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SI OU PA LA, OU PA EGZISTE !
SEYCHELLES
SEYBAY M.S.D.
'Our future successes will depend on preserving our gains'
Mr.
Speaker,
Honourable Members of the National Assembly,
People of Seychelles,
On this day
last year I presented to you the 2005 Budget which reflected my
determination to take Seychelles and the Seychellois people further on the
road of progress and prosperity.
The 2005
Budget was part of the new platform for our medium to long-term development.
It introduced further measures to modernize our economy, accelerate its
growth, inspire more confidence in both local and foreign investors and as a
result create more wealth and employment.
Throughout
2005, we strove to achieve these objectives and we have delivered.
This is what I said I would do and in 2005 my Government has:
- Carried
out changes in Government Departments to improve efficiency and
service delivery
- Created new bodies outside ministries such as the Seychelles Civil
Aviation Authority, the Seychelles Tourism Board, the National Statistics
Bureau and the Non-Banking Financial Services Authority
- Provided further incentives to the tourism industry
- Provided new incentives to the Agricultural and Fisheries sectors
- Concluded agreements for the construction of a 4th and 5th tanker
- Enacted measures to assist musicians
- Promoted cottage industries
- Increased support to small businesses
- Continued our programme of trades tax reduction
- Removed the requirement for import permits for most goods
- Adopted provisions for the declaration of assets by public servants
- Reduced the stock of domestic debt
- Established the Esmeralda Bond to encourage a culture of personal savings
- Reduced and in certain cases restructured external debts
- Adopted our divesture strategy
- Finalised the Investment Code
- Created the Seychelles Pension Fund
- Maintained a fiscal surplus despite adverse conditions
One measure
that I spoke about in the 2005 budget address has not been fully implemented
as yet. The privatisation programme, which was to start in the first
quarter, has been delayed to the fourth quarter as we have needed overseas
expertise and guidance. Government has been working with international
partners to develop the most appropriate framework for the sale of assets
earmarked for privatisation. We remain committed to the programme, but we do
not want to repeat the mistakes made by some other countries. We want
the privatisation we undertake to be for the real and long-term benefit of
Seychelles and the Seychellois people. We also want, as far as possible, for
every Seychellois to have the opportunity to buy a share in a privatised
venture.
Today, our
country is entering the modern economic environment. I see ourselves
as a young but maturing and optimistic nation, ready to face the challenges
of the new times.
The core of
my 2005 budget was based on the conviction that together we can create our
prosperity. The events that we have faced this year and the manner in which
we have responded to them, have further reinforced this conviction. It
has been a difficult year: we have faced unprecedented natural disasters and
the highest fuel prices ever. But we have also together created the
conditions to increase the wealth of the nation. There is more
confidence in our country and investments are on the rise.
More jobs are being created. We are earning more foreign currency and our
net reserve position has improved.
In short,
our efforts, perseverance and resilience as a nation over a difficult period
are starting to bear fruit.
In addition
to the improvements in our economic situation, we have continued to invest
substantially in our social programmes.
In 2006, I
am proposing an economic programme that benefits all Seychellois and builds
on the 2005 measures. My vision for Seychelles is of a society that is
both dynamic and caring – a vision which I believe epitomises our
Seychellois character. It is a vision which should inspire us to
develop our full economic potential while ensuring that the fruits of our
hard work are shared by all of our people.
Mr.
Speaker, before going into the details of the 2006 budget, I will highlight
major elements of our performance in 2005.
Developments in 2005
The international economy remained strong in 2005 despite the rising oil
prices and natural disasters in many parts of the world. The
increasing oil price was caused to a large extent by the high demand of the
newly industrialised countries, which continued to enjoy high growth.
The hurricanes experienced by the USA exerted further upward pressures in
the oil market in the second half of the year. Inflationary tendencies
started to appear especially in countries which are heavily dependent on
importing this commodity. A sector especially affected was the travel
industry, while the basic costs of freight and importation of goods have
also risen.
On the
domestic front, the tsunami and the torrential rains of late December 2004
caused considerable damage to the country’s capital stock, resulting in an
important negative shock for the start of 2005. We commend the
Seychellois people for their solidarity and strength of character and we
thank all local and overseas partners, foreign governments and international
agencies.
The natural
disasters were of concern to the Government as it threatened to derail the
reforms that we are undertaking, particularly our fiscal policy. But
despite these difficulties, and the increase in fuel prices, we were
determined to maintain the strong fiscal stance started in 2003. For 2005
our budget performance is better than forecast. Given the strong
fiscal position, we have been able to reduce domestic debt and consequently
relied very little on Central Bank funding.
The
improvements in the fiscal accounts translated into a general decline in
liquidity and for the year up to October, the fall was 0.6 per cent.
Since the reforms started in 2003, liquidity movement has been well
contained and has remained in single digits.
The
increase in the price of oil in the latter part of the year, exerted
pressure on the economy. As a net oil importer, our small economy was
not spared the effects of the price hikes. The average value of fuel
increased from US $38 a barrel in 2004 to US $60 a barrel in 2005. In 2002
our domestic imports were US $17 million, in 2003 US $23 million, in 2004 US
$28 million, and in 2005 an all time high of US $38 million.
Government continued to absorb the increases in price and maintained the
prices at the petrol station, electricity tariffs and public transport
charges. Consequently there has been a decline in its tax revenue
Despite the
above constraints, the Government implemented its announced strategies.
I gave my undertaking for a strong fiscal position; and we will achieve a
surplus for a third consecutive year. Mr. Speaker, this surplus, at 8%
of GDP, will be the highest ever. I consider this to be no small achievement
when we take into account the context in which we have done this.
