Pengelly wades into 'costly' tax-reform battle - New JMA head also proposes manufacturers' registry
Published:Friday | July 1, 2011 | 12:00 AM
Brian Pengelly takes over the presidency of the Jamaica Manufacturers' Association in the midst of tax reform that he sees as potentially harmful to the productive sector and could end up adding millions to the cost of doing business at individual companies.
The beer executive, who was elected on Wednesday, has indicated that the formulation of JMA's position on the proposal to adjust duties at the port was a top issue. He also hopes to maintain the lobby on getting an energy policy that works for companies, government procurement rules that are more business friendly, the printing of school books locally and "levelling the trading field" in Caricom.
On the formulation of JMA's position on tax reform, Pengelly has co-opted immediate past president Omar Azan, who will remain as chair of the committee assessing the Green Paper tabled by the Finance Ministry at the start of the fiscal year.
"My agenda for this year is one of continuity," he said in a speech laying out his priorities at the JMA's annual general meeting in Kingston.
"Our Government needs to facilitate and enact policies that will sustain and accelerate economic growth."
The proposed reduction of the Common External Tariff to 20 per cent, upfront payment as high as 25 per cent in other duties, and charges on manufacturing inputs could push production costs higher, he suggested.
A survey of JMA members found, he said, that:
Prices of some local finished products could increase as much as 40% and imported products will become more competitive;
Cash flow will be impacted and some manufacturers will have to pay at least $1.5 million more per container for raw materials.
The Customs Administration Fee, advanced GCT and standard GCT will cause cash flow to increase as much as $93 million over a 45-day cycle with a possible $1.2 million in interest costs if bank debt is used to finance.
Pengelly, whose day job is sales director at Red Stripe Jamaica, says demand for local goods will be reduced and exports severely threatened as a result, and that the micro, small and medium enterprises "will be unable to absorb costs over time, leading to factory closures, job losses and further contraction".
He said the JMA would continue projects such as the 'Buy Jamaican' campaign and Centre of Excellence; and maintain close working relationships with "major bodies" such as JAMPRO, Customs, Jamaica Productivity Centre and EXIM Bank, and participate in the discourse on bilateral and other trade negotiations.
He also plans to promote a change of mindset about manufacturing, which includes plans to lobby for certification of producers and a 'registry of manufacturers'; setting up a Manufacturing Advisory Board in collaboration with the industry ministry, and diversify the JMA's membership base beyond Kingston.
Said Pengelly: "80 per cent of our membership is within Kingston and St Andrew and at least 99% of our activities are concentrated in this geographical area. We, therefore, need to increase our membership outside of Kingston, and with that our representation of all manufacturers across the island."