June 30, 2012-BSJ-Week-in-Business

TheBroadSTreeTJournal June 30, 2012 1 news

Tuesday, June 30, 2012www.broadstreetjournalbarbados.com

TheBroadSTreeTJournaltheweekinbusiness

Pictured (from left) at Wednesday’s Post-Budget Breakfast Budget Session co-hosted by the Barbados Chamber of Commerce & Industry and PriceWaterhouseCoopers were Panellists Richard Cozier, CEO of Banks Holdings Ltd.; Troy Lorde, lecturer in econom-ics at UWI Cave Hill; Gloria Eduardo, partner, tax service, PwC East Caribbean, and Lalu Vaswani, BCCI president. See story, page 4. Photo by Vincent Tempro

the budget

Arthur: Barbados economy at “tipping point”

Barbados’ Independent Business Voice

Editorial: Dipping his toes in the Sea of Opportunity - page 8

By Patrick Hoyos

Opposition leader Owen Arthur said Thursday night in the House of Assembly that the Barbados economy was at a “tip-ping point” and until the foreign exchange position improved, it should use some its own reserves to stimulate local demand.

“The Barbados society is now confronted with a failing economy” which was “not providing for the future because we are sav-ing less,” he said. Further, Barbados’ infla-tion rate was three times higher at 9% than the inflation it imported, which was at 3%.

“What started as a problem in the macro and fiscal accounts is now embedded deeply in the two sectors that ought to be taking us out of this situation. It is like flying an aircraft that has four engines but you’ve lost two and the remaining two have started to sputter,” he said.

Mr. Arthur noted that people in tour-ism were now talking about a “fundamental crisis” in the sector. The largest tourism en-terprises were failing, he said, and more are likely to do so. “We are at a tipping point,” he told the House. He acknowledged that there were some “transformational” initia-tives in the budgetary proposals presented by the minister of finance, but before the country undertook them, he said, “we have to get past this tipping point (because) we can go over the brink.”

The question was whether the measures before the House were enough to bring the country back from the brink, or would they

Opposition leader says gov’t should stimulate domestic demand with larger tax cut

See ARTHUR, Page 2

The Barbados International Business As-sociation (BIBA), not surprisingly, has wel-comed the lowering of the minimum tax rate for international business entities in the Budget. In a press release, BIBA Presi-dent Melanie Jones said it was a “meaning-ful response” to the island’s recent loss of its competitive advantage in the Canadian market.

She added that having lower tax regime would enable Barbados to look for new

business in other The provision for a spe-cial entry permit system for high net worth individuals and their families, was also wel-comed by BIBA.

However, Ms. Jones said the new mea-sures to attract foreign investment should be part of a major effort to showcase Barba-dos as a hub for international business, and this meant more funds should be allocated to the agencies charged with foreign invest-

See BIBA, Page 2

the budget

BIBA welcomes offshore proposals

Mottley: Hotels need half billion for refurbishment - page 3

Sinckler retains tax regime in Budget Speech - page 4

TheBroadSTreeTJournal June 30, 2012 2 newsonly make “an adverse situation worse.”

Mr. Arthur said that after four years of recession the economy of Barbados was still expected to grow more slowly in the last three quarters of the year than it did in the first, yet the minister of finance had in-troduced policies which were going to have an overall negative impact on the Treasury.

Citing a recent article written by Central Bank Governor Dr. Delisle Worrell and others last year that the level of Barbados’ foreign reserves were high enough to allow for an even higher deficit than the 9 per-cent incurred last year, Mr. Arthur said the domestic economy should be freed up and allowed to regenerate economic activity.

But the administration’s only goal was to meet its targets under the Medium Term Fiscal Strategy, which he said had been im-posed on it by external lenders.

The minister of finance in his presenta-tion did not outline goals for reducing pov-erty, unemployment or the cost of living, said Mr. Arthur, but only measured his suc-cess or failure “narrowly in terms of wheth-er or not the MTFS could be achieved.”

The MTFS “had been conceived by in-ternational institutions and foisted on this country,” charged the Opposition leader, and the question was simply whether Bar-bados, with higher reserves than required for safety’s sake “should be using part of our reserves not just to finance the United States government - because that is what our reserves’ accumulation means - but whether as a matter of reasonableness and prudence use some of our reserves to just keep the economy growing at a time when we are at a tipping point.”

Mr. Arthur said the prevailing notion was that “any domestic stimulation, espe-cially in the area of tax rates, would lead to a fiscal deficit, and that fiscal deficit would cause a depletion in the reserves and put our exchange anchor under threat.”

However, he quoted from the article cit-ed, titled “Fiscal Sustainability in an Open Economy with an Exchange Rate Peg,” which appeared in the March 2011 edi-tion of the Central Bank Review, that “even though the fiscal deficit for 2009 was very high, a much larger deficit could have been accommodated without depleting foreign exchange reserves and imperiling the ex-change rate.”

Continued Mr. Arthur, “What the cen-

tral bank has told the government is that at the very moment when they were going to introduce all these major taxes to cripple domestic demand, our reserves are so com-fortable - and that was when the deficit was over 9% - that an even bigger deficit could be incurred without depleting the foreign exchange reserves, or putting the peg in peril.”

Mr. Arthur said that some of the reserves should have been used to help keep the economy stable. Government had indeed introduced an element of tax ease in this budget so it could not say there should be none. With the reserves still more than ad-equate and the deficit now at 4% of GDP, “the argument that you can’t have domes-tic stimulation is a joke,” Mr Arthur con-tended.

