SCCI reacts to 2021 budget address, pushes for a ‘Seychelles First’ approach |22 February 2021
To accelerate economic recovery and job creation, the Seychelles Chamber of Commerce and Industries (SCCI) has called for a ‘Seychelles First’ approach, with the private sector playing its key role as driver of economic growth.
This is one of the numerous points highlighted in the SCCI’s reaction to Finance Minister Naadir Hassan’s 2021 budget address, made before the National Assembly on Tuesday February 16.
Following a week’s worth of careful and thorough analysis of the budget, SCCI noted that the first budget of the new Minister for Finance, Economic Planning and Trade was “poised, firm and setting the tone for a transformative trajectory by the new administration”.
The SCCI strategic response to the budget is based around two fundamental goals: re-opening of our economy safely and shifting our measures from containment to restructuring for wealth creation, and continuing support for businesses and workers for long-term prosperity for all.
Reviewing and supporting Government’s fiscal strategy
In regards to the government’s fiscal strategy, the SCCI positively observed that the government’s approach from a fiscal perspective is based on a principle that recurrent expenditure should be funded by recurrent revenue. This ensures that the country spends in a responsible way – one that is fair for current and future generations.
The chamber welcomes the government’s announcement to reduce tax rate on business profits and working towards a more equitable tax regime for all. It notes that the current tax regime has various shortcomings, as pointed out by the Organisation for Economic Co-operation and Development (OECD), and the SCCI is urging the government to conduct a major tax reform.
“There is general consensus that the current VAT regime in Seychelles is administratively burdensome and not aligned to the ‘Keep It Simple’ principle. As a first step we need to analyse whether we should revert back to the VAT collection and enforcement system that operated under previous GST system or do we keep the current regime and simplify the administrative process,” reads the SCCI’s reaction statements.
“The removal of CSR is a positive move and the SCCI echoes the statement made by the minister regarding reminding businesses not to ignore their corporate social responsibilities.”
“The enormous amount of tax disputes and tax debt recorded against business must be analysed and measures must be adopted to support the call for more efficient and effective tax compliance.”
Even as SCCI understands the need for the government to terminate certain relief schemes for the private sector such as the FA4JR, it strongly urges the government to consider continued targeted support and measures to certain employers to avoid the risk of increased bankruptcies, non-payment of redundancy costs, closures, and retrenchment.
“SCCI believes that restructuring government is a very high priority and should be undertaken in a strategic and collaborative manner. We believe significant savings and efficiencies can be made if government administration is right-sized.”
“In this SCCI has previously offered to assist government. Member and stakeholder views show that government could adopt a policy of right-sizing as follows: ‘there are things that only government can do and then there are all the other things’. This basically entails a prioritisation exercise. This is further echoed by Minister Hassan when he asserted what the role of the government should be.”
“An example is that our members and stakeholders believe there are significant opportunities for privatisation, Public Private Partnerships (PPPs), outsourcing, consultancies and what is termed co-management. This will create many new business opportunities and therefore significant employment. SCCI can articulate other business associations, as well as Unions and NGOs on the forefront of innovation in this new and vital exercise.”
Transitioning the broad-based government support to more targeted ones for firms, especially those in the hardest-hit sectors.
“While we understand the constraints, the SCCI is of the view that the Government must re-consider the nature of support it will provide to the private sector moving forward. We are of the view that within the framework of the Budget that has been announced, we need to create a holistic Covid-19 Resilient Package.
“This proposed Covid-19 Resilient Package will have four prongs:
First, to address our immediate needs for Safe Business Re-Opening;
Second, to support workers and businesses where needed;
Third, to target support for sectors that are still under stress; and
Fourth, Supporting business to seize opportunities.”
“Concerning the gainful occupation permit (GOP) framework, we fully comprehend the Government's concern about safeguarding jobs for Seychellois. SCCI is in full support of the programmes such as localisation, skill development programme, and My First Job scheme.”
“The national employment policy strategy must include the holistic development of Seychellois workers by equipping them with both soft and technical skills. SCCI welcomes any policy that aims to enhance our workers' skills and productivity. In consideration of the challenges brought by the pandemic, workers must be equipped with a new knowledge, skill and attitude toolkit.
“We at the SCCI are of the view that the way forward is to have the right fit between expatriate and local workers. Business recovery, job retention and new jobs and business creation must be front and centre in decision-making to do with reinforcing and enhancing our core capabilities and competitiveness.”