We have
also made progress concerning FDI flows into the country with over US $40
million registered in 2005. The operations of the Seychelles Investment
Bureau have reinforced the investment climate and investor confidence has
never been stronger. This will be further strengthened by such other
measures as our ratification of the UN Convention against corruption and the
adoption of the Investment Code. There have also been encouraging
developments in the offshore sector with SIBA expecting 50% more revenue in
2005. My Government has also extended its network of double taxation
avoidance treaties, the latest of which is being negotiated with Belgium.
Such agreements are a further mark of confidence in our economy.
We have
restructured our bilateral debts with the governments of the People’s
Republic of China and the Republic of India and our multilateral debts with
Kuwait Fund and Abu Dhabi Fund. We have engaged in discussions with the ADB
and hope to reach agreement regarding payment of arrears early next year.
We have also resumed payment of our commitments to the World Bank and OPEC
Fund. Positive discussions are ongoing with other bilateral and multilateral
creditors. On the domestic side, we have restructured our debts.
We have also launched the Esmeralda bonds to promote savings and as part of
the domestic debt restructuring. The sale of the first SR25 million
worth of individual bonds is almost complete.
The
restructuring agreements provide for longer maturity, giving us a cushion
while the economy re-adjusts.
As we all
know, our country is facing certain foreign exchange constraints. This
is an issue which cannot be resolved overnight. We must maintain
measures to facilitate investment, increase productivity and enhance our
foreign exchange earnings. This approach Mr. Speaker, ensures that we
continue to develop while maintaining our socio-economic gains. The
flow of foreign exchange into the country is improving. Foreign
exchange earnings this year up to October totalled SR1.1 billion compared to
SR973 million in the same period of 2004.
New
incentives to the tourism industry have given another boost to this sector.
Several establishments are using the incentives to upgrade and offer much
improved products and service to our guests. A number of our hotels and
resorts are acclaimed as being among the best in the world. Seychelles
enjoys its well-deserved reputation to be not only a destination of
unparalleled beauty but, more and more importantly these days, one of safety
and security.
Up to the
end of October, arrivals totalled 109, 599, an increase of 6 per cent
compared to the same period in 2004. The rise in numbers has been
helped by the marketing exposure of the country through the new airlines in
late 2004 and the repositioning of Air Seychelles which have helped to
broaden the clientele base. The hotels themselves have also played a
part in marketing. Foreign Exchange flows for the tourism sector
between January and October are estimated to be SR947 million, compared to
SR880 million for the same period in 2004. The improved performance is
expected to continue in 2006 as new hotels open.
The
Agriculture and Fisheries (Incentives) Act introduced in April, is providing
the fisheries and agricultural sectors with a series of incentives designed
to improve productivity and competitiveness and ensure that the two sectors
increase their contribution to national wealth creation.
In the
fisheries sector, industrial fishing has maintained high catch levels
resulting in increased transhipment activities. The total revenue from
industrial fishing including licenses, transhipment fees and services is
estimated to be in the region of SR400 million. Artisanal fisheries
were adversely affected by the December 2004 tsunami, but are staging a
remarkable recovery this year as marked by their catch of 4200 tonnes.
In all
sectors, Government has sought to improve the employment situation and has
put in place a series of special training programmes including the
Apprenticeship Scheme, the Skills Acquisition Programme, and the Small
Project and Business Development scheme.
2005 Budget outcome
This year,
we will achieve a surplus of around SR318 million or 8% of GDP, 1% more than
budgeted.
Government
expects to collect SR2.109 billion in revenue. This is higher than what was
budgeted despite lower trades tax receipts and less dividend collection
because of higher Social Security contributions.
Government
expects expenditure to be SR1.792 billion which is SR81 million more than
budgeted. This is mainly due to higher spending in certain Government
services.
2006 Fiscal Objectives
The budget
that I am presenting today will complement the steps that we have already
taken, not only to improve the fiscal position but also to streamline
procedures and make government more efficient and responsive.
It is also
a budget which will see some of the fruits of the hard work of the past few
years being distributed and shared among our people.
For 2006, I
am aiming for a budget surplus of SR177.946 million or 5% of GDP.
Total
revenue is forecasted to be SR1.929 billion and total outlays SR1.751
billion.
- Revenue
The SR1.929
billion revenue for 2006 is a decrease over the 2005 budget of around SR60
million due mainly to further reductions in trades taxes.
The reductions are in line with Government’s endeavour to modernise the
economy, facilitate business, create the enabling environment for the
private sector and reduce the cost of living.
SR40
million more is expected as dividends from parastatals, and miscellaneous
revenue.
- Expenditure
The
proposed expenditure for 2006 is SR1.751 billion which is SR40 million more
than the 2005 Budget. Total appropriation is SR1.320 billion, a 10% increase
over 2005. This is because of planned expenditure for ministries,
which is proposed at SR835 million. Current outlays will be SR1.514
billion.
In line with our commitments to education and health services, it is
proposed that the ministries concerned again receive the largest
allocations. The Ministry of Health and Social Services will receive
SR184 million, and the Ministry of Education and Youth SR181 million.
This represents 5% of GDP for each sector.
The Police
will receive an increase of SR10 million with a total allocation of SR70
million. Peace and security are central to all our other efforts to
improve the economy and our social welfare. We will continue to
strengthen the Police Force through professional training and allocation of
necessary resources.
The
preservation of the environment and natural resources remains a priority.
An allocation of SR61.299 million is made for 2006.
The
Judiciary will receive SR8.5 million, representing an increase of SR1.5
million. A frequent complaint is that the process of administering
justice takes too long. Too many people on remand are waiting trial. I
have asked the Judiciary to spare no effort in ensuring that court cases are
dealt with in an efficient and timely manner in fairness to all concerned.
The increase in their allocation should contribute to that process.
Seychelles
is increasingly active in international relations and the Ministry of
Foreign Affairs has a key role to play in defending and promoting
Seychelles’ interests in an increasingly globalised world. In this context I
am pleased to announce that Seychelles will be rejoining SADC in 2006. We
propose a budgetary allocation of SR10.4 million for the Ministry of Foreign
Affairs.