Mr. Sinckler’s modest tax reform to give back some income to people whose per-sonal allowances were now being taxed was not enough to provide stimulation for the economy, he said. With inflation since 2008 cumulatively totalling 30%, he said, “the best thing that could happen to this economy is that the government of Barba-dos could have a tax change now to enable people who are earning $100,000 a year assessable income or less to pay taxes no higher than 25%.”

The first $25,000 would be tax-free, the

next $30,000 would be taxed 17.5%, and up to $45,000 more would be taxed at 25%.

“Barbados is a vulnerable economy,” he said, and instead of its exports being made by international companies like Intel, it was really the small and medium-sized pro-ducers for the domestic market who were exporting their surplus, and mainly to the Caricom market. Therefore, one of the best ways to increase exports “is to stimulate do-mestic production for domestic consump-tion,” in order to give them a “busy domes-tic base” on which to build their exports,” said the Opposition Leader.•

ARTHUR, from page 1

ment promotion. This was especially so, she said, given the almost $880 million cited by the minister as the contribution made an-nually by international entities to the Bar-bados economy through corporation tax revenues and additional spending.

Ms. Jones added it was “vitally impor-tant” for the public and private sector to work together to improve business facilita-tion here.

She said BIBA was looking forward to the House of Assembly’s “international busi-ness legislation day” and would work with other stakeholders, including government, on creating an “international business ad-vantage” for Barbados.•

A view from Shop Hill showing the fast-growing Warrens area in the middle distance.

BIBA, from page 1

TheBroadSTreeTJournal June 30, 2012 3 newsthe budget

Mottley calls for $500m hotel loan fundSaying that a $50 million fund for hotel re-

furbishment, as proposed by Minister of Fi-nance Chris Sinckler in his budget speech on Tuesday, was too small, Opposition spokes-man on finance Mia Mottley on Wednesday said at least half a billion dollars in conces-sionary finance was needed.

“$50 million cannot meet the problem of our aging tourism sector,” she told the House of Assembly while delivering the Opposition’s Reply to the Government’s Budgetary Prop-sals for fiscal 2012-13. “It cannot.”

In his presentation, Mr. Sinckler said that the National Insurance Scheme would be di-rected to set up a “Hotel Refurbishment, En-ergy Efficiency and Food Production Fund” as part of its investment portfolio. It would initially be capitalized with $18 million from the NIS and with one million dollars per month from the NIS as long as it had earned a surplus of more than $10 million. The min-ister of finance said a “further $50 million of financing will be provided from the receipts of the Government’s divestment programme.” Of the resulting $80 million in capital, $50 million would be allocated to tourism refur-bishment, $20 million to the initiation of a National Food Production Initiative, and $10 million to alternative energy, manufacturing and agricultural firms.

Ms. Mottley said that while the Opposition agreed with the government on the need for more financing for the industry, it had to be in the context of an overall effort to help the sec-tor reduce its high operational costs, which were making it uncompetitive and putting

pressure on the exchange rate.There was indeed a general need for more

development funding to support Barbados’ productive sectors, especially tourism, as the country had depended for too long on the commercial banks for such lending.

She said, “The majority of Barbadian ho-

tels need redevelopment or refurbishment, and the cost of finance from the commercial banks is too high.” But the “mechanism” of asking the NIS to set up a fund “in a vacuum” would not produce the kind of concessional funding required, because “the NIS has to have a rate of return that is, essentially, long-term inflation plus 300 basis points, that is, three percent.”

The scale of the problem would first require “nothing short of a $500 million dollars, low-interest fund, properly established as a func-tion of central government, not of the NIS,” but the latter could put in funds as long as it was guaranteed an “appropriate” rate of re-turn. It was the function of government, not the NIS, to operate a loan fund, because the latter was in the business of managing pen-

sions, not development finance.She added that hoteliers had written to the

minister asking for relief on “a number of mat-ters” affecting the cost of food and beverage, furniture and equipment, that “they need an ease on,” and were not produced locally, such as heavy cream. There was a range of items not produced in Barbados which were vital inputs to a hotel’s operating costs, but were still sub-ject to the bound rates, “that can be looked at.” The bound rates were set up to protect lo-cal production, and to provide revenue to the Agricultural Development Fund, “which we believe remains under-provisioned.”

There were also items of furniture, fittings and equipment not made in Barbados but on which the import duties applied were “too high for the hotels to bear.”

Ms. Mottley said tourism revenues had de-clined from $2.2 billion to $1.8 billion, and the industry required new measures in order to be stabilised.

She referred to recent complaints by the Barbados Hotel & Tourism Association that the prime minister would not meet with a delegation of past presidents of the organ-isation to discuss the sector’s financial plight prior to the budget speech, saying “The saga was already exposed to the public and I shall not add to it. But suffice it to say that if the people in charge of your primary foreign ex-change earner say that our industry is in crisis and they want a meeting, I would think, Sir, I would be worried, and want to meet with them as a matter of urgency to protect thou-sands of jobs in this country.”•


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The scale of the problem requires “nothing short of a $500 million dollar, low-interest fund, properly established as a function of central government.”


By Patrick Hoyos

“While we have surmised that some level of relief is now desirable in helping people in Barbados to continue to meet their ob-ligations and invest in our economy, we have decided that other ways to effect this reality must be found....As the figures clearly demonstrate, we are not yet out of the woods with our fiscal situation...”