“SCCI wants to create an enabling and competitive environment conducive to the growth of all businesses, equal opportunities to gather cutting edge skills and the right attitude for our young and emerging workforce who can aspire to high skilled, well-paid works. We support the call from Minister Hassan to invest in talent development of our young Seychellois through business scholarship and we propose that we formulate a framework that will allow a win-win solution for the business and the talent.”
Shifting focus from job retention to job creation, and the creation of an economic transformation moving forward in current and emerging industries
The SCCI highly recommends the set-up of a national competitive grant scheme for those that want to develop innovative ventures as above in the spirit of thinking outside the box and adopting the entrepreneurial culture as stated by Minister Hassan.
“The development of a digital economy is dependent on high quality internet provision and online activity. Telecommunication providers should be incentivised to provide ubiquitous coverage to all the populated parts of the country, venture into new technologies and bring Seychelles to the forefront of digital technologies.
But whereas this is a necessary condition it is not sufficient for the development of a digital economy. True competition within the industry must prevail so that fair, affordable and meaningful broadband access is available to every citizen of this country.”
In regards to the initiatives towards climate change adaptation and resilience SCCI observes: “The private sector needs to be part of the solution, as a key partner to the Government in ensuring sustainability. We welcome the opportunities that Minister Hassan referred to, in terms of green and blue enterprises that will be needed to address waste management, recycling and providing sustainable alternatives to the unsustainable options that exist on the market.”
“We also hope that the Government will maintain the schemes for businesses to install PV systems on their buildings so we too, can be part of the move to renewable energy and importantly, remove the pressures on our foreign reserves to import fossil fuels. We acknowledge it is not without its challenges and applaud efforts to explore the issues of storage and the upgrade of the PUC grid and systems.
“We propose that the government more aggressively promotes Electric Vehicles (EVs), such as in the public transport fleet, and that public charging infrastructure is installed to facilitate the uptake of EVs.
We also propose that the government provides incentives that will enable upgrading of facilities and buildings to become more energy efficient and climate smart.”
The SCCI further welcomes the recognition of the importance of the fisheries sector and values some of the investment areas detailed by Minister Hassan.
“SCCI would like to understand the position of the government in regards to encouraging industrial vessel to land fish in Seychelles and whether this is a condition of licensing those vessels. The onshore landing of the industrial long liners that are today mainly transshipping at sea, can potentially generate more revenues for Seychelles, and could also lead to value addition and processing of frozen fish onshore.
SCCI welcomes the creation of the Fish Processing Zone (FPZ) on Ile du Port in order to attract new Seychellois and International investment for Fish processing. SCCI would like to understand how the special zone will be organised, if this zone related to processing and fisheries will be bonded, or even declared as a Freeport zone. Clear conditions should be given to encourage local investment and attract new investors.
“The creation of the FPZ must be complimented by new key infrastructural development such as the rehabilitation of the Commercial Port, extension of the current jetty at Ile du Port for the Fisheries sectors, the setting up of an adequate sewage treatment plant for processing, and new fisheries dedicated container yard to improve the current logistics flows.
“Another area of concern for some of our members who operate in the fresh fish sector is related to the mere fact that apart from the possible investments in the handling of fresh fish at the airport, other targeted measures must be explored.
Furthermore, a major cost element in processing is electricity which together with labour costs will give any operator challenges in competing in the volatile markets.”
The SCCI concludes that the budget is transformative and includes many elements which need more thought and development. New, innovative and cutting edge activities such as biotechnology are disruptive in the business and social sense. On the other hand, transformation of existing businesses such as processing to meet the new challenges raised by the budget will need new tech and new practices. Not all of the private sector may be ready or primed to ensure the inclusive approach of promoting opportunities for Seychellois.
“Each business must be viewed as the basic economic unit. Therefore, each business’s transformation is necessary. But we can reap the full benefits of transformation, when we transform the entire value chain. This is fundamental especially with regard to our productive sectors such as agriculture and fisheries with initiatives that have been outlined by Minister Hassan.”
“This requires extensive and inclusive thinking and the SCCI is proposing the set-up of a Business Transformation Facility (BTF) to facilitate the implementation of the change-making policies laid out in the budget. The BTF will include the Government, NGOs and academia where research, new ideas and different ways of thinking and of doing things are also undertaken. This will also support the vision of our road map to manufacture more locally and orientate towards exportation of these same goods – Made in Seychelles.
“On a wider note, the Seychelles has to pursue a strategy of attracting foreign direct investment, especially for key critical infrastructure projects, through a package of opportunities and incentives, backed by systematic coordination with leading public and private sectors organisations in select countries that are amiable to invest.”
These foreign direct investment however should not come to the detriment of the Seychelles, the local businesses operating here and the communities.
Compiled by Elsie Pointe