The automotive industry is costing the country over $1 billion a year in foreign exchange, according to Minister of Industry and Commerce Donville Inniss.
Inniss revealed last night that an average of 395 vehicles are imported every month at a cost of approximately $10 million.
When the cost of fuel, spare parts and other supplies are added, the cost to the country is enormous, he said.
“A lot goes in the vehicles we drive – we are currently spending in excess of $1 billion per year on importation [of vehicles], fuelling and operations of vehicles in Barbados,” Inniss told the official opening of the new Platinum Motors Inc headquarters in Fontabelle, St Michael last evening.
Quoting figures from the Barbados Statistical Service, the minister said over the past five years 22,691 vehicles were imported at a value $572 million, with the number of both new and used vehicles rising each year.
Last year alone, dealers brought in 2,673 new automobiles – a 28.2 per cent increase over 2015, while the number of used cars climbed to 2,078, up 18 per cent over 2015, which itself had recorded an even steeper 30 per cent increase over the 1,352 used cars imported in 2014.
“One may want to argue that the economy is on the way up and therefore Barbadians are buying more new vehicles. If that is the case, let me rejoice in the first part of it,” Inniss said.
He said while the economy was benefiting from associated import duties and taxes, it was important to recognize the impact the automotive business was having on the country’s foreign reserves.
However, Inniss made it clear he was not calling for restrictions on the importation of vehicles.
“I am not suggesting in any way, shape or fashion that we curb the importation of the vehicles, but rather that we remind ourselves of the need for us to earn foreign exchange and save it wherever possible in order that we can pay for these goods that we so desire. We cannot tax or borrow our way out of our circumstance. We simply have to earn our way out of it.
“I do not foresee any significant decline in expenditure on vehicles, all things being equal, in the short or medium-term. Therefore our task must lie in how we can earn the money to pay for the vehicles we own and operate,” he said.
Despite the fact that the country’s foreign reserves stood at the lowest level in 14 years last year, Inniss said there was no need for panic or for Barbadians to become irrational, although the purchase of the vehicles came with “a big chunk of our foreign reserves”.
He also called for greater support for the revenue earning sectors such as tourism and its related services and manufacturing.
Inniss gave the assurance that Government would allow Barbadians to continue to enjoy their choice of luxury while “from the states end we will do what we have to do to maintain that level of stability”.