GIS - Nov 12, 2012: The Budget 2013 places much emphasis on the democratisation of the economy through the revamping and boosting up the manufacturing industry and SMEs. The textile industry which employs more than 50,000 persons and generates over Rs 14 billion annually needs support on that score.
Enterprise Mauritius will be provided with Rs 135 million to develop overseas markets. With a view to spurring investment in the textile as well as other manufacturing industries, Government will offer 50% accelerated depreciation on acquisition of plant, machinery and equipment. Bank guarantee required for expatriate work permits for export oriented enterprises is being abolished and replaced with an annual fee of Rs 500 per employee.
The AGOA levy, which is a tax on exports, has been abolished. In order to offer added security to Mauritian exporters, foreign insurance companies will be allowed to offer export credit insurance. Henceforth, any changes in import duty likely to affect local manufacturers will be announced with 6 month prior notice. This means that any change to be made on 1 January 2014 would need to be discussed with the industry by 1st July 2013.
Boosting the SMEs
In addition to the existing scheme, banks will now loan an additional amount of Rs 250 million annually to micro and small enterprises with turnover under Rs 10 million. Interest rates will be capped at repo rate plus 3%, that is currently 7.9%. All processing fees and other related bank charges will be waived. Government will exceptionally guarantee 50% of any losses incurred by banks. This measure will generate much needed funds to the sector.
Moreover, with regards to the Leasing Equipment Modernisation Scheme (LEMS), the interest rate for LEMS currently at 8.5% is being brought down sharply to 7.25% on all new leasing facilities.
Budget 2013 doubles the VAT registration threshold from an annual turnover of Rs 2 million to Rs 4 million. This measure will cost the exchequer Rs 300 million and will remove 1 300 businesses from the VAT net.
Government is also proposing the complete waiver of loans made by the Development Bank of Mauritius for which the capital outstanding does not exceed Rs 20 000 and which has remained unpaid for three years, thus relieving some 2 000 persons at the lower rungs of the ladder.
Moreover, Government is regrouping and rationalising the diverse existing schemes for SMEs. Henceforth, performance bonds will not be required for contracts of up to Rs 5 million, when bidding for a Government contract. The requirement to provide Advance Payment Guarantees will be overhauled.
The amount of refund to SMEs for participation in international fairs is being doubled from Rs 100,000 to Rs 200,000 rupees while a grant for freight expenses of up to Rs 20,000 rupees is being provided.
Special provisions for the Shoe industry will be made, including help from Mauritius Business Growth Scheme to increase productivity. A special grant of Rs 10 million is also being provided to Enterprise Mauritius to support their marketing efforts.
Government is putting an end to the unfair practice of passing imported handicraft products as being locally produced. SMEDA will develop the Mauritius “Made with care” label and the National Heritage Trust Fund Act will be amended to enable protection and control of importation of such products.