Thursday, February 29, 2024

THE HOYOS FILE: The ‘un-ease’ of doing business in Barbados


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IT IS LIKE WATCHING a tennis match between two players of equal skill: your head goes from left to right for what seems like an eternity, until some minor error, statistically required to ensure the whole universe does not come tumbling down, occurs and the point is won. And lost.

That is how it has been for me observing the “dialogue” between the Government and the private sector about whether Barbados is becoming an easier place to do business.

I was going to do some research and give you actual quotes from the champion of business improvement Minister of Commerce Donville Inniss, and also the prime minister and minister of finance as well. But I realised I would probably crash some website at THE NATION’s library because there would be so many articles to download.

Anyway, you can imagine my shock at learning that, far from getting easier, it is actually getting harder to do business in Barbados. Now, the judge of this is not me, but the World Bank’s latest Doing Business Report.

Barbados fell from 115 last year to number 119 this year in the overall rankings. And out of the ten categories within the overall framework we were down in seven, without change in two, and up in one. My friends, I liked to be positive, take the high road and so on. So I am here today to let you know that it is now slightly easier to deal with construction permits in Barbados than it was last year.

Meanwhile, Jamaica has jumped seven spots in the latest report, to 64th postition, second only to Puerto Rico, which at 57 was the highest in the Caribbean region. The study published last week by the World Bank and its International Finance Corporation affiliate, said: “Jamaica, one of the ten top improvers worldwide, reformed in four areas measured by Doing Business.” including making paying taxes easier and less costly by encouraging taxpayers to pay their taxes online. But Barbados, says the report, “made paying taxes more costly for companies by raising the ceiling for social security contributions and introducing a new municipal solid waste tax”.

Ah, you cry, grasping at straws, we got the Government to abolish that horrid tax! True, except they rolled it into our property taxes. Don’t believe me again? Well, according to the Central Bank’s latest report, also out last week, for the first half of its current fiscal year, that is, from April to September, the Government deficit was $19 million less than for the same period last year. This, said the bank, was mainly due to almost $100 million more collected in property taxes, which were increased to replace the estimated loss in revenue from the now repealed municipal solid waste tax.

You may remember that the municipal solid waste tax was expected to raise a total of just under $50 million over its first year. Talk about gouging your pockets.

I wonder how many days will pass before we hear a Government minister saying they are making Barbados an easier place to do business? I give them a week. Then the private sector will chime in: “No, you’re not” and the rally will start again.

Turning to that Central Bank Press release for the third quarter, I have to tell you that they are so well written that they are getting harder to understand. For example, I was heartened to learn that “the Barbados economy remains competitive, by international standards, and the quality of life remains high, making the country an attractive place to visit, retire and do business”.

An attractive place to do business? Apparently this is based on our ranking at No.1 in the 2015 World Economic Forum’s Travel and Tourism Competitiveness Index. But the real point that hit home was that only a couple of paragraphs below was this sentence: “Over the years, a widening gap has opened up between labour costs and productivity in Barbados.”

Can someone send me a memo on how we can still be competitive while at the same time becoming less productive? Another great thing about these recent Central Bank reports is that they now often feature a Zen-like passage, which requires you to read it over so many times until the only meaning you can get out of its borders on the ridiculous.

Here’s this latest one’s passage: “The growth prospects depend heavily on the success of Government’s medium term programme for growth and fiscal adjustment. This strategy could reverse the slide in the country’s international credit rating, once it features fiscal deficits that fall below the growth rate of GDP, to reduce debt levels and the burden of interest costs.”

So soothing, so meaningless. Question: What is the rate of growth of GDP? According to the Central Bank, it was 0.3 per cent in 2010, 0.8 per cent in 2011, 0.3 per cent in 2012, -0.1 per cent in 2013, and 0.2 per cent last year. Second question: What are our fiscal deficits over the years?

Between 12 per cent and seven per cent over the same period. This year, the Government is trying to reach its target of under five per cent, and will break out the champagne if they get there.

So, since the deficit is not going any lower than that four or five per cent even if we are lucky, it means we will have to grow the economy by four or five per cent a year in order to get the laudable effect envisioned by the bank. That is, the same bank which has revised its GDP growth rate down to half a per cent for this year, and one to two per cent in coming years.

Under the Dolittle administration, it might be easier to get to the top of the Doing Business chart than achieve the five per cent annual growth required. So much for the bank’s moment of Zen.


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