So said Minister of Finance Chris Sinck-ler in his Budget Speech Tuesday afternoon in the House of Assembly, as he retained most of the fiscal measures which he had introduced in his first Budget presentation eighteen months ago.

He also announced several initiatives aimed at stimulating growth in selected ar-eas of the economy.

In response to overwhelming criticism for the removal of personal allowances in his first budget, Mr. Sinckler adjusted the personal income tax bands to help compen-sate for the resulting loss of income.

He noted that there were “understandable concerns” over the removal of the allowanc-es, which had “assisted with both spending and saving in the local economy.”

The tax adjustment would cost govern-ment about $29m and a similar amount would be recouped by a directive to minis-tries to reduce spending by 2%.

The minister repeated his previous an-nouncement that VAT would stay at 7.5% for the foreseeable future as it had played the major role in bringing in revenue for the government, in fact, far more than had been expected.

On the Excise Tax, which he had in-creased by 50% eighteen months ago, he said it would stay at that rate but would be reduced proportionately if oil prices, cur-rently just under US$80 per barrel, went back up above US$95, so that current gas and diesel prices would remain around cur-rent levels.

The minister also proposed a new tax, called a national greening levy, be imposed on salaries “to assist in meeting the exten-sive costs associated with the treatment of the garbage which we all produce on a daily basis.”

The minister said the government was not in a position to do anything more on taxes because the economy was not yet out of the woods and needed to meet or exceed its Me-dium Term Fiscal Strategy targets.

Another major initiative contained sev-

eral measures aimed at helping the offshore sector to bounce back, including a reduc-tion in the taxes being charged to compa-nies and other entities operating in the in-ternational business sector.

Since 1995, Mr. Sinckler noted Barbados, through its Double Taxation Agreement with Canada, had been the lowest tax ju-risdiction whose companies were permit-ted under Canadian law to generate exempt surplus (taxed income in Barbados that can be repatriated to Canadian parent compa-nies without further tax being incurred by the parent companies).

Countries which have signed TIEAs with Canada, including Bermuda, Bahamas and Cayman,which have zero taxation regimes, have become the lowest cost tax jurisdic-tions that can generate exempt surplus. As a result, some offshore firms have already left Barbados.

The finance minister said a recent sur-vey commissioned by Invest Barbados had shown that in 2010, companies operating

in the international business sector, be-sides paying taxes of close to $190 million, had spent another $700 million in the local economy.

Overall, the measures relating to the off-shore sector would cost the Treasury around $58 million per year but there would be new revenue of around $25 million expected from new companies entering the jurisdic-tion to offset the loss. The minister also an-nounced a very limited land tax amnesty that will last for all of July.

To help increase vehicle sales in the medi-um-sized category the minister said he pro-posed to Increase the chargeable value on new vehicles from $45,000 to $55,000 with a review after one year, and lower the Excise tax by 25% with a review after one year.

The minister also announced a Revised Policy on Special Entry Permits for Non-Nationals who wish to retire in Barbados, incentives for homeowners and businesses to move to Renewable energy systems, a plan to privatise the air and sea ports and the oil company through IPOs for up to 30% of each company, now fully owned by the government.

He also proposed to have the NIS estab-lish a “Hotel Refurbishment, Energy Effi-ciency and Food Production Fund” as part of its investment portfolio, which would pool funds from its own surpluses with funds from government divestments for a total of $80 million.

Similarly, a Tertiary Education Fund would also be established using NIS sur-plus funds to the tune of up to $48m a year, which will be paid into the Consolidated Fund “and will be used to assist in the fund-ing of the University of the West Indies, The Barbados Community College, Samuel Jackman Polytechnic, Sixth Forms and Spe-cial Education Projects in Barbados,” Mr. Sinckler said.

He also announced fiscal incentives to companies listing on the Junior Market of the BSE of a full income tax holiday for the first five years and half income tax holiday for the second five of a ten-year period.•

Initiatives for offshore and renewable energy sectors, and a small tax ease for individuals

the budget

Saying economy “not yet out of the woods,” Sinckler retains tax regime

In 2010, companies oper-ating in the international business sector, besides paying taxes of $190 million, spent $700m in the local economy.

TheBroadSTreeTJournal June 30, 2012 5 newsupcomingCalendar

heritage tourism

“Ole Time Bajan” bus ride Aug. 2

If you would like to experience Barbados’ heritage and scenic locations by bus, sign up for the Ole Time Bajan Excursion, sched-uled for Thursday, August 2, from 9:30 a.m. to 3:00 p.m.

Deputy Permanent Secretary in the Ministry of Foreign Affairs & Foreign Trade and Event Organiser of the Barbados Network Consultation (BNC) 2012, David Bulbulia said there would be two choices for sightseeing, a northern and a southern route. The cost of the excursion, including lunch, is Bds$122.00.

The team will be led by noted Barbadi-an historians, Kevin Farmer and Maurice Greenidge and their associates.

The excursion will start at the Garrison Savannah to see the changing of the guard, and then head to Bridgetown, where it will

divide into two separate groups, one travel-ling to the north and the other heading to the south.

