Blue Power hurting from suspension of exports to Caricom

Jamaican soap manufacturer Blue Power Group Limited is hurting from the suspension of exports to the Caricom region, which has resulted in its revenues for the fourth quarter falling by 23 per cent.

For the three-month period ended July 31, 2021, total revenue amounted to $116 million, down from the $150 million realised in the previous year. The main contributor to this decline was the suspension of soap exports to the Caricom region.

Blue Power earns its revenue primarily from the production and sale of soap for Jamaica and export markets. The suspension was due to the fact that the Jamaican Government discontinued the issuance of certificates of origin for soap manufactured in Jamaica with imported soap noodles, as a result of an adverse ruling last November by Caricom’s Council for Trade and Economic Development (COTED) following a complaint by regional soap producer, Dominica Coconut Products Successors (DCPS).

COTED took a majority decision requiring the Jamaican authorities to cease issuing certificates of origin to Jamaican manufactured soaps, based on a DCPS claim for unfair competition that Jamaican soap manufacturers, in particular Blue Power, were avoiding the imposition of the full 40 per cent common external tariff on their products, which are essentially goods of non-Caricom origin.

With the suspension of the Caricom market, Blue Power’s Chairman Dhiru Tanna says the company is working on a number of strategies to grow its domestic and export soap markets. He advised shareholders that the company is “pursuing a number of avenues to improve our product portfolio, marketing and sales in the domestic and non-Caricom markets while also taking steps to regain our markets in Caricom countries over time.”

The South and Central American markets were among those overseas export markets that Blue Power is targeting but DCPS Director Yvor Nassief argues, “that is more spin than substance,” citing a similar outcome as in Caricom, if Blue Power were to go in without addressing the substantive matter of fairly competing with local producers.

In its case against Blue Power, DCPS successfully argued before COTED that the soap pellets raw material imported from Indonesia by Jamaican producers like Blue Power was simply reshaped as soap without going through a process of manufacturing transformation that is necessary for finished goods to be classified as being of Caricom origin, thus benefitting from the non-imposition of the 40 per cent common external tariff that goods of non-community origin attract.

Nassief told the Caribbean Business Report that Blue Power will continue to hurt from the suspension unless it starts trading fairly. He posited an easy way for Blue Power to get over the suspension, questioning “why the company is kicking and dragging its feet in doing the right thing, that is, simply investing in saponification equipment like little Dominica, with a population of only 70,000, has done. By making this investment BP (Blue Power) would increase its level of investment in the Jamaican economy, increase local value added, increase exports and increase employment.”