Shal­iza Has­sanali

This coun­try's boat man­u­fac­tur­ing in­dus­try is sink­ing be­cause of loop­holes in the law. Six years ago, the in­dus­try, com­pris­ing four boat man­u­fac­tur­ers, was at its peak, man­u­fac­tur­ing as many as 20 boats per year with its 400 staff. To­day, those fig­ures have dwin­dled, with on­ly five boats built an­nu­al­ly by just 20 em­ploy­ees.

In an Oc­to­ber 10, 2011 let­ter, lo­cal boat man­u­fac­tur­ers told Trade Min­is­ter Stephen Cadiz, some per­sons were ex­ploit­ing loop­holes in the laws which al­lowed for­eign-flagged ves­sels (yachties) en­try for up to six months. The let­ter was signed by Joe Pires Jr of Bowen Boats, Christo­pher Scott of Ca­lyp­so Ma­rine, David de Gannes of For­mu­la III Ma­rine and Pe­ter Peake of Peake Ma­rine.

They told Cadiz that in the last three years some T&T res­i­dents have been pur­chas­ing boats over 40 feet long in the Unit­ed States and reg­is­ter­ing them in states like Delaware, or oth­er Caribbean is­lands. The boats are then shipped to Grena­da where no du­ties are at­tract­ed and there­after, they come through Cus­toms in Ch­aguara­mas and are al­lowed en­try for six months with­out hav­ing to pay 15 per cent VAT or 25 per cent du­ty.

These Trinida­di­an-owned ves­sels are kept at fa­cil­i­ties like the Trinidad Yacht Club, San Fer­nan­do Yacht Club, Pow­er Boats Mu­tu­al Fa­cil­i­ties, Is­land Home Own­ers and La Soufriere. The boat­builders said they have no ob­jec­tions to the im­por­ta­tions but com­plained that T&T's boat­build­ing in­dus­try has de­clined sig­nif­i­cant­ly be­cause of the for­eign ves­sels.

Had gov­ern­ment im­posed VAT and du­ties, they said, it would have been im­pos­si­ble for Trinida­di­ans to buy boats from abroad. It is es­ti­mat­ed that more than 60 boats have been im­port­ed in­to T&T in the last three years. The man­u­fac­tur­ers ap­pealed to Cadiz and the Cus­toms and Ex­cise Di­vi­sion to as­sist in pro­tect­ing their liveli­hoods.

They point­ed out that com­bined, they em­ploy ap­prox­i­mate­ly 100 peo­ple a year and, in­di­rect­ly pro­vide 300 jobs. "Our in­dus­try has come to a stand­still with the four boat builders now build­ing few­er than five boats a year for lo­cal use, as com­pared to over 20 boats per year five years ago. Be­tween the four boat builders, we now em­ploy less than 20 peo­ple di­rect­ly," the let­ter stat­ed.

Los­ing mil­lions in rev­enue

Pires said af­ter the 2008 glob­al fi­nan­cial melt­down and fore­clo­sure of thou­sands of homes in Amer­i­ca, with thou­sands on the bread­line, the prices of boats start­ed to de­cline. A sec­ond-hand US boat which could have fetched US $250,000 was sold for US$75,000 by banks that were owed, he ex­plained.

This opened the flood­gates for Trinida­di­ans to buy sec­ond-hand US boats. "The gov­ern­ment is los­ing mil­lions in rev­enue this way be­cause they have not been pay­ing VAT and du­ties. If they were pay­ing du­ties and VAT we would be more com­pet­i­tive.

"For years every­body bought lo­cal boats. This in­dus­try cre­at­ed jobs for hun­dreds of peo­ple. Now it's down to ze­ro be­cause no one is pur­chas­ing our boats." Eight years ago, Pires man­u­fac­tured 22 boats an­nu­al­ly. "Now we are down to next to three or four which are sold out­side in Mar­tinique, USA, St Lu­cia, Aus­tralia, Grena­da and Guade­loupe-not Trinidad."

