Business

BPO sector growth squeezed - Epstein

BY HORACE HINES Observer staff reporter

Friday, June 20, 2014    

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MONTEGO BAY, St James - YONI Epstein is concerned about apparent stagnation experienced by the business process outsourcing (BPO) sector since the start of the year.

The sector recorded an 18 per cent growth last year, but the chairman of the Business Process Industry Association of Jamaica (BPIAJ) is fearful that this year's growth is sluggish.

This, he attributes to the country's lack of competitiveness which he claims is the result of the high "cost of doing business in general".

"We have seen stagnant or have had no growth in the first six months of this calendar year. This is basically saying to me that we are uncompetitive, there are better places to go to outsource work to," he told the Business Observer. "It's been stagnant, very minimal. It is questionable to see if we are going to see double-digit growth again this year.

"Jamaica is becoming more and more uncompetitive due to the high business cost; electricity, tax and telecoms, which is a very bad thing for a sector that grew by double digits last year."

The BPIAJ chairman bemoaned that the imposition of GCT on telecoms and electricity is having a debilitating effect on BPO operators.

He did note that the tax is reimbursable, but that it has had a severe effect on the cash flow of players in the industry.

Epstein, who is also CEO of Island Outsourcers/itel-BPO Solutions, is calling for a return what existed in the industry prior to 2013, where under the Frezone Act, all goods and services were zero rated, including utilities similar to competitors in the region.

"It is not that we are looking something that is unfair, it is something that we have had, it is something that makes us uncompetitive. We are calling to be exactly where we were in 2012," Epstein declared.

He added: "No other country in the region charges consumption tax on procured goods and services because it is written into their Freezone Act, similar to ours. So what that does it has basically made Jamaica uncompetitive."

He also called for a speed up of the 360-megawatt project which would bring cheap electricity to the Jamaican people.

"If you look at Honduras, you look at Canada and you look at other places in the Caribbean and Latin America, their cost of electricity is significantly less than ours," the BPIA chair argued.

During a recent signing of an agreement for a strategic alliance between the University of the West Indies (UWI) and Barnett Limited, for the sale of land to establish a western campus of the university in Montego Bay held at Bellefield Great House and Gardens, Peter Phillips, minister of finance and planning pointed to the need to nurture the business process outsourcing (BPO) sector, which he described as the island's looming economy.

Currently, more than 12,000 people are employed in 30 companies in the sector.

Dr Phillips noted that the Development Bank of Jamaica (DBJ) has approved six of eight applications for the provision of US$22 million to fund 334,000 square-feet of additional BPO space, which will provide between 7,000 and 10,000 additional jobs.

Meanwhile, the BPIAJ chairman said government has always supported the industry.

"Government is in support of the industry and they have been meeting with us and working with us," Epstein said.

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