Govt.'s stimulus uninspiring, S.A.M.E. President says
The Samoa Association of Manufacturers and Exporters does not see anything substantial in last week’s Supplementary Budget to genuinely help its struggling members cope with Samoa’s impending recession.
Instead, President Tagaloa Eddie Wilson said he read a package of limited support to a limited scope of the devastated private sector, from a Government without much wriggle room.
In the budget released on Tuesday, Minister of Finance Sili Epa Tuioti said the private sector would get a $12.5 million boost, including discounts to Accident Compensation Corporation (A.C.C.) and Samoa National Provident Fund (S.N.P.F.) payments. But looking at the breakdown, Tagaloa sees a smaller figure.
“If you take away S.N.P.F. and A.C.C. [moratoria and rent discounts] the budget really for the private sector only comes down to $4.3 million,” he said.
“If you take away the $1 million for Samoa Airways that’s $3.3 million and if you really look at that $3.3 million it’s all moratoriums and repayments for vulnerable small businesses and hotels in the Development Bank of Samoa. There is nothing there, really.”
Tagaloa said trying to fix one industry, tourism, without looking broadly at the entire private sector is the wrong approach.
“We agree tourism is suffering and needs support but all the sectors are suffering as well. There should have been a complete wide-ranging approach to the whole private sector.”
Among the private sector stimulus package is a six month moratorium for tourism industry businesses on S.N.P.F. and A.C.C. payments, plus a two month ACC moratorium for all businesses.
Government agencies with office businesses or facilities have given two or three month rent discounts and hotels have 50 per cent of electricity for three months. These measures do not significantly affect the manufacturing and exporting sector, Tagaloa said.
“I am not being cynical, but perhaps the budget was put together in a hurry and there was no consultation with the private sector.
“We all know there is limited funding but it could have been a lot more innovative if there were other more important things looked at.”
But despite his low expectations of what Government can afford to offer, he still expects a respected seat at the table when assistance programme and funding come to the party from multilateral donors.
When the Asian Development Bank, World Bank, International Monetary Fund and others are approached to help solve Samoa’s economic woes, Tagaloa expects S.A.M.E. to be party to their discussions with Samoa.
“There is nothing in the budget to assist manufacturing and exporters but we understand why, but the Government has to take not that we in this sector are doing our part.”
Exporter and owner of Natural Foods International Papalii Grant Percival said the Government package is a “great work of fiction.
“We have lost 40 percent of our economy with tourism, and we have made it much worse by shutting down the restaurants, shutting down the buses,” he said.
The blow to tourism has knocked out agriculture in the process, Papalii said, with farmers losing their biggest customers in the hotel, food and beverage industries.
And the pay-out of $1 million to Samoa Airways is just a drop in the bucket of what the airline will really need to survive.
“Overall I felt it was a very optimist budget and not at all realistic. It’s really, really hard out there,” Papalii said.
“You are starting to see the economic collapse that is coming, and it is a bottomless pit that you don’t know where it’s going to end, or when.
He said the discounts from A.C.C. and S.N.P.F. won’t be of use if the tourism businesses cannot afford to keep their staff employed. A better use of funds would be paying wages for staff and leaving the employers to continue meeting their retirement and accident fund obligations, Papalii said.
This is especially true for the tourism industry that currently has no light at the end of a seemingly unending tunnel.
“No matter what Government does, it cannot get people to travel because nobody will travel while COVID-19 is on. All Governments are aware the disease is introduced by travellers.”
And the measure to let people take 20 per cent of the provident fund will not help people long term, Papalii said.
Government should be encouraging people to keep money in those accounts, not taking it out, especially the lowest wage earners who do not stand to gain much from withdrawing from their saving before retirement.
“I want to see real money put up to keep staff employed,” he said.
Tagaloa and Papalii agreed the biggest win for manufacturing in the budget is the removal of duty on imported agriculture manufacturing equipment.
“I think that should be permanent, not a one off,” Papalii said.
“We import rice and flour duty free, why can’t we import the machinery to make flour in Samoa duty free. It’s a no brainer.”
“Our average imports are over a billion per annum,” Tagaloa said. Imagine if we could cut that down by half by producing and selling locally.
“We have very fertile land. Instead of importing flour we have breadfruit, bananas, land, sitting and looking at us.”