We are also
proposing for SR170 million under centralised payments to cater for a number
of activities and in support of national organisations. We are
increasingly conscious of the importance of disaster preparedness. An
allocation of SR1 million has been made to the National Disaster
Secretariat. A new allocation of SR2 million is proposed for the
Football Federation and SR3.5 million for the Concessionary Credit Unit.
SR2 million is provided as a contribution to religious organisations.
This is to assist in the construction and renovation of certain churches.
I should
like to express the Government’s appreciation for the most important role
that religious organisations play in the promotion of spiritual and moral
values in our society. Our society faces major challenges in the form
of drug and alcohol abuse and the spread of HIV/Aids. These are
challenges that require the common and concerted efforts of Government, the
Churches and the whole of society.
An
additional SR7 million has been proposed under subventions to regulatory
bodies and SR24 million more to parastatals and other bodies, mainly SPTC
and SBC.
- Capital Outlays
Capital
outlays will be maintained at R200 million in 2006. The main area of
expenditure will be the new housing projects and the completion of ongoing
projects of 2005.
The 2006 Budget Strategy
Budget 2006
builds on the foundations laid in the budget of 2005 for our medium to long
term development. It aims to promote economic growth and the creation
of wealth while furthering the well-being of the population and addressing
their concerns. It is a budget for every Seychellois.
The 2006
budget proposes measures which will:
- Address
the cost of living and improve the family budget
- Create employment opportunities for our population, in particular the
youth;
- Improve the conditions of service of the working population and promote
personal responsibility and productivity;
- Further improve the management and performance of the economy.
- Increase the confidence of investors, in particular Seychellois, in the
potential
of our country
- Promote the entrepreneurial spirit and business development;
- Improve public service delivery and promote better coordination and
implementation of policies;
- Reduce the costs of employment through a reduction in employers’
contribution to social security;
- Control Government borrowing, and manage public debt in support of the
economic growth process.
During the
year, I visited a number of work places in ministries. With the Vice-
President, I also held public consultations throughout the country. We
learnt a lot through those meetings and we are determined to address the
issues that came up. I have asked the ministries and services
concerned to follow-up on specific points and I expect them to do so
diligently and to ensure that where justified, the necessary improvements
are made.
Apart from
services, the public across the country raised a number of other issues,
notably the cost of goods in the shops and the cost of living, the
employment situation and housing. We have been considering how best we
can address these issues and the 2006 Budget gives them due attention.
For very
many Seychellois families, the cost of goods, transport and housing account
for a substantial part of their spending. The budget introduces a
number of measures that should reduce the cost of living over time.
Measures to reduce the cost of living
The
government will start with the following:
1) Public Transport
Taking into account that several commuters have to change buses to reach
their destination and that each change requires a new ticket, SPTC will in
January 2006 introduce a one day ticket of SR6. The one day ticket
will enable, for example, a Bel Ombre parent who has to drop a small child
at a Day Care centre at Beau Vallon before taking another bus to go to work
and do the reverse journey in the afternoon, to do so for SR6 instead of
SR12. The single fare of SR3 will remain.
Free bus
services currently available for pensioners will also be extended to persons
registered as disabled and to all post-secondary students.
2) Tax Reductions
Since 2003, Government has been reducing trades taxes on imports gradually.
As part of the efforts to reduce the cost of doing business and the cost of
living, further reductions in trades tax will be made on raw materials and
equipment for manufacturing and on certain food items.
The budget
makes provision for a trades tax regime where most trade tax would be
collected on four main items, namely fuel, motor vehicles, cigarettes and
alcohol. There will be further reductions in the rates already
published for 2006 for a number of items, especially food. In many
cases the trades taxes will be reduced to 0%. All other trade taxes
will be reduced so that the average rate of tax will be around 10%.
Trades
taxes on all raw materials, selected capital equipment and machinery for the
manufacturing sector will be reduced to 0%. This will benefit the
manufacturing sector and cottage industries and bring us in line with
regional requirements such as with COMESA.
Trades
taxes on domestic household appliances such as fridges, washing machines and
combined gas/electricity cookers will be removed completely. Trades taxes on
beauty products and cosmetics, hair products, etc which currently are at an
average of 50% will also be removed completely.
To protect
our local production we have established a seasonal and a sensitive
agricultural list. For the seasonal items, in times of plenty, the
importation of these items for retail will be regulated through import
permits. For sensitive items, such as bananas, sweet potatoes, cassava
and roses, Government will protect the farming community through a high
protective tax.
For local
industries, a similar tax will apply on certain imports, such as tea, UHT
Milk, canned tuna, prawns, savoury crisps. This will help to protect and
encourage local production and employment.
In the case
of imported non-alcoholic beverages such as fruit juice and bottled water we
will move away from an ad-valorem tax to a specific tax of SR15 per litre.
For
imported beer, a SR35 per litre tax will be maintained. The present levy on
beer and all other items will be removed except for cigarettes and dish
antennae.
Government
has decided not to implement the published trades tax reduction on imported
beer which was scheduled for 2006, as a further measure to protect local
industry and the employment it generates.
The
Government is currently assessing the tax structure on locally produced
goods. The tax on all locally produced soft drinks will be reduced so
that a 33cl bottle will retail at SR2 excluding the bottle deposit.
Similarly tax on local beer is being reduced, from R24.85 to R19.45 per
litre. This means that a 28cl bottle of Seybrew beer, currently
costing SR10.50 will retail at SR9 excluding the bottle deposit.
All
the new rates will take effect on 1st December 2005 except for the
reductions on locally produced drinks which will be effective from 9th
December.
It is
important that the benefits of the reductions in the various taxes are
passed on to the consumers. Price control staff have been visiting
shops to verify stocks and prices of goods to deter the practice of selling
newly imported items which benefit from the reductions, at the older prices.
