Interview: Mikaeel Mohammed
What impact has the currency shortage had?
MIKAEEL MOHAMMED: It has incentivised the activity of importers and penalised exporters. In many sectors, it is easy to bring in products that have been manufactured abroad and sell them at a cheaper price than locally produced industrial goods. Despite the restricted availability of foreign exchange, importers can still bring goods in at a lower rate than most manufacturers because of the high, fixed exchange rate of our currency.
In a global market situation where exporters compete on either product exclusivity or price elasticity, an artificially overvalued currency hinders our export efforts as we cannot provide the necessary flexibility in our prices. This has resulted in a significant number of local manufacturers closing down production lines, and a general lack of impetus to allocate any form of capital expenditure to increasing future export potential.
How have the recession and changes in consumption affected fast-moving consumer goods?
MOHAMMED: Most Trinbagonian customers have reassessed their consumption habits in recent years due to the noticeable contraction in the economy. Overall, the average customer is more price-conscious than they were three or four years ago. Depending on their purchasing power and other wealth indicators, individuals have either maintained their pre-crisis consumption patterns or reassessed the frequency with which they purchase products, sometimes even changing brands or choosing local goods over imported ones. Many Trinbagonian palates have grown accustomed to a lifestyle that is now difficult to afford, and given the ongoing process of macroeconomic restructuring, shopping habits should be adjusted accordingly.
In what ways can value addition be encouraged?
MOHAMMED: A thorough, long-term industrial policy will allow for increased integration into global value chains and gear the manufacturing sector towards high-value-added production. However, there are obstacles to overcome. Today, most of the sector favours the theory of scarcity over the law of abundance, which means competition is fierce, and companies share little or no data. Additionally, the banking system is not mature enough to provide sophisticated financial products to manufacturers due to the widespread difficulties in accessing finance. Global technological advances are also difficult to access, and often there is a noticeable lag. These are all challenges that local manufacturers wishing to tap into global value chains face on an everyday basis in Trinidad and Tobago.
How can the country maintain its position of industrial and manufacturing primacy in the region?
MOHAMMED: With decreasing disposable income and an oversaturated domestic market, companies should gear their efforts towards exporting, and penetrating new markets in particular, since Trinbagonian brands already have a consolidated presence in the Caribbean region and risk saturating this market as well.
Manufacturers should strive to make all local brands global in the coming years, and overcome their past reservations about exports. Whether it is new markets in North and Latin America, Asia, Africa or the Middle East, innovation, market disruption, product diversification and a recognisable country brand should be the drivers of this effort. A great example of this is Jamaica, which was able to build a respectable and vibrant manufacturing sector in a relatively short period of time, mainly thanks to a unified business community, a sense of national pride and open dialogue with the government. This last point proved particularly successful, and coupled with a low cost of labour and a large talent pool with a strong work ethic, it made a miracle happen. In approaching global markets, I believe a sense of camaraderie among members of the local business community, as well as national pride, are indispensable in facing the challenges posed by external competition.
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