The T&T Manufacturers’ Association (TTMA) wants Government to further the growth of the small and medium enterprises (SME) sector as part of its recommendations for the country’s 2022/2023 fiscal package which will be announced next Monday.
The organisation’s president Tricia Coosal who described SMEs as the engine for growth in any economy, emphasised the importance for Government to promote non-energy growth.
“In our efforts to diversify and stabilise the economy against future fluctuations in energy prices, the non-energy sector becomes significantly more important to T&T’s stability,” Coosal told the Business Guardian.
Coupled with this, earning foreign exchange is critical.
“The ability to earn foreign exchange outside of the energy sector is an integral component of growing our economy and the non-energy manufacturing sector has proven its worth in this regard,” Coosal explained.
There are other fiscal measures the TTMA is seeking in this year’s budget, including but not limited to, an Investment Credit Facility and the development of a Special National Development Fund for SMEs; again to enhance such entities which in turn, help create a more thriving economy.
Reducing fossil fuel use is another measure the TTMA wants Government to place more focus on as it advised there ought to be greater incentivisation for low carbon energy efficient products while promoting innovation in manufacturing.
This, Coosal added, would be a step in the right direction to enable T&T achieve its goal of a reduced carbon footprint.
But more importantly, it will push manufacturers in the direction of clean energy and improved technology, allowing for not only increased efficiencies in manufacturing but greater competitiveness in the global environment, the TTMA president stressed.
Enabling a digital environment is also key to thriving businesses.
Therefore, morphing outdated business practices into a more digitalised practices will go a long way in building competitiveness and efficiencies, Coosal suggested.
Further, she noted, such initiatives will not only move this country along the right trajectory in the ease of doing business index, but also enhance the attractiveness of potential investors, thereby increasing forex.
T&T is currently ranked 105 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings.
Regarding other issues Coosal said the TTMA is still seeking clarity on last year’s budget which referenced a reduction on corporation tax for three years for significant exporters with revenue of over 500,000.
According to Coosal no company has benefited from this proposed change to the corporation tax framework thus far.
“It is imperative that we know what is happening in this regard,” she added.
Also, the timely payment of Value-Added Tax (VAT) refunds remains problematic, resulting in the stymied growth of business and this is another matter which the TTMA said ought to be rectified.
“Companies are still having difficulty obtaining their VAT rebate and we hope the measures the association is submitting to have the perennial problem of VAT rebate build-up solved on a long-term basis.
“This includes solutions such as net-off and removal of VAT on imported inputs into manufacturing, be considered for implementation in 2023,” Coosal said.
On the legislative front the association is calling for the Beverage Container Bill to be prioritised as well as, a revisiting of what it also termed the “antiquated” Industrial Relations Act.
“These two pieces of legislation would aid in allowing T&T’s business environment to be more in line with international standards, and so position the business community on a more sustainable and productive trajectory that will redound to the benefit of the citizenry of our country,” Coosal explained.
According to the Planning Ministry’s website, one significant contributor to the amount of waste heading to the landfill is beverage containers, used particularly in the packaging of food and drinks.
It said improper disposal of beverage containers impact negatively both on the economy and the environment, and this is especially the case with plastic and expanded polystyrene containers as, given their non-biodegradable nature, such impact is lasting.
For more than two decades the State has been bandying about the idea of a Beverage Container Bill, meant to prevent littering by monetising empty beverage containers for recycling.
The concept of a Beverage Container Bill dates back to the Basdeo Panday administration in 1999 but promises from successive governments to have it introduced into law have all fallen flat.
Planning and Development Pennelope Beckles recent said the new Beverage Container Bill with private sector buy-in will offer monetary incentives to citizens to recycle plastic and glass bottles.
And as T&T continues to grapple with an annual food import bill averaged over $5 billion, the TTMA said food security and addressing challenges in agriculture locally and within Caricom remain urgent.
According to Coosal, the organisation is prepared to work with the relevant authorities to meet these objectives.
Reflecting on some of last year’s measures, the TTMA president said the association was pleased the foreign exchange facility at Exim Bank for instance, was implemented.
“This facility worked really well to assist manufacturers and thus the TTMA is asking for the facility to be kept in place with an increased injection for 2023,” she added.
The bank has sold some US$296 million to 123 manufacturing companies from 2018 to May 9, 2022 under its Foreign Exchange Facility, designed specifically for manufacturers.
Exim Bank CEO, Navin Dookeran had said in 2020 and 2021 the bank sold US$75 million and US$147 million to manufacturers, respectively.
This, he explained, contributed to US$190 million in exports in 2020 and US$245 in 2021.
Availability of foreign exchange has been a problem plaguing the country for years, which was, in turn, hindering manufacturers from exporting.
In 2018, the Ministry of Finance launched the Exim Bank’s Forex Facility to ease the burden by funding critical imports needed by manufacturers to export.
In March, Finance Minister Colm Imbert had announced that his ministry was seeking to increase the allocation of foreign exchange to the Exim Bank so that it can up the allocations to importers of essential items and to expand the foreign exchange availability to MSMEs.
“We are going to put considerably more money into those special windows at the Exim Bank to allow many more of our local businesses to access foreign exchange for productive purposes,” Imbert said, as he acknowledged the rising cost of goods and shipping caused by the COVID-19 pandemic and the Russia-Ukraine war.
Dookeran also reported the bank generated after-tax profit of $49.5 million in its financial year ended December 31 2021, an increase of 342 per cent over the 2020 achievement of $11.2 million.