HILTON ROSE HALL HOTEL – MONTEGO BAY

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REMARKS BY PSOJ PRESIDENT WILLIAM MAHFOOD
CARIBBEAN EXPORTER OF THE YEAR AWARDS CEREMONY
APRIL 16, 2015
HILTON ROSE HALL HOTEL – MONTEGO BAY

 

Thank you for the invitation to be here tonight. I am flattered that I was chosen to speak tonight and I’m grateful for the opportunity to participate in such a prestigious event.

Before I get into my remarks, I’d like to congratulate all the nominees. To be selected is an honour, as it means that your company is being noticed and even if you don’t end up winning tonight, you would have already gained significantly through the exposure being affiliated with these Awards bring.

I particularly want to commend the idea of a Green Exporter of the Year Award, as it shows that we are recognizing the importance of implementing green technologies in one’s business, and the significant benefits this can lead to, including costs savings, market differentiation and of course, a chance to help improve our environment.

As someone who spent 20 years managing the WISYNCO Group, I understand clearly the intricacies of exporting within the region and as such, I’d like to begin with a look at some of the challenges currently being posed by various countries in the region.

The lesser developed countries such as the OECs and Belize, despite having CARICOM status still have tariff barriers which prevent competition. For example, pasta incurs 50 – 100% duties, carbonated beverages and beers 75% duties and so on. Jamaica has already raised the matter at several meetings of CARICOM’s Council for Trade and Economic Development (COTED).

At the most recent COTED meeting in November 2014, Belize was asked to, and in turn gave assurances that it would undertake the necessary steps to address the matter of the discriminatory application of its Revenue Replacement Duty (RRD) on imports from CARICOM and report on the actions it has taken at the 40th COTED, which will take place this month. The number of policy measures of a restrictive nature still in operation in CARICOM point to the need for further trade liberalization and we need to continue to lobby for the necessary changes.

Meanwhile Trinidad has improved on its non-Tariff barriers, which has been a very sore point for us over the years. We found that Jamaican products are now being readily accepted – Juici Patties are now being sold on a large scale, and shortly Jamaican oranges will be exported along with fresh juices.

Yet I think it goes without saying that Jamaica is still probably the most open market in CARICOM. Each year we waive billions in duties on goods imported from CARICOM, at the expense of Jamaican producers, goods and jobs. As the CARICOM member state with the largest population after Haiti, we remain a prime export market not only for Trinidad and Tobago, but also for Guyana, Belize, Barbados, and the Bahamas, which is not participating in the CARICOM Single Market and Economy (CSME).

On the other hand, from a competitive point of view Jamaican exporters’ face a larger challenge than other competitor territories like Trinidad & Tobago, where Jamaican Customs fees can be a challenge for exporters’ particularly the small exporters.

For example, the cost to export a single container is J$62,595.27. We would then have to add another US$300 on average for security SCANNING fees, which can be doubled if they decide to do a second scanning. While these security checks are random it can be significant depending on what is being exported. A small Syrup Manufacturer recently had to fork out $60,000 because customs said that they had reason to double scan the container.

Note also that there are other fees that are also associated with Government agencies; the Trade Board for example, takes $3,000 for every container exported. Exporters also pay JAMPRO an annual fee.

The fees for breaches are also exorbitant. For example if a container misses a vessel on a particular sail date after making the booking, and a letter is not sent to customs within 24 hours of sailing explaining why the date was missed, that exporter is fined $100,000. If this vessel sailed on the weekend and no one is in office to receive the information, there is no waiver. The fees must be paid. When a small exporter has to pay these charges it erodes their profitability.

Many exporters also face the challenge of the slow pace of customs reforms and screening. Screening can result in a container missing its vessel and when an exporter has perishable goods, this can become a problem. So when Jamaica has to compete with countries like Dominica Republic whose port fees are ¼ of Jamaica’s, then we are at a disadvantage at all times.

I believe it is time we look at reducing the fee structure to make it easier for our exporters. Jamaica already has a significant trade deficit within CARICOM and perhaps if we lower the fees we may be begin to see a reduction in this deficit.

But even as I would like to see a reduction in fees, I would also like to see less bureaucracy within the customs system. For starters, the customs department overall must be encouraged to do away with the traditional paper-based audit procedures and instead make use of electronic and other time-saving systems to expedite collection and examination procedures. We have heard too about the arbitrary and often frustrating behavior of officials regarding inspections.

As an example, a study conducted between 2011 and 2012found that 32% of complaints from exporters related to the procedural issues associated with Customs. In particular, one of the complaints spoke about the issue of the random inspection of goods before they are shipped, to ensure that what is being shipped is as stated on the exporting documents. This inspection is often time consuming and delays the export process. Most importantly, because of the nature of the goods, the quality of the goods may be compromised and possibly contaminated during inspection. We cannot be serious about improving our doing business environment and becoming a world class Logistics Hub similar to what exists in Dubai and Singapore, if we continue to employ similar practices.

I am the first to admit that there have been attempts to improve the process and ease of exporting, but if we are to truly take our place in the world of exports there is still a lot more that needs to be done. At the PSOJ we have been actively engaged with the relevant authorities at Customs and other areas and I am happy to say that there has been consistent dialogue with Customs. We are indeed encouraged by the approach being taken in various areas of consultation with the government and we and will continue to work through the various challenges together.

Turning my attention now to what can be done to increase our export market, a little explored area I believe is online sales. Global internet sales were worth nearly US$640 billion in 2013. Although e-commerce accounted for just 5% of global retail sales in 2013, its growth has been spectacular, with internet sales soaring by 127% in current value terms over the past five years. How does this relate to exports? Well the Caribbean on a whole has an image and culture that resonates with people all over the world. Obviously, everyone won’t be able to visit us, but I’m sure many of them would still love to have a piece of the Caribbean. Instead of placing our focus on selling directly to the tourists and members of the diaspora who come to our shores, we should be looking at establishing more of an online presence, and selling items via that route.

This online presence should also include social media. We see more of our companies becoming established on Facebook and Twitter for example, and racking up hundreds and thousands of likes, but failing to turn that interest into sales. With an estimated one in four people globally on some form of social media, it’s safe to say that there are numerous sales opportunities that can be found via this avenue.

So in closing, I’d like to once again thank you for the invitation to be here tonight.  Congratulations again to the nominees and indeed the winners, and I look forward to meeting some of you later on.

Thank you.

WILLIAM MAHFOOD
PRESIDENT
THE PRIVATE SECTOR ORGANISATION OF JAMAICA

APRIL 16, 2015

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