The northern group will visit Holetown, Portvale, Speightstown, St. Nicholas Ab-bey, Farley Hill, Morgan Lewis Mill, Cher-ry Tree Hill and Bathsheba, ending at River Bay with lunch. The southern group will visit Oistins, Christ Church Parish Church, Callenders, Bournes’ Land, The Crane Re-sort, Ragged Point Lighthouse, Gun Hill Signal Station and St. John’s Parish Church, ending at the East Coast, where lunch will be served.

Reservations for the Ole Time Bajan Excursion can be made online at www.foreign.gov.bb/barbadosnetwork or by con-tacting the Ministry of Foreign Affairs at 431-2200.•

We were “mining” our own busi-ness when someone sent this via BBM. Thanks to our friends at Trimart for making our day!

2nd Diaspora conference• The Barbados Network Consultation (BNC) 2012, also known as the 2nd Diaspora Conference will be held Au-gust 7 -10 at the Lloyd Erskine Sandiford Centre, Two Mile Hill, St. Michael.

In addition to a packed agenda, BNC 2012 will also

provide other recreational and business activities such as Speed Networking sessions; Bajan Road Tennis demonstrations and games; a Creative Economy Show-case; a Career Forum, hosted by the Young Barbadian Professionals Society; screenings of Barbadian films; an Ancestry Research Workshop and a Bajan Cultural Immersion, where participants can learn to cook the Bajan Way.•

• The Barbados International Business Association’s July lun-cheon will be held at the Hil-ton Barbados on July 4, 2012 from noon to 2 p.m. A distin-guished panel will discuss the topic: “Selected Markets in Review: Prospects for Bar-bados as an International Business Hub.”

The panel will feature new BIBA President and Partner, Lex Caribbean Melanie Jones; Russ Jones, tax partner, PwC Bar-bados; Ben Arrindell, director, Cidel Bank & Trust; and Jerome Dwight, managing director, RBC Wealth Management.

They will discuss how clients and business profes-sionals from mature markets, such as Canada, and emerging markets in Latin America and China perceive Barbados; the solutions preferred by investors from those jurisdictions; and opportunities for Barbados in those markets.

The cost is $95 per person for members, and $115 per person for non-members. Reg-ister via e-mail: [email protected] or call 434-2422 ext. 101 with queries.

About the panellists: • Melanie Jones has 20

years’ experience serving in-ternational corporations and financial institutions;

• Ben Arrindell consults on business and product development opportunities utilizing Barbados’ treaty network;

• Russ Jones has over 32 years’ experience in advising clients on tax matters.

• Jerome Dwight oversees captive insurance, funds management, global custody, and corporate trust across the Caribbean including related initiatives in Latin Amer-ica.•

Melanie Jones

Ben Arrindell

Russ Jones

BIBa luncheon July 4

Jerome Dwight

the economy

Central Bank to issue six-month economic review July 9

Dr. Delisle Worrell, governor of the Cen-tral Bank of Barbados, is scheduled to pres-ent the bank’s review of the economy’s per-formance for the first six months of 2012 week after next.

On Monday, 9th July, the bank will issue its review in press release and will follow this up with a press conference the next day.

This Sunday, however, the Central Bank celebrates things cultural, with the launch of the Cropover Visual Arts Exhibition, which it is sponsoring, in the Grand Salle, at 6 p.m.

Finally, on Saturday, July 21 at 4 p.m. the bank will host the “Pan in the Plaza Extrav-aganza.”•


Panellists at Wednesday monrning’s “Post-Budget Breakfast Session” held at the Hilton Barbados and co-hosted by the Bar-bados Chamber of Commerce & Industry and PriceWaterhouseCoopers East Carib-bean shared their initial reactions to the proposals outlined by Mnister of Finance Chris Sinckler in the House of Assembly on Tuesday afternoon.

After opening remarks by BCCI presi-dent Lalu Vaswani, PwC Tax Partner Glo-ria Eduardo discussed the implications of some of the initiatives proposed as anal-ysed by PwC’s team in its special edition of Tax News. The report said that PwC was “hopeful for success with the privati-sation initiatives identified, which should generate much needed investment dol-lars.” However, PwC anticipated “much discussion around the use of NIS funds” to finance some of them, as the NIS had “a heavy responsibility to achieve appropriate

investment returns and to maintain a level of independence in its investment policy.”

However, it felt that the provisions to lower taxing of international business was “a step in the right direction,”and hoped it would “stem the recent losses of business to our zero-tax competitors.”

Economics Lecturer Troy Lorde said he had expected to hear more about “structural transformation” of the economy from Mr. Sinckler. He also note that the proposal to increase the “chargeable value” on mo-tor vehicles, which would make it less ex-pensive to purchase a mid-size car, for ex-ample, conflicted with other tax incentives relating to “greening of the economy.” And while he generally supported the reducing of taxes for the offshore sector he warned that it would only work in the short-term as “we will also have to reduce the cost of doing business” in order to make the en-tire economy more competitive, and cited

the telecommunications sector as one that needed to reduce costs to the consumer.

