American Sugar Refineries (ASR) is expected to make payments to settle all of the debts by Belize Sugar Industry Limited and BELCOGEN to the tune of 64 million U.S. dollars by next week. Also liquidated will be a 10-million-dollar loan, which the government made to BSI back in 2010 as well as 2-year dividend payments to the BSI Holdings trust amounting to 5.4 million dollars. Additionally, ASR will invest 30 million U.S. dollars in production expansion at the plant.
But before ASR makes the payments, the Government went to the National Assembly to pass the Sugar Industry and Cogeneration Project (Development Incentives) Bill, 2012.
The Bill is an updating of the BELCOGEN Act of 2005, which gave the company certain tax concessions that run up to 2022. In the area of Business Tax, BELCOGEN currently has 2 years remaining; that will be adjusted to go up to 2016. Under the new ASR arrangement, BSI/BELCOGEN will get tax exemption of 80% in 2013; 60% in 2014; 40% in 2015 and 20% in 2016.
As it relates to taxes on dividends, BELCOGEN has a 15-year tax break from 2007 up to 2022 and that has been reduced to go to the year 2018. Similarly, taxes on technical services has been cut down from the year 2022 to 2018, tax breaks on interest payments remain up to the year 2022 as it was in the original BELCOGEN Act.
A 10-year exemption is also being given to the company from 2013 to 2018 on import duties and environmental tax; this is a reduction of time as the original BELCOGEN Act gave the company exemptions up to 2022. In the area of Stamp Duties, the company is being given a 50% waiver on the transaction for the sale of shares.Â
Speaking at the House Meeting on Wednesday, September 26th as the new Bill was being passed, Prime Minister Dean Barrow explained that the concessions are justifiable since the investment by ASR will rescue the sugar industry and guarantees the long term viability and prosperity of the industry. He added that, “government is proud of the role it has played so far.” PM Barrow then went to explain the trajectory that the sugar industry has taken to bring it where it is at now. He recalled that the industry was on the verge of collapse with government having to step in to lend BSI 10 million dollars and creditors coming to the company’s door to collect on debts amounting to 64 million U.S. dollars.
With the new composition of ownership in BSI/BELCOGEN, ASR will assume a majority shareholding in the company with the Government and employees of BSI owning a combined 22% in the company. All told, ASR is investing over 100 million U.S. dollars in BSI and BELCOGEN and the Prime Minister noted that this is the largest all-at-once direct investment the country has ever seen.Â
More than the largest investment in Belize, ASR’s investment will guarantee better prices for sugar exported to Europe. Technical services will also be extended to BSI, BELCOGEN and the farmers as well as financing of extension services to cane farmers. There are also components for funding of planting and cultivation of sugarcane by farmers. In the event of failures at the plant or in the event of natural disasters, ASR will assume responsibility for any damages.
In summing up, Prime Minister Dean Barrow noted that with the investment there will be unprecedented prosperity for cane farmers and it is the best imaginable deal for farmers in Orange Walk and Corozal.
