For some time manufacturers in Barbados and the wider Caribbean have had to compete with goods from Trinidad and Tobago where production and energy costs are much lower.
As the cost of oil rises and affects several other overhead costs of local businesses, one manufacturer suggested that Caribbean countries may need to impose a tax on imports from the twin island republic in an effort to level the playing field.
Speaking last week during a wide-ranging interview with BARBADOS BUSINESS AUTHORITY, Good Time Snacks director Rosie Noel said local manufacturers were struggling while Trinidadians were thriving.
“It’s rough competing with Trinidad because they get subsidized gas and oil and diesel for their trucks and we have to pay an electricity bill that has doubled in the last two to three years,” she said in the March 5, 2012 edition.
A few years earlier Dick Stoute, then president of the Barbados Chamber of Commerce & Industry, suggested that Government should consider giving a tax ease to the export sector in the wake of an increase in fuel prices.
“The real effect of the increased price of fuel is going to [impact] the exports of this country. . . ,” he is quoted as saying in the April 17, 2008 DAILY NATION.
Stoute said Barbados had to take a long, hard look at what was needed to make its exports competitive, considering factors such as the advantage businesses in Trinidad and Tobago had because of “very low energy prices”.
One suggestion was to have “a minimum of those taxes feeding into the export system”.
He charged that there was “a high level of local taxes” having an impact on exports, including port charges. He estimated that as much as half of the cost of doing business might be some form of taxation.
Furthermore, in the October 16, 2010 SATURDAY SUN local manufacturers and businesses appealed to newly appointed Minister of Finance Chris Sinckler to give them some relief from the tough economic climate in his first Budget.
Ian Pickup, then president of the Barbados Manufacturers’ Association, said bearing in mind the financial situation, they thought it would be improper to go asking for large concessions.
However, he said there was no running away from the fact that the cost of doing business remained high and that the sector was “under tremendous pressure”.
He pointed to rising commodity prices as well as recent hikes in the domestic price of electricity and water, which he said had significantly affected the bottom line.
In addition, he said local manufacturers were forced to grapple with high port charges.
“People have to understand, I think, that even at the lowest level for a single small 20-foot container, the Barbadian importer pays 121 per cent more than a Trinidadian importer would to bring it through the port – and if you are talking about a 40-foot refrigerated container, then Barbadian importers are paying 434 per cent more than their Trinidadian counterparts,” explained Pickup.
Import challenges were also a concern for Glendine Greaves, director of sales and marketing for condiment manufacturer C&G Star Trading Ltd.
The June 29, 2009 BARBADOS BUSINESS AUTHORITY reported that amid the global economic crisis, her foremost concern was not dampening demand for products for export but rather the means to get products to the market in a timely manner at a competitive price.
“Oftentimes the customer will give an order and payment is only made after the goods are received by them, which means that the onus is on the small manufacturer to finance the actual production of the goods,” she added.
Greaves said this was a problem that caused small Barbadian export manufacturers to lose out to regional competitors such as those in Trinidad and Tobago and Jamaica.
Those countries, she explained, had dedicated export-import banks that provide financing to exporters like her, freeing their cash flow for other business investments and operational expenses.
“In both of those territories, the ex-im bank provides support to their local manufacturers. An order comes in, the bank takes the order, they give the manufacturer the funds to work with, and then the collection of the funds comes to the bank and not actually to the manufacturer. And that is what we need in this industry to propel it,” said Greaves.
In Barbados, she pointed out, the lack of an export-import bank meant that manufacturers needing financing had to depend on commercial banks, which didn’t present the best options since their business priorities were not necessarily the same as those of a nationally backed facility with a mandate to support small exporters.
Meanwhile, in the July 16, 2007 BARBADOS BUSINESS AUTHORITY economist Brian Francis noted that “the trade imbalance with Trinidad and Tobago does not exist because that country is dumping goods into the Barbadian market.
“The trade imbalance stems from the fact that Barbadians are demanding more Trinidadian goods than Trinidadians are demanding Barbadian goods.”
“Another misconception is that it is the country itself, Trinidad and Tobago, which is exporting these goods.
“In actual fact, it is Trinidadian businesses, largely from the manufacturing sector, which are exporting the goods.
“While this last fact may seem obvious to some and trivial to others, it cannot be denied that the relatively lower cost of doing business in Trinidad and Tobago provides Trinidadian businesses with the wherewithal to manufacture, supply and export goods at prices and level of quality that Barbadians find attractive,” he said.