Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, accountability the all new Talk Radio Freedom 106.5 Continue our discussions about economic matters. This time we're talking about the business community and the impact the Forex shortage is having. Joining us here this morning representing the Kuva Point, Lisa's Chamber of Commerce, that's its vice president. Let's say good morning and welcome to our program to Amit Das. Good morning to you. Nice to have you with us here this morning.
And our discussion this morning is one that has been swirling around for some time and I'm sure that the Chamber would have its own perspectives, its own issues and so on. Let's start there.
The members of the Couva Chamber I'm sure would be making representations to the Chamber and saying certain things. What has your membership been saying about this forex shortage?
[00:00:59] Speaker B: Well, for the fundamental problem that our members are facing is access to US Dollars. Now we in the chamber, we represent both Kuva and Puerto Visa. So we have members who actively generate US Dollars through sale of commodities.
We have manufacturers such as Casey. They are in net surplus suffering to be quite honest. One hardware specifically told the Chamber that they had they have no access to to US Dollars and in order to pay their suppliers they had to purchase euros and then convert that into US. The effective, the effective rate that they ended up with was 8.6 to 1. So some people may say why prices are going up but quite frankly businesses can be getting, they don't have access to that 6.7 or at least not any quantities that they want because in this case the hardware had to pay a million US to its suppliers.
No bank was able to give them us at that point in time. And you could only carry your suppliers for so long. Right.
So overall, overall the business community prices are going up. And I was listening to a conversation earlier with regards to the oil and gas and the your listeners make valid points.
We right now with regards to the Dragon Gas which we were told to ban our belts or ban our bellies till about 2027, but with the Trump presidency in front of us, we have no idea if that license is going to be renewed.
[00:03:13] Speaker A: How is this?
Let's zero in on Christmas.
What is the impact this Forex shortage is having on your members when it comes to them being able because December is almost upon us and this is the crunch time one would have expected that the way things normally go, business people would have had their stocks on the shelves already and looking to capitalize on the six week period leading up or two month period from November, some people start having their sales and so on, but it's not happening. I spoke to somebody over the weekend and they had good ports still. So aside from the Forex challenge report challenge and that kind of thing, what's your membership saying about Christmas and what these days may look like for them?
[00:04:04] Speaker B: Well, it's quite obvious. Anybody who goes to the malls, anybody who goes to the high streets, it's, it's empty. Right. So business is just at essentially a standstill. Most business people are waiting till monthend, hopefully they start seeing some sales. But it's, it's extremely quiet. And the port is an issue. Right. We have clients, we have members that their goods are stuck on the port and they have to pay rent for their goods being on the port for so long. So the cost to the business is actually increasing the longer these port matters continue. And even though the strike so for the workers have to go back to work, it's, it's on a go slow. Right.
The deeds that take containers out of the port is two, three weeks. So a lot of businesses, even though they may have purchased their goods as early as September, October, they still have good sedan report waiting. So don't expect to see brand new goods for sale right through this Christmas, plain and simple. And what you do see, initials or initials, the price is going to be a lot more than you will be accustomed to.
[00:05:23] Speaker A: Yeah, when we have these conversations there are people who think that they are, they are immune to the effects of the forex shortage. I've actually heard people say, well you see me, I don't deal in foreign exchange. I can't remember last I see a US dollar so mean business about what's going on, not taking into consideration how every single thing that is imported into this country, and we import plenty things into this country that every single thing they cost is going to be affected one way or the other. I actually went to the grocery some time ago and there was one item that has almost doubled in the price in a very short space of time and that is directly, I mean I had the conversations with people, I speak to business people all the time. So I know to myself that's a result of the forex shortage and all the delays on the port and this and that and the next and the other general population understands where we are and how bad the situation is. You spoke of a situation where a hardware owing some supplier a million US that's plenty money to be owing your suppliers and I'm assuming it would be over a period of time and we Spoke to others who are saying that their members are finding it so difficult that some of these suppliers are now taking action against some of the people that they've supplied goods to to recover. Is that, is that the same situation taking place with your chamber and its members?
[00:06:55] Speaker B: Yeah, you see it instantly.
Your suppliers, they don't, they won't offer you as much credit as they would prior. It's a situation where the cost just has to go up because you have to pay upfront in some cases for depending on the goods. And to the listeners who say, well I don't see a US dollar, the fundamental question you should ask them, do you use the phone, do you use Internet?
