Clarke faces wicket slicked with oil

As Finance and the Public Service Minister Dr Nigel Clarke opens the 2022-2023 Budget Debate in Gordon House this afternoon, Small Business Association of Jamaica (SBAJ) President Michael Leckie is appealing for action by the Government on two fronts.

First, the SBAJ head is urging Clarke to pump more resources into the Social and Economic Recovery and Vaccine (SERVE) Jamaica Programme to the micro, small and medium-sized enterprise (MSME) sector to provide additional working capital for businesses and to allow for greater access to digitisation.

Leckie said that word from his membership was that they have engaged SERVE and were finding it very beneficial.

Last year, the Government allocated $3 billion in loans and grant support to MSMEs affected by the COVID-19 pandemic through a partnership between the finance ministry and the Development Bank of Jamaica

He said the SBAJ was also willing to work with the Ministry of Finance to reach out to the informal sector so that they, too, can benefit from the SERVE.

Clarke comes to the nation to explain how the Government’s programme will be funded at a time when Russia’s invasion of Ukraine has triggered a surge in oil prices on the global market.

At the start of the year, oil prices were about US$76 a barrel. The war in Ukraine has now pushed the prices to close to US$120 per barrel.

On Monday, Toril Bosoni, head of the International Energy Agency oil market division, said that oil prices have reached levels that are “uncomfortable for consumers” across the world.

She argued that these higher prices are impacting inflation and posing a serious risk to economic growth.

In a Gleaner interview, Leckie signalled that skyrocketing oil prices would place an additional burden on the small business sector.

“I want the finance minister to realise that the category of the MSME that is experiencing the biggest blow is the retail/wholesale sector,” he said.

Leckie urged the finance minister to reduce the level of fuel taxes which directly impact their earnings with the spiralling transportation costs.

He said that these costs would have to be passed on to consumers if steps are not made to cushion the effects of the sharp rise in prices.

David Parker, operations manager at First Venture Limited, which operates a number of Texaco stations in Barbican, Constant Spring, Half-Way Tree, and Spanish Town, said that prices have jumped by between 15 per cent and 20 per cent over last year.

He said the sector was under tremendous pressure even before Russia declared war against Ukraine, noting that at one point petrol stations had to deal with 12 consecutive weeks of price hikes.

In terms of petrol sales, Parker said that motorists are forced to purchase less petrol than at previous times.

The petrol station operator said that the COVID-19 restrictions that were imposed by the Government had led to a significant fall-off in petrol sales over the last two years.

“What I would like the Government to talk about tomorrow (Tuesday) and take a good look at is some of those taxes on petrol, because as an industry, we have to pass it on to the customer,” said Parker.

He is urging the Government to provide relief for consumers and the industry by cutting back on taxes.

“We are going to be faced with a big challenge because the more the price increase is, the less our margins will be,” said the First Venture operations manager.

Ossel Campbell, managing director of Domestic and Commercial Appliance Spares Limited, told The Gleaner that shipping costs were posing a serious challenge to the viability of his business.

The company imports about 80 per cent of its merchandise out of the Far East and the United States. Campbell said that the main challenge his business is now facing is the cost of freight, particularly the cost of containers out of China.

In early 2021, he said he imported a 20-foot container out of China for about US$5,000. “I just got a quotation from my contact in China and it is now US$14,500 to bring a 20-foot container from China,” said Campbell.

He said that freight has escalated to nearly 50 per cent of the cost of the imported merchandise.

Campbell said his business tries to minimise the cost to the end user.

He said that in 2021, a proposal was made for the Government to remove the cost of freight from customs duty.

“Customs duty is based on the cost, insurance and freight, and so it would be good if the Government could take the cost of the freight out of the final duty,” said Campbell.

The businessman said he also supported a call for the Government to reduce the gas tax to the country.

He argued that the finance minister was faced with a “hard task” in the context of the current global oil crisis, noting that Clarke had the difficult job of balancing the books while balancing lives and livelihoods.

He said there was a time when the country would await the presentation of the Budget with trepidation, as tax increases would be anticipated.

“Fortunately, for the past few years, we have not had that, and long may it continue,” he added.