MSE sales down 49%
Published:Friday | June 25, 2010 | 12:00 AM
Small and micro-businesses were particularly hard-hit in the recession, losing half their markets last year, while hundreds of proprietorships and 'own-account owners' appeared to have shuttered operations, according to a Planning Institute of Jamaica analysis of tax returns.
In 2009, sales in the vulnerable micro and small business or MSE sector, were estimated at J$99.1 billion, based on general con-sumption tax (GCT) returns, a 49.3 per cent decline from J$195.5 billion of revenue in 2008.
GCT is a now 17.5 per cent tax, up from 16.5 per cent in 2009, collected by businesses on behalf of the Government.
MSE sales last year represented 9.3 per cent of total revenues by all companies that filed GCT returns; the year before, they had a 16.4 per cent share of total estimated sales, according to the 2009 Economic and Social Survey of Jamaica, an annual publication of the Planning Institute.
In terms of the number of operators, microbusinesses had a bigger fallout. Some 10,324 of them filed GCT returns last year, compared to 11,044 in 2008, suggesting that as many as 719 micro operators either exited the market or failed to secure enough sales to put them above the threshold for GCT collections.
Filing small enterprises dropped by 468 in the same period, from 3,924 to 3,456.
Small company revenues declined by 46.2 per cent to J$81.8 billion, due to the general downturn in the economy and the decline in business confidence, the ESSJ asserts.
Small companies contributed 82.5 per cent of MSE sales, down from about 90 per cent.
While the MSE sector shrunk overall by 1,187, from 14,968 firms to 13,781, small businesses added players in the energy/water sector, which grew from two filings to five; and in the financial sector, which added eleven filings, moving from 68 to 79.
Of the 13,781 MSEs, just about 41.6 per cent or 5,739 were involved in the wholesale and retail trade during 2009, representing the highest number of filings. Wholesale/retail was also the dominant sector in 2008, with 6,170 firms or 41.2 per cent of MSE filings.
Despite declining sales, the MSE sector borrowed more for expansion of existing businesses involved in agriculture, manufacture, services, and wholesale and retail trade. Loans disbursed from the wholesale lending agencies totalled J$1.652 billion, to more than double the J$753.1 million of credit issued in 2008.
The Planning Institute attri-buted the expansion of credit to Development Bank of Jamaica's entry in the microfinancing market last year.
The bank disbursed J$981 million to eclipse the combined J$671 million of credit issued by Development Options Limited, Pan Caribbean Financial Services, MIDA and the National Insurance Fund.
Retail lender Jamaica National Small Business Loans also added business, selling 39,398 loans valued at J$2 billion. In 2008, the lender disbursed 37,982 loans valued at J$1.77 billion.
In its outlook for MSEs this year, the Planning Institute says it expects that, with commercial banks opening credit to small companies, more displaced workers who lost jobs in the recession will gravitate towards starting their own businesses, creating new income opportunity for the sector.