GMSA proposes measures to improve manufacturing sector

Members of the GMSA during discussions with the Finance Minister

MEMBERS of the Guyana Manufacturing and Services Association (GMSA) have proposed measures which could improve the local manufacturing sector when they met with the Ministry of Finance this week for budget consultations.

The proposal was made on Tuesday when a team from GMSA including its President, Shyam Nokta, Vice Presidents Ramsay Ali, Ramesh Dookhoo and Glennis Hodge, along with several executive members, met with Minister of Finance, Winston Jordan as part of engagements on Budget 2019.

GMSA submitted a comprehensive list of measures which cover key areas of taxation, energy, public procurement, hinterland road improvement and management, access to finance, and standards and regulations along with sector specific measures covering forestry and wood processing, agro-processing, services and construction and engineering.
Nokta in presenting the organisation’s position paper for budget 2019 alluded to the slowing down of the manufacturing sector. According to the Ministry of Finance Mid-Year Report for 2018, the manufacturing sector contracted by 2.4 per cent primarily due to declines in the production of sugar and rice. Light manufacturing also recorded slower growth compared to 2017, 1.2 per cent as compared to present.

While alluding to the growth in the forestry sub-sector at the half year point of 18.1 per cent and driven by the production of logs and round wood, mainly from small operators, the GMSA indicated that exports of timber are now slowing down.

“For much of the year this sector has been plagued by the deplorable condition of hinterland roads which has been compounded by poor weather. The state of interior roads has also affected the supply of goods by manufacturers to hinterland areas,” said the GMSA.

The association also said tax measures introduced in Budget 2017 such as Value Added Tax (VAT) on electricity, continue to impact negatively on the manufacturing sector.

Additionally, adjustments to the VAT Act in 2018 where several items were re-categorised from zero rated to exempt have affected the ability of manufacturers to reclaim VAT on inputs made for items for export.

Among the sectors which have been severely affected are wood processing and rice exports. The GMSA also pointed out that the steady decline in the sugar industry is cause for concern not only for its national impact but also because of the dependence of light manufacturing for inputs from the sugar industry – specifically molasses, and where there were instances of delays and unavailability in 2018.

Among the measures proposed are; removal of VAT on electricity; reversal of the policy where items that were transferred from zero rated to exempt, especially for items of export from the manufacturing sector; provide incentives to manufacturers utilising local raw materials in their manufacturing processes; provide a greater share of public procurement for locally manufactured goods in areas of pharmaceuticals, lumber, aggregate and quarry products, agro-produce and juices, etc., removal of the excise tax on fuel used in manufacturing and adjusted/reduced tariffs for manufacturing entities based on performance thresholds; incentives for renewable energy options such as gasifiers to utilize biomass in wood processing and agro-processing; and support for packaging and labelling facilities for agro-processors. “The GMSA acknowledges that for many of the proposed measures are not new and have featured in the Ministerial Roundtable Discussions between the GMSA and the Government of Guyana through the Ministry of Finance,” said the association.

They also form part of the deliberations of the Joint Technical Working Group where focus is on the Forestry & Wood-Processing and Agro-Processing Sectors.