(Trinidad Guardian) Chairman of the Confederation of Regional Business Chambers, Vivek Charran feels disappointed that businesses across the country are not seeing the economic growth that T&T’s authorities have boasted about.
“A lot of the issues that we are facing, whether it has to do with shortage of U.S. dollars and so on with regard to people’s disposable income, with regard to the levels of commercial activity in the country, we are not seeing things getting better. For us in the small and medium business sector, we often have to face statistics, statistics that are printed in the newspapers and that we see in publications and reports. When statistics say that we are doing well and there is economic growth, we don’t feel it. Down in the trenches we are trying to create business and make a dollar. We are not feeling the improvement,” he said.
Charran spoke at a webinar on the Medium-Term Economic Situation in T&T hosted by the Trade and Economics Department of the University of the West Indies (UWI), St. Augustine.
He said there has been a drastic increase in the cost of shipping coming from the Far East as well North America to T&T and Panama to T&T and this will lead to price increases locally.
“When we look at this drastic rise, it is quite considerable. The World Container Index Price shows that the container index increased by 16 per cent to US$4,073 per 40 foot container. To T&T, from the Port of Shanghai or India or anywhere in the Far East through Panama, it is actually US$7,000. Many small and medium businesses import goods from Los Angeles and New York like clothing, accessories, shoes and consumer electronics. These prices have risen drastically from November 2023. What it means for us is that the cost of inventories that are going to be found on the shelves of our stores in T&T is going to increase in price considerably compared to the price of importing those same items last year or even last month.”
He added that the country could be seeing rising inflation for key consumer items such as food, toiletries and certain pharmaceuticals.
He also said that when having weekly conversations with the local business community in the retail sector, business owners complain that they are not seeing an increase in their sales.
“Everyone has the same problem with the shortage of U.S. dollars. What it means is that we are at a critical point where traditional retail is not as successful as it used to be. Retail outside of the sector of food, pharmaceutical, toiletries or other necessities are suffering greatly. People’s disposable income in T&T is not increasing. Most people are constrained right now with their disposable income,” said Charran.
Manufacturing
Charran said small and medium sized businesses must think about diversifying into other sectors like manufacturing, but pointed out that challenges stand in their way.
“While many small and medium sized businesses are interested in diversifying into manufacturing…they are helped in a sense by certain Government grants through exporTT. There is the grant fund facility that allows up to a maximum of $250,000 that halves the cost of purchasing small machinery.
“While it is possible to access some of these grants, one of the largest barriers to entry for the diversification of small and medium sized businesses is that of land. Where will you set up your small factory? Where you will put your plant? Where you will do your production? Commercial real estate prices for 5,000 square feet for a place like San Juan or Chaguanas, you are looking at $30,000 to $37,000 a month. When you are looking at manufacturing for the local market and items that could be competitively priced that can be purchased by retail businesses, then it has to be at a price point that allows you to sell to the masses and it is difficult to do that when you have the cost of rent or purchasing a property.”
He said the eTeck parks are an answer to business people having to buy property at exorbitant prices, but the problem is that these industrial parks no longer have space.
“One of the things we would like to see is that if new eTeck parks are developed, I think it is important to have new policies for first-time manufacturers and to distinguish between start up funding and concessions for new entrants into the manufacturing sector. We have fewer new entrants into the manufacturing sector than we should.”
Labour
Charran also said it is important for the manufacturing sector to create employment, as many persons reach out to him enquiring about employment and he always contacts some of the country’s manufacturers asking about job opportunities.
“We would like to see an increase in employment within certain regional areas. We would like to see an increase in employment within certain geographic areas and that is where small and medium sized businesses come in. Now we have a situation where many of the bigger companies that can do the hiring, where there is a warehouse or there are other aspects of unskilled labour that people can get jobs at, they have to travel out of the area. And travelling in T&T is quite expensive and many find it is not worth their time.”
Energy
Former Minister of Public Administration, Dr Bhoe Tewarie who also spoke at the webinar said the entire country looks at non-energy manufacturing as the country’s hope to diversify.
He said T&T is not doing well in its energy sector because of the gas production shortfall.
However, he said the Government has made a good attempt to strike deals with Venezuela to make up for this shortfall which should materialise over the next few years.
“The details of these arrangements are not clear, some might say not transparent. The T&T Government has also done well in the negotiations with the US authorities in securing the OFAC licence that seems to operate under the radar of sanctions or newly imposed ones on Venezuela. The medium term prospect looks positive for T&T in energy. But all of this depends on when we start.”
He said the Government has been speaking about giving life to the non-energy sector but the forex problems seem to be “escalating.” Tewarie, said, owever there are glimpses of hope.
“How is manufacturing progressing in this regard? I think the Exim Bank facility has made a difference. In 2022 and 2023, US dollars repatriated to T&T based on manufacturing exports exceeded forex sold to manufacturers by over US$100 million for each of those years. That information was given by the chairman of the Exim Bank in a public forum. This is a good sign that the Exim Bank’s execution of policy is working and manufacturers are in fact exporting.”
He said the T&T Manufacturers’ Association (TTMA) is pursuing a target of doubling exports by 2025 using the base year of 2019 and the trade body is optimistic that this goal will be achieved.
“There has been a sharp rise in chemical production of things like detergent, dish washing liquids and hand sanitizers which maybe the result of demand jumps during the COVID pandemic period and new habits formed. Doubling 2019 exports by 2025, which is a five-year period, would be a significant achievement.”