I call on all traders to participate in our common effort to provide goods
to the Seychellois people at fair prices.
3) Reduction in the price of LPG
As of 1st December, the price of LPG will also be reduced from SR9.33/kg to
SR7/kg. This means, for example, that a 4.5kg cylinder which currently
costs SR39.50 will cost SR31.50, one of 9kg costing SR84 will cost SR63, and
a 12kg costing SR112 will now cost SR84.
4) Domestic air travel
From 1st January 2005 the rate of Goods and Services Tax (GST) on Domestic
Air Travel will be adjusted to 7% to be in line with other tourism related
services. Thus a Mahé-Praslin return ticket currently costing SR280
for a resident will now cost SR260.
5) Telecommunication charges
In recent years there have been welcome reductions in rates for both local
and international calls. Following initial negotiations with Cable and
Wireless and Airtel, it is expected that there will be further reductions in
the coming year.
6)
Strengthening consumer protection
From 1st December 2005, a Consumer Affairs Unit in the Department of Finance
will act as a clearing house for consumer complaints. It will
reinforce the provisions of the 1997 Consumer Protection Act and other
complementary laws and regulations. This unit will promote good trading
practices in the interests of consumers and traders. It will have the
power to investigate cases of alleged infringements and prosecute where
necessary.
Mr.
Speaker, our efforts to reduce the cost of living for all Seychellois are
reflected not only in the points I have just announced but also in other
measures in this budget.
Housing
The
Government is committed to its policy of facilitating each Seychellois
family to have their own home. A total number of 46 projects with
contract values totalling R750 million and representing 3,257 housing units
are in various stages of construction.
In addition
to major advances in our housing programme, the Housing Finance Company (HFC)
has been disbursing loans for house construction and for land purchase.
736 loans totalling R86.4 million have been granted to families in the
period January 2004 to date. 906 home improvement loans worth SR18.3
million have also been disbursed over this period. A total of 2,092 families
have benefited from our housing and loans programmes since January 2004.
In 2006, it is planned that 1,075 houses will be completed under the ongoing
programmes.
The Home
Ownership Scheme launched by Government in 2002 has achieved remarkable
results. Some 1,900 persons have benefited directly. The revenue
of SR83 million it has brought in is helping Government to sustain its
housing programme.
In the 2005
Budget address, I said that further measures would be taken to encourage
families to buy and own their own homes.
The Government is introducing a new Home Ownership Scheme to benefit
families who have legally occupied PMC (Property Management Company) houses
as well as those who have taken loans from SHDC, prior to 31st December
2003.
The scheme which will start on 1st December 2005, will make it possible for
families who have been living legally in a PMC house for 15 years or more
and who are up to date with their rent to acquire their house and
corresponding land without any further payment. Families who have been
repaying a loan with SHDC for 15 years or more and who are up to date with
their repayment will not pay any further amount. Their loan will be
considered as having been paid in full.
Families
who have occupied their house or repaid their loan for a period less than 15
years will be able to buy their house or pay off the total balance of their
loan at substantially discounted prices based on the period of occupancy and
repayments made.
People
joining the scheme will also benefit from a minimum 20% reduction in their
existing rent or loan repayment.
Some 3,800
families stand to benefit from this scheme. The offer made in the
scheme will be for a limited period and it is in the interest of the
families concerned to seek information on the scheme. I encourage all
families concerned to do their best to become the proud owners of their own
house which they can later pass on to their children or grandchildren.
How many persons in other countries, have such an opportunity. What is
only a dream for many people elsewhere can become a reality for the ordinary
Seychellois family.
Families
occupying PMC flats and bed-sitters as well as houses ear-marked for
redevelopment prior to 31st December 2003 will benefit from a 10% reduction
in their rental payments with effect from 1st December 2005.
All these
measures are also part of my Government’s drive to bring about a reduction
in the cost of living.
Employment
During this
year Government has looked closely at the employment situation. In the
district consultations, the issue of unemployment, especially among the
youth came up. It was also pointed out that in many cases unemployed persons
are reluctant to take jobs immediately available. In the last few
months the Employment Department has been actively engaged in providing
advice to job seekers and guiding them to appropriate vacancies.
In
September 2005, there were 1,596 registered job-seekers in Seychelles, and
the unemployment rate was 3.8%. The number of persons in formal
employment has increased from 38,763 in September 2004 to 40,128 in
September 2005.
In the
coming year there will be increased employment opportunities but, we must
also as a society, address the question of willingness to take up available
employment.
To further
facilitate employment and business development, the government is reviewing
social security payment by employers. A 20% cap on contributions
by employers in the tourism industry has already been implemented and
similar concessions extended to the agriculture and fisheries sector.
I should
like to announce that with effect from January 2006 the rate of employers’
contribution for the salary range of SR2,001 to SR10,000 will be reduced
from 35% to 30%, for all other sectors of the economy.
The aim of
this reduction is to facilitate employment and to improve employees’
remuneration in the private sector.
Government
will also continue to localise posts occupied by expatriates as far as is
possible.
Senior citizens
The
progress that our country has made would not have been possible without the
contribution of the senior citizens of our society. Our parents and
grandparents are an important source of knowledge, experience and guidance
for us and the younger generations.
I should
like to emphasise once more the responsibility we have towards our elderly
and the love, affection and care that we should give them.
The
Government will continue to play its part through its social policies.
I am pleased to announce that provision is made in the budget for an
increment of SR100 to their Social Security benefits, which is to take
effect in January 2006.
Public Service
The
Government will persevere in its endeavour to improve the efficiency and
effectiveness of the public service. My visits to workplaces and
exchanges with the staff have been enlightening.
I recognise that many public servants are performing commendably, but we
must aim for improvements on the part of all.
