The Grenada Chamber of Industry and Commerce (GCIC) has urged local businesses to face up to the reality of amalgamation or risk going under in the face of increasing competition in the region. GCIC President, Yvonne Gellineau-Simon noted that many businesses within the private sector are reluctant to break out of their traditional operational mode and are continuing to do business as usual.

She made the remarks last Friday in a presentation entitled "The private sector and the economy" that was delivered at a one-day conference organised by the main opposition National Democratic Congress under the theme, "Making the Economy work for All"

According to Gellineau-Simon, some of these businesses that are resisting changes are family-owned and operated, and are not responding to the changes taking place in business and the trading environment."This will leave us in a very voluble position in that the recent trends of mergers and amalgamation will soon be on our shores, if not here already," she said.

The GCIC President said that the key areas of private sector growth in the recent two decades were in the area of tourism, financial services, health and education services, construction and real estates services. She stated that the explosion of tourism was represented by significant increase in room stock, growth in in cruise ship arrivals, and increases in the number of marinas on the island.

In addition, the growth in catering, tour operation and taxi services also played an integral part in the tourism growth. She cited high energy cost, transportation, and communications as fundamental issues affecting the development of the private sector.

 The GCIC President told the gathering that high energy cost severely restricts the prospects of a competitive manufacturing sector on the island including the development of agro-industries."In Grenada, business are paying up to 80 cents per kilowatts as opposed to Trinidad businesses that are paying 15 cents per kilowatts or less," she said.

Gellineau-Simon also pointed out that the high cost of regional air transport was affecting the movement of goods and people in the area. She feared that the recent hike in air travel has virtually undermined the real prospects for export-led private sector growth in Grenada and the OECS sub-region as a whole.

In the area of communications, she said that high mobile rates were proving to be serious obstacles for local businesses."The private sector in Grenada is unable to cash in on the windfall of cost reduction and time-reducing benefits that the ICT revolution has made available to international private sector," said the female GCIC boss.

Gellineau-Simon also addressed the fiscal incentive framework, which she said is another external factor affecting the private sector.
According to her, the fiscal incentive framework has operated on an adhoc and unpredictable manner, and has precipitated private sector development in a very limited way.

She said the current fiscal regime is characterized by a high degree of micro management, inequality between foreign and local investors in granting of concessions. She is hopeful that the much talked about and long awaited Investment Act will effectively address these matters.

The GCIC President said that in the meantime, the private sector is under significant pressure to make investment decisions without a clearly defined fiscal incentive framework in which to operate. Gellineau-Simon indicated that the private sector is concerned that the educational institutions in Grenada are not putting out the quality human resources that are required for the competitive world of work.
She said the work ethic of the past was better than what prevails in today's world.

"We cannot expect to compete on an international market without addressing how to improve our productivity," she added. Gellineau-Simon also addressed some "hurdles" which she said the GCIC needs to cross.

She said studies have pointed to the urgent need to have Grenada's tax base broadened through the re-introduction of the Value Added Tax (VAT). She was confident that in the long term, VAT will lower the tax burden and bring into the tax net significant numbers of persons who are currently outside of that net and who have the capacity to make national contributions.

She said that a glaring example of this is the illegal two-tier system of duties that continue to operate at the Customs Department in the form of the traffickers' price list. According to Gellineau-Simon, this accounts for a significant portion of revenues that are not being collected on an annual basis by government.

The female GCIC President also made some passing comments of the rising cost of living in Grenada. She said that GCIC recognizes government's initiative to engage the private sector in stabilising the cost of some products on the price controlled list but regarded this as nothing but a short term exercise.

"The increase in the cost of living could not just arrive in mid 2007. It has been coming for some time. This is an issue that will require private and public sector harmonisation in a meaningful way to bring reduction to the cost of living," said Gellineau-Simon.

In recent weeks, consumers have been complaining about significant increases in some goods in shops and supermarkets with milk moving upwards by over $EC2.00.