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.”