BHL CEO Richard Cozier, for his part, noted that while the whole budget was about “stabilising” the economy and keep-ing up our foreign exchange reserves, it had done little to increase people’s disposable incomes. Instead, reducing such income “takes money out of the economy ” in order to reduce the foreign exchange component of local business transactions and consumer purchases. This was slowing down our eco-nomic recovery and he therefore felt that Mr. Sinckler had not “got the correct mix yet” of policies that would create growth. He added that the finance minister had made proposals that could help businesses over the longer term, but he should have reduced the excise tax on diesel “there and then,” as this would have brought immedi-ate relief, since in Barbados, “diesel fuels both manufacturing and distribution.” •

the budget

Large turnout of executives for BCCI-PwC post-budget breakfast update

Business executives attending the breakfast session at the Hilton Barbados listening to the panellists discuss issues arising from the Bud-get Speech given by Finance Minister Chris Sinckler the previous afternoon. Photo by Vincent Tempro



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By Patrick R. Hoyos

CEO of the Barbados Stock Exchange Marlon Yarde said last week that greater in-centives were needed in order to get smaller companies to list on the local stock market.

What qualifying SMEs needed, said Mr. Yarde, who was speaking at a semi-nar sponsored by the Small Business Association, were incentives, includ-ing tax holidays, on the scale which have been offered by the Jamaica Stock Ex-change since 2009, and which have proven very success-ful.

Mr. Yarde said the BSE had lobbied the minister of finance for such measures to

be introduced in last year’s budget without

success, and had made the same budget sub-mission for this year’s.

He got his wish.Minister of Finance Chris Sinckler in his

Budget Speech Tuesday adopted proposals put forward by the BSE aimed at develop-

ing the Junior Market. He said that “firms that choose to list on the Barbados Stock Exchange’s Junior Stock Market will be provided with a tax incentive for ten years structured as follows:• “An income tax holiday on 25% of the company’s operation for the first five years of the ten year incentive period;• “A full income tax holiday for the first five years of the ten year incentive period;• “A half income tax holiday for the second half of the incentive period;• “An exemption from withholding tax on dividends and other distributions from companies listed on the junior market;•“An exemption from transfer tax on trans-fers of shares in Junior market companies.”

Mr. Sinckler went on: “To promote li-quidity and encourage economic democ-racy, in order for a company to qualify for the above-mentioned tax incentives the fol-lowing could be required:•“The company must have a minimum of 50 shareholders;•“No single shareholder should own more than 25% of the shares of the company and no other shareholder should own more than 5% of the shares. •“If at any point these are violated the com-pany must repay the Government all taxes claimed.”

The Junior Market, launched by the BSE in the late nineties, has not lived up to ex-pectations thus far, to put it mildly.

It was set up, Mr. Yarde noted, because the BSE board recognised “a need to embrace smaller companies in Barbados by allowing them the use of the same equity financing facility offered to larger companies,” and therefore provided a more “relaxed” set of requirements. To list on the “Regular Mar-ket” of the BSE a company must be making a profit and have at least a million Barbados dollars in assets. So it was decided that to list on the junior market a company needed to have equity capital of a million shares with a stated value of at least Bds $200,000, owned by at least 25 public shareholders who held among them at least one-fifth of the equity ($40,000).

And while for the regular listing a com-pany had to produce financial statements showing that over the past three years it had had “adequate” working capital and paid dividends, along with providing projections for the coming three, for a junior listing you only had to show a good track record for the past two years.

The Jamaica Stock Exchange’s Junior Mar-ket has blossomed in just three years of ex-istence, according to Mr. Yarde, with three companies already listed on it so far and an-other ten on their way. Not only that, but the IPOs issued by all 13 companies were fully subscribed. The Jamaican government was now reaping rewards as the companies were paying more including payroll and sales tax-es because they had hired more people and were doing a larger turnover.

He added that Trinidad & Tobago had gotten on the bandwagon last year, offering a rate for companies listing on the TTSE’s junior market that was well below the nor-mal rate. No stats were provided on actual new entrants.•

the budget

BSE succeeds in campaign for tax incentives for Junior Market

Marlon Yarde. Photo courtesy the BSE.

TheBroadSTreeTJournal June 30, 2012 8 newsthe budget

Dipping his toes in the Sea of Opportunity

Editor: Patrick R. Hoyos

Published weekly in PDF by Hoyos Publishing Inc.Boarded Hall, St. George, Barbados Tel: 230-5687

Email: [email protected]© 2012 Hoyos Publishing Inc.

All rights reserved.

editorial


During the whole of the current administration’s tenure in office, and moreso in the past eighteen months when Mr. Sinckler has been finance minister, the government has fol-lowed a policy of raising taxes to keep itself going no matter the consequences to the rest of the economy. The result has been almost zero growth in the real economy, unemployment levels rising to over 11% even as government retained its full workforce, inflation of close to 10% and the loss of confi-dence in the Barbados economy as a place to invest, both on the part of locals and foreign-ers.

Mr. Sinckler therefore de-serves some praise for, on his third attempt, producing a set of budgetary proposals that will at least try to create conditions for economic resurgence in a few se-lected areas of the economy, as-suming the needed legislation can be brought to Parliament and passed in a short time. The measures announced had in great part to do with increasing incentives for the international business sec-tor by proposing sector-recommended updates to laws and drafting new regulations allowing wealthy people to live and run their busi-ness empires or manage their wealth from here in a more predict-able and transparent way.

There were several other tax measures aimed getting citizens to do things or make investments the government deems desirable, but if they don’t first spend the money they will not qualify for the tax savings.

As a result, the budget presented by the government this week has failed on at least two significant grounds: one, meaningfully ad-dressing the need to earn foreign exchange from tourism and man-ufacturing exports along with the offshore sector, and two, creating opportunities for more employment by lowering both the cost of living and the cost of doing business, as well giving businesses in-creased incentives to hire and invest in Barbados. In other words, to help government grow the economy out of recession.

