Third meeting of the National Economic Council-Govt acts to lessen effects of recession |20 April 2012

The measures include stricter budget and personnel management, and tightening tax collection to eliminate any leakages of revenue.

This came out yesterday at State House during the third meeting of the National Economic Council (Nec) chaired by President James Michel.

The council discussed a range of issues, proposed by members, on measures related to economic development.

Members expressed concern over the potential impact on the economy of the recent rises in the price of fuel and agreed that government should consider legislating the Consumer Price Index (CPI) as the official benchmark to monitor and regulate unfair price increases as a policy instrument to contain uncontrolled inflation, as well as the need for an aggressive communications drive to develop an energy saving culture, starting from within government and public entities themselves, as an example.

The Council noted the revised growth forecast for 2012 from 4 to 2.8  per cent, and discussed strategies to boost the productive sectors of the economy in areas like tourism, construction, fisheries, manufacturing and how to capitalise on the imminent connection to the fibre optic submarine cable.

Among other issues discussed, the private sector requested the deferral, to a more appropriate time, of the proposed introduction of the Value Added Tax system in July.  Government would give early consideration to this proposal.

It was agreed that the tourism sectors need to provide appropriate diverse local services for new tourism markets such as China, in order to attract visitors from these areas when the European market is weak.

Members noted the significant increase in visitor arrivals, despite the decline in some traditional markets, and proposed various ways to increase tourism yield.

The Seychelles Tourism Board (STB) and the Seychelles Hospitality and Tourism Association (SHTA) were called upon to propose strategies for the consolidation and adaptation of the tourism industry given the changes in global tourism, recession in the traditional markets and the withdrawal of direct flights from these areas.

Air Seychelles has a key role to play in attracting tourists from new and diversified markets to holiday in Seychelles. Government would provide complementary assistance for capacity-building, as well as and incentives for tourism operators who wish to take advantage of the new drive for diversification.

The private sector expressed concern over the high cost of rental of business premises and the unavailability of commercial space/offices in and around the Victoria area.

Government would consider making land available to the private sector for real estate development, that would enable new commercial offices to be built in suitable locations.

The government and private sector agreed that more needed to be done to encourage the growth of small and medium enterprises (SMEs) through the new structure that was recently announced. Government would also consider providing bank guarantees for SME loans, subject to sound business plans, and become an active partner in this sector.

Banks would be encouraged to provide development loans for productive purposes.
The private sector expressed concern over the high cost of domestic air services between Mahé and Praslin and the related effects on tourism. The need for Air Seychelles to remain commercially viable was emphasised and that costs would need to reflect the free market variability. 

Government said that it would consider applications for licenses from new domestic airline operators subject to their ability to meet safety and civil aviation regulations in force.

The chairman said that the proposals of the council would be submitted to the Cabinet of Ministers, and action in respect of approved measures should be implemented promptly.