Food importers say 2016 will be tough as they face double jeopardy with the reintroduction of Value Added Tax (VAT) on certain food items and limited foreign exchange as they struggle to keep prices down by sourcing cheaper, alternate sources.
Several food importers were contacted on how they intended to operate with the changes to the VAT structure and after Prime Minister Dr Keith Rowley called for citizens to make healthier food choices while balancing their budget. They are Vemco Ltd, CGA Ltd, Sincere's Chinese Grocery and Sheik Lisha Ltd.
Director of Vemco Ltd, Marc Mouttet, said with the limited availability of foreign exchange the company would have difficulty paying suppliers.
He said whenever the company could procure foreign exchange, it was at an inflated rate which meant that everything it imported now would cost more along with VAT.
“Vemco is not only a food importer but also a major manufacturer, we have a pasta manufacturing plant, and a condiment and sauces manufacturing facility,” Mouttet said.
“The reality is that as a result of having these large manufacturing facilities, Vemco is an exporter and a revenue earner of foreign exchange.”
The challenge, he said, was that the majority of the inputs into manufacturing were all imported items.
He said with the limited foreign exchange, the company was unable to procure raw materials and it placed a significant strain on the manufacturing end of the business.
Mouttet said this also threatened the company’s ability to earn foreign revenue which was its main challenge at the moment.
He said he understood the predicament and the company was trying its best to work with it but it would be a challenging year.
General manager of CGA Ltd, Michael Sirju, said the company was still waiting on significant VAT refunds from early 2015 and this was going to put a further burden on companies to manage cash.
He said CGA manufactured soaps, edible oils, margarines and shortenings and if there was one product that should be given a concession it was coconut oil, which the company manufactured.
Sirju said the company imported copra from Guyana and St Lucia, and bought some locally to be processed and refined into coconut oil.
He said this would be the first time the company would be paying VAT on copra and it should be removed completely to help offset the increases in other products.
Helen Lee, director of Sincere’s Chinese Grocery, said her company might have to adapt and source alternate suppliers for their food stuff and imported items at better prices while trying to maintain high quality.
She said many of the Asian products the company imported also had health benefits such as Chinese teas which were packed with antioxidants. She said these were now going to be more expensive for customers with the addition of VAT.
Lee said the Government should reconsider or do more research on VAT for items with such health benefits.
Azad Akaloo, managing director of Sheik Lisha Ltd, said many people could not calculate 15 per cent VAT much less calculate 12.5 per cent and that the figure should be rounded off to 12 per cent.
He said he expected problems such as businesses having to reprogramme their cash registers, which entailed a lot of additional work.
Akaloo, whose company imports foodstuff such as vermicelli, pasta and split peas powder, said who was to determine what was healthy food. He said what might be healthy for one person might not be healthy for another.