The Jamaica Manufacturers’ Association (JMA) and the Jamaica Exporters’ Association (JEA) are extremely perturbed and disappointed with the government’s announcement to end the Modernisation of Industry Programme (MOI) on March 31, 2011, as well as the proposed adjustment to the duty regime for raw materials. This decision has the potential to affect 77,000 jobs and approximately 300,000 dependents. What is even more concerning is that there has been no consultation with the productive sector, which will be impacted by this decision, in spite of the government’s assurance and the Prime Minister’s directive to consult with industry players. There is much talk about tax reform to stimulate production; however it is ludicrous that to date the government has not met with the producers.

When it was initially made public that the MOI would end in March, and that there would be a review of incentives, we called for the retention of the MOI and duty regime for the sector. The MOI is the only incentive offered to manufacturers and exporters to modernize and retool their plants and helps with cash flow; and the zero duty on raw material and capital equipment ensures competitiveness with regional and international manufacturers that benefit from similar incentives. However, our concerns were quickly allayed, as the Government advised that the MOI would be replaced by an improved Modernisation Regime. When the Associations realized that the deadline for the ending of the MOI was fast approaching, we further called for an extension until the government could disclose and consult on the new regime, to facilitate manufacturers and exporters with the intention to modernise. The Notice published in the March 6, 2011 Sunday Gleaner clearly indicates that this has not been accepted.

Investment, competitiveness and innovation are key platforms for any prosperous society and the removal of the MOI prior to the implementation of a new system is the wrong approach. The growth of the manufacturing and exporting sector should not be held hostage to increase Government revenue. We should instead turn our focus on reducing the cost of energy, security and bureaucracy, and encouraging Jamaicans to buy Jamaican. The government continues to erode the trust between the public and private sector, and the message which is clearly being sent is that “investment and expansion is to be put on hold.”

We are therefore discouraged that in a time when production is needed to create jobs and foreign exchange earnings required to pay for our increasing oil bill and debt, that the government is removing this incentive before the Tax Policy Review exercise is completed and would be contemplating increasing the cost of production by taxing inputs.

Manufacturers and exporters need to operate in an environment of certainty and at this time, requires assurance in a recessionary environment. We look forward to the long-anticipated consultation with Government, to establish an incentive regime for the sector.

Manufacturing and exporting is the key to growing and better living. The Government and the productive sector must therefore stand unified to grow the manufacturing sector and the economy. The only way to find ourselves out of the problems that confront us and advance the welfare of all citizens is to produce and export our way out of our problems.