Pre-Budget consultations kick off

The Prime Minister and Minister of Finance Pravind Jugnauth has last week started the traditional exercise of pre-budget consultations by visiting Rodrigues. The purpose of the visit was to discuss Rodrigues’ priorities in the wake of the forthcoming National Budget. In Mauritius, the consultations will start after the celebrations of our National Day.

The National Budget 2018/2019 is the next big event and the Prime Minister has already started his first budget consultation in Rodrigues last week. Pre-budget consultations in Mauritius will continue after the National Day celebrations of March 12th. Finance Minister Pravind Jugnauth had several working sessions with Rodrigues officials.

The priorities for Rodrigues Island remain major infrastructure projects, including submarine cable link and the airport and port expansion. Plaine Corail Airport will see the construction of a new runway to be able to accommodate larger planes. In the same vein, the Prime Minister promised government’s assistance to modernise the public transport bus fleet on the island.

In Mauritius, sources indicate that the pre-budget consultations will be made in a particular context: the acceleration of the “Three Year Strategic Plan 2018 to 2020”, of which one third of the projects or programs are either already completed or in progress. The Three Year Strategic Plan was launched with the previous Budget and this will be Pravind Jugnauth’s second budget since he became Prime Minister and perhaps the penultimate one before the next general elections.

So should we expect an ‘electoral’ budget? No, according to his close ones, because the Prime Minister insists on rigour, responsibility and discipline, having repeatedly reiterated that he knows where he is leading the country ...

In addition to the 2018-2020 strategic plan, the next Budget, as the previous one, will be presented against the backdrop of Vision 2030, with a target of a minimum of 4 percent economic growth this year, and subsequent higher growth to pave the way for Mauritius to become a high income country.

There are also plans for additional reforms to further improve ‘Business Facilitation’ in the wake of the creation of the Economic Development Board.  Procedures of permits and licenses will be further streamlined, with the focus being more on online services. It is expected that new infrastructure projects will be announced, especially the construction of drains and social housing. SMEs will not be forgotten, with new measures for them, following the creation of SME Mauritius.

Major obstacles

• Inadequate supply of skilled human capital

• Lack of an innovation ecosystem

• Low private sector investment in research and development

• Poor linkages between foreign direct investment, and Small and Medium Enterprises

Major challenges

• Increasing productivity and improving competitiveness

• Reducing income inequality

• Formulating sustainable policies for an ageing population

• Improving the quality of education and training

• Attracting more foreign investment, but towards productive sectors

• Building an innovative economy

• Reducing unemployment among young people and women

Sectorial objectives

• Improve international rankings

• Increase renewable energy production

• Increase the number of households connected to the sewage network

• Build 6,000 new homes

• Achieve 3% growth in tertiary education enrolment

• Complete the first phase of the Metro Express (13 km)

• Increase airport capacity to 4.5 million passengers

• Reduce unemployment rate to below 6%.

Potential growth sectors

• Agriculture: Value addition can be increased by Rs 18,000 per hectare

• Financial services: Rs 11 billion value addition can be achieved in this sector

• Computer Technology: Government expects the sector to create another 7,000 jobs

• Ocean state: Annual growth of 5% is envisaged

• Manufacturing: This sector will have to add at least Rs 6 billion to GDP

• SMEs: SMEs’ contribution to employment can rise by 3%

• Tourism: The sector aims for number of arrivals up to 1.6 million by 2020, with a contribution of Rs 73 billion to the economy.

Estate Agents to be regulated

The Law Reform Commission has published a Paper on the Legislative Framework for the Regulation of Activities of Estate Agents, following which the government has agreed to the drafting of the Real Estates Agents Bill.

This legislation aims to establish a Real Estate Agents Authority, set professional standards in the profession of real estate agents and provide accountability and transparency. The Ministry of Housing and Lands will have consultations with relevant stakeholders on the proposed Real Estates Agents Bill. Readers will recall that estate agents have always complained about the complete ‘laisser-aller’ in this sector which has been unregulated for too long.

Many agents operate without a Trade Licence and do not pay tax or VAT. The absence of any code of conduct and general guidelines also makes it difficult to protect consumers from abuse by unscrupulous agents. Laval Savrimootoo, president of the Estate Agents Association, states that so far his Association has not received any communication regarding this Paper. Once consultations start, he will share his proposals.

