Business groups welcome Govt’s US$50K forex initiative

Derek Achong

Se­nior Re­porter

[email protected]

A for­eign ex­change ini­tia­tive for small and medi­um-sized en­ter­pris­es (SMEs) by the Min­istry of Fi­nance has been met with op­ti­mism from busi­ness groups and stake­hold­ers.

On Fri­day, the min­istry an­nounced that SMEs would be able to ac­cess up to US$50,000 a month to pay in­ter­na­tion­al busi­ness ex­pens­es through a fa­cil­i­ty man­aged by the Ex­port-Im­port Bank of T&T (Ex­im­bank).

In re­sponse, the T&T Cham­ber of In­dus­try and Com­merce wel­comed the move by the Gov­ern­ment.

It said, “This ini­tia­tive rep­re­sents a step to­ward eas­ing the for­eign ex­change (forex) chal­lenges that have dis­pro­por­tion­ate­ly af­fect­ed the small and medi­um-sized en­ter­prise (SME) sec­tor.”

Re­fer­ring to its re­cent pub­li­ca­tion, ti­tled “Chal­lenges in Ac­cess­ing For­eign Ex­change: Busi­ness In­sights”, it not­ed that it iden­ti­fied sys­temic in­ef­fi­cien­cies in forex al­lo­ca­tion in­clud­ing sig­nif­i­cant de­lays, un­equal ac­cess, and a lack of trans­paren­cy.

“With 62 per cent of sur­veyed busi­ness­es re­port­ing dif­fi­cul­ty pay­ing in­ter­na­tion­al sup­pli­ers and near­ly 60 per cent fac­ing a de­cline in prof­itabil­i­ty due to forex short­ages, this in­ter­ven­tion by the Gov­ern­ment is both time­ly and nec­es­sary,” it said.

De­spite com­mend­ing the in­ter­ven­tion, the cham­ber sought to make rec­om­men­da­tions based on its sur­vey find­ings and mem­ber feed­back.

It sug­gest­ed that the Gov­ern­ment’s forex al­lo­ca­tion should fo­cus on the man­u­fac­tur­ing and dis­tri­b­u­tion sec­tors.

“While the SME Win­dow is wel­come, par­al­lel mech­a­nisms must be con­sid­ered for larg­er firms that are crit­i­cal to sup­ply chain con­ti­nu­ity and em­ploy­ment,” it said.

It al­so sug­gest­ed that ex­porters and firms seek­ing to re­duce im­port de­pen­den­cy should be pri­ori­tised.

“We urge the in­clu­sion of el­i­gi­bil­i­ty cri­te­ria that in­cen­tivise such con­tri­bu­tions to na­tion­al eco­nom­ic re­silience,” it said.

Sug­gest­ing a quar­ter­ly re­view of the ini­tia­tive with key busi­ness or­gan­i­sa­tions, it said: “This feed­back loop can help re­fine the win­dow and en­hance its im­pact.”

In a tele­phone in­ter­view, T&T Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA) pres­i­dent Dale Par­son not­ed that his or­gan­i­sa­tion’s mem­bers would not be di­rect­ly af­fect­ed by the ini­tia­tive in­tend­ed for sole traders and small man­u­fac­tur­ers with few­er than 25 em­ploy­ees.

He not­ed that TTMA mem­bers al­ready had ac­cess to al­most US$450 mil­lion an­nu­al­ly through the Ex­im­bank and could not ac­cess the lat­est ini­tia­tive if they al­ready source forex through the bank.

How­ev­er, Par­son not­ed that he and the TTMA still sup­port the mea­sure due to the crit­i­cal role SMEs play in con­tribut­ing to the econ­o­my.

“I be­lieve that SMEs are the on­ly way the econ­o­my could be stim­u­lat­ed,” Par­son said.

“Some of these peo­ple do im­port stuff whether it is pack­ag­ing or peanuts or what­ev­er it is and they re­al­ly need sup­port be­cause they are re­al­ly be­ing sti­fled and can’t grow their busi­ness­es.”

In a brief tele­phone in­ter­view, Greater San Fer­nan­do Area Cham­ber of Com­merce pres­i­dent Ki­ran Singh said his or­gan­i­sa­tion was ex­cit­ed by the ini­tia­tive, which it has been ad­vo­cat­ing for sev­er­al years.

“We were at the fore­front of hav­ing con­ver­sa­tions with the Ex­im­bank a cou­ple of years ago as to the de­vel­op­ment and de­sign for this mech­a­nism to as­sist the SME sec­tor, in par­tic­u­lar giv­en the fact that the large cor­po­ra­tions tend to swal­low the al­lo­ca­tion of forex be­fore the SMEs get a chance to get part of that ever-shrink­ing pie of forex,” Singh said.

How­ev­er, Singh said they would be seek­ing a meet­ing with Ex­im­bank of­fi­cials to ob­tain de­tails on how the mea­sure would be ad­min­is­tered.

