The following is the Minister of Finance Hon. E. Jay Saunders' presentation of the Micro, Small, Medium Enterprise (MSME) (Amendment ) Bill 2022, in the House of Assembly on December 1.
Mr. Speaker, it is stated in 1st Thessalonians Chapter 5, verse 11:
1 Thessalonians 5:11
“Therefore encourage one another and build one another up, just as you are doing.”
Mr. Speaker, for the period 1st of April 2022 and the 30th of November 2022, we have issued 24 Concession Orders for a total of $365,830.00. Mr. Speaker, this is what I call “building one another up”, and today we’re going to take it up another notch with this Micro, Small, and Medium Enterprises Development (Amendment) Bill 2022.
As a bit of a background Mr. Speaker, this Bill seeks to amend the Micro, Small and Medium Enterprises Development Ordinance to enhance the grant of concession orders to all entrepreneurs (and would be entrepreneurs) who are engaged or intends to engage in a business that will be beneficial to and/or have significant economic benefits to the islands.
Mr. Speaker, the Office of Advocacy for US Small Business Administration in a 30th January 2019 Press Release stated the following:
“Small businesses are the lifeblood of the U.S. economy: they create two-thirds of net new jobs and drive U.S. innovation and competitiveness. A new report shows that they account for 44 percent of U.S. economic activity. This is a significant contribution…” In commenting on the findings, Acting Chief Counsel for Advocacy Major L. Clark stated that “… small businesses continue to be at the forefront of driving innovation, jobs and economic growth.”
Mr. Speaker, these findings mirror what is happening in the Turks & Caicos Islands. Micro, small, and medium enterprises are no less important to the TCI economy.
As a matter of fact, Mr. Speaker, more than 90% of businesses across these islands are Micro, small, and medium enterprises, and they contribute to more than half of our GDP, and they Mr. Speaker, employ more than 40% of our workforce.
Mr. Speaker, these enhancements are being introduced at a time when the islands are at a critical juncture. On one hand, the global economy faces enormous challenges in a post-covid environment, leaving businesses in recovery mode, and particularly putting a strain on small businesses; but on the other hand, Mr. Speaker, through our Government’s prudent handling of the economy, the TCI has been able to revitalize itself, and as it stands now, it presents enormous opportunities for local businesses to grow and thrive, and most of all, contribute to the sustained growth of these islands.
Mr. Speaker, to help this honorable House and the listening public understand each business category, I will give brief descriptions on each.
A Micro Enterprise is a business that is registered under the Business Licensing Ordinance with at least two of the following attributes:
(a) Has not more than five employees;
(b) Has not more than $500,000 in assets;
(c) Has not more than $250,000 in annual turnover.
A Small Enterprise means a business that is registered under the Business Licensing Ordinance, with at least two of the following attributes:
(a) Has not less than six employees, but not more than nineteen employees;
(b) Has not more than $1,000,000 in net assets;
(c) Has not more than $1,000,000 in annual turnover.
A Medium Enterprise means a business that is registered under the Business Licensing Ordinance, with at least three of the following attributes:
(a) Has not less than twenty employees, but not more than twenty-five employees;
(b) Has not more than $2,500,000 in net assets;
(c) Has not more than $2,500,000 in annual turnover;
(d) Has been in operation for a minimum of ten years.
Mr. Speaker, previously the priority areas were:
1. Agriculture subsectors of:
• market gardening,
• farm mechanization,
• livestock and dairy development,
• agro-business and
• apiculture (beekeeping).
• Market Gardening – a start-up farm that produces fruits and vegetables.
• Hydroponics – growing plants in water containing nutrients, growing plants without soil.
• Farm Mechanization – development and use of machines that can take the place of human and animal power in the agriculture process.
• Livestock and Diary Development – to raise productivity and increase efficiency, safety, and profitability through climate-smart livestock management with a better approach to animal health, nutrition and breeding.
• Agro-business – also known as agri-business, is the process of farming and farm-related commercial activities. It involves all the steps required to send an agricultural good to market.
• Apiculture – the scientific method of rearing honeybees.
2. Fisheries sub-sectors of
• fish farming and
• fish processing.
• Fish Farming – involves commercial breeding of fish for food.
• Fish Processing – the process associated with fish and fish products between the time fish are caught or harvested and the time the final product is delivered to the customer.
3. Manufacturing, processing and commercial cleaning services;
• Manufacturing – the process of turning raw materials or parts into finished goods using tools, human labor, machinery and chemical processing.
• Processing – perform a series of mechanical or chemical operations on something in order to change or preserve it.
• Commercial Cleaning Services – non-domestic cleaning of businesses, including hazardous waste handling.
4. Tourism sub-sectors of:
• bed and breakfast,
• vacation rentals,
• tourism attractions and
• tourism activities.
• Bed and Breakfast – an accommodation that provides an overnight stay and breakfast.
• Vacation Rental – accommodations that travelers can rent on a short-term basis.
• Tourism Attractions – a place that draws visitors by providing something of interest or pleasure.
• Tourism Activity – Recreational or leisure activities for tourists.
5. Physical infrastructure, specifically to the areas of:
• Manufacturing, and
• Agriculture-related - covers (but is not limited to) irrigation, roads, and transportation, equipment, and machinery, infrastructure for precision agriculture, buildings and greenhouses, energy production, institutional infrastructure, waste management.
