Blog: Budget 2012 - Removing Obstacles

Budget 2012, adoption of which is a foregone conclusion has removed quite some obstacles to attain its objectives but quite some daunting ones still remain.

The Prime Minister during his intervention in the debates said that the two obstacles which were responsible for the drop in Foreign Direct Investment (FDI) in the 2010-2011 financial year forecast were the capital gains tax and the tax on interest. The drop was 61%. These taxes have been removed.

In this global economy, there is fierce competition to attract FDI. At present, it is the emerging countries known as BRIC - Brazil, Russia, India and China that have billions of dollars surplus available for investment. Europe is looking towards these countries to rescue it from its debt crisis.

We entertain excellent relations with these countries. The innovation of the budget is that it has set a fixed timetable to implement all budgetary measures. Meeting the deadline for implementation of the measures is one thing. Getting the desired result is a totally different cup of tea.

As far as FDI is concerned, the previous vice prime minister and minister of finance, Pravind Jugnauth has accused the PM's office and the PM for blocking projects worth 80 billion rupees FDI. I refuse to believe that the PM himself or for that matter, any PM will ever think of blocking any FDI project. But I will not put my hand in  fire for the present system. I am personally aware that quite a few projects coming from India worth more than a billion rupees is awaiting the final green light having gone through all the process starting from BOI to all other departments concerned. They are suffering undue delay and losing money daily.

We should not forget that businessmen come to invest and to make money. They can easily go to other places where they can thrive. There are occult hands and forces, some prisoners of indecisions, some incompetent persons unable to decide who are holding these projects.  As far as India is concerned, in spite of our friendly relations and India willing to accede to any of our demands, it is the private sector which decides where to invest.

It is to be noted that investment from India and China has made Ethiopia the fastest growing economy in the world. There are others including Zimbabwe which are growing faster than Mauritius. I suggest the government sets up a special unit to investigate and find out why implementations of projects are delayed in Mauritius. The future of our education, medical, ICT, IRS, RES and tourism depend on FDI.

Another major project is making Mauritius a filmmaking and production centre. The budget has provided a 25% contribution to the local expenses of a film project, in line with international practice. The entertainment industry is worth trillions of dollars. Countries like England, Switzerland, Malaysia, New Zealand, Australia, and South Africa roll the red carpet for the stars and film making teams.

In Mauritius a perfect co-ordination among different bodies like Air Mauritius, MTPA, Hotel Associations, and PM's Office is called for to put the act together.

I happened to have been the first chairman of the Film Development Corporation (MFDC) in the 80's with only Rs. 400,000 grant and some officers on secondment. MFDC then co- produced with CFSI, Children Film Society of India, a film which won the national award. The film was based on a story, Pink Pigeon written by Ramesh Ramdoyal. Another TV serial was co-produced with T.S.Narasihan, producer of Malgudi Days. It was entitled Stone Boy. The third serial of 26 episodes of Tropical Heat of CBS was also partly shot in Mauritius.

Artists like Gerard Depardieu, Amitabh Bacchan, Shah Rukh Khan, Rajnikant, Govinda, Salman Khan, Sanjay Dutt, Aishwaria Rai, Sri Devi, Madhuri Dixit and producers like Yash Johar, Romesh Sharma and so many others were frequent visitors to Mauritius. Romesh Sharma has even set up a studio at Baie du Tombeau. Quite a few TV serials were shot there. Film-making and production project could easily become another pillar of our economy, if handled properly.

The most innovative approach to help SMEs has been the arrangement made by government with the banks to provide finance at an affordable 8.5% interest rate. Banks do not have to interface with government agencies to give loans. Government also provides some guarantee and banks losses could be adjusted in the income tax.

The main obstacle to setup an SME project is the different licenses required and the basic training for the small entrepreneur to do business within the framework of the legal requirements. I suggest that a fully fledged incubator unit is set up to help and accompany SMEs. The failure rate is always high. Each promoter should be fully aware of the risk he is taking. Many entrepreneurs have lost their savings, personal property, having been victim of propaganda that SME is the easiest way to do business.

The budget has provided also adequate funds for food security. We have the expertise, a tradition of excellence in food crop production. Unfortunately, I find fields of small planters being abandoned. By accident, I came across an article of Uttum Bissoondoyal. He revealed that by 1940 small planters owned 35% of land in Mauritius. Small planters are hard-working, proud and independent persons. Today they are abandoning their plantations and they may suffer the fate of the Dodo.

Already the built-in area has reached some 25% of the surface area of the country. We are creating concrete jungles. Three obstacles are preventing the development of this sector, shortage of labour, theft of the produce of small planters and marketing. The average age of the small planter is 50 years. Their children can be farmers but not labourers. The green revolution in India, particularly in Haryana and Punjab, has been brought by labour from Bihar. The same stock which contributed to the success of our agriculture in Mauritius. Just like workers from abroad working in textile factories and tourism sector, all obstacles to bring labour to work in our fields should be removed. The problem of theft and marketing should be addressed by police and Agricultural Marketing Board.

To realize the full potential of the budgetary measures, I pray Lord Ganesha, remover of all obstacles to help our decision-makers and bureaucracy in their tasks.