REMARKS BY PSOJ PRESIDENT WILLIAM MAHFOOD
LIONS CLUB OF KINGSTON
APRIL 1, 2015
ICAJ BUILDING – 8 RUTHVEN ROAD, KINGSTON 10
Good afternoon ladies and gentlemen. Thank you for the invitation to be here at my very first Lions Club presentation in my capacity as PSOJ President. The overall mission of any Lions Club is to serve communities, meet humanitarian needs, encourage peace, and promote international understanding and I commend you all for choosing to apply this ideal to your personal, business and community lives.
Today I’d like to talk about Jamaica’s development path and what needs to be done to ensure that it is sustainable. I am a firm believer that Jamaica is on the right path towards achieving economic growth and success, but we aren’t out of the woods yet, and there’s more to be done to ensure that we continue moving towards realizing this goal.
To begin with, it is critical that we stick to the path of fiscal and economic reform that we are currently on, as in the past whenever we have started to feel any difficulty from any adjustment, especially coming up to an election, we have retreated from the proper reform path and borrowed to support our unsustainable consumption habit. This is what has caused us to have the recurring problem of high debt to GDP and low productivity.
I cannot emphasize enough howimportant it is that the government does not jeopardize the path that we are on and that the publicis made to understand the importance of sticking to the programme.
But at the same time, while there is a need to stick to this path and maintain fiscal and economic viability, the government must be mindful of creating an environment where fiscal concerns strangle our productivity and business growth. We must recognize that growth, and economic sustainability can only come through a highly confident and sustainable private sector, which we are cognizant of at the PSOJ. It is therefore important that a more competitive and friendlierbusiness environment be facilitated.
This is primarily why the PSOJ recognizes the need for the recentgas tax to facilitate the oil hedge and add some amount of stability to a very important input in our production process and competitiveness. We do understand that this is difficult to swallow but the alternative could be even more devastating, as we have seen the effects that high oil prices have had on business costs and the pockets of consumers. It is therefore important to make the sacrifice now when prices are low so that we can be more certain of the future prices. What the hedge will do is give us enough time to bring greater efficiency to the organization of our energy sector. And so I say to the government that we must all ensure that this time the energy solutions be implemented without the delay we have seen over the past six years, with two failed attempts because of our bureaucratic process. The people of Jamaica must finally see the benefits of their sacrifice.
In this regard we look forward to no new taxes next fiscal year, and even a reduction in tax rates, as the Finance Minister has said is the intention of his government. So this year must be a turning point and we must do everything to ensure that we maximize the benefit of our sacrifices. The Jamaican people, and businesses, have been asked to sacrifice for too long.
A key aspect of creating this easier business environment also lies with addressing the high levels of bureaucracy that continue to burden the system. Unless there is a revolution in how the State facilitates business investment and business activities both through legislation and through the Public Sector processes, economic growth will continue to elude us. I am the first to admit that the government has made great strides in this area, and has proven to be very facilitative of consultation, and must be commended for this. But if we are to be world class, there is more to be done. And we at the PSOJ have been dialoguing with the respective authorities in this regard.
Central to that revolution is the introduction of more technology in how the State conducts its business. For example, we should be able to conduct more of our transactions with the government online. The Tax Administration of Jamaica has already begun to bring some of their services online, but many more government agencies need to follow suit.
Ultimately, we would like to see a partnership for change being created between the Public and Private Sectors, where both the Public and Private Sectors work harmoniously to bring forth the best from Jamaica. The government should be able to draw on the minds and abilities of leaders and professional managers in the private sector and a good starting point is to fast track Public-Private Partnerships, as a way to push certain projects forward. The PPP approach has borne much benefit for other countries like the UK and Canada and we should be looking to do the same.
Secondly, we also need to focus on energy. The recent dip in oil prices can only be seen as a positive for businesses, as it will lead to lower manufacturing costs. Ultimately, if we lock into these current oil prices for even the next 18 months, I believe we’ll see a surge in the growth of SMEs, as it has been proven that high energy prices has a seriously negative effect on start-ups. A 2011 MSME Survey found that among medium, small and micro enterprises, the high cost of electricity was a leading factor in business failure.
So if we are serious about having our SMEs play a key role in the long-term transitioning and development of our country, we must do all that we can to take the pressure off of them and increase their chances of survival.
The fact also is that if SMEs thrive, then employment will increase and naturally large businesses will also do better, and the government will collect more revenues. So focusing on the facilitation of SMEs is a win-win-win strategy. The PSOJ has shown its commitment to this strategy and will continue to do so through projects and programmes geared towards SMEs.
Finally, we mustensure that proper governance and control mechanisms are in place, so that we do not have to ever see again in our lifetime,the Billions in GDP lost to man-made situations like the way the ChickVoutbreak was managed or the very recent Riverton Dump fire. We also cannot impose taxes, such as the Minimum Business Tax in its current form, which only serves to discourage persons from formalizing their businesses in the early stages, as they should. We also must guaranteeexcellent customer service frompublic sector bodies and that the tax authorities do not continue to pressure already compliant tax payers, and penalize them for $1,000 if the overall tax they pay is in the millions, while allowing illegitimate persons to continue to stay out of the tax net.
The PSOJ has stated our own position on the need for greater compliance and I have also made calls on the private sector to ensure they adhere to the tax laws. We agree that each person should pay their fair share of taxes, but the tax authorities also have a role to play in going after those delinquents instead of focusing on those who are already compliant.
In closing, we all have a role to play in the country’s development, and we must ensure that we understand the path we must stay on. If we do so then I am optimistic that we will see a better tomorrow, and a big part of that responsibility lies with us the people as we move closer to the silly season. We have to ignore the distractions and promises of what is not realistic and understand that only through sacrifice and increased productivity will we see a better tomorrow for Jamaica, and ultimately our children.
THE PRIVATE SECTOR ORGANISATION OF JAMAICA
APRIL 1, 2015