Government Weighs Extension of Expired ASR Tax Concessions

With the 10-year period of these concessions having officially expired, the current government finds itself in a complex position, as it contemplates whether to extend the concession for ASR.  Essentially, the 2012 concession essentially paved the way for ASR to acquire a majority shareholding in BSI, injecting a much needed sixty-four point eight million US dollars into the industry. In return for this significant investment, the government granted ASR a series of major tax exemptions and concessions. These included exemptions from income and business tax, as well as customs and excise duties on imported goods for a number of years. The terms were designed to give ASR the financial breathing room to modernize the industry and pay off BSI’s debts, ensuring the long-term viability of Belize’s sugar industry.  ASR/BSI has invested hundreds of millions of dollars into the factory and its operations, and now a discussion has begun to emerge about a potential extension of the concession. On one hand, there is the argument that ASR’s investment has stabilized the industry, provided jobs, and made the local sugar sector more competitive globally. An extension, proponents argue, would reward this commitment and encourage further investment. On the other hand, the idea of extending these lucrative exemptions for a foreign company is a tough pill for many to swallow, especially as the government seeks to maximize its own revenue. Agriculture Minister, Jose Abelardo Mai, explained that the matter must be thoroughly analyzed by technical teams and discussed in Cabinet and Parliament before any decision is made.

Jose Abelardo Mai, Minister of Agriculture: “It has not gone to Cabinet yet and certainly it will go very shortly to Cabinet, the approval of the concession. It will be discussed in Cabinet and there is where that decision is going to be made. After the Cabinet decides if the decision is that they should be granted the consent then that goes to the House of Representatives so that it will be debated in there and approval then is final there and the Senate.”

The current issue over the ASR Concession is steeped in political irony. The government now tasked with deciding on the extension is the very same political party that, while in opposition in 2012, was a fierce critic of the original concession. At the time, the People’s United Party (PUP) vocally opposed the deal, arguing that the tax exemptions and concessions were “lavish” and gave ASR an unfair advantage over local cane farmers. They contended that a multinational corporation should not be given such preferential treatment and that the agreement would create an uneven playing field.  Then-opposition leaders, including figures now holding key ministerial positions, stood in the House of Representatives and passionately debated against the concessions. They accused the then-ruling United Democratic Party (UDP) of giving away too much to a foreign company and of potentially jeopardizing the livelihoods of the thousands of Belizean sugar cane farmers. Fast forward to today, and the tables have turned. The very party that once lambasted the ASR concession is now the one considering its renewal. Speaking on the irony of the situation, Minister Mai referred to changing times and circumstances between now and then.

Jose Abelardo Mai, Minister of Agriculture: “I’m in support of what the Cabinet decides. The Cabinet decides as a group but there will be many questions asked definitely and there has to be many concerns raised and so that has to be well ventilated in the Cabinet and in parliament.”

Paul Mahung, Toledo Correspondent: Why I ask because if I’m correct in about 2012 when you all in the opposition there was some opposition to the concession but now we’re in a different phase 2025.

Jose Abelardo Mai, Minister of Agriculture: “Yeah. Clearly 2012 fast forward to 2025 the situation in the Industry has changed dramatically. Today the farmer is surviving, maybe not even surviving. The Mexicans will refer to their state as they’re not dead they’re buried because the price is depressed, we are plagued with three or four pests and diseases to name them Fusarium, Stem Borer, Melee Bug, Frog Hopper and maybe one more but this is affecting not only Belize but the Mexican farmers too. And so if you look at the news daily you will see that the Mexican farmers are up in arms asking the government for support. The farmers in Belize are, because of the price paid to farmers are even in a worse situation. From $136 million to $100 million is a big drop and so the cane farmers are not in a good situation now. The mill is not in a good position today.”

The original agreement formulated back then was referred to as the Sugar Industry and Cogeneration Development Incentives Act.  It was dubbed a lifeline for the Belize Sugar Industries (BSI), which was deeply in debt at the time of the agreement in 2012.