In seeking to transition from an economy stagnated since the world plunge in 2008, Barbados now faces a possible overheating of trade, and in consumption of goods and services because several investments are set to come on stream around the same time.
This word of caution amidst an expectation of much investment and construction beginning this year, came from Minister within the Ministry of Economic Affairs, Marsha Caddle, who has spoken of the need for the projects, implying at the same time that any feverishness of commerce would have to be managed.
“We believe that based on the investments that are anticipated over the next financial year that we may, in fact, have a small level of overheating of the economy,” Caddle said to members of Barbados Labour Party St Peter branch.
She explained that because of uncertainty on the readiness of the Barbadian population to supply all expected the labour needs, planners are eagerly awaiting results of the Continuous Labour Force Sample Survey that was restarted mid-January.
“There are going to be so many investment projects coming, and some of them up here in the north, that we actually think – and developers have been concerned – that there may be a shortage of labour because a lot of them are going to be onstream at the same time,” she said last weekend at the Roland Edwards Primary School.
Following a presentation explaining objectives of Barbados Economic Recovery and Transformation Plan (BERT), Caddle fielded questions on employment, investment, and energy use.
She said that the use of cheaper renewable energy to reduce the cost of doing business was a main focus of BERT.
Noting that the investment projects will create economic activity “not just in the areas where they’re located but across the island” Caddle spoke of the unfolding impact of the just opened Ross University that will have a spinoff school of nursing and Sagicor Financial Corporation
$400 million first phase investment on a 20-acre retirement village and medical centre.
These are to be coupled with some US$60 million main highways road repairs stemming from IDB and CAF, the Latin American development bank, loans.
Additionally, she said that laid-off skilled workers will be getting access to small-works contracts of $250,000 or less. Such works include getting homes of the needy for hurricane prepared and installing water-borne toilet facilities in many households.
A significant area of capital investment is expected to stem from last month’s conversion corporate tax for local and international businesses on a scale from one per cent to 5.5 per cent.
Caddle said that in the first instance this tax readjustment is expected to ensure international companies remain.
“Once the entire scheme of legislation comes together, including the Town Planning legislation and all the other ways in which we are making the doing business environment easier, we don’t anticipate high levels of capital flight.”
Emphasising that the conversion will be an incentive for local businesses Caddle spoke of a company operator indicating a plan to expand operations and employ more Barbadians thanks to the reduction in local company taxes that had been in the range of 30 per cent.
While retaining what Barbados already has the Minister said the drastically reduced taxes were lower than any other jurisdiction that no longer has a zero-tax regime as stipulated by the Organisation for Economic Cooperation and Development and for this reason Barbados would be attracting more businesses to these shores.
“We anticipate that companies will want to come. We’ve been getting a lot of interest in companies wanting to come under the new rules,” she said.
During her year-end statement to the nation, Prime Minister Mia Mottley had spoken of banks gearing up for the inflow of business.
“The commercial banks report a wave of new foreign investments coming,” the PM said.
Given this expected level of investment, Caddle said planners are looking to the current labour force survey to answer, “what are the population issues and measures, and what is the policy that is going to allow us to grow the economy and to generate the revenue we need?”
“It is not just a question of diversifying the economy and having a revenue-positive policy – which we do have as part of the BERT plan, but it is also a question of making sure you have the population base to support it and that is one of the reasons for the population commission is important,” she said.