Monday, February 18, 2013

Rum Distillers in Jamaica Hit with New Problems

   The Jamaican Government has plans to slash millions of dollars in discretionary tax waiver that had been afforded to the rum industry and other manufacturing in Jamaica.     The rum producers can not survive on the molasses that is produced in Jamaica, they have to import some 60,000 tons to be able to produce the rum that is needed for export to blenders abroad.   This molasses has been coming into Jamaica on the waiver system, without which the distilleries will have to raise their prices or shut down.   With the current battle in the Caribbean over the subsidies to Puerto Rico and the U.S. Virgin Islands where they are already able to buy molasses with the cover over tax rebate, greatly reducing their costs of production.

     The issue hits the entire industrial sector of Jamaica.   There is a policy of not taxing goods imported from the "Caribbean Community ", but still raising taxes on their own countries manufacturing.   This is taking the companies ability to compete on a level playing field.   The high energy costs are another problem that the distillers are facing, for which there doesn't seem to be a solution for in the near future as well.

    Brian Pengelley, Jamaica Manufacturers Association said"The principle is that you cannot be putting duties on import products that are going to drive the efficiencies in the manufacturing sector or put plants at risk of closing."

   This is a classic case of the "domino effect", it is very interesting how one thing directly effects so many other parts of the economy.