Because we don't have direct cables that connect to the rest of the world. Right. We lease those cables, we pay those leases in US dollars. Do you use electricity? The majority of electricity comes from TGU.
TGU has a US bond that is due in 2027 that's 600 million US we have to pay at a 5% interest and then when the bond is ready we'll have to pay back that do use water. Diesel cut. We pay diesel cut. In US the very fundamental goods and services in Trinidad and Tobago, everything is in US dollars. If you even drink alcohol, Angastura, they purchase their raw materials in US Think about it, think what do we use on a day to day basis that does not have some level of US dollars in it? Can you think of any? Because, and that's, that's, that's the, the, the, the impact that any movement in the exchange rate will have. The shortage of US impacts every single thing, plain and simple. Because we don't produce. Our economy is a consumer economy, plain and simple. We do not want to manufacture, we do not want to produce. We, we want to be like the United States. And as long as we want to be like the United States and we don't want to actually work and produce in Trinidad and Tobago, we will be in this problem.
[00:09:22] Speaker A: Yeah.
As a chamber, one of your role and functions would be to have discussions with your membership about how you treat with certain problems.
What discussions have been held along those lines to treat with some of the problems. When it comes to forex.
[00:09:42] Speaker B: We are telling our members to be honest, they need to start manufacturing more source goods that probably are not from the west because we all know the western goods we have, the U S sanctions or tariffs I should say that are coming into effect. So once we buy anything from the US the price is more, the inflation is more. So trying to get it directly from China, but that, that is also a problem, right? Because going through the loopholes, the amount of banks you have to deal with to pay a supplier in China is extremely hard and far less for the language barrier on top of it. But retail, the retail sector in Trinidad is suffering from Amazon, from teu, from all these online. So retail is suffering right now. So we try to tell our members, go more into the manufacturing because as if you try to open any new retail business, you're going to be at the whims of whoever your banking representative is to get us.
And you could beg them every single day, but I don't mean you will get any us for your business.
[00:11:08] Speaker A: And that's a sad state for us to find ourselves in.
We've had a number of conversations with people and COVID 19 did something. There was a lot of bad, but there was some good that came out of COVID 19, because what you had is you had people who started businesses online and we're talking about huge businesses, but they're small businesses where they would go online, they'd buy things and then they would deliver them themselves. And that's, that's. Well, it was flourishing at one point in time and a lot of these people would have used their credit cards to pay for these things. You're buying on Sheen, as you said, Timo and Amazon and all over the place. But now that has been hit a serious blow with the restrictions placed on credit card usage by the banks. So all these people who had found themselves in a lucrative position because aside, and apart from the markup they had buying these things very, very cheap, settling them at a markup. Yeah, $35 delivery charge on every single one. So the price you automatically go up by $35 per unit. Now they're finding themselves in a real problem and I don't know how they're going to get over that. Some of them, some of them may have to fall by the wayside simply because there's no way for them to get around other than buying on the black market. Now we have some pretty interesting comments being made by the Financial Intelligence Unit that's in today's Guardian newspaper about purchasing foreign exchange on the black market. I don't know if you had the opportunity to read the story, to hear what it is the FIU had to say. What's your take on it?
[00:12:45] Speaker B: It's an interesting thing, right? I did read the story and I, I like one thing they said is cultural, right?
And the reason that is important is we in Trinidad tend to ignore laws. We don't like. Yeah man, that would not affect us. I think that's, that's how they say.
And the FIU is quite correct. Right. If you don't have a license to buy and sell us, you should not be doing it. Whether that law is right or wrong does not matter for politics. Right, but it is what it is. But, but I'll be quite honest, the majority of businesses don't follow that. You could go in any grocery, there will be a sign for U. S purchase. In US Most places, most businesses you go buy any businessman and say I have 100 US I want it for 700, they will take it off you one time. I myself included, I have no qualms in saying that.
Or what is the real intention behind keeping you locked behind these seven institutions, these seven banks?
Because the government, the majority of the government or the majority of the U.S. i should say comes from the government right through the central bank. The central bank sells the US to the commercial banks and now they allocate the US as they see fit. Which is another issue our members are raising.
