Updated: September 2019
News headlines such as “Will Guyana Soon Be the Richest Country in the World?”, “US, China Trade War Deepens as Beijing Retaliates with Higher Tariffs” and “Brexit: UK and EU Agree Delay to 31 October” featured during the year 2019. Such headlines justify the 2019 theme of the World Trade Organisation’s Public Forum, which is “Trading Forward: Adapting to a Changing World Domestically”.
Domestically, local businesses continue to adapt to the changes in the global economy, as evidenced below. Using Constant (2012) prices, the manufacturing sector experienced growth in 2018 (see Table 1). It is anticipated that this sector would continue along its positive trajectory, resulting in increased employment and foreign exchange earnings.
Table 1: Excerpt of Gross Domestic Product of Trinidad and Tobago at Constant (2012) Market Prices/Percentage Change
|Food, beverages and tobacco products||(1.1)||(2.8)||2.6||9.7||(12.0)||5.6|
|Textiles, clothing, leather, wood, paper and printing||(3.1)||(5.9)||(9.6)||(6.6)||(1.6)||1.5|
|Petroleum and chemical products||1.6||(3.9)||1.9||(4.5)||(0.1)||9.0|
Source: Ministry of Finance’s Review of the Economy 2018
Developments in the sector were the result of initiatives by companies with support from the Government. Some of the successful initiatives are identified below:
ANSA Coatings Limited – exported its first shipment to Cuba in March 2019. One of Trinidad and Tobago’s manufacturers of paints, the shipment was valued in excess of €500,000.00.
Creamery Novelties – established in May 2018, the company began exporting to the CARICOM market within seven months. A manufacturer of ice cream and ice cream cones, the company is also seeking to export to Latin America.
Domus Windows and Doors Limited– the company officially opened its factory doors in February 2019. During the opening speech, the CEO indicated that Trinidad and Tobago was selected as the destination for the plant based on an analysis among several CARICOM markets.
The aforementioned successes can be repeated by other firms as long as there is an environment that is conducive for positive results. To create this environment, the private sector and the Government are addressing several issues:
- Fair trade – anti-competitive mergers, abuses of monopoly power, and anti-competitive agreements can adversely affect the local economy. The Government is pursuing full proclamation of the Fair Trading Act, so that companies can be assured that fair competition will exist in the market.
- Free Zones – the existing regime is being reviewed by the Government for its efficacy. Additionally, it is expected that the revised regime would remove the Organisation for Economic Co-operation and Development’s (OECD’s) perception of Trinidad and Tobago as a tax haven.
- Illicit trade – the parallel trade of items provides unfair competition to local manufacturers and authorised distributors alike. Thus, a private sector-led illicit trade working group has been created to address the illicit imports of, inter alia, pharmaceuticals and tobacco.
- Quality in manufacturing – ensuring that quality is an integral part of a company’s processes translates into a competitive advantage. Thus, the Government is focused on the implementation of the National Quality Policy, which contains initiatives geared towards improving the quality of offerings of local manufacturers.
- Increased efficiencies in regulatory bodies – the efficient operation of our regulatory bodies that facilitate trade is important, as inefficiencies and ineffectiveness result in loss of time, opportunities and money. Projects have been developed to review business processes and legislation. Furthermore, the Government has created a Trade Facilitation Committee that comprises all of the regulatory bodies that affect trade. This Committee is one of the requirements of Trinidad and Tobago’s compliance with the World Trade Organisation’s (WTO’s) Trade Facilitation Agreement.
Coupled with the achievements are the challenges which inhibit business. One notable challenge is the restricted access to foreign exchange.
Source: Central Bank of Trinidad and Tobago
According to Figure 1, the sales of foreign exchange to the public (purple columns) declined in 2016. All movements (both decreases and increases) are commensurate with the revenue received (pink columns) for the corresponding period. To compensate for the gap between earnings and sales, the Central Bank injects foreign exchange into the economy (green columns). As the primary source of foreign exchange earnings, fluctuations in revenue are (primarily) attributed to fluctuations in earnings from the energy sector. Such fluctuations reiterate the need for the manufacturing and service sectors to increase their foreign exchange earnings via increased exports.
In response to the need for increased value and volume of exports, manufacturers have engaged in market diversification. Thus, in addition to CARICOM, companies continue to explore non-traditional, extra-regional destinations. Several manufacturers have attended trade missions that were targeted to markets such as Colombia, Costa Rica and Panama. These trade missions provided local manufacturers with the opportunity to understand the respective export market, to meet with potential distributors, and to secure deals.
In conjunction with the market diversification efforts from manufacturers is the Government’s provision of a facility for access to foreign exchange via the EXIMBank Forex Facility. This USD 100,000,000 facility is dedicated to manufacturers so that the access to foreign exchange woes can be mitigated.As at January 2019, the World Bank has projected that Latin America and the Caribbean would experience GDP growth (see Figure 2). Such growth provides opportunities for local businesses as the purchasing power of the citizens in these economies will increase. Thus, companies should exploit Trinidad and Tobago’s geographical position vis-à-vis the remainder of Latin America and the Caribbean by boosting its exports to these neighbouring markets.
In all aspects of life, change is the only constant. Local businesses recognise this fact and are embracing the changes that are occurring. It is envisaged that Trinidad and Tobago’s economy will continue to grow as long as companies quickly adapt to these changes.View Companies Related to Manufacturing and Retail Distribution -