Cedric Richards, ContributorGOVERNMENT'S SUCCESS in obtaining funding locally is the continued demolition of the productive sector. The fact is that with an offer of 26 per cent interest on Government bonds, it is no wonder that they get offers for triple the amounts they need.
Usually when the productive sector attempts to borrow it is the other way around - $800 million is needed, and $300 million might be obtained. There is no legitimate business that shows that kind of return these days; especially without the attendant problems such as bureaucracy, professionals input - legal and otherwise workers, and extortionists.
What the Government's kick is, is not so clear, as they have no available income with which to repay this money in the years when it becomes due. This country has not shown positive growth going thirty years.
Jamaican contractors have been largely replaced by foreign contractors; manufacturers and farmers are in pretty much the same position and this situation will continue until crime, violence, corruption, productivity and expensive money are addressed.
TAX COMPLIANT
Foreign contractors do not have to pay 15 per cent general consumption tax on equipment and materials they bring in for the job; they don't have to be registered with the National Contracts Commission and pay the registration fees, until they are to be awarded a contract; nor do they have to be tax compliant in their country of origin.
Local contractors do not get any of these privileges.
Manufacturers and farmers cannot compete with their foreign counterparts due to outmoded equipment and technology, which expensive money and government bureaucracy keep out of their reach.
Expensive utility services, such as electricity and water which are not always available, security measures for their compounds and goods, and difficult labour conditions are major factors always needing attention. Jamaica has been scaring away investments for decades and as a result the tax take from the declining number of businesses, even with the drastic increases, continue to be significantly less than is required to fund the budget.
But, as long as the returns on financial instruments continue to be so attractive there will be no need to invest in productive enterprises, as the ultimate goal of any wise investor is to put money where the risk is lowest and the return is highest.
Patriotism plays no part in this decision and anyone who does otherwise is a fool.
And don't even think of pushing interest rates too low until crime, violence, corruption and extortion is addressed as the sucking sound of money leaving our shores would be deafening.
