Nov 29, 2017 News
– Govt. proposes VAT-free lumber for sawmills to help jumpstart sector
On top of a requirement that all Pine Wood importers will need a licence as of January 1st, Guyana has successfully applied to introduce a regional tax of 40 percent.
During his 2018 Budget Speech on Monday to the nation, Finance Minister Winston Jordan, disclosed that as announced earlier this month, the restriction of the importation of Pinewood and related products have been engaging the attention of Government.
“Following strong representation at the recent meeting of the Council for Trade and Economic Development (COTED), an organ of CARICOM, Guyana’s request for suspension to increase the Common External Tariff (CET) on Pinewood and Pinewood products, from 5 percent to 40 percent, has been approved.”
The hike of the regional tax and the introduction of import licences for Pinewood would bring a breath of relief for loggers, sawmillers and lumberyards, who have all be complaining about the presence of Pinewood on the local market and the unfair competition that lumber has been posing to them.
A number of hardware stores and other importers have been shipping in the Pinewood lumber, with some contractors gravitating to the finished product for especially interior framings for homes.
The issue of the Pinewood presence has forced Government to step in with measures announced earlier this year.
The actions by government have upset some hardware store owners who have found a way to make the Pinewood lumber even cheaper than what is being produced here.
The issue of the Pinewood has been hammering at the forestry sector in recent years.
Addressing the matter, Minister Jordan that the Government has come up with a package of incentives to the forestry sector that is intended to improve its competitiveness and boost output and incomes.
These include the restriction of the importation of Pinewood and, with effect from January 1, 2018, a proposal to exempt from VAT, a supply of logs and rough lumber to the sawmilling industry.
“This would improve the cash flow of operators in the industry by at least $80M,” Jordan said.
The minister noted that a sum of $120M has been set aside to commence a forest inventory with another $50M put aside to partner with the private sector to establish what is known as a “Dimension Stockyard”.
Government is badly hoping for improvements. Forestry has fallen with Barama Company Limited giving up its concessions.
The forestry sub-sector is expected to show some improvement with a projected slowing of the contraction to 7.2 percent in 2017, from 27.3 percent in 2016.
Total production for 2017, Jordan reported, is projected at 297,070 cubic metres, 10 percent lower than 2016.
“The subsector continues to face several problems, especially competition from imported wood products. Government is actively working with the industry to support growth, going forward.”
According to Jordan, to strengthen the capacity on the forestry sub-sector to adapt to sustainable production practices, which ultimately will improve international competiveness and access to foreign markets, Guyana has committed to become a part of the European Union Forest Law Enforcement, Governance, and Trade (EU-FLEGT) programme.
“We are on our way to initialing the Voluntary Partnership Agreement (VPA) of the programme by the end of this year. Once the VPA is ratified, we can then commence the implementation phase, at the end of which, the aforementioned benefits would be realised.”
In addition, Jordan disclosed that the Government has spearheaded the establishment of an
Inter-Ministerial Roundtable, tasked with working collaboratively with the private
sector, through the Guyana Manufacturers and Services Association (GMSA), to meaningfully develop methods and initiatives to stimulate growth amongst the various industries of the manufacturing and services sectors.
“The forestry subsector was identified by the GMSA as the priority industry for the attention of the roundtable, given the struggle of its players in progressing to value-added production, which would allow for the sector‘s true potential for growth and employment to be realised.”
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