In presenting the proposals for the international business sector, which revolve around reducing taxes to make us more competi-tive with other jurisdictions, Mr. Sinckler noted that government was taking a big gamble, but could already predict that it would be able to “claw back” about half the expected tax loss through new entrants to the market this year alone. The ‘gamble’ is that a bet-ter, lower taxed, more legislatively up-to-date jurisdiction would attract far more new companies and thus bring total corporate tax revenues back to where they were a few years ago, not to mention put more money into the local economy. Is that really a throw of the economic dice?

Mr. Sinckler also did not take the golden opportunity he had to ease the pain his tax regime has inflcited on the average person.

With Value Added Tax providing far more revenue than expected, government could have given back some of it to ease the burden on both households and businesses. The tax could have been removed from more essential food and clothing items (especially those cat-egories of products used by the old and the very young) and to assist businesses right away with reducing some of their costs, on electricity, for example. The 50% increase in excise tax has run its course and should have been removed immediately as well, which would also have helped homeowners and businesses alike.

To take the road not taken, the finance minister would also have had to beef up his rather anemic proposals for tourism beyond freezing land tax rates and providing a loan fund that might help refurbish a few small hotels, and find a way to attract major new investment. And he would have actually had to re-member that manufacturing ex-

ists in Barbados and should be helped to overcome export barriers more aggressively, whether they be in Port-of-Spain or elsewhere.

We were also treated to a long discourse on the nation’s gar-bage collection woes in order to justify a pittance of a tax, called a Greening Levy, rather than the more apt (in more ways than one) Garbage Levy, which may cost more to collect than it is worth, and which could easily have been paid out of the embarrassment of riches that is this country’s VAT regime.

A major source of potential government revenue, the proposed selling off of 30% of the airport, seaport and oil-importing compa-nies owned by the government, was backed into and away from just as quickly amid a discourse about beefing up the turnover of the Barbados Stock Exchange, and the proposed implementation of Jamaica-like incentives to try to give a kiss of life to the moribund Junior Market.

Selling of these stakes could bring in much-needed Foreign Di-rect Investment from major corporations already experienced in operating such businesses abroad.

If Mr. Sinckler had chosen to bring a budget that would really carry us forward he would have gone for a swim in the Sea of Op-portunity all around us rather than just dipped his toes in it.•

Mr. Sinckler did not take the golden op-portunity he had to ease the pain his tax regime has inflcited on the average per-son. The VAT could have been removed from more food and clothing items.

TheBroadSTreeTJournal June 30, 2012 9 newsnews

By Patrick R. Hoyos

ONE OF THE BEST places you can go to in Barbados for fast food is Chicken Barn. It tastes great and the

price is competitive. Now, you don’t get a lot of alternative menu choices there - it is basically how much of the bird you want at any one time (quarter, half, whole).Unfortunately, Chicken Barn has

become so popular that is now seems to run out of chicken parts more fre-quently than before. When this hap-pens to me at Chefette, I am told “The wait for chicken will be eight minutes.” (For some reason it is always eight minutes, not seven or nine. I am told to go and park, if I am in the drive-thru, or have a seat and wait. And they do bring it very quickly.)Sadly, the opposite is the case at

Chicken Barn. At least, this has become more and more my experience. When they run out of chicken, you have to leave and come back, sometimes the next day. I have been to the Barn at 9 p.m. to hear that they have run out and I will have to take whatever is left (usu-ally breast) because they are not getting any more chicken for the night.Last week, when I went around 8 p.m.,

I was told “the chicken is coming down in an hour-and-a-half.”I am not sure from where the chicken

comes down, but that is what they say. Now, at that point the other night they

had already charged my credit card and were having trouble reversing the pay-ment in order to re-bill it for the other items I was also buying. So I told them I would take those items and come

back another time for the chicken. With palpable relief they agreed and said they would “write my name down in the book.” I had never heard of this book before,

so I was intrigued. I inquired if they had a sort of Chicken Doomsday Book in which they wrote with a quill pen, “We Owest Thou one medium-sized Fully-Grown and Cooked Chicken...set

down in Ye Book of Chicken this Day the Fourteenth of June instant.”They looked at me with some suspi-

cion. I was clearly wasting their time.Anyway, a few days later I called up

and asked them to check the chicken book for my name and queried if I could come over for it soon. They looked and said okay, come in about half an hour.When I got there, would you believe

they told me that they were “out of chicken” again? There was a long line of people behind me and many in front, all of whom had presumably received the news. In desperation, I told them my name

was in The Book and this caused them to pause, then call for the store man-ager, who checked, said hold on, and the bird was produced. When I warned another guy coming

in about the lack of chicken, he said, “Well, I ordered ahead.” I don’t know if that helped him.It occurred to me that the business model

that Chicken Barn seems to be following is one in which costs are so controlled that there must be no - or very, very little - left over/unsold chicken at the end of the night.So when they are running out at one loca-

tion, they seem to have to call up some-where else in hopes that additional supplies can be sent “down.”Meanwhile, customers are being turned

away unless they want to wait. And wait.Here is the trade-off they should be

thinking about: Although they might not be “losing” money by over-estimating the amount of chicken they will need, telling customers to come back in an hour or 90 minutes, especially at dinnertime when they have hungry families waiting on food, more likely drives those customers to visit other fast food places that night.This is a “recipe” for driving your custom-

ers into the arms of your competitors. You must really believe your product to be so special that people will literally postpone their dinner just to get it. That seems to be a rather big gamble to

take in this day of proliferating fast food choices.As for me, I hardly go to Chicken Barn

any more unless specifically begged by family members, and then only under du-ress, because I am tired of being told I have to wait over an hour for chicken.The prices at Chicken Barn, in dollar

terms alone, are competitive, but when when you factor in the long waiting periods for sold-out parts to “come down,” the price becomes way too high.•

not the budget

Chickens flying the coop too often at Chicken Barn

comment

Although they might not be “losing” money by over-estimating the amount of chicken they will need, telling cus-tomers to come back in an hour or 90 minutes more likely drives those customers to visit an-other fast food place.


