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JMA uneasy about waivers to sugar company

Published:Friday | June 1, 2012 | 2:35 PM

The Jamaica Manufacturers’ Association (JMA) said it was deeply concerned about the implications on the local manufacturing sector of waivers granted to Pan Caribbean Sugar Company Limited (PCSC), the local arm of Chinese firm Complant which owns three sugar factories in Jamaica.

“The issue for the Association as it relates to the government’s agreement with PCSC is that the company has been offered tax breaks and waivers to import products that are locally manufactured,” the JMA said in a release.

On Wednesday, The Gleaner revealed that Complant has received 20-year tax breaks on general consumption, corporate income, withholding and transfer taxes as well as customs and stamp duties.

The GCT waiver applies to the purchase of a range of goods, including fertilizer, as well a number of equipment.

A July 2010 letter to Complant, signed by then Finance Minister Audley Shaw, indicated that the company has been granted the waivers.

Complant bought the Frome, Bernard Lodge and Monymusk sugar factories in 2010.

The JMA, noted “specifically that fertilizer was listed as one of the goods eligible for waivers whilst we already have an established manufacturer of this product in Jamaica.”

It continued: “In this regard, if the government has allowed, as part of the agreement for PCSC to retail its imported fertilizer, we could be on the verge of the closure of another manufacturing facility in Jamaica.”

The JMA said that while it was aware that incentives were utilized by governments across the world to attract investment, “we have to ensure that it is not to the detriment of those who have already invested millions in the challenging field of manufacturing.

“We recognize the importance of attracting new investors to Jamaica but urge the government to ensure that due process is followed in making commitments that will, in turn, create losses in the manufacturing sector, increase the loss of foreign exchange and increase our trade deficit.”

In addition, the JMA said, the years afforded for incentives such as the waiver of corporate income tax must be thoroughly analyzed.

“Was the 20 years granted to PCSC based on a cost/benefit analysis to the country, and is it in keeping with international best practices?” asked the Association.

It said that based on current locally legislated incentives the most time given for tax relief is 15 years, a facility that is afforded to the tourism sector.

“We therefore call on the government to make public the details of this agreement and to ensure that the playing field is fair and has not further eroded the competitiveness of a local manufacturer vis-à-vis an importer. If this is the case, it needs to be rectified immediately,” said the JMA.

“We also ask that the government indicates if the imported fertilizer is meeting the quality standard and requirements of our local farmers and Jamaican conditions as the health, food safety and security of Jamaicans are of utmost importance,” it concluded.