Blue Power soap exports to Caricom market hit by tarrif barrier

Blue Power soap exports to Caricom market hit by tarrif barrier

Wednesday, December 11, 2019

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Soap manufacturer Blue Power Group Limited, based on a ruling from the World Customs Organization, has been deemed ineligible to receive preferential treatment under the Revised Treaty of Chaguaramas for bath and laundry soaps produced by the company from palm oil-based soap noodles.

The products, Jamaica Customs advised, do not meet Community Origin requirements, thus attracting the duty rate which is charged to soap imports from outside the region.

Soap noodles are the sodium salt of fatty acids derived either from vegetable oil or animal fats that are used as the primary ingredient in the manufacture of soap bars.

Local supplies and exports to non-Caricom countries like the USA and the UK are not affected by this ruling.

According to Dr Dhiru Tanna, chairman of Blue Power, approximately 20 per cent of the company's sales go to Caricom countries and the application of the duty may impede sales from importing countries.

“Jamaica Customs is aware of the importance of the industry to Jamaica and has offered to negotiate with the other Caricom countries which are affected to have the rules changed to restore the preferential treatment for regional manufacturers within Caricom countries. However, this may take time,” Tanna was quoted in a press release.

“The rule is expected to apply to all manufacturing countries using similar raw materials as Blue Power and means that imports of soap from regional countries (using the same manufacturing process) will face the same tariff barrier.”

Palm oil is in an abundance of supermarket products from soaps to foods such as ice cream, supplying about 35 per cent of the global market for vegetable oils. But palm oil, grown mainly in Africa and south-east Asia, has also been identified as a main driver of deforestation, with increased production contributing to climate change and risking several animals such as the orangutan, pygmy elephant and Sumatran rhino.

Tanna indicated that Blue Power will take steps to increase its sales in the domestic and non-Caricom markets while continuing to lobby for a change in the rules.

The company previously operated through two divisions — soap and lumber. It also sells hardware supplies and related products. In August, the Lumber Depot division was successfully separated from Blue Power Group Limited and Lumber Depot Limited was created with its own board of directors headed by Jeffrey Hall as chairman.

Blue Power Group has been restructured to report on Blue Power Group results excluding the former Lumber Depot division and fully carry the expenses relating to the chairman and the manager at Blue Power which were previously accounted for in the results for the Lumber Depot division.

For the quarter ended October 31, 2019, Blue Power Group Limited achieved an after-tax profit of $28 million. According to Tanna, this compares favourably with the previous year when after-tax profit for the quarter was $27 million, with the operations of the Lumber Depot division included. In addition, the company earned $6 million in other income.

Blue Power Group's revenue is derived from manufacturing activities, rental of property and provision of management services to Lumber Depot Limited.

— Abbion Robinson

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