CEO of Banks Holdings Ltd, Richard Co-zier, in a press conference last week expressed concern over what his company saw as dis-crimination against Pine Hill Dairy products by Trinidad and Tobago.

According to the Caribbean Media Corpo-ration, by Friday, Trinidad and Tobago “was moving swiftly...to head off a trade dispute with Caribbean Community (CARICOM) trading partner Barbados, apologising for the actions of its food safety agency in blocking the entry of Barbadian milk and juices into the two-island republic and saying it was work-ing to resolve the issue.”

On Sunday, the press reported that Mr. Co-zier had welcomed the response from Port-of-Spain, but noted that the problem had been go-ing on for some time and therefore it remained to be seen whether all of the barriers would be removed and the Pine Hill Dairy’s products allowed to enter T&T without hindrance.

Below is the full text of the statement re-leased by Mr. Cozier at a press conference last Thursday in Barbados.

By Richard Cozier

RECENTLy THERE has been much comment on the dollar value of our island’s food imports – in every case the commentators are im-

ploring Barbadians to practice “volun-tary import substitution” in structuring their purchases so that locally produced food items are selected in preference to imports.

We at BHL support this suggestion, as we believe in the quality of the local prod-ucts and the security that buying local af-fords us. We also believe that another, less promoted, opportunity to mitigate against this high cost is for us to grow exports of our products; this is an aspect of our opera-tions that we have invested in significantly in recent times. These investments have

brought our plants to the stage where there are all now among the more technologically advanced in the region. We had to do this if we wanted to have any chance of compet-ing in regional markets, as production costs in other territories are significantly lower, especially in Trinidad where subsidies and other measures appear to create an unlevel playing field. We are now therefore in a po-sition to be much more efficient than we have ever been and this contributes to our ability to be competitive in these regional markets. As the smallest MDC (270,000 persons) we need access to the larger mar-kets of Trinidad, Jamaica and Guyana, and traditionally this has not been an is-sue. Within the last 18 months, however, we have encountered several “challenges” in accessing the Trinidad market. These are unique to Trinidad and are not present in any other markets and it is these challenges that I want to share with you today.

I spoke earlier of our investment in plant and equipment as a means of improving or lowering our production costs. At PHD that investment has resulted in us being able to significantly extend the life of our prod-ucts and move them from the cold chain to ambient storage and distribution. This development opens markets which were previously impossible to service due to the limited shelf life and the need for constant refrigeration from production through fi-nal consumption. We therefore can now supply our range of fresh milks and shelf stable juices to these regional markets, or rather we should be able to do so. We have, however, run up against a roadblock in ac-cessing the Trinidad market as their Food & Drug Agency has indicated that several of our brands have non-compliant labeling.

Trinidad is the sole regional country to indicate this.

Ordinarily, we would look at the non-compliance and make the investment to alter the label to be compliant; in this case, however, we believe, and you will have the opportunity to judge for yourself, that

whereas they are informing us of the areas where we are non-compliant, prominent Trinidadian and international brands sold in Trinidad, are equally “non-compliant” but are not prohibited from be-ing sold in Trinidad nor, as far as we are aware, being requested to alter their label-ling. I will detail the areas where we believe we are being discriminated against.

Use of the word “Natural” on packaging

Our associated company in Belize man-ufactures Not From Concentrate Orange and Grapefruit Juices.

“Not from Concentrate” (NFC, for short) indicates that the juice is prepared directly from the juice extracted from the fruit – not from a concentrate. They indicate on their label that the product is “100% Natural” as

theweekthatwas

BHL’s Cozier delivers scathing indictment of T&T import policies

CEO of Banks Holdings Richard Cozier. Photo courtesy BHL

BHL says Pine Hill’s juices do contain all natural ingre-dients, yet its labels were re-jected while a granola product was deemed compliant.


the ingredients are simply the juice; this we believe qualifies them to use the “Natural” designation, a position adopted by every other country with which we trade.

Trinidad, however, has indicated that these products have undergone a process and once any food is processed it ceases to be natural.

This definition effectively rules out every packaged food/beverage item, including water, and while we would disagree with their definition, the reality is that they can determine whatever definition they want.

Our concern, however, stems from the fact that other food products in their mar-ket make the same statement on their pack-aging and are deemed compliant. One of those products, Nature Valley Granola Bars, clearly states “All Natural” on its packaging and this product is allowed entry into Trini-dad. Unless these granola bars are picked from a tree or fished from the ocean and packaged then they must have been pro-cessed, so why is this regulation only ap-plied to us and not them?

Flavoured MilksWe are informed that our Malted Fla-

voured Milk is non-compliant as the prod-uct common name is not in the same size and font. A comparison to Nestle’s Supli-gen, produced and sold in Trinidad, indi-cates that their product common name is also not in the same size and font, but they are compliant we are not.

