominic Gaskin, other members of the GMSA and the media, among others, at Pegasus Hotel during a dinner conference.
According the GMSA President, despite Government stating their intention to move Guyana from being a primary producer to one where we can add value across the productive sectors [Agriculture, Forestry and Mining], there are several measures which pose as obstacles in attaining this goal.
Nokta says that this includes the tax measures introduced in Budget 2017 with regards to the re-categorizing of zero and standard rated items to exempt.
In addition, he posited that Value Added Tax (VAT) on electricity and forest products have impacted negatively on the manufacturing sector leading to increases in prices and reducing cash flow in some instances.
Furthermore, other “unhelpful” impositions include Guyanese Manufacturers being replaced by import servicing on Public Procurement.
“Such measures coupled with increasing domestic demands and imported substitutes in the case of the wood processing sector in particular have been unhelpful to value adding and encouraging the manufacturing sector,” he asserted.
The GMSA President also recalled that earlier in 2017 the association had made a public appeal regarding the exchange rate depreciation and the availability of foreign currencies at commercial banks.
He noted that while it was recognized that government did take notice and interventions have led to the stabilizing of the foreign currency situation, concerns still remain whether this could re-occur along with depreciation considering the downturn in performance of key foreign exchange earning sectors such as bauxite and sugar and the possibility of a rise in fuel prices, globally.
Nokta encouraged Government to bring about assurances that “there is a menu of measures to maintain stability.”
Moreover, he called on the Finance Minister to provide information regarding the Government’s policy position as it relates to the manufacturing and services sector, as well as an indication of the wider economic plan encompassing other productive and export sectors.
Meanwhile, during his presentation shortly after Nokta, Minister Jordan noted that, contrary to the utterances that government has done little for the manufacturing sector, “in addition to the wide-ranging concessions granted by previous Administrations, there have been several legislative and operational changes in support of the manufacturing industry in Guyana, since May 2015.”
He says these include the fact that the exemption of duty on the import of machinery for use in the manufacturing process and raw materials were maintained, while the importation of raw materials has been done free of excise tax since 2016.
Jordan further justified that manufacturers are also granted waivers on duty and taxes for items that are not listed on the approved list of raw materials, providing that applications are made to the Council for Trade and Economic Development (COTED).
He says that another major initiative that was implemented to boost the manufacturing sector was the granting of 1-year tax exemption letters, as opposed to the previous system of approval per consignment.
Among several other justifications, the Minister proudly noted that the manufacturing sector benefitted from a reduced corporate tax rate, declining from 30 per cent to 27.5 per cent. He did not forget to mention that the VAT rate was reduced from 16 per cent to 14 per cent, and that manufacturers who generate sales of under $15 million are exempted from registering for VAT.
Nevertheless, he asserted that while the government is expected to continue to create the enabling conditions for a green economy and lead by example, the GMSA needs to start acquainting itself with the Green State Development Strategy Framework (GSDFS) and the many opportunities afforded to manufacturers.
He stated that in this vision for a clean, green, sustainable economy in Guyana, the private sector has a responsibility to ensure that this transition takes place by introducing fundamental changes in how they conduct business.
“A new study by the World Economic Forum has identified 16 emerging-market firms that are turning eco-consciousness into a source of competitive advantage. These companies turn limitations into opportunities. Limitations such as resources, labour, and infrastructure motivate these companies into thinking creatively ‘out of the box’ and turning these opportunities into profit. For example, India’s Shree Cement, a company plagued with water shortages, developed the world’s most water-efficient method for making cement, in part, by using air cooling rather than water cooling.”
Jordan explained that similarly, Guyana’s corporate sector should look beyond the conventional business model and be innovative.