The current business climate generally and the implementation of the Value Added Tax (VAT) which is said to have led to a decrease in sales have caused one local company to drastically scale-down operations, going down to just 18 employees from over 100.
And the owner is calling for a revision of the tax regime. Local businessman Mohamed F. Khan told Stabroek News in a recent interview that the present business climate is not conducive to commerce, stating that the manner in which the VAT was implemented caused some amount of problems.
Khan, the proprietor of MFK Trading, has drastically scaled down his business and is in the process of selling another of his properties.
Only the supermarket remains of what was once a popular and vibrant store that sold groceries, clothing, hardware and household items at the MFK Trading building on Hadfield Street.
Items from the former departments are, however, still stocked at the supermarket though on a small scale while many items that were previously carried are no longer available there.
Now down to 18 employees from a former roll of 102 staffers, the closure of another store and the selling of some properties, Khan is looking to sell another building on Broad Street and is hoping to rent out space at MFK Trading building for small businesses.
Stating that he had promoted VAT based on information that it would be beneficial to the country’s development, the businessman declared that everything initially said by the Guyana Revenue Authority (GRA) differed after the implementation of the tax.
He said that the 16% rate is too high and posited that when that tax was introduced in other countries, those countries had strong and stable currencies, a large population and people enjoyed benefits from the tax.
“VAT has consumed all our resources,” he declared, stating that “consumers are not buying as they used to before, our sales has dropped to 20% of what it was.” Asserting that “the system” consumed all the company’s resources and “everything just deteriorating all the time,” Khan said that business owners are now faced with the options of renting or selling. However, he said, he has no intention of migrating at this time and will continue to operate the supermarket and wait to see what happens next year. “We will have to watch and see what happens in the future,” he said.
He pointed out that many businesses are not doing well and with high bills and other problems, the business climate was not favourable “except for some people.”
Khan stated that had sold three properties and ploughed millions back into the business but got no returns and since the VAT, he has gone into debt. “You have to continuously find money to put into your business if you want to stay,” he said, stating that “many have gone under silently.”
Security
On security, the businessman said that this continues to be a problem to business owners and many are troubled about it. “We have to operate in such an environment in which we are not sure of tomorrow,” he said, adding that kidnapping was a major concern.
Khan was recently targeted by kidnapping threats. Alluding to the case of businessman Farouk Kalamadeen, who was kidnapped and later found beheaded, Khan expressed the view that there is a trend at present that “you working 40 years of your life and then something goes wrong and then suddenly it’s drug-related.”
He said too that Guyanese were not prepared for VAT at a rate of 16% and asserted that businesses have been made out to be oppressors.
He declared that as long as security continues to be a problem and locals continue to see businesses as oppressors, and with them not making a profit, then “we have to come up with an alternate solution which is to sell.” Khan said in such an environment one has to diversify and he noted that he is now renting out space in the MFK Trading building.
He is hoping to attract persons who can open small businesses there.
The businessman said too that the tax should have been implemented gradually and the government and the opposition should come together and look into the matter and see what can be done. He called for all food items to be zero-rated and the VAT reduced to 10%. He said that this would improve the business climate.
Pointing out that if businesses were suffering, “then what about the poor man?”
