Raphael John-Lall

Trinidad and To­ba­go Man­u­fac­tur­ers’ As­so­ci­a­tion’s (TTMA) has re­vealed that its re­cent trade mis­sions abroad have gen­er­at­ed mil­lions of dol­lars as the par­tic­i­pat­ing man­u­fac­tur­ers seek to play their part in gen­er­at­ing much need­ed for­eign ex­change.

“We just came back from a suc­cess­ful trade mis­sion from Guyana and Suri­name. The im­me­di­ate re­turns that we can quan­ti­fy com­ing out of that trade mis­sion, well ini­tial­ly it was US$3.5 mil­lion. We did some fol­low up and to­day it is close to US$7 mil­lion gen­er­at­ed from that trade mis­sion and that is ac­tu­al but in terms of po­ten­tial it can move to US$12 to US$15 mil­lion in the short run as in the next six months. We al­so have the Trade and In­vest­ment Con­ven­tion (TIC) trade show that is around the cor­ner where we bring over 200 buy­ers to T&T from about 30 dif­fer­ent coun­tries. They are com­ing to meet the man­u­fac­tur­ers,” he said.

Ramdeen spoke at a we­bi­nar last Fri­day host­ed by the Uni­ver­si­ty of the West In­dies’ Trade and Eco­nom­ic De­vel­op­ment Unit (TEDU) en­ti­tled “Non-En­er­gy Ex­ports Dri­ving Eco­nom­ic Trans­for­ma­tion: A Pol­i­cy Di­a­logue.”

He added that T&T can­not con­tin­ue to de­pend on the en­er­gy sec­tor to dri­ve the econ­o­my.

“For quite some time, for years since I worked in the Min­istry of Trade, we have been hear­ing this talk about di­ver­si­fi­ca­tion and the need to move away from the over re­liance on the en­er­gy sec­tor but the econ­o­my to­day and the chal­lenge we face in T&T, it brings every­thing home. Every­thing that we pur­chase in T&T, we need for­eign ex­change.

“But the on­ly way to get for­eign ex­change is ei­ther to rob Fort Knox or you ex­port. You ex­port goods, you ex­port ser­vices, un­less you get in­volved in il­le­gal ac­tiv­i­ty and we are not talk­ing about that. So, it is im­per­a­tive that we move to­wards gen­er­at­ing our own for­eign ex­change. We can­not keep de­pend­ing on the en­er­gy sec­tor.”

Ramdeen ad­vised that a lot more has to be done to have new sec­tors con­tribute to the econ­o­my as even if the man­u­fac­tur­ing sec­tor quadru­ples its con­tri­bu­tion to the econ­o­my, that will not be suf­fi­cient.

“To­day if we take 100 man­u­fac­tur­ers who are ex­port­ing, if they dou­ble their ex­ports, if they prob­a­bly quadru­ple their ex­ports, we still can­not fill that gap that we have lost in the en­er­gy sec­tor. Let us be re­al. The man­u­fac­tur­ing sec­tor needs to ex­port but we need com­pli­men­ta­ry sec­tors as well such as the tourism sec­tor, the eco-tourism, the health tourism, the sport tourism, the ser­vices sec­tor, the fi­nan­cial sec­tor, we have to se­ri­ous­ly think about di­ver­si­fy­ing the econ­o­my. We can dou­ble, we can quadru­ple non-en­er­gy man­u­fac­tur­ing ex­ports, it just would not fill the gap.”

He added: “Once man­u­fac­tur­ers reach a thresh­old of ex­port­ing about 30 per cent to 35 per cent, they be­come a net earn­er of for­eign ex­change so that what we need to do is to en­sure that man­u­fac­tur­ers get to that lev­el. We are do­ing every­thing pos­si­ble at the TTMA to ready man­u­fac­tur­ers to ex­port their prod­ucts in­clude lead­ing the trade mis­sions.”

Ramdeen said that crime is one of the ma­jor is­sues that con­tin­ues to hurt lo­cal man­u­fac­tur­ers and busi­ness­es in gen­er­al. De­spite this, T&T’s com­pa­nies con­tin­ue to pro­duce word-class prod­ucts.

“There is the ease of do­ing busi­ness, that is a big chal­lenge. I al­ways tell peo­ple that at the fac­to­ry gate, T&T’s man­u­fac­tur­ers pro­duce some of the best qual­i­ty goods in the world, if not this part of the world. The is­sue is that you could pro­duce some­thing at your fac­to­ry gate for five cents but all the in­ef­fi­cien­cies in the sys­tem al­lows for that prod­uct when it reach­es the shelf to be sold for 20 cents.”

