The Government is examining the steadily increasing cost of construction materials based on concerns raised by several in the business community.
On Monday, Minister of Tourism, Industry and Commerce, Oneidge Walrond and Senior minister with responsibilities for Finance, Dr. Ashni Singh met with stakeholders on the matter at the Arthur Chung Convention Centre.
There, it was expressed that while the cost of sand and cement has remained fairly stable, other prices, such as that of steel, have skyrocketed due to increasing product and freight costs.
As part of the Emergency Budget in 2020, the Government had announced the removal of VAT on building and construction materials. However, consumers and contractors have nonetheless been complaining about the steadily increasing cost of materials.
“We decided to meet with you and hear from the people who are directly involved in the sector before we make any decision or determination,” Minister Walrond told the stakeholders, according to a press release from the Ministry.
These increases are also a concern to Dr. Singh, who warned that it is illegal to charge VAT on zero-rated materials. The minister’s caution was based on complaints by some stakeholders, that some hardware stores have maintained the price of materials, even though VAT is no longer applicable.
He encouraged citizens to report cases where stores continue to charge VAT on zero-rated items.
“We have been paying close attention to developments in the market for key construction materials, not only because the government is a large consumer and purchaser of construction materials, but also because we recognise that construction is going to be an important driver of the economy going forward,” Dr. Singh stressed.
The Senior Minister of Finance stated further that he expects that there will be a boom in the construction sector, pivoted by the housing initiative of the President, the construction of several branded hotels, new office spaces, and other buildings by the private sector.
“We have been getting reports of some price movement, and so we are very interested in understanding how prices have moved and what might be contributing to the price movement,” Dr. Singh added.
In sharing his perspective for the increase in prices, Chairman of the Region 3 Tourism Committee, Halim Khan, said transportation cost was the main driver of the costs for the items. He suggested that a lower cost of fuel should result in a reduction in the cost of materials.
Business woman, Briony Tiwarie supported this view and surmised that the increase in fuel prices has directly impacted the cost of materials because of increased transportation costs.
Meanwhile, Mohamed Raffik of Central Corentyne confirmed that there has been an increase in the cost of materials. He noted that the cost of materials from China has been increasing steadily.
Also contributing to the meeting via Zoom, was Christopher Persaud of David Persaud Investments. He reported that the price of steel has increased by more than 20 percent, and the material remains in short supply. He said that shipping rates have also increased by over 400 percent.
In response, Minister Singh noted that the Government has moved away from fixed prices and regulated market to a more open and competitive environment. He added that the world market largely dictates fuel prices and while the Government can intervene by lowering taxes, that move would have limited effects on the overall cost of fuel.
Dr. Singh promised to examine the legal and administrative implications of adjusting taxes associated with shipping costs.
Meanwhile, Minister Walrond committed to engaging agencies under her supervision, such as the Competition and Consumer Affairs Commission and the Guyana National Bureau of Standards to safeguard against unscrupulous business practices and to ensure quality.