Government is currently undertaking a review of public sector salaries with
technical assistance from the Commonwealth Secretariat to ensure that
remuneration is done in a fair and sustainable manner. The system of
periodic gratuity is also under review.
New schemes of service for teachers and members of the Defense Forces will
be implemented in 2006. Schemes for the health sector are also being
finalised and for implementation in January 2006.
I am
pleased to announce that this budget makes provision for enhancements to the
basic salaries of public sector employees in posts below the senior
executive level. These will take effect from 1st January 2006 and will
be as follows:
- An
increase of SR300 per month for public sector employees holding posts at
Grade V and Grade IV, i.e. posts in salary bands SP20-25 and SP25-29.
- An
increase of SR200 per month for public sector employees holding posts at
Grade III and Grade II level, i.e. post in salary bands SP29-34 and
SP34-39.
- An
increase of SR100 per month for public sector employees holding posts at
Grade I and Senior Officer level, i.e. posts in salary bands SP39-44 and
SP44- 49.
The
remuneration of officers employed on contract terms will be reviewed upon
renewal of contract, as is the current practice.
I call
again on employers in the private sector to make use of the reductions
allocated in social security contributions to provide an increase to benefit
their employees.
Graduates
In my
National Day address I made special mention of the significant investment
our country makes in our graduates and the important contribution they can
and should make to national development.
A new
remuneration package will apply to graduate employees in the public sector
as from January 2006. The housing allowance of SR2,000 will be
extended to three years. In the fourth and fifth year of employment a
graduate in the public sector can expect to receive a minimum basic salary
of SR4,725 per month and a new graduate salary supplementation of SR2,000
per month. From their sixth year of service graduates will be offered
public sector commission contracts.
The Seychelles Pension Fund
The
establishment of the Seychelles Pension Fund is a significant achievement of
my government. In 1979 our government instituted a social security
fund which over the years has guaranteed a basic old age pension to our
people. In 1991 the Pension Scheme was introduced to provide an additional
income upon retirement. In its 25 years of existence, the Social
Security Fund has laid a solid foundation which today permits us to
establish the new Seychelles Pension Fund.
All
workers, not only civil servants and employees of a few companies as in the
past, can now look forward to an additional pension based on their
contributions.
Hard work
pays.
The more
wealth we produce, the more we can benefit when we retire.
The
Seychelles Pension Fund belongs to all who contribute to it. It is the fruit
of our labour and savings. I appeal to all Seychellois, especially the
young, to understand how the fund works and to take up available employment
opportunities in order to be able to contribute to the fund and start saving
for a comfortable life later.
Business opportunities and privatisation
It has long
been a principle of the SPPF and this Government, that Seychellois of all
backgrounds should have the possibility of becoming investors or business
owners. That is why today in our country, all taxi operators are the
owners of their own cars. Likewise instead of there being only a few,
some fifty operators have a share in the car hire business. The same
is true of hire craft operators.
The DBS,
YES and SEnPA have put in place the facilities to enable many young people
and housewives to start small business activities and cottage industries.
As at mid-November, there were 543 registered cottage industries and SEnPA
receives a dozen new applications a week. There are 317 registered
small businesses, with on average 4 new applications a week.
The
construction of the micro-enterprise centre at Providence will start in
early 2006 through funding from the Seychelles Pension Fund.
Arrangements are also being made for the funding of a similar centre at Cap
Samy, Praslin, and for the kiosks for artisans to be built at Port Glaud.
Opportunities for investment and ownership should be open to all Seychellois
and the new phase of privatisation will provide such opportunities.
In the
privatisation of its assets Government bears in mind three major points: the
protection of employment, the ownership of shares by the staff and sale of
shares to the general public.
The process
for the privatisation of Sacos is underway. As already announced
Government will retain a 20% stake and 30% of the shares are being tendered
to strategic investors.
We want to
encourage the development of a share ownership culture in the country.
Therefore 20% of the shares will be offered to the staff of Sacos.
Furthermore, another 30% of the shares will be available for purchase by any
Seychellois. The cost of each share will be ascertained early next
year.
The Government is looking at ways to ensure that within this 30%, every
Seychellois over the age of 18 will have the opportunity to purchase a share
in Sacos. This is indicative of our commitment to share the wealth of
the country among the whole population.
Importation of essential goods
In our
endeavour to modernize the economy, we have gradually moved to open up the
trading regime and facilitate the importation of goods. The system in
place since the 1st January 2005 has enabled most goods to be imported
without an import permit except for goods classified as “restricted”, such
as pharmaceutical drugs, plants and animals.
As a small
country that has to import a large proportion of the basic commodities it
needs, we have to ensure the efficient importation of essential goods.
Government has introduced the tender system for the provision of
commodities, namely, rice, sugar, flour, margarine, milk, oil, vegetables,
fruit and meat.
Through the
tender system, we want to ensure the availability of essential commodities
at fair prices while guaranteeing quality, sanitary and phytosanitary
requirements. Government will be responsible to stock and distribute
these essential items.
Tenders
have already been awarded for the supply of flour. Tenders have also
been invited for the supply of sugar, ginger, garlic, onions and potatoes.
Tenders for other items will be invited when existing supply contracts
expire. Government will ensure foreign exchange for the payment of
goods tendered.
Review of Trades Tax Act
The Office
of Tax has just completed an exercise to revise the Trades Tax Act.
New HS codes have been introduced for certain items and others
re-classified. As part of this exercise the trades tax on vehicles of
1300cc and less will be reduced from 125% to 75%. Trades tax on
delivery vans and pick-ups not exceeding 1.5 tonnes will also be reduced,
from 50% to 25%. This will be of benefit to small business.
Stamp Duty
At present
the stamp duty on the sale or transfer of land is applied at a rate of 4% on
the first SR50, 000 and 10% on the remainder. This will be changed to
a flat rate of 5%. Stamp duty will be exempted on transfers between
parents and children, inheritance, and transactions arising from court
settlements of matrimonial cases where the value of the land does not exceed
SR1 million.
