Some local manufacturers say they are unsure how their businesses will fare, following the introduction of a tax on foreign exchange transactions and a hike in the National Social Responsibility Levy (NSRL) that both take effect next month.
Minister of Finance Chris Sinckler announced in last week’s Financial Statement and Budgetary Proposals that from July 1, the NSRL, which is applied on imports as well as locally produced goods, would increase from two per cent to ten per cent. A two per cent tax will also be applied to any foreign exchange transactions.
Speaking to Barbados TODAY at the Barbados Manufacturers’ Exhibition (BMEX) over the weekend, a few local manufacturing businesses indicated they expected the measures to have a negative impact on their operations.
Managing Director of Superb Blend Ingrid Brathwaite was visibly upset as she recalled the impact the two per cent NSRL had on her business when it was introduced last year. She said even that was a challenge for her condiment company.
“People struggled with two per cent, how are they expected to cope with ten per cent? It is going to increase your costs and then it puts the individual products in a bad place. So how are people going to pay more for something?” she questioned.
Brathwaite stressed that manufacturers’ hands would be tied with the introduction of the two measures, and consumers were going to bear the brunt of them.
The business owner accused Government of destroying the local manufacturing sector which was already facing difficulties competing regionally and internationally.
“You have got to consider other brands coming in from the region so much cheaper than we can produce already. They are selling in our markets and our home-based products are more expensive than theirs, so that puts us at a disadvantage in our own market,” she lamented.
“If the cost of our manufacturing is already high and . . . all of these additional levies increase our products, what are we doing in our market besides destroying our own local products? You do not advance an argument to spend more by increasing costs. I don’t know who does that when there is no more money in people’s pockets and they still have the same things to do,” she said.
Alison Burnham of Coconut Baby was also tentative about the increases.
She runs a confectionary that specializes in vegan delights, and described the measures as “getting blood from a stone”.
“It is already expensive; I don’t know how people are going to react to higher prices. I understand what the Government is trying to do but I also think that the Government has to think about the small business people and realize you can only get so much,” Burnham said.
However, Ann-Marie King of the Barbados Agriculture Developing Marketing Corporation (BADMC) was more optimistic.
The head of the BADMC’s Agribusiness Division contended that manufacturers should use this opportunity to get innovative with their products and packaging, as it would force consumers to buy locally.
“We need to see these challenges as an opportunity to rise above and become more resourceful and innovative and just become more rigorous in the ways we manage our resources and our businesses. So we can’t roll over and play dead; we can’t play the victim. At the end of the day, this is not going to impact only one or two businesses, it is going to impact all of us,” King told Barbados TODAY.
“Before we lose heart, before we give up, let us do our research, let us do our analysis [and] let us see what we can do to make our businesses sustainable.”
King contended that it was the responsibility of the manufacturers and local enterprises to be more self-reliant and seek out a solution that would benefit not only themselves but the entire sector.
“It is not necessarily going to be easy, there are going to be challenges, but we have to realize as an independent nation there is a price you pay for that independence. You have to row your own canoe, and if every time a challenge comes we enter a victim’s paradigm we are always going to be on the back foot. Let us see how we can get ahead and use what many people believe is a crisis to our benefit,” she added.