TTMA president: Govt bonds will increase business costs

 TTMA President Franka Castello   PHOTO SUREASH CHOLAI
TTMA President Franka Castello PHOTO SUREASH CHOLAI

TT Manufacturers Association (TTMA) president Franka Costelloe offered her view on Monday's budget, saying government's solution to the VAT arrears issue would do more harm than good by increasing the cost of doing business.

Speaking with Newsday after the TTMA dinner and excellence awards at the Hyatt on Tuesday Costelloe said the concessions by Finance Minister Colm Imbert, specifically government bonds, were not enough to improve the ease of doing business and maintained that challenges of foreign exchange were still major obstacles to the non-energy sector.

She also said while this may be a solution to companies in debt to larger, international retailers, smaller local companies were especially vulnerable.

"The bond, as a quick fix, is very innovative, because you (government) don't have cash we get that, when we have VAT refunds owed, right now, we can't place that as receivables. So when you go to the bank they won't recognise that $1 million in VAT refunds.

"What this might do is appease the big, international companies might take the 1.5 per cent (annual interest rate), but the people this is going to hurt are the small and medium-sized enterprises.

"What I'm saying is this is going to intensify the problem even more, this collateral bond is an asset that you can go and borrow on, now you're adding a six per cent so this address to VAT refunds is increasing our cost of doing business."

Asked if the TTMA has quantified the extent of the VAT arrears among its members, Costelloe said the last figure, which was recorded earlier on Tuesday, stood at $390 million for 34 companies, compared to the last figure in July of $85 million for 32 companies.

She said the situation is stifling growth in the manufacturing sector, and stressed the importance of cash in operating and maintaining businesses.

"The situation is deepening. You need capital to invest in packaging, trade missions to expand, to hire people. Corporation tax has increased on us; now we have to absorb VAT refunds. We have to let go people and shrink to keep our doors for less.

"The cost of doing business in Trinidad is rising exponentially and the ease of doing business is also rising. We understand the cash flow restraints of government, but the recommendations we (TTMA) put forward required no cash out."

Costelloe said despite the challenges manufacturers would continue to do their best in finding solutions and working around challenges to push exports over the next five years.


"TTMA president: Govt bonds will increase business costs"

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