3 weeks ago
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Two groups representing large and small businesses in Jamaica are looking forward to meeting with the government to hear details of its plan to pivot to economic growth, following Prime Minister Andrew Holness’ policy briefing last week.
Although they say they have heard similar pronouncements in the past, the heads of the Private Sector Organisation of Jamaica and MSME Alliance say they are willing to work with the government to stir growth in the economy, which has suffered a downturn the past two quarters.
Dr Holness in his policy briefing last week promised to institute a national drive to reduce red tape and bureaucracy to make Jamaica the most business-friendly country in the region, a move that is of importance to the PSOJ.
“Reducing bureaucracy and red tape is the number one issue to the PSOJ of all the things that the Prime Minister announced. We feel like that it can have the quickest and most impact on growth. I think the difference this time is that the Prime Minister has announced, in a cursory way, EPOC 2, which is the efficiency oversight committee. I think the time has come for us to come together to ensure we do break the back of this terrible disease of red tape and bureaucracy that is hindering our growth so terribly,” PSOJ President Metry Seaga told the Financial Gleaner.
Seaga said the success of EPOC, the Economic Programme Oversight Committee, established in 2013 to monitor the implementation of Jamaica’s economic reform measures under its agreement with the International Monetary Fund, is proof that difficult problems can be overcome when stakeholders set targets and work together to achieve outcomes.
He cited examples of the bureaucracy that was stifling business.
“We have members of our organisation that tell us of two, three years to get approval on the most basic of things. People tell us of six months to get a letter signed. We have people telling us about people in ministries and agencies going on leave as the only person able to sign approval for export items, things of that nature. It is a plethora of things. It happens in every ministry, every agency, and is cross-cutting to every single industry in Jamaica.
As a matter of fact, there are government agencies who are experiencing the same bureaucracy from themselves. It is really a serious issue.” Seaga said.
Meanwhile, president of the MSME Alliance Antoinette Hamilton said the red tape involved in accessing loans from the Development Bank of Jamaica increases the cost of the loans to small businesses.
“We believe it is difficult for our members to access (DBJ loans) because of the upfront costs they have to come up with. We have been proposing that instead of charging these fees that require significant initial outlay from our members, we’re saying, price that fee into the interest rate for the loan,” Hamilton told the Financial Gleaner.
According to Hamilton, there are several fees required to access a loan from the DBJ, including a commitment fee and a credit enhancement facility fee, each of one per cent plus GCT, as well as an annual renewal fee of two per cent plus GCT. This she said was in addition to fees from the banks which disburse the loans which can reach up to five per cent.
“So, for example, if you take a $10 million loan, which is a reasonable amount for a small or medium entity to acquire a small machine to increase their production, you’re looking at finding almost $700,000 up front to access the loan. And we’re not talking about the other requirements like creditor or personal life insurance,” she said.
The MSME Alliance head suggested rolling the fees into the DBJ loans in exchange for a one per cent increase on interest rates.
In the meantime, both the PSOJ and the MSME Alliance are looking forward to meeting with government officials to work out the details of the growth plan.
“Whether it means sitting on the EPOC 2, getting the details of the investment, tax incentives, whatever it is, we are happy to sit down with government and to be a part of the solution,” Seaga said.
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