Pires rec­om­mend­ed that Fi­nance Min­is­ter Win­ston Dook­er­an im­pose a rule in the 2013 Bud­get that all for­eign boats be reg­is­tered lo­cal­ly. T&T does not have an in­ven­to­ry of boats. Pires con­ced­ed that some of the lo­cal boats' in­te­ri­ors are not up to the stan­dard of the Amer­i­can ves­sels but said this is be­ing ad­dressed by his com­pa­ny. He said last year he in­vest­ed $400,000 in new moulds.

Sec­ond hand boats biggest com­peti­tor

Peake said it is be­com­ing ex­treme­ly dif­fi­cult to com­pete since the cheap sec­ond-hand boats from the US are their biggest com­peti­tors. "We can eas­i­ly com­pete with new boats in Amer­i­ca. But sec­ond-hand boats are sell­ing rel­a­tive­ly cheap." He called on gov­ern­ment to give the lo­cal boat­builders du­ty-free con­ces­sions.

Scott said many of the own­ers of these boats don't have im­port li­cences and get gaso­line for the same price at the sta­tion pumps, since no­body checks. "This year, I have a few or­ders. But it's still not as be­fore." Scott said an­oth­er nail in the lo­cal boat­builders' cof­fin came in 2009, when the gov­ern­ment pur­chased boats from the US.

"We could have built bet­ter and stronger boats in Trinidad for less mon­ey. Af­ter that I was ready to close my doors, be­cause the boat­builder had no work." Col­lec­tive­ly, Scott said the turn of events is a slap in their faces.

Cadiz-No eq­ui­ty in the sys­tem

In re­sponse to the com­plaint, Cadiz said the is­sue with the lo­cal boat man­u­fac­tur­ers is a re­sult of di­rect com­pe­ti­tion in the world. "It's a case of mar­ket forces," he rea­soned. "The boat­builders have a prob­lem on their hands which is for­eign com­pe­ti­tion. They have to com­pete like every­body else. They have to build a bet­ter boat that can be de­liv­ered with­in a rea­son­able time and the pric­ing not pro­hib­i­tive."

Cadiz said the boat man­u­fac­tur­ers will have to find ways to com­pete glob­al­ly, which was some­times dif­fi­cult to do, es­pe­cial­ly when they have to com­pete with the Unit­ed States. He not­ed that they are re­strict­ed to build­ing larg­er boats of a cer­tain type.

"So buy­ing a lux­u­ry boat for some peo­ple is re­al­ly a cus­tomer choice." Cadiz said larg­er boats pro­duced out­side of T&T are sold for al­most the same price as a small­er lo­cal­ly pro­duced boat. While T&T is a sig­na­to­ry to the World Trade Or­gan­i­sa­tion, Cadiz said Trinida­di­ans have a ten­den­cy to buy for­eign over lo­cal­ly pro­duced items.

"You can get good sec­ond hand boats in the US for a frac­tion of the cost," he said Cadiz ad­mit­ted the loop­hole in the law is a prob­lem: "It's some­thing we are look­ing at." He said Trans­port Min­is­ter De­vant Ma­haraj had sent out ex­pres­sions of in­ter­ests for de­vel­op­ing a boat reg­istry in T&T.

"There is no eq­ui­ty in the sys­tem, with­out a doubt. You can put a boat in the wa­ter and it does not have to be reg­is­tered. Again, that is a prob­lem that we have. If there is a boat­ing ac­ci­dent, it is very dif­fi­cult some­times, if the boat does not have a reg­is­tra­tion num­ber."

On­ly fish­ing boats are reg­is­tered, Cadiz said, adding that the Mar­itime Act, New Har­bour Act and Ship­ping Act are al­so be­ing ex­am­ined. "It will take time to bring it to­geth­er. We are op­er­at­ing with leg­is­la­tion draft­ed in the ear­ly 1990's. It's ridicu­lous that this was not dealt with ear­li­er," he said.