Evaporated MilkIn this case we are informed that our

packaging does not indicate the heat pro-cess utilized (UHT) in the manufacture of the product. Again, a check on the Nestle

brand produced and sold in Trinidad re-veals that the above is also missing from theirs, yet they are compliant, but we are not.

Fresh MilkWe are informed

that our Fresh Milk products are non-compliant as the product common name is not in the same font and size – in this case “Fresh Whole or Fresh 2% Reduced Fat” are in smaller case than Milk. With time we can adjust this, how-ever we believe we are again being discrimi-nated against as Nes-tle Svelty product uses different fonts and sizes throughout the product name – indeed you have to really search the label to discover that it is milk – yet that product is deemed compliant.

There are other examples but these above are the main ones we are faced with, and as a result we have not shipped any of the above product to that market in the past 18 months. We have brought this matter to the attention of the authorities here and in Trinidad but it appears as though the only way forward would be to make the changes requested. This will of course take time as new packaging would be needed and whilst we could do this we do not think we should

be required to as it would mean that our products are being held to as different stan-dard than the competition. This, we con-sider, is unfair.

Do not for a moment think that this is just a case of sour grapes on our part. As recently as last week there was an article repro-duced in Trinidad from the Jamaica Gleaner which states that Jamaica is openly accusing Trinidad of subsi-dizing their manufacturers and putting in place non-tariff barriers to restrict Jamaican goods into Trini-dad. We are therefore either both wrong and Trinidad right, or we are right and there are these non-tariff barriers in place.

We at BHL are firmly supportive of Caricom and the single market but it has to be fair and equitable for all players. Caricom mar-kets – including Trinidad – should be open to all Cari-com goods without being restricted through discrimi-

natory practices such as detailed above. We in Barbados do not restrict their brands; their milks, juices, soft drinks & beers are all freely sold here and have varying levels of support. Why should our brands not be giv-en similar opportunities in Trinidad? Unless this discrimination can be addressed quick-ly we will be forced to further compromise production and this could develop into re-duced working hours for Barbadian labour. No one desires this but it is a reality where we have to compete locally against them but are prevented from doing the same in their market. •

theweekthatwas

Can you spot the difference? Left: T&T says the Pine Hill “common name” is not in the same size and font, but neither is Nestlé’s. Right: T&T says Pine Hill doesn’t have “UHT” on its label, but, again, neither does Nestlé. Photos courtesy BHL

BHL says Pine Hill’s fresh milk labels were also deemed non-compliant while a Nestlé competitor with the same font problem was said to be compliant.

Unless Nature Valley granola bars are picked from a tree or fished from the ocean, why is this regulation only applied to us and not them?, asks Mr. Cozier.


Who’s Who in Barbados Business has be-come one of the most sought-after local publications.

It is widely used as a research tool by middle- to upper-level executives interested in reaching upmarket consum-ers, senior executives, entrepreneurs and buyers.

8,000 copies are distributed annually to hundreds of company offices, as well as hotels, conference centres, banks, super-markets, coffee shops, convenience stores and restaurants.

The cost per listing (including photo), logo, 40-word profile or cor-porate box is $120.00 each plus VAT, and clients can take advantage of the following discounts for early payment (add VAT):- 15% OFF by June 30: $102 per listing- 10% OFF by July 31: $108 per listing- 5% OFF by Aug. 31: $114 per listing.

Our new “what’s on” publication, Barba-dos INSIDER Magazine, will contain accu-rate, up-to-date information on attrac-tions, restaurants, nightclubs, health and medical services, shops, boutique and stores, museums and galleries, vehicle hire and tours.

It will also provide information on ma-jor events each quarter, and showcase the people and establishments in our hospitality and service sectors.

8,000 copies of the magazine will be distributed free every quarter in over 200 locations, aimed at both locals and visitors who want to enjoy the best the island has to offer in food, drink, enter-tainment, culture, health services and shopping.

Get one free basic listing for your busi-ness. Just send us your email address and we’ll send you a URL for an online application.

You can enhance your free listing with a logo, 50-word profile or photo for $I00 each plus VAT.Size of publication: 9” high x 4” wideNumber of columns per page: 2

in Barbados Businesswho’swho

in Barbados Businesswho’swho

2012 Edition

Photos and contact information for over 500 top business executives at your fingertips

In January thus year, Hoyos Publishing Inc. launched a new publication called INBusiness. The magazine focusses on achievers - business executives, entrepre-neurs and professionals based in Barba-dos whose life and work experiences are informative, educational and inspiring.This positive editorial environment has made the first edition of INBusiness wide-ly-read at all levels of the community.

HABIB ELIAS Finally living out his dream

Premiere Edition • January 2012 • From The Broad Street Journal

EXECUTIVE OUTLOOK: How we can emerge stronger from recession

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KAYMAR JORDANTHE MAKING OF AN EDITOR

MARKKINGNEW MAN IN POWER

PAulAlTMANlIMEGROVE’S VISIONARYCREATOR

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The Barbados INSIDER • May 2012 • Page 1

July 2012 • PILOT EDITION

LISTINGS AND RECOMMENDATIONS FOR• Shopping• Dining & Entertainment• Health & Medical• Professional Services• Art Galleries & Museums

June 30, 2012-BSJ-Week-in-Business

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