Monitor increases in building materials costs

Although the cost of sand and cement has remained fairly stable, the price for steel has skyrocketed due to increased product and freight costs. This was the general sentiment expressed by construction sector stakeholders during a meeting with the Minister for Tourism, Industry and Commerce, Oneidge Walrond, and the senior minister with responsibilities for finance under the President’s Office, Ashni Singh. The meeting was held at the Arthur Chung Conference Center on Monday.

Outlining the purpose of the meeting, Minister Walrond noted, that the engagement was to deal with the reported price increases for the cost of some building materials. He explained that the Government wanted to meet with stakeholders to better understand the factors responsible for the rise in the cost of these materials.

“We decided to meet with you and hear from the people directly involved with the sector before we make any decision or decision,” Minister Walrond told the meeting.

As part of the Crisis Budget in 2020, the Government announced the elimination of VAT on building and construction materials. However, consumers and contractors have been complaining about the ever-increasing cost of materials. These increases are also a concern for Dr. Ashni Singh, who warned that it is illegal to charge VAT on zero-rated materials. The Minister’s warning was based on complaints from some stakeholders that some hardware stores have maintained the price of materials, although VAT is no longer applicable. He urged citizens to report instances where shops continue to charge VAT on zero-rated items.

“We have been paying close attention to developments in the market for key building materials, not only because the government is a major consumer and buyer of building materials, but also because we recognize that construction is going to be an important driver for the economy to go. on, ”stressed Dr. Singh.

The Senior Minister for Finance expects a boom in the construction sector, driven by the President’s housing initiative, the construction of several branded hotels, new offices, and other private sector buildings.

“We have been receiving reports of some price movement, so we are very interested in understanding how prices have moved and what may be contributing to the price movement,” added Dr. Singh.

Sharing his perspective on price increases, Chairman of the Region 3 Tourism Committee, Halim Khan, also said that the cost driver for the items was the main driver. He suggested that a lower cost of fuel should lead to a reduction in the cost of materials. Briony Tiwarie supported this view assuming that the increase in fuel prices had a direct impact on the cost of materials due to higher transport costs.

Mohamed Raffik of Central Corentyne, meanwhile, confirmed that there has been an increase in the cost of materials. He noted that the cost of materials from China has been steadily increasing. Raffik stressed that the genesis of price increases is the international market and has nothing to do with the Government of Guyana.

Also contributing to the meeting through Zoom was Christopher Persaud of David Persaud Investments. He said the price of steel had increased by more than 20%, and that the material was still scarce. He further explained that transportation rates had also increased by over 400%.

In response, Minister Singh noted that the Government had moved away from fixed prices and a regulated market to a more open and competitive environment. He added that fuel prices were largely determined by the world market and while the Government could intervene by reducing taxes, that move would have limited effects on the overall cost of fuel.

Dr. promised Singh explored the legal and administrative implications of adjusting taxes related to transportation costs. Meanwhile, Minister Walrond committed to engaging with agencies under her supervision, such as the Competition and Consumer Affairs Commission and the Guyana National Standards Office to protect against unscrupulous business practices and ensure quality. [Extracted and Modified from DPI]