KINGSTON, Jamaica – JAMAICAN manufacturers are facing increasing competition from imported products from the Dominican Republic and Costa Rica, two countries with which Government plans to fully enter into free trade agreements (FTAs).
Brian Pengelley, President of the Jamaica Manufacturers’ Association (JMA), said a flood of imported soaps, rum, corrugated cartons, biscuits, jams, soups, pasta, sausages, coffee, and mattresses from those countries are making it even more difficult for industry players to remain viable in a domestic environment that is notoriously unfriendly to the productive sector. What’s worse is that existing data does not support that FTAs with these countries have resulted in increased market access for Jamaican products, Pengelley said, while noting that imports from these countries, on the other hand, have increased.The most updated statistics show that Jamaica imported over US$51 million worth of goods from the Dominican Republic in 2011, but exported only US$5 million worth of goods to its Spanish-speaking counterpart in the Caribbean. And, from Costa Rica, Jamaica imported US$52 million worth of goods in 2010 while exporting a relatively small US$726,000 worth of goods to the Central American country.“Does this feel like a balanced trading position to you? We cannot afford for imports to displace local production, as the implications for employment, foreign exchange savings and government revenue are potentially disastrous,” Pengelley argued at the JMA’s annual general meeting on Wednesday, after he was re-elected president.“If we fully open up to these countries on a huge scale, where is that going to leave Jamaica?”However, the manufacturing lobby group’s head noted that he is not against FTAs.“Let me once again state that the JMA is not against free trade agreements, but Jamaica needs to create some breathing room to aid in our recovery and our Government must take the responsibility for creating this space, and then the private sector must step in and make it happen,” Pengelley said.Jamaica earlier this year agreed to join its regional neighbours and sign off on the full implementation of the Caricom/Costa Rica FTA. Established in 2004, the deal is intended to increase trade between the region and the Central American country, by granting reciprocal duty-free or preferential access to a wide range of products.Government also agreed to the implementation of a similar agreement between Caricom and the Dominican Republic.It was among a wide range of challenges addressed by Pengelley at the meeting. The Customs Administration Fee (CAF) on imported raw material and dollar devaluation were other thorny issues.Following outcry from manufacturers after the implementation of the CAF, the Government reduced the fee by 50 per cent on June 1 for imported raw material. However, the adjustment was not applied to packaging and spare parts, and the fee for meats and fish was moved from a flat rate to $4/kg.Pengelley said the JMA is currently lobbying the Ministry of Finance for a review of the Order to Customs, so that these “critical inputs to the sector” will qualify for the 50 per cent discount. Furthermore, he argued that no tax should be applied to raw materials for the sector.“Let me be clear however that although we appreciate the 50 per cent discount, that this is and must be an interim concession as the position of the JMA remains that no taxes should be applied on the inputs to the productive sector, but applied on the finished products,” Pengelley said, noting “This is exactly how our regional competition works and we cannot afford to give any advantage to them.”The JMA head also urged Government to put under control the slide in the dollar, which has devalued by more than nine per cent since the start of the year against its US counterpart and now trades at $101.29 to US$1.“The declining rate that we have seen recently fuels speculation and a loss of confidence which does not inspire investment. Our position is that this devaluation will lead to a decline in employee efficiency, motivation, morale and overall well-being, as people will demand wages that businesses cannot afford to pay,” Pengelley said.“This therefore means that our people will steadily move down the socio-economic ladder, and will have less money to spend on products and services, which will negatively impact businesses,” he continued. “Businesses will therefore be forced to downsize or shut down, which means jobs will be lost and the economy will further contract. The Government will in turn lose revenue, which will be compounded by increased US dollar liabilities such as debt and foreign purchases.”However, Pengelley lauded Education Minister Ronald Thwaites and Tourism Minister Wykeham McNeill for their efforts towards facilitating the manufacturing sector within the procurement policy, under which government and its agencies aim to source 20 per cent of purchases locally, by financial year 2014/2015.“After years of advocating for the printing of text books locally, we are pleased at the thrust by the Minister of Education and his team to have publications owned by the Ministry of Education, which are valued at $64 million, printed locally by 2014, and we expect to sign an MOU with the Ministry within the next few weeks to this effect. This is huge, as it will stimulate the expansion of the Jamaican printing sector and create employment,” Pengelley said, adding commendations to McNeill for creating sectorial linkages.PENGELLEY… We cannot afford for imports to displace local productionView the original article here
Dom Rep, Costa Rica imports add to manufacturers" woes
