Manufacturing earnings down

Barbados’ manufacturing sector has declined to its lowest levels since 2014.

The sector contributed an estimated $478.6 million to the economy last year, compared to $495.4 in 2018.

In 2014, the sector’s contribution to the gross domestic product sank to $468.9 million before rising to $491.3 million the following year.

Officials were unable to say what exactly caused the decline in the sector. However, expressing concern about the fall off, Governor of the Central Bank of Barbados Cleviston Haynes said: “We do want to see a thriving manufacturing sector because diversification is important.”

“It allows us to better utilize the skills we have in the country. Not everyone is necessarily going to be service-oriented, there are some persons who want to use their hands, who want to be engaged in manufacturing activity. Unfortunately we have not been doing so well in manufacturing in recent years.

“It is not that we are ignoring the manufacturing sector, but we have to sort of reposition it in a number of ways. We have to look at our processes, how we produce things, what we produce and we have to look at productivity. Productivity is what is going to engender competiveness. That is really the critical component,” said Haynes.

Acknowledging that Barbados was a very small player in the global manufacturing arena, the governor said it could be very difficult at times to compete.

“We have to find in some instances our niche market where we are going to be able to produce, and this is for manufacturing as well as other services that we produce from time to time,” he said.

Meanwhile, Barbados continues to be an attractive jurisdiction for offshore companies, with the number of newly registered international business and financial services increasing last year.

There were close to 300 new registrations in 2019, an indication of the growth of the sector.

A year ago, Government lowered the corporation tax rate in an effort to attract more business, setting the rate at between one per cent and 5.5 per cent.

“As you know the sector has now gone through a transformation with the change in the tax regime and so the number of companies that renewed their licences for 2019 that was a little bit above what it was for 2018. That is a good sign that you had more companies renewing their licences,” said Haynes.

“What we want is not simply to get registrations, but it is the nature of the activity in which they engage; to be able to get substance and be able therefore to generate sufficient foreign exchange both in terms of the employment they provide for our skilled citizens and through the tax revenues,” he added.

Haynes said he was confident that over time the sector would continue to grow to such an extent that it can help to build out and grow the country’s revenue intake. “If we can do that, it creates more fiscal space for us to do things that better the lives of our citizens,” he added.