Economic Sectors
The
Tourism Sector
I am
confident that our tourism industry is set on its recovery course and this
is evident from the high interest being shown by foreign and local
investors. The Barbarons Meridien and the Northolme have undertaken
important upgrades and have reopened their doors this year. Their
investments total over US $30 million, providing 300 jobs. The development
of Eden island as an integrated tourism project which will be implemented in
phases over a number of years also started this year.
New
projects that are already under way and that are expected to be completed in
2006 include a new hotel to be operated by the Southern Sun group at Anse
Louis as well as a project at La Passe on Silhouette. These projects
combined should provide investment to the value of US $54 million and over
400 jobs. A further 10 new projects are also scheduled for launch in
2006 including an extension of Banyan Tree, a second development on
Silhouette, a new hotel on the current site of Allamanda hotel at Anse
Forbans, an extensive project for Port Launay as well as projects from world
renowned companies such as Beach Comber on Praslin and Four Seasons at
Petite Anse. Total investment from these new projects over the next 2
years is expected to be in the region of US $475 million and is expected to
create over 1,700 new jobs.
The new
developments highlighted are expected to bring an increase of around 28,000
visitors which would result in an increase of around US $60 million per
annum in earnings. These projects will also have a multiplying effect
on the economy as a whole.
Alongside
these new developments, the Government believes that product enhancement
should be our priority in keeping with our vision of Seychelles as a quality
destination.
A number of
small establishments are already benefiting from the small hotel enhancement
programme in partnership with the trade. The programme will in the
year 2006 be pursued with renewed vigor.
The
development of human resources in the sector will continue to be a priority
and Government will encourage increased involvement of operators in this
endeavour.
Renovation
of our international airport is well under way and if all goes well the
newly refurbished facilities will be operational in 2006.
Air
Seychelles
The
worldwide airline industry has been experiencing a crisis for the last 5
years. With the further opening of air access and the arrival of two
major competitors in 2004, there were fears that our national airline, Air
Seychelles, would not survive.
It was the
view of my Government that Seychelles as a destination needed more exposure
and the arrival of more foreign carriers would bring about interest not only
in terms of direct marketing but also foreign direct investment. I am happy
to say that this is proving to be the case.
For its
part Air Seychelles has succeeded in implementing the measures necessary to
ensure not only its survival, but improved performance. It is already
in negotiation with aircraft manufacturers to replace its B767s and in the
process of purchasing another Shorts 360 to augment its domestic fleet.
Air Seychelles continues to work in close collaboration with Air France,
currently the world’s biggest airline in terms of revenue. As from
next year, the two airlines will operate six flights a week to and from
Paris, with a daily flight as from 2007. Likewise Air Seychelles values its
collaboration with Air Mauritius, which allows us to maintain 2 flights a
week to and from London.
Our Air
Seychelles is the pride of Government and every Seychellois who has the
interest of the country at heart. I have seen it face the crises of
two wars in the Gulf, September 11th, and SARS, not to mention the current
fuel price problems. In my travels I have to fly many airlines and I
can confidently say that Air Seychelles is second to none. It is a
world class airline with a world class staff. Only last week I had the
pleasure to confirm this for myself once again when I travelled to Europe
for the Commonwealth Heads of Government Meeting.
The Fishing Sector
The various
measures announced for the fishing sector last year have all successfully
been introduced. The capital and operational incentives offered under
the Agriculture and Fisheries (Incentives) Act will, I am sure, be the
catalyst for the further development of Seychellois-owned artisanal and
semi-industrial fishery operations. The incentives and
concessions offered will improve the efficiency and competitiveness of the
artisanal and semi- industrial fishery and enable them to increase export of
fish and fish products.
The
intervention of Government by way of financial and logistical support has
enabled all fishermen affected by the December 2004 tsunami to resume their
activities and normalise supply of fish to the domestic and international
market.
Unfortunately, planned renovation of some fisheries facilities affected by
the tsunami remains outstanding because of delays by donors to honour
pledges for financial assistance to tsunami affected countries. We
have however undertaken some renovation from our own resources. We
will continue to pursue these pledges through the United Nations system.
The
efficient operation of the fisheries sector is dependent upon the
availability of fishing inputs. I would like to assure the industry
that I have put in place the required mechanism through the Seychelles
Fishing Authority which will ensure that fishing inputs are available at
competitive prices. I urge the private sector to equally play their
part in this respect.
Earlier
this year the new fisheries policies of Seychelles was finalised and
published. An inter-ministerial working group has been commissioned to
prepare a 5 years strategic plan for the fisheries sector which will guide
the further development of our fishing industry.
In 2005,
Port Victoria reaffirmed its status as the most important tuna transhipment
port in the South West Indian Ocean with transhipment activities expected to
total 350,000 MT (Metric Tonnes) out of an estimated total catch of 400,000
MT in the region. In 2006 the Government will continue to explore avenues to
further develop the potentials of Port Victoria as a hub in the region.
During the
district consultations, stevedoring workers requested assistance from
Government during periods where they do not have work. Government is
considering the matter with a view to facilitate assistance to those in
need.
In an
effort to improve the safety of dockworkers, Government will during the
course of 2006 be introducing new regulations concerning safety of the
environment in the dock and safety of workers. The introduction of
these regulations aims to arrest the rising trend of accidents in the ports.
Recently
Government intervened on the question of compensation for IOT workers in the
event of the sale of the tuna cannery. Provisions have been made for the
payment of compensation to all Seychellois workers in the event that Heinz
sells its share in IOT.
