Amid debate on the repeal of the 1974 Fiscal Incentives Act, a Government senator on Tuesday warned that new protectionist measures would be necessary to safeguard the future competitiveness of local businesses.
Addressing the Upper Chamber, Senator Lynette Holder acknowledged that the global environment for business had changed over the past four decades since the Act was first introduced, and the cost of utilities, labour, raw materials and certain commodities had increased exponentially.
As a result, Holder said, local production costs were uncompetitive when compared to other markets.
“I strongly believe that Governments must play a greater interventionist role to protect vulnerable sectors. After all, the biggest markets in the world do exactly that. So we must implement the legislation to make sure our most vulnerable sectors are protected,” she added.
Barbados, which became a signatory to the World Trade Organisation (WTO) in 1995, has been deemed to be in contravention of the WTO’s subsidies and countervailing measures. As a result the country was given a deadline of December 2015 to phase out the subsidies as outlined in the Fiscal Incentives Act.
However, Holder, who was a longstanding president of the Barbados Small Business Association, maintained that a level of protection remained necessary if local enterprises were to be competitive.
She also stressed the importance of having businesses explore niche markets as well as opportunities for export.
Holder also suggested that they get away from the “Lone Ranger” approach.
Citing an example, she said, “recently we had a manufacturer who got a contract to supply his product to the British supermarket chain Tesco, and he struggled to meet the order because he did not have the capacity to do it on his own. That is why we must encourage networking, pooling of resources, and creating more incentives for small firms”.
Also taking part in Tuesday’s debate, Government Senator Lisa Cummins suggested that a research and development task force be established comprising the ministries of trade, foreign trade and all related line ministries and the University of the West Indies.
“We cannot remain static and expect to be competitive. We must invest in the education of our private sector service providers, exposing them to new methods, processes and services. Companies should also take advantage of the credit guarantee schemes such as the Enhanced Credit Guarantee Fund administered by the Central Bank and the IDB [Inter American Development Bank], which are under-utilized at present,” she said.
Cummins noted that all of the Caribbean Community member states had similar rules in place and some had already repealed them, including Jamaica, which “identified sectors of their industries that were growing or now starting up, and then created measures to help develop them”.
In her contribution, Senator Dr Crystal Haynes noted that while the Fiscal Incentives Act was beneficial in many ways, in retrospect it did not address sustainable growth of the manufacturing sector.
“In reading the old legislation, I realized there were no specific provisions on transfer of technology, or how to bring local staff up to managerial or leadership positions so that if the company left, a local person would have had the expertise and knowledge to start a similar establishment, and we gave them concessions to import their raw materials rather than sourcing them here,” she said.
In terms of where the country should go next, the eye specialist said: “We must become more efficient in processing applications and granting permits, having the necessary transport and infrastructure in place to support growth, and ensure we have a skilled workforce to attract high level companies.” (DH)