He ques­tioned if de­ci­sions on al­lo­ca­tions would be based on the type of busi­ness be­ing con­duct­ed by SMEs.

“These are the in­ter­est­ing ques­tions we have and we hope they can be an­swered forth­with. Like, how long would the process take? We know bu­reau­cra­cy is a prob­lem with any new pro­gramme launched in the coun­try,” Singh said.

UNC says it’s a ploy

Com­ment­ing on the ini­tia­tive, Unit­ed Na­tion­al Con­gress (UNC) can­di­date for Oropouche West and shad­ow min­is­ter of fi­nance Dave Tan­coo de­scribed it as an elec­tion gim­mick de­signed to “hood­wink” SMEs on the eve of the Gen­er­al Elec­tion on April 28.

“It is un­for­tu­nate that the Gov­ern­ment is stoop­ing so low on the eve of an elec­tion to do some­thing they should have tried to do in the last decade when they have been in gov­ern­ment,” Tan­coo said.

“This is a farce, a con job. It is an in­sult to the small and medi­um-sized busi­ness com­mu­ni­ty who al­ready knows that this Gov­ern­ment does not care and will not care.”

The ini­tia­tive was sup­port­ed by Peo­ple’s Na­tion­al Move­ment (PNM) can­di­dates for Ch­agua­nas East Richie Sookhai and Clax­ton Bay Mukesh Ram­s­ingh.

Sookhai for­mer­ly served as pres­i­dent of the Ch­agua­nas Cham­ber of In­dus­try and Com­merce, while Ram­s­ingh was the for­mer head of the Cou­va/Point Lisas Cham­ber of Com­merce.

While he praised the ini­tia­tive, which he said would bring eas­i­er ac­cess to for­eign ex­change, Sookhai ad­mit­ted that SMEs would need as­sis­tance in meet­ing the re­quire­ments to ac­cess it.

“What I in­tend to do through the MP’s of­fice is as­sist SMEs in get­ting up to par,” Sookhai said.

Ram­s­ingh sug­gest­ed that the mea­sure demon­strat­ed that the Gov­ern­ment was at­tuned to the con­cerns of cit­i­zens.

“It is a very good step in the right di­rec­tion,” Ram­s­ingh said.

An­nounc­ing the ini­tia­tive last Fri­day, the min­istry stat­ed that it would com­mence on Tues­day.

Prime Min­is­ter Stu­art Young pre-empt­ed the an­nounce­ment as he re­vealed it while be­ing in­ter­viewed by for­mer UNC MP Di­nesh Ram­bal­ly on Ra­dio Jagri­ti on Thurs­day evening.

Young said the Gov­ern­ment will al­so aim to im­prove forex ac­cess to every­day cit­i­zens as well.

On March 25, Young and Fi­nance Min­is­ter Vish­nu Dhan­paul met with rep­re­sen­ta­tives of the ma­jor com­mer­cial banks, the Cen­tral Bank and the Bankers’ As­so­ci­a­tion of Trinidad and To­ba­go to dis­cuss the forex woes be­ing ex­pe­ri­enced in the coun­try.

—Re­port­ing by Shas­tri Boodan

SMEs Forex Fa­cil­i­ty

Ac­cord­ing to a post on Ex­im­bank’s web­site, on­ly SMEs, who are clients of Re­pub­lic Bank Lim­it­ed and First Cit­i­zens Bank Lim­it­ed and in good stand­ing, are el­i­gi­ble to ap­ply.

Ap­pli­cants must be in op­er­a­tion for at least 12 months and are re­quired to sub­mit their month­ly forex re­quire­ments for con­sid­er­a­tion.

“There is no guar­an­tee that any busi­ness will get the amount re­quest­ed as forex al­lo­ca­tions are based on a com­bi­na­tion of fac­tors such as avail­abil­i­ty and in­for­ma­tion sub­mit­ted,” it said.

It said that ap­pli­cants must sat­is­fy the an­ti-mon­ey laun­der­ing and com­bat­ing the fi­nanc­ing of ter­ror­ism re­quire­ments of both banks.

“The Dis­burs­ing Bank re­tains the right to stop or refuse pay­ment of the forex al­lo­ca­tion to the client where nec­es­sary to en­sure com­pli­ance,” it said.

Sole traders, part­ner­ships and lim­it­ed li­a­bil­i­ty com­pa­nies are el­i­gi­ble but pub­licly list­ed com­pa­nies, un­reg­is­tered com­pa­nies, NGOs, gam­bling com­pa­nies, and those in­volved in the pro­duc­tion or trade of arms and am­mu­ni­tion and mon­ey trans­fer ser­vices are ex­clud­ed.

Com­pa­nies al­ready ben­e­fit­ing from Ex­im­bank forex pro­grammes are al­so not el­i­gi­ble.

Once ap­pli­ca­tions are ap­proved by Ex­im­bank, a let­ter will be is­sued to ei­ther of the banks for set­tle­ment and pro­cess­ing of pay­ments di­rect­ly to in­ter­na­tion­al ven­dors and sup­pli­ers.