Trinidad and Tobago expands regional industrial cooperation with Latin America and other countries in the Caribbean

Alongside the renewed impetus to diversify Trinidad and Tobago’s industrial sector, businesses are pursuing new export markets for products and services. Traditionally, exports have been focused on the member countries of CARICOM, established in 1973. The largest export market is Jamaica, which received $182m worth of T&T products in the first 11 months of 2015 and accounted for 25% of T&T’s trade with countries with which it shares a trade agreement. Guyana ($141m), Barbados ($112m) and Suriname ($66m) are the next three largest trading partners.

T&T’s food and beverage industry has a strong market share in many countries but could be reaching a saturation point. Frequent buy-local campaigns in countries such as Jamaica and Barbados are another potential obstacle. The increased penetration of products from China and other CARICOM countries could threaten T&T’s market share. The good news is that major markets are on the country’s doorstep, and efforts are under way to boost exports to new Caribbean destinations, mainland Latin America and diaspora populations in North America and Europe.

New Caribbean

Of the original founding members of CARICOM, only Jamaica, with 2.7m inhabitants, has a larger population than T&T. However, the island of Hispaniola – comprising Haiti and the Dominican Republic – has a total population of over 22m. Haiti joined CARICOM in 2002, though trade with T&T has been negligible to date. In 2015 the American Chamber of Commerce of T&T (AmChamTT) took nine companies on a delegation to Haiti, of which five had already started doing business there by March 2016, according to Nirad Tewarie, CEO of AmChamTT. A similar opportunity exists in Cuba, which has a population of 11.3m, as the communist nation increasingly opens up to foreign trade. Local T&T cosmetics firm Sacha Cosmetics has already established a presence there.

T&T was one of the first three countries to maintain diplomatic relations with Cuba after the introduction of the US trade embargo in 1960, and this places the country in a privileged position to access the market, according to Tewarie. “There is no doubt Cuba’s opening up will impact the region. It can be a market for T&T’s goods, but it could also be a major exporter. Major change is imminent, and we need to take a coordinated and structured approach to market entry,” he told OBG. However, Cuba’s state bureaucracy requires a long registration process in order for companies to enter its supplier list. Furthermore, Chinese competition is particularly intense, with Beijing offering various credit terms to Cuba for the purchase of Chinese products.

Looking To Latin America

In theory, the Caribbean-facing countries of Central America, along with Colombia and Venezuela, should provide an attractive market for exports. CARICOM has established trade agreements with Colombia, Costa Rica and Venezuela. However, at $1.5m in the first 11 months of 2015, T&T exports to tiny Montserrat were double those to Costa Rica at $712,000.

Generally speaking, companies in T&T have tended to stay within their comfort zone, according to Dhanraj Harrypersad, manager of export market research at exporTT, the government agency responsible for promoting exports. “Many companies seem to be more comfortable trading within CARICOM than other territories,” he told OBG. “Latin America is a far bigger pond with much stiffer competition. Language issues and finding the right distributors are challenges faced in market entry.”

Venezuela, so close to T&T that it can be seen on a clear day from Trinidad’s coast, is another long-term prospect. The country’s current economic problems, lack of manufacturing and acute shortages of consumer goods make it a natural destination. However, a lack of US dollars makes trade difficult. “With regards to Venezuela, T&T needs to be ready to react if the country opens up to trade,” Tewarie told OBG.

Big Break

The two countries were able to make a key breakthrough in May 2016, when local daily Newsday reported that Venezuela and T&T had a signed a memorandum of understanding that will see the South American nation assist T&T with is current shortfall of natural gas. Prime Minister Keith Rowley stated that the talks covered efforts to monetise gas in the Loran-Manatee field, which is split between the two countries’ maritime territories and has an estimated 10.25trn cu feet of gas.

Meanwhile, Nicole Olivierre, minister of energy, said that there is also potential for T&T to be granted access to Venezuela’s Dragon oilfield, though this would require a new pipeline to connect the field to the Hibiscus platform in Trinidad’s North Coast marine area. The two governments also brokered a deal that will see Venezuela purchase $50m worth of goods from T&T. In late May 2016 Paula Gopee-Scoon, minister of trade and industry, provided further details on the arrangement. She said the ministry was already working on a list of items with their counterparts in Venezuela, as well as a timeline for trade. While initially the governments had intended to exchange petroleum for goods, the final arrangement will see Venezuela paying for goods. “This is a different arrangement. We are speaking now of the Venezuelan government paying for goods from T&T. That is how we are going to kick off the trade. I believe it will be on a revolving basis,” Gopee-Scoon said.

Diaspora

If products are to penetrate the world’s most developed markets, the help of the Caribbean diaspora may be required. According to the World Bank, as of 2013, the number of Caribbean nationals living abroad was almost equal to the number residing in the region. The hope for exporters is that the diaspora can help popularise Caribbean products abroad. Initially, online export sales will be targeted, and then local warehousing and production options can be considered. “Our buttercup setting powder is the best-selling face powder on Amazon in the USA, Canada, UK and France” Kama Maharaj, managing director of Sacha Cosmetics, told OBG. “We expect online sales as a proportion of exports to grow from 30% to 90%, since stocking the product at Amazon and aggressively promoting it in these territories.” The principle challenge for this business model is the more stringent standards for products. “It is not easy for T&T companies to find the finance for the improvements necessary to meet international standards,” said Harrypersad. “The standards can require major infrastructural work and new equipment, which may make rebuilding a plant easier than upgrading.”

With the largest manufacturing sector in the Caribbean, T&T companies have successfully penetrated CARICOM; however, future export growth will largely depend on these firms’ ability to acquire the production capacity and marketing skills needed to penetrate Latin America and other neighbouring markets.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Trinidad & Tobago 2016

Industry chapter from The Report: Trinidad & Tobago 2016

Cover of The Report: Trinidad & Tobago 2016

The Report

This article is from the Industry chapter of The Report: Trinidad & Tobago 2016. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart