An improved trading environment is needed to create a sustainable resilient manufacturing sector. Tackling bureaucratic challenges, illicit trade and an uncertain industrial relations climate are high on the TTMA’s agenda
by The Trinidad and Tobago Manufacturers’ Association
Published in CONTACT Magazine
It is no secret that business conditions in the Trinidad and Tobago economy are less than ideal. The Central Bank reported in its last monetary policy announcement (December 2018) that “primary economic indicators are all down as growth has slackened and inflation remains sluggish because of weak domestic demand”.
In an environment with slow economic growth, the Trinidad and Tobago Manufacturers’ Association (TTMA) believes there is an urgent need to explore new opportunities in the manufacturing sector, which has the potential to contribute to positive economic growth and development.
The manufacturing sector goes far beyond the employees, companies and investors directly involved in industry. It affects everyone. Defined by the TTMA as including all the non-energy sub-sectors, it provides the necessary foundation for an economically, socially and environmentally sustainable society. Manufacturing also drives technological innovation – the key to research and development – and the creation of new products and manufacturing processes.
While the sector is critical to the local economy, it faces many challenges, one of which is operating in a dual economy that relies heavily on oil and gas revenues. The inability of the manufacturing sector’s contribution to Trinidad and Tobago’s GDP, to move beyond 9% for the past ten years indicates stagnation. This is the result of several factors, including poor policy infrastructure and too many bureaucratic procedures that cause delays or bottlenecks.
Bureaucratic agencies and procedures
Manufacturers are critical of the regulatory bodies that support the trading environment, because of their recurring inability to function efficiently and effectively.
A number of agencies play key roles in fostering an enabling environment, but they are plagued by a lack of human and financial resources, and lack of access to technological advances, which can result in delays in trading both locally and internationally.
Another concern of local producers is the growth of illicit trade, which has a negative impact on local manufacturing. Every year, more goods and brands are affected, from consumer products – including electronics, apparel and alcoholic beverages – to vehicle lubricants and auto parts. This undermines legitimate manufacturers, as illicit goods are cheaper on the local market. Most of the illicit traders do not pay the correct duties, and if goods are smuggled in, they do not pay any duties at all. In some instances goods do not meet national standards, and in others they do not even have free sale certificates in their countries of origin.
Improving industrial relations
According to local producers, labour force issues are also affecting the manufacturing sector. For example, when job openings are not filled and the work force lacks the skill sets that the market needs, manufacturers cannot maintain or increase production levels to satisfy customer demand. The fragile industrial climate of Trinidad and Tobago along with the uncertain relations between employers and employees, has had a negative impact on the manufacturing sector and the overall economy.
Additionally, local companies face considerable barriers to trade when exporting. The lack of market intelligence, lengthy registration procedures, and onerous labelling requirements, are some of the major concerns for firms which aim to become net foreign exchange earners and fully contribute to the local economy.
In spite of these challenges, there are real opportunities in the manufacturing sector. The food and beverage sub-sector, for example, is dynamic and innovative. In 2018, a 5.6% increase in food, beverage and tobacco pro-duction demonstrated its continued growth. There are also opportunities in chemicals, printing and packaging, and construction.
In order for these opportunities to advance, however, a resilient, sustainable manufacturing environment needs to be developed. Certain strategic initiatives are required:
- a globally competitive regulatory framework
- improved performance by government processes
- a supportive international trade position.
Other key prerequisites for success include:
- the development of a science, technology and innovation policy which promotes local manufacturing
- promotion of innovative/technological entrepreneurship
- adoption of an education and workforce policy
that develops superior talent
- furtherance of economic diversification strategies
- more collaboration between manufacturers and universities.
The bottom line
Every economic sector faces challenges, and the manufacturing sector is no exception. The TTMA believes that the way in which the challenges of the manufacturing sector are addressed holds the key to progress. The above recommendations can go a long way in building a future sustainable economy and con-tributing to economic growth.