The cost of doing business in Barbados has been cited as one of the impediments to the island’s global competitiveness and progress.
From high legal costs – described as “profit-crushing” by economist Avinash Persaud – to exorbitant prices for basic goods and services, it is accepted that Barbados is a high-cost locale.
This has implications not only for the volume of foreign investment the island is able to attract but the ease with which ordinary Barbadians can carry out basic tasks.
These high costs can be attributed in some measure to international events.
In the March 21, 2011 BARBADOS BUSINESS AUTHORITY, Barbados Chamber of Commerce & Industry (BCCI) executive director Lisa Gale said the cost of doing business at every level is increasing as the economic financial crisis persists.
“Simply put, these are still tough times. The crisis is further compounded by rising commodity prices, more recently including that of oil, [which] is an essential make-up of all business.
“This has translated into increased cost of doing business at every level from the farm to the retail store. Many businesses have witnessed a significant decline in profits in the last years; 2008 to 2010,” she said.
Gale said Barbados was but a small dot as it relates to international trade and would therefore have no influence on prices.
“We have to accept the prices in the international market if we need the goods and services that we purchase – and Barbados, as you know, is very small.
“In terms of the trade, our trade is about 0.0001 per cent of world trade; we are really a small dot. So as price takers, we are not influential at all.”
Another concerning factor has been the cost of electricity, which is seen by many businesses and individuals as simply too high.
The August 28, 2011 BARBADOS BUSINESS AUTHORITY editorial noted that the cost of electricity will always be a front-burner issue since it has implications for the economy, the price of doing business and for day-to-day living.
“Keeping fuel costs as low as possible must be in everyone’s interest,” it stated.
Following on from this, in the October 19, 2011 MIDWEEK NATION Minister of Finance Chris Sinckler said the direct pass-through of rising fuel costs affects virtually every aspect of the Barbados economy.
“For the first six months of this year, Government has been called upon to expend an additional US$92 million (BDS$184 million) on the importation of fuel this year over last year.
“When one considers the role which fuel plays in development and the continuing operation of Barbados’ economy and society, one could only imagine the difficulties which would portend with such an increase,” Sinckler said.
The minister said he had indicated in the Estimates debate in March “that if there was a continuation in the increases for petroleum products on the world market, there was every likelihood that it would produce a drag on operations within the Barbados economy as the cost of doing business increased across sectors. . . .”
However, in relation to relatively avoidable costs, Sinckler said in?order for Barbados to provide world-class infrastructure and services it has to maintain an abundant array of taxes and other fees.
He said the country’s health, education, social welfare, roads, ports, and utility platforms all demanded millions of dollars to stay “operable and relevant” and it was for this reason that Barbados had maintained a “copious array of taxes, duties, fees and other impositions”.
“In other words, running a modern democracy, a modern social democratic economy such as ours is not inexpensive,” he said in the March 21, 2011 BARBADOS BUSINESS AUTHORITY.
Sinckler said this was due to the continued efforts, as a nation, to establish and build a “solid platform” of social, economic and political systems which promote and engender stability and transparency and provide access to world-class service.
“Our expansive physical infrastructure, strong social development platform and well-educated population sets Barbados apart from many of its contemporary counterparts as a high-value, low-risk destination for doing business.
“To the extent that we have been able for the last decade and even now, in recessionary conditions, to retain billions of dollars in foreign direct investment is a tribute to our desire to maintain high standards,” he said, noting that such services were not cheap.
International developments notwithstanding, the question still remains whether enough is being done at the local level to ensure that the cost of doing business in Barbados does not spiral out of control.