• Fisheries-related – covers fish landing places, unloading and handling facilities, vessel services facilities, navigation aids, etc.
• Manufacturing-related – facilities to manufacture products.
• Tourism-related – facilities and services necessary to develop tourist reception such as accommodations, transport and museums.
6. Technology and Innovation.
• Technology - the application of scientific knowledge to the practical aims of human life or, as it is sometimes phrased, to the change and manipulation of the human environment.
• Innovation - a new idea, method, or device, the introduction of something new.
7. Arts and Music.
• Arts - the expression or application of human creative skill and imagination, typically in a visual form such as painting or sculpture, producing works to be appreciated primarily for their beauty or emotional power. The majority of "art," can be broadly sorted into ten categories, namely, painting, graphic design, illustration, sculpture, literature, architecture, film, music, theater, and fashion.
• Music - vocal, instrumental, or mechanical sounds having rhythm, melody, or harmony, the science or art of ordering tones or sounds in succession, in combination, and in temporal relationships to produce a composition having unity and continuity, the art of combining vocal or instrumental sounds (or both) to produce beauty of form, harmony, and expression of emotion.
In order to modernize our economy, and meet the needs of our entrepreneurs, especially our young entrepreneurs, Mr. Speaker, we are expanding the priority areas to include:
1. Heritage/Cultural/Historical Preservation Projects;
• Heritage/Historical Preservation Projects - an endeavor that seek to preserve, conserve and protect buildings, objects, landscapes or other artifacts of historical significance.
• Cultural Preservation Projects - keeping the artifacts and traditions of a community intact against factors trying to change them or wear them away. Some common examples are restoring historical buildings, passing on an ancient craft or recording traditional tales.
2. Public/Mass Transportation;
• The movement of people using group travel technologies such as buses and trains.
3. Healthy Living/Lifestyle;
• This encompasses activities which promote physical and mental wellbeing.
4. Food Processing/Food Packaging.
• Food Processing - any of a variety of operations by which raw foodstuff are made suitable for consumption, cooking or storage.
• Food Packaging - enclosing food to protect it from tampering or consumption from physical, chemical, and biological sources.
5. Highly skilled or specialized services such as:
d) technicians, and
e) STEM (science, technology, engineering, mathematics).
• Specialized services provided by professionals in the STEM related industries.
6. Businesses with a direct correlation to the TVET programme (and it has to be majority owned by TVET graduates);
• Businesses with a direct correlation to the TVET Programme and majority owned by a TVET graduate.
a) Hospitality - refers to food preparation, bartending, housekeeping and customer service.
b) General Construction - refers to masonry/block laying/tiling, carpentry, plumbing, electrical and air-conditioning.
c) Beauty Services - refers to hair styling/barbering, message therapy, nail technology and makeup artistry.
d) Automotive Services - refers to motor vehicle repairs, MVAC, MVD and marine mechanics.
e) Information Communication Technology - refers to digital animation, coding/programming, app development and web page design.
7. Renewable Energy/Energy Efficiency;
• Renewable Energy - energy produced from sources like the sun and wind that are naturally replenished and do not run out.
• Energy Efficiency - using less energy to perform the same task or produce the same result.
8. Sea Salt Harvesting/Processing; and
• Sea Salt Harvesting - the extraction of salt from the sea.
• Sea Salt Processing - the activities involved preparing salt for consumption.
9. Waste Management/Collection.
• Waste Management - various schemes to manage waste disposal such as discarding, destroying, processing, recycling, reusing, or controlling.
• Waste Collection - the collection and transport of waste to the place of treatment or discharge by municipal services or similar institutions.
Mr. Speaker, with these amendments, a small business will be able to receive a reduction in Customs import duties on capital equipment, raw materials, and spare parts for the construction of a project of up to a maximum of:
• $10,000 for a micro-enterprise
• $25,000 for a small enterprise, and
• $100,000 for a medium enterprise.
In addition, Mr. Speaker, businesses can also receive a Technical Assistance Grant of up to:
• $5,000 for Micro enterprises,
• $10,000 for small enterprises, and
• $15,000 for Medium enterprises.
In addition, Mr. Speaker, startup businesses are also eligible to receive a Cash Grant of up to:
• $10,000 for Micro enterprises,
• $20,000 for small enterprises, and
• $30,000 for Medium enterprises.
Mr. Speaker, I hope you’re sitting down for this one. In addition, Mr. Speaker. a business that has been granted a Concession Order can apply after six months for an additional cash grant up to $10,000, but to be eligible for the additional grant, those businesses will need to show that they have met certain KPIs. So Mr. Speaker, within a 12 month period, eligible businesses will be able to receive total cash grants of up to:
• $20,000 for Micro enterprises,
• $30,000 for small enterprises, and
• $40,000 for Medium enterprises.
Mr. Speaker, previously, only Micro businesses were eligible to receive grants and that was up to $10,000.
Mr. Speaker, regardless of how high we increase the grant amounts, it will be all for naught if businesses can’t access it. Mr. Speaker, persons have been complaining that the process was too lengthy – the application form was 5 pages. We have now reduced that application process down to 2 pages. Mr. Speaker, I know of only 2 previous times in the history of the world when a complex process was made so simple – the introduction of the 10 Commandments (c1446BC) and the introduction of the iPhone (January 2007).
Finally, Mr. Speaker, we’re removing the Application fee, saving applicants an additional $25.00.