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Regional meeting mulls economic obstacles

Wesley Gibbings
Published: 
Thursday, March 3, 2016

Economic growth in the Caribbean will continue to experience roadblocks once it’s the region’s air transport sector and sea port operations, among other important areas of business, continue to lag behind the region’s developmental objectives.

This was one conclusion when private sector and civil society organisations met in Belize earlier this week to discuss reforms to drive the development process in the Caribbean.

One document tabled by organisers of the annual Caribbean Growth Forum (CGF) was a 2015 Caribbean Development Bank (CDB) study of regional airlines which pointed to, among other things, “bad financial decisions...such as by Caribbean Airlines (CAL) in a short period over 2010/11.”

Another, commissioned by the World Bank (WB), pointed to shortcomings in port operations throughout countries of the Organisation of Eastern Caribbean States (OECS). The Forum is an initiative of the WB, Inter-American Development Bank (IDB) and CDB.

The groups endorsed a communique which includes a call for reform actions to have “specific and measurable milestones” while the CGF will provide “a framework and facilitate the review process.”

World Bank Caribbean Country Director, Sophie Sirtaine, said because of the “participatory approach” of the Forum “each citizen has an incentive in keeping track and monitoring the issues discussed to make sure that the reforms collectively identified are moving forward.”

One area of urgent need of change is air transportation. The CDB air transport study concludes that the sector “is close to reaching a tipping point” in the Caribbean.

“Some domiciled carriers that have made significant contributions to the socio-economic welfare of the economies they have served over the years, are going through a period of uncertainty,” the study says. 

“The airlines continue to make losses, with shareholder governments concerned about having to prop them up indefinitely.”

The study sets out a number of measures to “limit the vicious cycle of losses, high debts, bankruptcies and bailouts” and “to place the industry on firmer footing in order to facilitate its re-launching into the global marketplace as a stronger competitor.”

Among the challenges confronting the sector identified by the study is the fact that “intra-CARICOM markets are too thin.”

“There is simply not enough scale to overcome the high fixed costs of operation,” the study says, citing rising fuel costs, inadequate Information and Communications Technology (ICT) systems are inadequate and “industrial relations” which the study says “can also be challenging.”

It adds that regional airlines “struggle to compete with better capitalised foreign airlines on services to (and) from the Caribbean while even much larger airlines “have found it necessary to participate in mergers, equity investments, alliances, code shares and other cooperation imperatives in order to survive and thrive.”

High taxes and charges are also identified together with the fact that regional airlines are often required to operate “some unprofitable routes for social reasons.”

“Airline boards,” the study says, “are often not free of political intervention.”

T&T was not a part of the deliberations and when asked why by T&T Guardian one source replied that “each country has different review processes and discussions are still ongoing with a few governments including T&T, Antigua and Barbuda, and Barbados.” The meeting also focused on the investment climate of regional states, levels of skill and productivity and logistics and connectivity.

A 2015 WB policy research paper focusing on sea ports within the Organisation of Eastern Caribbean States (OECS) was also tabled at the meeting.

Though the Efficiency and Performance Assessment looks specifically at port operations in the seven Eastern Caribbean states, T&T comes in for mention since this country accounts for the bulk of regional imports by countries of the sub-region. Vincentian exports of ground provisions and fruits to T&T are also cited.

The WB paper says while “there is no apparent cargo capacity problem” in the OECS, there are problems such as “inadequate maintenance of existing facilities and equipment” while “the connectivity of the OECS ports is limited by internal issues, not by the capacity of shipping liners or current route design.”

“Revamping ports to enable the efficient handling of containers—and to move past outdated break-bulk practices—is clearly overdue,” the paper says while, in some instances, “the OECS ports have not fully developed their infrastructure to satisfy the current and potential demand of cruise ships, forcing them to use cargo terminals for passenger traffic.”

The CGF is now into its second phase of deliberations, having initially focused on determining the priority areas. The current phase is devoted to implementation by regional governments. Sirtaine said the WB saw “the renewed commitment of Caribbean countries under this second phase of the CGF as a real catalyser to support new growth models for the region.” 

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