Agriculture
Development
of our agricultural sector to produce as much as our available resources
will permit and to sustain such production will remain the key policy
objectives of my Government. The capital and operational incentives
and concessions ranging from reduced trade taxes and GST on capital
equipment and other inputs, exemption from business taxes on profits of less
than SR240,000, reduced employers contribution to social security offered
this year will, I expect, result in increased production of quality
agricultural produce which will be available to consumers at fair prices.
As regards
chicken production, the government will support the establishment of a
parent stock farm to obtain hatching eggs so that day old chicks can be
produced locally. The parent stock farm will also result in
substantial foreign exchange savings.
Cultural industries
The
economic potential of cultural industries needs to be further developed and
to that end the Government will continue to provide an enabling environment
for this to be realised.
I am
pleased to note that our young musical artists are making an impression in
the international market, and I would like to congratulate Dezil on their
success. I know that other Seychellois successes will follow.
From 1st
December, there will be no trades tax on musical instruments and recording
equipment required by musicians. The Government will also continue to
facilitate their participation in international events.
Strengthening the environment for growth
The medium
term economic framework put in place last year laid the foundation for
renewed economic growth. The increase in new investments is evidence
of this.
During
2005, we have started on a review of existing business practices, systems
and procedures; with a view to amending legislation where necessary to
reflect the realities of our changing economy.
One
important piece of legislation which I mentioned last year was the
Investment Code. I am glad to report that the Investment Code,
providing the legal conditions for the facilitation and protection of
investments and legal remedies for dispute resolution has just been adopted
by the National Assembly. The Investment Code has been developed in
collaboration with the Seychelles Chamber of Commerce and Industry and with
technical assistance from the World Bank and I thank all concerned for their
collaboration.
The
Government has also been revisiting other legislation which will provide
more flexibility for business development. These include the Companies
Act, Licensing Act, and the Employment Act. The first two will be
amended to make them in line with international standards as well as to
accommodate new business activities being created. There will also be
a reduction in the import license fee from SR5,000 to SR1,000 to be
effective from January 2006. For the Employment Act, the Government, with
economic and social partners, has considered provision for more flexibility
for employers and employees alike. The Employment Act Amendment Bill will be
presented to the Assembly early next year. The changes proposed include the
facilitation of casual and part-time employment and a revision of the
redundancy process. Provision will also be made for annual
leave to be based on 21 working days instead of 21 calendar days as at
present.
To further
facilitate the access of financial resources for small business, the
Department of Finance is consolidating all the different financial schemes
under one body – the Concessionary Credit Agency. As announced on November
15, this Division will take responsibility of all the existing schemes.
To
facilitate in the streamlining of procedures for imports, the government has
decided to centralise the import permit system through the Department of
Finance. As of December, all traders will come to the Department of
Finance as the one-stop shop for the import procedures.
The
government has also taken into account the needs of the business communities
of Praslin and La Digue. In this context the Department of Finance has
decentralised some of its services through the setting up of a new office on
Praslin, namely the “Business Advisory Centre” at Baie Ste Anne. This
will reduce the necessity for residents to have to travel to Mahé for
administrative purposes.
The office
on Praslin will perform multiple functions as follows:
- Advise on tariff and other Customs matters;
- Advise on import procedures;
- Advise on investment matters;
- Facilitate the processing of Young Enterprise Scheme (YES) loans
applications.
My Government will continue to look at ways to enhance business and
investment services on Praslin and La Digue, and if necessary outside
Seychelles.
As
announced in the Budget 2005, we have finalised the legislation for the
setting up of the National Statistics Bureau. The Bill laying the
legal framework under which it will operate has been published. The
Bureau will have an important role in ensuring the quality of national
statistics, so vital for effective monitoring of economic developments and
policy formulation by government.
Social sectors
Education
Mr.
Speaker,
My Government is determined to provide the highest standard of education
possible within the resources available. This is why our programme of
training for education personnel has remained consistent, irrespective of
cut backs in other areas.
In addition
to the training of teachers at degree and postgraduate levels, from 2006 the
Ministry of Education and Youth will embark on a project to upgrade the
qualifications of over 200 in-service teachers from Diploma Part I to
Diploma Part II. 25 Supply Teachers with more than five years teaching
experience will also follow training at Diploma level for a period of three
years.
Post-secondary students from families with a monthly income below SR5,000
currently receive an allowance to help them meet costs associated with their
studies. This allowance will now be extended to families with a
parental income below SR6,000. An adjustment will also be made to the
amount granted.
In 2006
construction of 3 new schools will start. This concerns the Baie
Lazare Primary and Creche, the Mont Fleuri Primary and La Rosière.
The
programme for the maintenance of educational institutions will also be
strengthened. I note with satisfaction the increasing involvement of
parent teacher associations in this effort.
Information
and Communication Technology education will be strengthened through the
provision of a second ICT room in secondary schools next year.
In the
post-secondary sector, the Seychelles Institute of Technology (SIT) will
begin to receive students in early 2006. This institute, with a
capacity to accommodate 600 students, is mandated to provide life-long
training opportunities for the human resource requirements of the
construction and engineering industries and support the economy of the
country.
The
construction of the new National Institute for Health and Social Studies and
the new Maritime Training Centre will begin in 2006. The expansion and
improvement of the SHTTC is also planned.
Government
is also currently in negotiations with the Government of India for the
setting up of an Information Technology Centre that will provide training
and build capacity in software development.
During the
past 3 years significant funds have been allocated for the procurement of
furniture, equipment, and other resources for secondary schools. As
from early next year, each educational institution will be provided with a
heavy-duty photocopier. Tenders have also been made for text books and
library books for next year.
It is
important that all this investment made for the good of the students are
safeguarded and well used. It is the duty of students and teachers to
ensure this and of the parents and community at large to support them.
Mr.
Speaker, Government also aims to improve security in schools.
