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LETTER OF THE DAY - Increased customs fees will harm manufacturing sector

Published:Tuesday | April 9, 2013 | 12:00 AM

THE EDITOR, Sir:

I was very disturbed when I heard a prominent person on Cliff Hughes' TV programme 'Impact' proclaim that Jamaica's exports are driven too much by imports and, on that basis, is almost justifying the increased fees by customs on imported containers of packaging/raw material. Implicit in the argument is that the high fee will serve as a deterrent and force people to source their materials locally.

I agree, as was stated, that the importation of craft into the island for export is unacceptable. However, there needs to be a distinction between the importation of finished goods and that of raw material.

Jamaica is a small country and cannot produce all the raw material required to sustain the manufacturing sector. As a result, we have to import the various materials that are not available locally. A prime example is glass. Our rum, beer, sauces and seasonings are all required to be packaged in glass bottles in order to compete in the global market. Our local company, West Indies Glass, closed its doors long ago because of the high energy cost.

What is important in all of this is that importation of raw material to drive the productive sector is not all bad and should not be seen in that way. The concept of value chain is one that speaks to each activity adding value to a product. A company that imports a container of raw material for US$10,000 and exports the corresponding finished product for US$30,000 is engaged in this activity. The net gain is US$20,000.

Factories remain open, people are gainfully employed, and Government gets its taxes from the activity. Many successful countries engage in this very activity.

The important point is that value is added to the product. We in Jamaica have products to sell, but the world requires a certain type of packaging that is not available locally. If we do not conform, we will not get into the market.

One cannot limit the productive sector to the use of only locally available material. This would grind it to a haul in a very short time. We also have to look at the cost of producing these materials locally, as it may not be economically viable to do so. This was precisely the case with West Indies Glass.

There should also be a policy that favours the importation of raw material over the importation of finished goods. Failure to do this will result in more manufacturers closing down and becoming merchants.

The recent policies are counterproductive to the sector. Is it that the manufacturing sector is no longer seen as being relevant?

ANDREW GRAY

grays.pepper@cwjamaica.com

Gray's Pepper Products

Sav-la-Mar, Westmoreland