Commerce in T&T

A MAJOR BLOW: Commerce in T&T could slow down if the coronavirus continues to impact the economy for an extended period, say self-employed workers and an economist.

INDUSTRIES and individuals will be negatively impacted by COVID-19 or coronavirus in T&T.

The fledgling tourism industry is the first to feel the impact, with the cancellation of flights and the barring of cruise ships from docking at Tobago and Trinidad ports.

It will inevitably have a knock-on effect on hotels, affecting occupancy, and tour operators whose business is based on tourist arrivals.

Already events and conferences have been cancelled while others are being pushed back for later in the year.

With the Government urging self-isolation and the closure of schools and universities for one week, restaurants and other leisure activities will be impacted.

But there’s an immediate impact on the country’s economy—jobs.

For temporary/freelance or seasonal workers, the coronavirus means unemployment and the inability to earn income until business is back to normal.

“I can’t get gigs! Clients cancelling. Plenty don’t want to have weddings due to large gatherings,” videographer Ajeet Siewnarine told the Sunday Express.

“I’m a freelancer so I work for myself. At least three events I was hired for have been postponed or cancelled this month. If I don’t work, I don’t get paid,” photographer Peter Lim Choy told the Sunday Express.

With the closure of school, one temporary teacher said he was unsure what his next step is.

“With schools closed, I will lose all income,” he said.

For entrepreneurs, the immediate future is cause for concern.

“We are extremely worried about finances as we work for ourselves and our projects are off. I’m also worried that food prices will go up because of panic buying,” one mother told the Sunday Express.

Mudassar Karamath, a lawyer who embarked into business said: “I can tell you this much. It’s crushing me currently but am seeking adaptation. I have already rebranded part of it and directed a promotion there. I have received a lot of requests from businesses to set up a pure, online shopping experience, point-of-sale and customer data portals for them to simply reduce human interaction. My e-commerce stores are suffering due to supplier delays and disruptions and simply no orders. I have ceased all ad spending and I am trying to determine the best way forward.”

Stephen Broadbridge, vice president of the T&T Tour Operators Association, said that cancellations are coming from ecotourists.

Rachel Lee Young, photographer/designer at Rapso Imaging, explained that she designs, makes and sells mainly souvenir and gift items alongside being a photographer.

She said: “Souvenir sales will stop with reductions in international travel/tourist arrivals/non-essential purchases. There will be challenges with sourcing inputs and lack of cash flow will prevent me building up my stock using external inputs but I’m sure my cupboards are a gold-mine of materials waiting to be made into something! Challenging times encourage innovative thinking — looking forward to using some ‘spare’ time to catch up with business accounts and work on some new designs. There’s always lots to do when you’re a photographer: organising, cataloguing, backing up, archiving. We have to cut our expenses to the bone to be able to survive the downtime — but this is a useful exercise to also save money in the long term!”

Another individual told the Sunday Express: “I’m presently in Cuba until next week, and I’m wondering if I will get any groceries when I return to Tobago. I usually don’t stockpile foodstuff. Next thing is the stock market. I’m so glad I don’t have to sell any shares right now to have cash in hand. That would be a total disaster,”

Animator and multi-media producer, Camille Selvon Abrahams said: “Animae Caribe, though in October, may be cancelled for the first time in 19 years. No one will commit to travel and our big crowds will affect events. Going online will be the option but of course we are a very hands-on festival so absolutely will affect it negatively. University week break we pushed to go online. That’s a good thing anyway. The way of the future.” She is the founder and creative director of Animae Caribe Animation and Digital Media Festival and founding director of Full Circle Animation Studio.

Economist weighs in

In addition to the direct impact of the coronavirus on jobs and incomes, UWI economist Vaalmikki Arjoon observed that T&T faces a delayed blow— the impact of falling oil prices.

He noted that T&T is vulnerable to the global supply chain and the issues now caused by the virus for inputs for production, consumables such as food items, medication, toiletries, clothing and electronics.

“There is now a major supply shock to the global economy making it more difficult to access these items. Factory, warehouse and other industrial shutdowns continue globally, especially in Asia and Europe, leading to disruptions in the global supply chain and logistics, reduced trade and a downturn in global growth.

“Many local businesses are therefore facing delays in getting their items for resale and inputs for the production process. It is anticipated that this will continue in the months ahead as factory output in China is currently at a record low and is expected to continue to fall – the manufacturing purchasing managers’ index fell from 50 to 35.7 from January to February. Productivity is also on the decline, as many employees are not turning out to work, either because their workplace has temporarily shut down or they have self-quarantined. Many are now vulnerable to job loss. As such there is less global production and supply shortages of consumables and inputs for the production process, such as raw materials, machinery etc.

“We will therefore see a further slowdown in the production process especially for manufacturing firms, while those in the retail sector will face further shortages of goods for resale. A slowdown in the production process will also hurt the forex-earning capabilities of those manufacturing firms that export. Overall, we will find that the profitability of the business sector will fall, resulting in lower tax revenue for the State and possibility increases in job losses if the virus escalates further,” he told the Sunday Express.

Arjoon observed that countries that sell raw materials and consumables could start restricting and rationing exports which could impact T&T.

“With a supply shortfall here, shelves will not be restocked in a timely manner, which will affect the availability of food items and medications. This will all be exacerbated with the current ‘panic buying’. This highlights the need for us to be more self-sufficient and stop relying on other countries to feed us! We will now realise how important it is to have our own local food supply and many will have no choice but to switch to local alternatives,” he said.

Less government revenue

A slowdown in local business means less taxes for the Government, Arjoon said.

Self-isolation, for instance, could reduce the number of people visiting cinemas, restaurants and malls.

“This will harm the earnings of these businesses, leading to lower tax revenues for the State. The fall-off in revenues of $3.5 billion projected by the State might therefore be an understated value. This is because the modified budgeted oil and gas prices of $40 per barrel and $1.80 per mmbtu respectively are overstated and not the worst-case prices as described, especially given that the price war is only getting worse – just this week the UAE joined the war to increase production by over 4 million barrels of oil per day.

“Also, the earnings of local companies will take a further hit due to the global supply chain issues, lowered production and retail activity caused by the coronavirus, leading to less tax revenues for the Government. We therefore need to prepare ourselves for a possibility of a fall in projected revenues of as much as $4.5 to $5 billion,” he said.

He said to sell State assets to raise revenue at this stage is less likely, as it will take time, since several issues such as valuations and procurement will need to be sorted out – and time is against us.

Arjoon said in the short term the Government can ease the economic pain by monetary stimulus where the Government buys local treasuries and lowers the interest rates, reduced corporation taxes, increased loans to SMEs, enhanced unemployment benefit and paid leave from the State, increased financial allocations for medical care etc.

“Easing the economic burdens can ensure that many firms can afford to keep all their employees. At this point, we also need to be financially prepared with an approved contingency fund in case there is an outbreak at some point. We need to ensure that we have finances set aside for adequate hospital beds, emergency response doctors, medication and medical equipment. We must have forex put aside for the importation of medication, and the current delays and charges at the ports have to be eliminated so that when these meds are brought in, patients can have timely access to them. We also have to start considering alternative sources of food, given that we import most of what we consume,” he said.

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