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Go out and find new markets
Entrepreneur Arthur Lok Jack is encouraging local companies and businesses to go back to the basics and look for foreign markets if they want to survive.
He criticised some company CEOs and owners of “over administrating.”
“We are entrepreneurs. We should be out there in the export markets selling our products and creating new markets not sitting at our desks eight hours or 12 hours a day. Doing what? To eek out one more per cent efficiency out of the plant?”
He said the same way local companies have expanded in T&T, they need to go to foreign markets and do the same.
Lok Jack won the Lifetime Achievement Award at the Manufacturers’ Association (TTMA) Excellence in Manufacturing awards ceremony two Tuesdays ago held at the Hyatt Regency Hotel, Port-of-Spain.
He said he has been through several economic cycles where he has seen both booms and busts.
“The early years when oil prices crashed to US$9 after a US$37 high, there was a lot of blood, sweat and tears all over the country.”
He said T&T has a very small population of 1.3 million and being a member of Caricom it increases the potential market size to six million. And if the Dominican Republic, Costa Rica and other neigbouring Latin
American countries where T&T has free trade agreements are added, the potential market would increase to over 30 million.
He noted some differences like overseas shipping or language differences but added that these are not insurmountable.
“If one were to include Colombia where T&T has a free trade agreement, you are talking 80 million people. With the right policies manufacturers who have not started to export can begin to do so. Those who are already doing so can continue to increase market share.”
He said there are positive developments from local companies going overseas which include greater employment, increased foreign exchange for the country and capital investment.
He said because of the precipitous decline in oil prices, the government has had to find ways to balance income and expenditure.
“The country has to have a strategic plan so we are not that dependent on oil and gas; commodities which we have absolutely no influence over pricing. Unless the government has a national strategic plan we will continue to be at the vagaries of the energy prices.”
Lok Jack added that while T&T is having economic problems because of low energy prices, its neighbours in the Caribbean and Central America are doing well as they have access to cheaper energy and are now able to balance their budgets.
The next step for T&T, he said, is to increase market share in these increasingly prosperous markets.
Lok Jack shared some figures on foreign exchange earnings.
Foreign exchange earnings fell by 30.2 per cent compared to one year ago, while forex sales from authorised dealers to the market only declined by seven per cent.
“The difference is made up from disbursements from the Central Bank to the authorised dealers. The Central Bank for the first five months drew down US$810 million to support the market; an increase of 41.6 per cent compared to the same period last year. If annualised this means that the disbursement is US$2 billion per year to authorised dealers.”
Lok Jack said that this cannot continue and T&T will quickly draw down the reserves which will leave the country with no alternative but to approach the IMF.
He said there are options which include curbing the demand for forex, increase forex earnings and the last option is a combination of the first two options.
“Drawing down on our foreign exchange and increasing debt is short term and not sustainable. It does give us time to restructure our economy to live within our means.”
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