Manufacturers: Fix crime, ease of doing business, pay VAT refunds

Manufacturers called for better customs and port operations, an improvement in the ease of doing business and a continuation in payment of VAT returns during the TTMA's post-budget forum on Tuesday.

TTMA president Tricia Coosal, addressing stakeholders and Finance Minister Colm Imbert at the Hyatt Regency, Port of Spain, said one of the obstacles to business is crime and called for “practical and successful solutions” to the scourge of crime.

“The escalating crime translates as a disincentive to investment, higher costs to operate, possible brain drain and other such ills to the society. The effects of these factors erode our competitiveness,” she said.

Coosal along with fellow panellist, Amjad Ali, the executive director of Advance Foam, highlighted the ease of doing business as one of the areas with which manufacturers were still struggling.

Coosal said the development of more efficient border agencies, port operations, tax collection, data collection and a digitalised environment would improve investors’ confidence and the demand to do business in TT.

Ali also knocked the customs and excise divisions.

“Far too often businesses are held to ransom because of the inefficiencies that they experienced by those bodies,” Ali said.

He added that higher priority needed to be placed on trade facilitation, meaning that businesses and the government would need to take another look at how they think about business operations.

Arthur Lok Jack, former chairman of the TT Export Development Corporation, Eximbank and the TTMA, took Imbert to task on VAT refunds, saying some businesses still have not been fully paid. He said the slow pace of payments is a “tremendous blow” to businesses' cash flow.

“We cost our export prices without VAT, but we pay it. In my group alone (Associated Brands) the government has tens of millions of dollars in VAT refunds long time now outstanding; and this is money that we are not getting back and we need, so we would have to use bank borrowings with huge interests to get that money back.”

“I have no problems with the budget. I don’t need any more incentives. The main thing is, you cannot incentivise us to get into export, then penalise us with VAT.”

Imbert said billions of dollars were paid out in VAT refunds in 2022 and more would be paid this year.

“The available money in the 2023 budget is somewhere close to $4 billion more than what was spent in 2022. Two billion of that is going into capital, programmes and development work, one billion is going into paying bills, because we have been trying to pay off those things systematically.”

In May Imbert announced that $1.6 billion of the supplemented expenditure would be allocated to an increase in payment of VAT refunds for April to September 2022.

Imbert conceded that border agencies such as the Customs and Excise Division needed improvement.

“I listened very carefully to Mr Ali, and you are right, the customs system is inefficient,” he said. “We need to deal with it. There are no two ways about that. Whenever I hear about the ease of doing business I turn to the Minister of Trade and say 'that's your fault' but you reminded me that it’s also the fault of the Ministry of Finance because we are in charge of customs, and we need to deal with that environment. We need to digitise it, we need to speed up processes and it is going to be a project going into 2023.”

Several initiatives were highlighted in the budget read on Monday, including enhancing human resources in the sector, giving businesses access to more foreign exchange through Eximbank, improving technology and providing support to allow SMEs to grow.

Imbert highlighted two apprenticeship programmes – one for the non-energy manufacturing sector and another for wood and wood product manufacturing.

The programme for non-energy manufacturing was launched in May 2022 and is expected to train over 300 apprentices in mechanical engineering technology, electrical/electric technology, industrial maintenance technology and mechatronics.

The programme for wood and wood products was launched in August through the Ministry of Trade and Industry.

He also said through Eximbank, two financing arrangements were made for manufacturers and importers of essential goods, one of which was the forex facility which provided funds which absorbed costs and the need for foreign exchange across 16 sectors, including the food and beverages, building and construction and plastic and packaging industries.

“The facility sustained international exports,” Imbert said during the budget reading. “Data shows a 17 per cent increase in non-oil exports for the period June to July 2022 when compared to the same period in 2021.”

He assured that the facility would be expanded to give manufacturers more access.

In a statement released on Tuesday, hours before the TTMA-hosted post budget forum, Coosal said initiatives in the budget would further boost business.

She said the $500 million in government support for long-term guarantee schemes for SMEs – a ten-year loan, guaranteeing up to 80 per cent and an increase in ExporTT’s maximum grant fund facility from $250,000 to $340,000 would help boost the SME’s competitiveness and its contribution to the exports in the non-energy sector.

She also said she looked forward to the TT Revenue Authority beginning its work in 2023 and said it would be a step in the right direction for better efficiency in tax collection.