Business

Success is staying afloat

Business Year In Review

BY TAMEKA GORDON Assistant business co-ordinator tamekag@jamaicaobserver.com

Wednesday, January 09, 2013    

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SOME local businesses have touted their ability to stay afloat as their chief success, given 2012's harsh economic conditions.

Having described last year as very challenging, micro, small and medium-size enterprise (MSME) advocates forecast an even tougher 2013.

The absence of the long-debated IMF deal and increasing energy costs were chief on the list of complaints.

"The uncertainty that looms over the sector because of the pending IMF deal needs to be tied down," said Jamaica Manufacturers' Association (JMA) president, Brian Pengelley. "Everybody is on edge, businesses and investors are waiting to see what will happen and this is not good for the economy."

In underscoring the onerous energy bill most in the sector face, Pengelley called for a "firm direction on the new source of fuel" which he said would help to level the playing field with the country's CARICOM counterparts.

"The growth of the sector will continue to be impeded unless our energy problem is addressed," he said.

The MSME alliance pleaded for "competition in the energy sector" to curtail what they too described as a major hindrance to productivity.

Citing anecdotal conversations with members of the group, MSME treasurer Donovan Wignall said several entrepreneurs went out of business or were forced to cut staff to remain viable last year.

"Energy-intensive enterprises will undoubtedly feel it more if something isn't done," bemoaned the alliance's chairman, Rosalea Hamilton.

With the introduction of the net billing system, eleven licences have been granted to people and companies to sell their excess capacity to the grid.

The move, by Wignall's reckoning, indicates the country's strides toward renewable sources of energy, a trend which he hopes will continue.

Poor policy frameworks for the growth of MSMEs were also cited as sour points by the alliance.

The "slow and bureaucratic pace" in the renewal and awarding of National Contract Commission (NCC) certificates was also highlighted as a hindrance to the success of some operators.

Describing those operators who depend on government contracts as "being at the mercy of the system", the MSME alliance bemoaned the "merger slice of the pie" it said its members had to contend with.

"When you have individuals whose NCC certificates were not renewed on strictly bureaucratic reasons, you are leaving people to starve," Wignall said.

Echoing this sentiment, Hamilton scoffed at what she described as the "scant regard" paid to struggling businesses in light of the notion that MSMEs are the engine of growth.

"There is no doubt that more businesses will fold in 2013," she said.

"If it was bad for 2012, it will be worse for 2013 and the superlatives go on," she said in describing the outlook for the sector.

"The 2012 economic climate was just not conducive to business success," Wignall said.

The alliance cited the implications of the flat tax on the MSMEs as another area of concern.

"Businesses at the micro level, such as taxi operators, tend to be engaged in subsistence trading, there is no set rate of income for this group so this tax could very well drive them into the ground," he said.

Noting the gaps in the economic framework for growth, Pengelly echoed his call for greater private and public sector dialogue.

The year was not without its successes. The JMA praised its "creation of at least 8000" new jobs which Pengelley figures added to the fulfilment of the association's mandate of bolstering the economy.

Twenty new manufacturers were brought into the association in last year through the introduction of its Micro and Small Enterprise Membership Facility.

The fledgling entities were provided with business mentorship in an effort to bolster what Pengelley described as "the land of entrepreneurs".

He said the JMA however "found that a number of these companies operated from their homes due to the lack of available factory space".

The organisation also noted that MSMEs "continued to face challenges in accessing affordable financing, which limited their opportunities for growth".

The issue of security remained a challenge in 2012 creating what the JMA described as "another burden" to operational expenses.

"Our members operate out of some of the tougher areas of the country, so security is an ever present concern and comes at a great cost," Pengelley said.

He cited the improvements made in curbing the monster of crime and violence but noted that much more still needs to be done to rid the nation of this major deterrent to productivity.

The continued fall in the crime rate was also a point to celebrate for the Jamaica Exporters' Association (JEA).

The JEA called for greater collaborative efforts between the police and citizens to continue the trend.

The JEA reported that 2012 was overall "a very challenging year" and that "September and October were tough", particularly due to the constraints of the back-to-school period.

Speaking with reference to cargo, the exporters' association said "a little upturn was experienced in the November and December but noted a trend in the decline of revenues.

"Business confidence is low," the JEA said adding that complications from the outstanding IMF deal "only makes things worse".

Additionally, the JEA called for greater strengthening of government and private sector partnerships to move the country forward.

Despite the challenging times, Pengelley reckons that Jamaicans will continue to launch entrepreneurial endeavours.

Initiatives such as the JMA/JEA expo and the Buy Jamaica Campaign were praised for "creating some needed traction and attention from customers".

The events, along with the Jamaica 50 celebrations and the 2012 Olympic Games brought some "visibility" to local businesses.

In the face of the shallow appetite for local products, operator of the Ripple Effect, Ronald Clarke hopes the impact of the expos will continue into 2013.

The micro operator said sales of his products, which were showcased through Things Jamaican at the London Olympics, got a well-needed boost.

The Jamaica Business Development Commission (JBDC) through its Things Jamaican arm, said the Meet Jamaica Initiative and Jamaica 50 celebrations held in the United Kingdom during the Olympic Games, provided remarkable exposure for MSMEs.

"Seventy per cent of the participants were MSMEs whose products were entering the UK for the first time," the JBDC said.

Some 121 suppliers received market exposure, the JBDC said.

"The survival of many companies for 2012 was mainly driven by their own internal efficiencies, Pengelley said, urging the same outlook for 2013 and beyond.

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