He demon­strat­ed how the cost for pay­ing for se­cu­ri­ty has sky-rock­et­ed over the years.

“For ex­am­ple, there is crime. At one point in time, I did a sur­vey with the Su­per­mar­kets’ As­so­ci­a­tion and 15 to 20 years ago, it cost a su­per­mar­ket be­tween $10,000 to $15,000 for se­cu­ri­ty. To­day that price on the av­er­age is about $60,000 to $70,000. You have to have dog se­cu­ri­ty, gun se­cu­ri­ty, you must have cars tak­ing work­ers home, you must have all kinds of peo­ple col­lect­ing your mon­ey. The su­per­mar­ket is not ab­sorb­ing that cost and that is caus­ing the re­tail price to in­crease. Al­though the man­u­fac­tur­ers are pro­duc­ing at five cents, when it reach­es the su­per­mar­ket, it is sold for 20 cents. It is the in­ef­fi­cien­cies in the sys­tem.”

Apart from crime, he com­plained that there are oth­er lo­gis­ti­cal in­ef­fi­cien­cies which slow down busi­ness in T&T.

“Twen­ty years ago, you could have moved three or four con­tain­ers from Ari­ma to the Port. To­day with the traf­fic on the road, you could prob­a­bly move one or two if you are lucky. That is a cost to pro­duce. I have an is­sue with the Port of Port-of Spain not work­ing op­ti­mal­ly to move goods.”

Chair­man of the Con­fed­er­a­tion of Re­gion­al Busi­ness Cham­bers, Vivek Char­ran, who al­so spoke lament­ed that the dri­ve to di­ver­si­fy the econ­o­my is “in­cred­i­bly slow.”

“There are so many bar­ri­ers to di­ver­si­fi­ca­tion par­tic­u­lar­ly for the Small and Medi­um En­ter­prise (SME) sec­tor. I have trav­elled to Medellin (Colom­bia), I have trav­elled to Chi­na. I vis­it­ed an area that looked as if I was go­ing in­to Laven­tille on­ly to re­alise it was a huge gar­ment fac­to­ry and they were mak­ing uni­forms for LATAM, which is a huge South Amer­i­can air­line. The size of the fac­to­ry bog­gles the mind, how many peo­ple in there sewing and so on. I went to oth­er ar­eas where I saw many oth­er small fac­to­ries mak­ing oth­er things like sportwear and jeans. What they have in com­mon is that they are able to ac­cess the tech­nol­o­gy. I go to Chi­na and I see the same thing.

“When I look at T&T it is so easy for SME’s to di­ver­si­fy. You need less than one mil­lion dol­lars if you con­vert that to US dol­lars to get some of the ma­chines that they have out there.”

He used the ex­am­ples of emerg­ing man­u­fac­tur­ing pow­er­hous­es like In­dia, Mex­i­co, Chi­na and Medellin in Colom­bia and said the gov­ern­ments of those coun­tries have lift­ed the im­ped­i­ments for man­u­fac­tur­ing to al­low busi­ness­es to thrive.

T&T, on the oth­er hand, is dif­fer­ent where the cost of the fac­tors of pro­duc­tion like land and labour con­tin­ue to be very high which is a dis­in­cen­tive for busi­ness­es.

De­spite the nu­mer­ous chal­lenges the new Gov­ern­ment faces, Char­ran called for more Gov­ern­ment in­ter­ven­tion in as­sist­ing the SME sec­tor in get­ting in­to man­u­fac­tur­ing.

“The way for­ward for SME’s is again is to di­ver­si­fy in­to man­u­fac­tur­ing, light man­u­fac­tur­ing and pro­cess­ing. They are hin­dered by the flow of in­for­ma­tion as it does not trick­le down to this very cham­ber. If a gov­ern­ment has a strate­gic plan and it in­volves grants then it should be dis­sem­i­nat­ed equal­ly to every­body in the econ­o­my. I have found un­for­tu­nate­ly in the last ten years that has not been the case. Some cham­bers get the in­for­ma­tion and oth­ers do not…I am wor­ried about the state of SME’s in the coun­try go­ing for­ward. We have a new Gov­ern­ment but they have con­sid­er­able chal­lenges.”