The Government of Prime Minister Dean Barrow today convened a Special Sitting of the House of Representatives to legislate tax concessions for American Sugar Refining (ASR) in order to enable the company to gain control of the country’s only sugar cane processing facility Belize Sugar Industries Limited. The move has been under negotiation for several months after BSI ran into financial problems following allegations of mismanagement and bad investments in an allied electrical generation project BELCOGEN Ltd. The Belize government first attempted to promote the sale of BSI to Honduras’ Banco Atlantida but this failed. A purchase offer from Belize’s cane farmers, who supply 90% of the factory’s sugar cane, was not entertained with much interest by the government.
The sale to the U.S. company is being met with opposition and resentment by some Belizeans who view it as a sell out and offering extraordinary concessions to foreigners not afforded to locals. Some of the arguments being put forth include the view that the company will outcompete and eventually put Belizean cane farmers out of business by gradually extending its own plantations exploiting its tax free advantages.
The Prime Minister today described the Bill as “Part of a development which represents the rescue of the sugar industry in this country, and which guarantees the long-term viability and prosperity of that industry and of the six thousand cane farmers that are the principal stakeholders.” Under the terms of the Bill, ASR will pay no customs and excise duties and environmental tax for a period of ten years. It will also enjoy a partial exemption of eighty percent from January first to December thirty-first, 2013, sixty percent in 2014, forty percent in 2015 and twenty percent in 2016. To top it the Bill gives BSI unrestricted right to export raw sugar and molasses for a period of ten years from the factory headquartered in Belize’s Orange Walk District.
Mr. Barrow today tabled the “Bill And Act To Provide For Certain Exemptions From Taxes And Duties To Attract New Capital Investments To The Sugar Industry.” Using powers usually reserved for urgent or emergency situations, the P.M. pushed though and had the legislation approved in one day, instead of the normal three sittings of the House.
He explained the rational for the extraordinary concessions saying “American Sugar Refinery, in turn for assuming the entire debt of BSI, will become the beneficiary of additional shares issued by BSI so that at the end of the day there will be something like 78 to 22 per cent ownership structure of BSI under which arrangement ASR will in fact hold the majority shares to the tune of this roughly 78 per cent and the government of Belize, Booker Tate and of course the Employees Trust representing the actual workers of BSI will together hold the other 22 per cent.”
Mr. Barrow said that ASR’s initial investment in Belize is not less than US $100 million. Of this $60 million is BSI debt it will assume, and the balance of US$ 30 million is for factory modernization and other expenses.
In a time when foreign investment has all but dried up in Belize, Mr. Barrow described the ASR deal as a coup for his government, and that what his government is doing to facilitate the investment is not a giveaway as some of his critics have described it. “It is well known that in return for an investment of this magnitude governments all over the developing world offer the sorts of concessions and exemptions that we are offering in this Bill.”
During the debate in the House of Representatives at which the opposition Peoples United Party staged a walkout in protest, Mr. Barrow stressed that without concessions there would be no deal with ASR. The Prime Minister also confirmed that to sweeten the deal, ASR will pay local cane farmers an additional 80 Euros premium per ton of sugar cane delivered to their factory. The Bill goes to the rubber-stamp Senate on Friday after which it will become law.
Belize News - Read more: http://belizean.com/belize-government-grants-tax-break-to-american-sugar-refining-company-for-purchase-of-belize-sugar-industries-1261/#ixzz27hyZ2sV8
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Posted By: Josue Morejon
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