Budget measures not yet realised

Almost all the budget measures announced last July have already been implemented. A few measures concern major infrastructure projects that have not yet started. Some measures are waiting to be realised. Among them, there is the transformation of the Mauritius Research Council into the Mauritius Research and Innovation Council, and the replacement of the Town and Country Planning Board by the Planning Commission, among others.

Regarding SMEs, it was planned to amend the Mauritian Civil Code and the Commercial Code to allow the use of movable assets as loan guarantees. However, although SME Mauritius Ltd is now operational, some banks do not accept ‘movable assets’ as security.

Figures

The public debt has already exceeded the threshold of Rs 291 billion on 31 December 2017, whereas it was to the tune of Rs 280 billion in December 2016. However, in terms of percentage of GDP, there has been a slight decrease from 2016 to 2017, from 64.5% to 63.2%, due to a rise in GDP.

The trade deficit was Rs 9.9 billion in December 2017. The total annual trade deficit has oscillated between Rs 77 billion and Rs 81 billion from 2012 to 2016. For the year 2017, it is estimated that the trade deficit could well exceed Rs 100 billion!

Reaz Chuttoo : “For a better distribution of income and wealth”

Reaz Chuttoo of the Confederation of Private Sector Workers is already working on his budget proposals. He explains that his union will advocate for a greater distribution of income and wealth, and job creation for young people.

“Older people need to retire to make room for young people.” Reaz Chuttoo is also outraged by certain practices in the financial sector, banking and insurance. “For example, in the case of the ‘constat à l’amiable’, policyholders have to wait a lot before being compensated. Consumers, he says, are subject to many misleading advertisements, and the government must intervene. Regarding foreign workers, he reveals that there are always cases of exploitation and he demands that foreign workers enjoy the same working conditions as Mauritians.

“However, priority must be given to hiring local workers.” Finally, he says his union is strongly against the proposal to extend the retirement age to 70 years. “There are thousands of foreign nationals who work in Mauritius and pay tax and social contributions but who will not retire here, so the government wins as it is pocketing their contribution but will not pay them a pension. I think we can lower the retirement age.” The trade union will hold a press conference next week to talk on the issue of foreign workers.

Rashid Imrith : “Our priority this year is to tap into the potential of agribusiness”

Rashid Imrith, president of the Federation of Public Sector and Other Unions, states that his priority this year in the context of Budget consultations will be the agricultural sector. He is of the view that we have many people in Mauritius with high qualifications and competencies in the agricultural field, but these are untapped.

“We are not optimizing our competencies in agriculture. Agribusiness has high job creation potential, but we have had a tendency to ignore this,” he says. Rashid Imrith notes that, while we have Vision 2030, the vision of many ministries does not stem from Vision 2030. It is time to align visions.

“In the agricultural sector, we have many pressing issues that need to be addressed. Today we are talking about bio production, but there are also bio threats. Bio security is an important feature.” Rashid Imrith says he believes in the potential of the agricultural sector if the right decisions are taken.

Radhakrishna Sadien : “Impact on development on environment must not be ignored”

Radhakrishna Sadien, president of the Government Servants Employees Association (GSEA), says his union will lay more emphasis on social and environmental issues during the pre-budget consultations. “Workers must have their say in social policy formulation.”

He notes that we are lagging behind in environment protection and he believes it is high time the authorities come up with sound policies and implementation programme of waste segregation.

“It is important that trade unions are fully engaged in social dialogue. We want to be involved in social and environmental issues. Mauritius is facing the consequences of climatic change, and it is time we tackle environment protection and waste disposal seriously. Local authorities must come up with new plans of waste segregation,” he says.

“The onus is on infrastructural development, investment and wealth creation, but we have been overlooking the impact on our environment. For example, higher development is causing obstruction of natural water courses, resulting in fast flooding of roads and houses after a few hours of rainfall.”

He will also raise the alarm on privatisation as he notes a surge in the volume of contracting out of government services. In the same vein, Radhakrishna Sadien will press for enhanced collective bargaining in the public sector. Another hot issue to be debated by trade union bosses is the proposal to raise the retirement age to 70.