This first budget of the newly elected Government aims at greater national wealth, and better sharing, while maintaining social peace. In the words of the minister of finance himself, we are at a crossroads in various areas of our economy and important decisions are required for our economic future with regards to Social Justice and mainstreaming of vulnerable families and Environmental protection.
In its economic review, the budget reminds us that growth has been at a low rate of 3% for the last decade as compared to the 6.5% that was achieved in the 1980’s , leading to full employment. An ambitious target of 5.3% is set for 2016/2017.
The budget sets the pace for change as it raises some fundamental questions:
· Need for openness to foreign know-how
· Importance of good governance in the management of public affairs
· Investing in the youth to create a smarter future generation
The Key Budget Measures
Smart Cities
8Smart cities plus 5 technology parks will lead to infrastructural investments in various regions of the island and which aim at being:
· Environment friendly
· Generating their own resources in terms of energy and water
· Providing for state of the art connectivity
· Providing smart modern transportation, and
· Reducing traffic congestion across the island.
Some of these projects have already been announced in the past or initiated. They aim at leveraging on the 7,000 arpents of land obtained in the context of sugar sector reforms. While it is expected that construction activities will be boosted it depends on whether:
· The contracts will be allocated to local enterprise and
· Whether SMES or SME consortiums will be allowed to have a fair share of the opportunities.
Nation d’Entrepreneurs
In an effort to promote local value creation the budget provides for numerous facilities for SME development. These include:
· Setting up of SME Bank for seed capital without personal guarantee
· Setting up of One Stop Shop in the centre of the Island
· SBM providing additional working capital of SMES
· Fast tracking of permits and centralised collection of Trade fees by SMEDA for all local authorities
· Corporate tax exemption for 8 yrs under this specific scheme
· Creation of 7 SME Parks
· VAT registration threshold raised to Rs 6 million from Rs 4 million initially
· Turnover threshold for submission of quarterly returns raised to Rs 10 mn from Rs 4 mn
· Decrease in Annual registration fee of Companies to Rs 500.00 from Rs 2,500 initially.
While the budget admits that the support to SME development is “piece meal and fragmented” we have yet to see an up-hauling of the Business development Services that are required for the emergence and growth of high performing SMEs. Similarly the budget is silent on the sectors being promoted.
The budget remains silent on the existing SMEs enterprises and the required support to make them more dynamic and high performing. For these categories as well as for emerging ones, the cost of inputs, the high cost of imported machinery and technology and the limited local skills set remain important constraints. While the Chambre des Metiers could be useful for the third constraint, but would not necessarily address the other ones.
Transformation of Port Louis into a Regional Hub
The budget plans for investment in the port infrastructure in order to be able to accommodate thousands of vessels and supply a large variety of port and maritime services, namely bunkering, sea food, transhipment, cruise ,petroleum and a full- fledged marina.
Restructuring the IRS/RES
The Budget provides for a restructuring of the IRES/RES projects on the claim that they may constitute a risk to the social fabric of the society as they are viewed as enclaves. The aim is to have schemes providing open access to living, employment and leisure opportunities to locals and foreigners.
Training and Human Resource Development
There is an attempt to orient HR development towards areas where these is a demand, which may be further increased in the future with the proposed projects. Instead of producing graduates, the budget promotes the development of middle management skills andqualified technical skills. To this end, three polytechnic campuses are being created.
A budget of Rs 80,000 per graduate is also earmarked for re-skilling through tailor-made crash courses in fields with high job prospects. The MITD is expected to put more emphasis on the training of specific trades such as plumbers, electricians, welders, masons, carpenters, and other technicians. Greater recognition of skills is also expected with the setting up of a Chambre des Metiers.
Ram Jutliah
In its economic review, the budget reminds us that growth has been at a low rate of 3% for the last decade as compared to the 6.5% that was achieved in the 1980’s , leading to full employment. An ambitious target of 5.3% is set for 2016/2017.
The budget sets the pace for change as it raises some fundamental questions:
· Need for openness to foreign know-how
· Importance of good governance in the management of public affairs
· Investing in the youth to create a smarter future generation
The Key Budget Measures
Smart Cities
8Smart cities plus 5 technology parks will lead to infrastructural investments in various regions of the island and which aim at being:
· Environment friendly
· Generating their own resources in terms of energy and water
· Providing for state of the art connectivity
· Providing smart modern transportation, and
· Reducing traffic congestion across the island.
Some of these projects have already been announced in the past or initiated. They aim at leveraging on the 7,000 arpents of land obtained in the context of sugar sector reforms. While it is expected that construction activities will be boosted it depends on whether:
· The contracts will be allocated to local enterprise and
· Whether SMES or SME consortiums will be allowed to have a fair share of the opportunities.
Nation d’Entrepreneurs
In an effort to promote local value creation the budget provides for numerous facilities for SME development. These include:
· Setting up of SME Bank for seed capital without personal guarantee
· Setting up of One Stop Shop in the centre of the Island
· SBM providing additional working capital of SMES
· Fast tracking of permits and centralised collection of Trade fees by SMEDA for all local authorities
· Corporate tax exemption for 8 yrs under this specific scheme
· Creation of 7 SME Parks
· VAT registration threshold raised to Rs 6 million from Rs 4 million initially
· Turnover threshold for submission of quarterly returns raised to Rs 10 mn from Rs 4 mn
· Decrease in Annual registration fee of Companies to Rs 500.00 from Rs 2,500 initially.
While the budget admits that the support to SME development is “piece meal and fragmented” we have yet to see an up-hauling of the Business development Services that are required for the emergence and growth of high performing SMEs. Similarly the budget is silent on the sectors being promoted.
The budget remains silent on the existing SMEs enterprises and the required support to make them more dynamic and high performing. For these categories as well as for emerging ones, the cost of inputs, the high cost of imported machinery and technology and the limited local skills set remain important constraints. While the Chambre des Metiers could be useful for the third constraint, but would not necessarily address the other ones.
Transformation of Port Louis into a Regional Hub
The budget plans for investment in the port infrastructure in order to be able to accommodate thousands of vessels and supply a large variety of port and maritime services, namely bunkering, sea food, transhipment, cruise ,petroleum and a full- fledged marina.
Restructuring the IRS/RES
The Budget provides for a restructuring of the IRES/RES projects on the claim that they may constitute a risk to the social fabric of the society as they are viewed as enclaves. The aim is to have schemes providing open access to living, employment and leisure opportunities to locals and foreigners.
Training and Human Resource Development
There is an attempt to orient HR development towards areas where these is a demand, which may be further increased in the future with the proposed projects. Instead of producing graduates, the budget promotes the development of middle management skills andqualified technical skills. To this end, three polytechnic campuses are being created.
A budget of Rs 80,000 per graduate is also earmarked for re-skilling through tailor-made crash courses in fields with high job prospects. The MITD is expected to put more emphasis on the training of specific trades such as plumbers, electricians, welders, masons, carpenters, and other technicians. Greater recognition of skills is also expected with the setting up of a Chambre des Metiers.
Ram Jutliah
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