Madagascar's businesses 'to withhold tax' over political crisis By RIVONALA RAZAFISON in Antananarivo | Saturday, June 1  2013 at  15:22

Madagascar's building and a construction industry has been among the worst hit by the country's political deadlock, with investors reducing investments. RIVONALA RAZAFISON | NATION MEDIA GROUP 

Madagascar's businesses have piled pressure on the political leadership to resolve the country's running political crisis by suspending ties with the state, saying they did not know who was in charge.

They have said they would withhold tax payments in a move that could deprive the state of up to 90 per cent of its income, further exacerbating the economic crisis precipitated by a military-backed coup on the island in 2009.

The uncertainty was making it difficult for their businesses to survive, powerful unions in the country said at a press conference in the capital Antananarivo on Friday where they announced the suspension of their links with the state.

"The first measure we’ve taken is to cease our relations with the government. We no longer know with what kind of authorities we should deal at this stage," Ms Noro Andriamamonjiarison, the chair of the Madagascar’s Enterprises Union (GEM), said.

"The second measure is that we stop reporting to the tax administration from June 15. We are to secure our taxes at the lodging and confinement fund until things are clearer for us", Ms Andriamamonjiarison added.

Facing insolvency

The island's industries and factories were threatened by insolvency, another grouping, the Malagasy operators’ union (Fivmpama) said.

"We directly contribute to the state's income. But what we have today is that almost all the companies are now close to the collapse," Mr Ntsoa Randriamifidimanana, Fivmpama’s head, told reporters.

The traders said they have failed to create new jobs since the beginning of the crisis. Fivmpama said its members have rejected about 300,000 job applications over the last four years.

"The banks no longer trust in us. They refuse to grant us loans even if they know very well that business has been experiencing serious issues on the island," Mr Randriamifidimanana said.

The building and construction industry has been among the most affected since the suspension of substantial donor funding.

In the past, operators in these domains benefited from the implementation of various projects funded by the World Bank, the European Union, the French development agency (AFD) and the African Development Bank, among others.

Stroke of luck

The advent of mining projects was a stroke of luck for them as foreign investors have been reluctant to launch new projects over recent years.
"Several building and construction enterprises are now ruined. They have nothing to do. The sector is seriously endangered," the operators said.

The country’s Agriculture Chamber said it was worried about the inertia of the government facing a major locust invasion.

"The swarms have affected over 60 per cent of the regions at this stage. Technically speaking, they will become ten times destructive during the next season if nothing is done now,” Ms Solofo Randrianjafimahatratra, the president of the Chamber, warned.

These insects are a real danger for agriculturally-dependent Madagascar.

"Locust are today at the gates of the capital Antananarivo. We don’t know where to go and what to do,” Ms Andriamamonjiarison said.

Open disagreements

Traders were particularly concerned with the recent institutional crisis related to open disagreements between President Andry Rajoelina and the consensual Premier Jean-Omer Beriziky. (Read: Madagascar PM, President fall out as political crisis deepens)

Mr Beriziky is under pressure to resign, mainly from supporters of Mr Rajoelina, who has himself defied international pressure to announce his candidacy for uncertain July 24 elections. The President has also said he will not step down as stipulated by law.

"The state has not existed since over two or three last days. Let us be confident that the country still have a valid government," Mr Martin Rakotozafy, the boss of the gas and petrol distributors’ union (GPGLSS), told reporters.

"We aren’t politicians. All what we want is simple: the rapid resolution of the political issue. We have been silent over the four last years hoping that politicians would manage to overcome the deadlock.

"But, from now, we can no longer support what is happening. The situation is extremely critical for us," he said.

A meeting of officials planned for Monday retains hope that a way out for the island may be found.