Business Facilitation

It is crucial that we find ways of reducing the cost and removing much of the hassle associated with doing business in Barbados.

I now propose to introduce a few measures to assist in this regard.

Insurance Issues

Without doubt the cost of insurance has risen faster than any other cost in Barbados. The General Insurance Industry has continuously made representation that the high cost of property insurance is a consequence of high re-insurance costs as a result of the designation of the Caribbean, which includes the southern USA, as a high risk area.

The events of September 11th, 2001 and subsequent hurricane activity has served to exacerbate the situation.

Re-insurance rates have risen between 25 to 30% since September 11th, 2001 and these costs are passed on to the consumer.

A partial solution to the problem is for the industry to retain a larger share of the risk, thus reducing the amount ceded.

In 1996 the Insurance Act made provision for property insurance companies to deduct 20% of net written premium income, provided that amount was set aside in catastrophe reserves.

It was expected that over time sufficient catastrophe reserves would be built up to enable the companies to retain increasing amounts of the risks underwritten.

The industry has now made representation for an increase in the tax deductible allowance for catastrophe reserves in an effort to further encourage companies to retain more risks and cede less thus reducing re-insurance costs.

I have therefore agreed to increase the tax deductible amount of premium income for catastrophe reserves from 20% to 25% of net written premium income.

I also propose to reduce the premium tax on property insurance from 5% to 3.75%. Both of these measures will come into effect from income year 2003.


Customs

The operation of the Customs Department is an area cited frequently as raising considerable difficulties to the carrying on of business.

As part of an exercise to rectify this the Customs Department will embark on the automation upgrade from the current Automated System for Customs Data (ASYCUDA) version 2.7, to the latest ASYCUDA ++, version 3. The upgrade is expected to be completed in 18 months at cost of $2.5 million.

The upgrade will enable the department to embark on full electronic document processing, and will assist in reducing the cost of doing business to facilitate increased revenue collection, faster turnaround times, improved trade data collection and retrieval and will generally enhance departmental efficiency and effectiveness. Barbados will be the first administration in the Caribbean to complete this system.


Customs administrations worldwide have had to address the increasing challenges of the movement of containerised cargo across national borders.

In the Caribbean and in Barbados in particular, the system of direct deliveries saw increasing volumes of containers being sent to importers premises all over the island.

There are several inherent risks in the current system including the unauthorised opening of containers, movement of contraband and ineffective deployment of resources.

Agreement in principle has therefore been reached for the establishment of the Central Container Examination facility where all regulatory agencies will be accommodated and where all containers released from the Bridgetown Port but targetted for examination will be processed.

Containers released from the Bridgetown Port and not targetted for examination at the Facility will be delivered directly to the importers who will be permitted to start unstuffing them as soon as they arrive at their premises. The regulatory agencies reserve the right however to visit and examine those containers even after the direct delivery.

Mr. Speaker at present residents of Barbados are permitted under the Customs Regulations 1963 No.85 to import duty free quantities of tobacco
and spirits for their personal use. It is not clear why these "sin" goods occupy such an exalted position.

Much friction has however developed between some members of the travelling public and Customs officials, because other goods intended to be used for non-commercial purposes do not enjoy any such similar provision.

To remove this hassle, I now propose to provide a duty exemption of Barbados of up to $500 per annum for residents, which residents can claim on all items intended for non-commercial use - and not just for cigarettes and liquor - with effect from January 1st, 2003.

Such a provision would facilitate and expedite the movement of legitimate travellers while enabling officers to concentrate on high risk cases.

The provision of a duty free allowance on non-commercial items will be consistent with similar provisions in other jurisdictions.




Justice System

The modernization of our judicial system is seriously constrained by an insufficiency in the number of judicial officials.

Delay in justice is now endemic. This state of affairs has been occasioned by the high incidence of matters now being brought before the Court as well as the paltry number of judicial officials.

Since 1995 when we last made an increase in the number of High Court Judges, the number of cases referred to them has increased by 27 per cent to over 3400 and it is estimated to reach 4200 by 2007.

The situation at the level of the Magistrates Court is even more grim. There currently exists a backlog of about 4000 cases at this level of the judiciary where the case load has increased ten to twenty times since 1956 when there was last a permanent increase in the magistracy. Over 22 300 cases were lodged in the Magistrates Court in 2001 of which nearly 20 per cent were drug cases compared to none in 1960.

This situation needs urgently to be rectified. Hence it is now proposed:
o to increase the number of magistrates by two;
o to add two High Court Judges to the bench; and
o provide another Appeal Court Judge.

Mr. Speaker these measures will cost the Consolidated Fund about $1.1 million and will have to be funded by an increase in court fees which have remained unchanged for nearly twenty years.

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