Manufacturing
After three years of decline, the manufacturing
sector showed itself amenable to policy stimulation and as a result has recorded
growth of 2.2 % for the first six months of 2002.
Since 1998 the Government
has consistently sought to apply a policy to Manufacturing to afford it protection
in all forms and up to a level consistent with our regional and global trade obligations
to mitigate the effects on the sector of trade liberalisation. We have also sought
to encourage the sector to begin to find industrial solutions to industrial problems,
and the Government has facilitated this transformation by undertaking to mount
on the sector's behalf a technical assistance programme amounting to $5 million
per year over a period of three years. We have recognised the need to find new
means by which to finance the creation of new competitive industrial enterprises.
As such we have created a $25 million Industrial Investment and Employment Fund.
Above all, we recognise that Manufacturing can be restored if it is afforded a
larger domestic market, and hence Government has supported the bringing on stream
of the 100% Bajan Campaign.
These policies have had the desired effect and
will be kept in place. However, some refinement is required to ensure that the
signs of recent growth in the sector can be translated into robust recovery. We
need especially to institute a major new initiative for export marketing and to
expand the pool of funds available to finance the creation of new competitive
enterprise.
I deal first with the refinement of our policies. Tariff
protection at the rate of 60% on a number of goods formerly under the surtax was
recently introduced. This measure covered a range of industrial products spread
over ninety tariff headings. In granting protection by way of high tariff, it
is the wish of the Government to shield sensitive manufacturing activity in Barbados
from foreign competition but to do so in a manner that does not bear adversely
on the consuming public and our tourism sector. It has been found that of the
ninety goods now enjoying such tariff protection at least thirty are either not
produced in Barbados or produced in such minimal quantities as not to warrant
the protection at all. As such, with effect from January 1st, 2003, the 60% duty
will be removed from a list of goods under thirty tariff headings. The full list
is appended. These goods include some items of furniture, household articles and
food.
We will retain in place, as is our right under WTO rules, the special
safeguard mechanism to protect our agro processed food industries and our beverage
industries from surges in low priced extra regional imports. The use of this safeguard
mechanism will remain in place for the foreseeable future but will be reviewed
to ensure that it is having the desired impact.
The 100% Bajan Campaign
has been of great value and will not only be maintained but will, with Government's
financial assistance, be expanded into a third phase to cover all aspects of domestic
production of goods and services.
These efforts to boost domestic demand
for manufactured goods must now be supplemented by efforts to expand production
for exports. Hence, through a joint public/private sector partnership we propose
to establish a new trading and marketing enterprise to exercise major responsibilities
for selling Barbadian goods abroad. The enterprise will function by buying goods
from local manufacturers to sell overseas, thereby allowing manufacturers to focus
on production and to avoid having to carry the risk of export marketing.
This initiative will initially benefit twenty-five export manufacturers and will
in the first year exploit already identified opportunities in the U.S and British
Virgin Islands, Bahamas and Atlanta. The creation of the enterprise is estimated
to cost $2 million dollars, and it is proposed that it be financed from the Industrial
Investment and Employment Fund.
Second, additional finance for the sector
will be provided through the $30 million dollars which was recently borrowed from
the Caribbean Development Bank and placed at the disposal of the Industrial Credit
Fund for on-lending to financial institutions providing credit to industrial projects.
International Business
Barbados has recorded
an improvement in the performance of the International Business Sector so far
this year. Of particular note, has been the strong growth in the registration
of International Trusts. So far this year 115 International Trusts have been registered
compared with only 2 for all of last year. In the International Insurance Sector
17 companies have been registered this year so far, compared to 8 for last year.
For Offshore Banks, 4 were licenced this year as compared to 2 for last year.
This year 202 International Business Companies have been licenced to far compared
to 210 last year. So far this year 17 Societies with Restricted Liability have
been registered, compared with 22 for the entire of last year.
As part
of our emergency response to September 11, 2001, a programme for the accelerated
development of the sector was put in place. The essential elements of the programme
were:
o Enhanced marketing of the sector
o Expansion of the Tax Treaty
Network
o Lower cost and increased capacity in telecommunications
o Acceptance
and implementation of international best practice in the supervision and regulation
of financial services
o Expansion of services exports beyond financial services
In support of this programme additional resources were placed at the disposal
of the sector. The more aggressive marketing of Barbados has clearly contributed
to the improved results achieved this year.
Support for the Programme
for the Accelerated Growth of the International Business Sector will continue.
Particular emphasis will be placed on the areas where growth, is most possible,
namely Insurance and International Trusts.
Nothwithstanding the improvement
in the sector, it is clear that several challenges remain. The chief is to bring
about the comprehensive convergence of all aspects of international and domestic
sectors of the economy and especially the tax regime available to them. I will
later specify the framework within which tax convergence will be undertaken.
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