Letter of the Day | Do much more to reinvigorate SMEs

THE EDITOR, Sir:

Shortly after winning the 2016 general election, the Jamaica Labour Party established a number of structures aimed at jump-starting the lethargic Jamaican economy.

It appointed a growth czar, established a Ministry of Economic Growth, created an Economic Growth Council, and set a target of five per cent growth in four years - the famous 5-in-4.

Sadly, after two years of successive sub-two per cent growth, the 5-in-4 dream has all but faded, erased by the reality of the economic malaise it was supposed to remedy.

So how is it that after swallowing the 'bitter medicine' and staying on the difficult economic course, we are still unable to achieve substantive economic growth? In reality, macroeconomic stability is not enough for a developing country to produce the bloom of prosperity. Instead, it must be accompanied with bold initiatives aimed at invigorating the private sector. After all, the private sector, specifically the small and medium-sized enterprises (SMEs), are the engine of growth.

Engine without fuel

And this is where we have failed, for we have not provided any additional fuel to the engine. Beyond leaving the tax incentives on the Junior Market of the stock exchange, a benefit to a select few, the SMEs have only received moral support from the Government, when what's needed are initiatives that can increase the flow of resources to the private sector so that businesses can drive the growth we seek.

So, in this regard, let me suggest three such initiatives:

First, reduce the corporate tax rate from 25 per cent to 20 per cent and remove the corporate three per cent NHT tax, this will leave more revenue in corporations' coffers and encourage reinvestment, which will lead to job creation.

Second, implement a 'Buy Jamaican' bias in the Government's procurement policy, the only way local companies thrive in a developing country is to have an advantage in their own market. We need only the lessons of the Asian economies in the 1970s and '80s for affirmation.

Third, for SMEs, cash flow is their lifeblood, and the Jamaican Government's withholding tax policies on services and General Consumption Tax, leaches it away. Repealing these measures would substantially improve the cash flow for SMEs.

I believe that these three initiatives, if implemented with urgency, could still salvage the 5-in-4 dream and, ultimately, move us closer to our much-deserved goal of economic prosperity.

PAUL DUNCAN

pduncan428@gmail.com