Following a review of the security arrangements, in 2006 the Ministry of
Education and Youth will contract out security services to professional
security companies. They will be responsible on a 24-hour basis for
the security of secondary and post-secondary establishments. The staff
and students will also benefit from the presence of security personnel who
will ensure a safe working environment and assist the school management in
the prevention of anti-social behaviour.
Children and Youth
Our
national theme for this year, ‘Our children, our treasure, our future’ has
caught the imagination of the Seychellois people and I was heartened to see
the many initiatives that various organisations undertook to promote it.
Our children are truly our treasure and they are our future and we need to
do the best we can to ensure they have good care and education.
In order to
facilitate the care of small children while mothers and fathers are at work,
we will extend the provision of day care. The Ministry of Education
and Youth will lease Day Care Centres in 10 districts to interested and
suitable persons.
On our
National Day this year I announced that as from January next year every new
born Seychellois will receive SR1, 000 as a gift from Seychellois society.
Arrangements are already in place at the Savings Bank for the opening of the
children’s accounts. The scheme is also intended to promote a culture
of savings and I encourage parents and others to contribute when they can so
that the child can truly benefit in the future.
Young
people have throughout this year participated in feedback sessions on the
Aspiration 2013 initiative that they worked on two years ago. It is
fitting that young people participate in the affairs of society and
contribute their views and ideas while at the same time learning more about
their country’s affairs. I was also pleased that young people
participated with interest in the district consultations conducted earlier
this year. This budget aims to address a number of the issues that
they raised.
Community Development
In 2006 my
Government will continue to support community projects, especially those of
direct benefit to residents. We will continue to place emphasis on
sports in the districts so that as many persons, especially the youth, can
participate and develop their talents. This is consistent with our
goal for a healthy and active population.
We must
place more emphasis on community development and encourage residents to
participate actively in the life of their districts and increase their sense
of ownership.
Wherever
possible, services will be decentralised to the districts. In this
context, Government will aim to have a social worker serving each district
in order to bring social services closer to people.
Health and Social Services
Throughout
this year the Government has given a lot of attention to our Health system.
I have personally visited the Victoria Hospital and health centres on a
number of occasions, and discussed improvements with the management and
staff. A number of facilities have been and are being renovated and
enhanced to provide better service. A new spiral CT scan has been
installed at Victoria Hospital. Laundry services have been contracted out.
Where services can be improved by outsourcing in this way, Government will
do so. The system for the purchase, storage and distribution of drugs
has been reviewed and strengthened, and we have tendered one year’s supply
of drugs for the Ministry of Health and Social Services. A new
clinical laboratory for Victoria Hospital which offers many more diagnostic
tests than before has also been built.
The
construction of the Beau Vallon Health Centre will be placed on tender in
the coming weeks and will start early next year.
A number of
significant contributions in equipment and materials has been made by the
private sector and organisations, both local and international.
We need to
pursue our efforts to improve and modernise our health services. In
general the health staff work diligently and with devotion and are
appreciated by the public. I congratulate them and assure them of my
support in their efforts to achieve the highest standards of health care
possible in Seychelles.
While we
continue to improve working conditions for our healthcare professionals and
build our capacity to offer new services, our programme of overseas
treatment where necessary will also continue.
Concluding remarks
Mr.
Speaker,
Honourable Members of the National Assembly,
People of Seychelles,
Seychelles
is a young country but in our 29 years of nationhood, we have achieved a
lot. Our achievements are not just in the past, but are continuing
today.
On the
economic front we may have difficulties that still need addressing. But
which country does not have difficulties at one time or other? In our case,
there are clear signs of improvement that should bear fruit in the near
future.
We have
achieved a lot. However, the world is in constant and, now, even accelerated
change and we need to change with it whilst safeguarding our values and the
social and economic gains we have made.
We need to
take the measures necessary to strengthen our economy and gear it to the
requirements of global developments and new threats and opportunities.
We must
maintain fiscal discipline and ensure the proper management of our debts
while pursuing the measures for modernizing our economy and strengthening
our major industries as well as small enterprises.
We need to
work harder and be more productive. We need to work intelligently and
strengthen cooperation and partnerships.
We must
maintain the stability and harmony that our country has enjoyed over the
years and that have permitted the progress we have made so far. We,
the Seychellois people and our Government, have worked hard over the years
to reach where we are today, to become what we are today. We have persevered
against all odds. We must preserve our achievements. We must preserve the
conditions that have enabled us to succeed so far. Our future successes will
depend on this.
Budget 2006
builds on the Budget of 2005. It aims for both a dynamic economy that
will produce more wealth and the consolidation and improvement of the social
services that benefit us all. The economy and the social service are
interdependent and mutually reinforcing.
It is also
my conviction that the measures in the budget to address the cost of living
and bring more comfort to our families will in turn lead to increased
productivity.
The budget
I have presented today is a budget for each and every Seychellois. I believe
that each Seychellois sees himself or herself in it. Each Seychellois will
benefit from it. Each and every Seychellois should also know that he
or she has a part to play to make it succeed.
We produce
the wealth of our country. The contribution, the hard work, of each
worker counts.
Let us, all
of us Seychellois, come together to take our country forward. In 2006
we will celebrate 30 years of nationhood. We will celebrate the many
achievements we have made, in spite of our size and the many constraints.
Let us also celebrate the spirit which underpins our work and our
achievements. That spirit of unity, solidarity and perseverance that reminds
us that we have a common future and that we must, each one of us, truly play
our part in the common task of building it.
I believe
that we have a bright future. I believe in our people.
Let us
believe in Seychelles. Let us work together. Together, we shall
succeed.
Mr.
Speaker,
Before I end, allow me to thank all who worked on preparing this budget. I
also wish to thank the Seychellois people for their support and their hard
work.
Mr.
Speaker,
It is my pleasure to recommend the 2006 Budget to the Honourable Members of
our National Assembly.
Thank you.
God bless Seychelles and the Seychellois people.
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