Thu | Nov 21, 2019

Shaw's decision bad for business - PSOJ

Published:Wednesday | September 5, 2018 | 12:00 AMChristopher Serju/ Gleaner Writer
Robert Clarke (left), managing director of Worthy Park Sugar Estate, discusses the future of the sugar cane industry with Ambassador Derick Heaven (right), while Karl James (second left) chats with a cane farmer, ahead of yesterday’s stakeholders meeting at the Spanish Court Hotel in New Kingston.

Ambassador Derick Heaven has welcomed the announcement by Agriculture Minister Audley Shaw that he intends to reimpose the tax on processed (granulated) sugar, which is used as a vital ingredient in a wide and diverse range of manufacturing processes. He, however, cited the need for a safety net for those legitimate businesses that will be adversely impacted, and at least one businessman agrees.

"The minister's announcement is long overdue about the reintroduction of the way in which imported refined sugar is handled," the former diplomat told The Gleaner after yesterday's stakeholders luncheon at the Spanish Court Hotel in New Kingston, hosted by the Sugar Industry Authority and All-Island Jamaica Cane Farmers' Association.

"The manufacturers are going to need some assurances and it has to do with the way it is managed. With proper management, it need not impact negatively on manufacturers apart from having to upfront the money. But with the assurance from the minister of quick return to the extent that it is going to cause the massive leakage that is taking place, it is going to be a plus."

However, businessman Steven Sykes, who represented the Private Sector Organization (PSOJ) at the meeting and is a member of the Jamaica Manufacturers' and Exporters' Association, took issue with the minister's handling of the situation.

Sykes, an executive of Continental Baking Company Limited, which is a major importer of granulated sugar as an ingredient for its very popular National brand of baked products and snacks, anticipates that there will be significant pushback from the manufacturing sector.

He explained that the promised quick return on their upfront expenditure will cost businesses much more than the cash value of that spend.

"History has shown that whenever we pay and try and recover it, you never ever get back till 30 years later, and when you pay a tax and you recover it later, you lose on the cost of money," Sykes told The Gleaner.

"If you pay a million dollars and you receive a million dollars a month later, that money has depreciated in terms of the US-dollar value. You lose in the finance cost in paying that million dollars in the first place, so it is costing you more than a million dollars."

The businessman also questioned the minister's rationale for bypassing the police, especially in light of the mountain of evidence he claims to have in hand.

However, Shaw defended his actions and decision to leave the security forces out of the loop as a pragmatic approach to dealing effectively with such major crimes.

"That is the way to really rescue this industry. If I decide that we a go wait to see who we can arrest and who we can do this, it won't work. The system is so corrupt now, the corruption is everywhere. The corruption is at customs, the corruption is among so-called brokers who are brokering on behalf of manufacturers who import the sugar duty-free. Some goes to manufacturing and the rest goes into the market, destroying the Jamaica sugar industry," Shaw said, in justifying his unorthodox approach to this vexing issue.

For Sykes, the minister's action is misguided and misinformed.

He explained: "Now the minister said that he has conclusive evidence of this adulteration and corruption. Then they need to use the evidence and go out and find the people, take their pictures, put it in The Gleaner and Star and lock them up and charge them. But do not get into a situation where you are going to burden the legitimate manufacturers who are playing on a level play field and trying to do what they are supposed to do and right. And then you burden them because you, your system and those who are supposed to manage it are not managing it."