One of our past presidents, he is actively active member saying that he believes that the, that the commercial banks there need to be additional regulations for some sort of transparency on how this US is being distributed because they, they are a business, they deal in basic commodities and getting access to them is, is, is very difficult. One, one suggestion from a member was stop letting the central bank sell us to the commercial banks and let it be an open seal to the citizens of Fernanda Tobago.
Yeah, give us the opportunity to buy the US directly from central bank instead of buying it through the commercial bank. And the, the systems are already there because central bank we, they sell bonds on a monthly basis. So the system is there. It's just whether or not the political will is there to get the public access to USD.
[00:15:42] Speaker A: Yeah, that's, I think that's a crunch point because what you're talking about is messing with what obviously is a billion dollar profit margin for the commercial banks and whether or not any administration will want to even touch that with a 20 foot pole. Well, I think we all know where the answer is but somebody sent a pretty interesting question here because your chamber and all the others that we've spoken to have lamented that what's going on at the port is resulting in increased charges for businessmen having to pay for all these increased charges and then having your goods there so long and everything else. Have you all thought. And the question is if the chambers are considering teaming up to approach the authorities for some kind of waiver of the extra charges that resulted from the situation at the port and say to the government all these extra charges we are paid for storage. I think there is no waiting some kind of way. Are those discussions on. Are you thinking about something?
[00:16:44] Speaker B: Yeah, we have already asked. Oh yeah, you see, we have already asked and because the, the problem with that is you need, need the politicians, right. You need they, they to step in and say okay, there's a waiver, we are going to stop.
And it, the, the way how the port is, is set up. Sometimes it's not just the port fees you have to worry about because the politicians could give us waivers on the port fees but the actual container and the demage that has to do with the actual shipping line. So that's another business that you have to approach now and can we please get waivers? And these are international companies, right. They ship all over the world and a small island nation, 1 million people coming and ask and quite frankly they believe we need to sort ourselves out. We need to have our ports running efficiently.
How can you go to a multinational company and say please be sorry.
Some workers were striking and we run our two weeks over. We, we could get some, some leeway. They look at us and laugh.
[00:18:02] Speaker A: Yeah. Because business is business at the end of the day for them. Whether you're, whether the container come back on time or the container come back later. I pay for it. And I guess it ties back into.
[00:18:13] Speaker B: The whole you're using my container, you have to pay it.
[00:18:18] Speaker A: But it's a serious thing because the cost give us an idea of how much it costs this two week delay per container. What kind of increase cost?
[00:18:30] Speaker B: You know you're looking anywhere between a thousand to two thousand USD.
[00:18:36] Speaker A: 42 weeks.
[00:18:38] Speaker B: Yeah. Just, just sit down doing nothing.
[00:18:42] Speaker A: That's 15. No goods on your shelf is $15,000 extra. And, and there, there are, and there are some businesses who've had containers on the port for longer than that.
[00:18:51] Speaker B: Yeah, correct. In some cases. And this had this happened right. Where the course becomes so much that the business say hell you keep the container. I just did. And whatever happened because it's just too much money to pay. They're not going to make back their money.
[00:19:08] Speaker A: Right.
[00:19:09] Speaker B: So earlier this year the port actually had like a, an auction, a seal of, of goods that was just left on the port because sometimes these things just there so long it doesn't make sense for the business to claim it again. So now that's additional cost that the ports have to incur to do our Auction sale.
[00:19:31] Speaker A: Is it like. So this is like storage was Trinidad style then?
[00:19:36] Speaker B: Yeah, yeah.
[00:19:37] Speaker A: Wow. Yeah, it's, it's very rare that you get that insight into war really going on, you know, because sometimes when you have these discussions, you have it on a superficial level where, well, all right, port workers striking, they income all today, some of them sick, who they're working. You get one container a week and that kind of thing. But you don't think about the implications of these things and how far reaching there. And there's a discussion in this country that has demonized business people for whatever reason. There are some people who feel business people greedy and they're evil and they're wicked and I just want to carry up costs. But discussions like these clarify what's really going on. I mean, put yourself in any businessman's position. Yeah, you have your normal costs that you had to pay to get all these things here and how much you have to pay for the goods and your shipping and normal port and storage. But to pay $15,000 more in a container through no fault of your own, to send up your entire course by 15, you gotta recover that. And recovering that means, well, if I was going to sell it for $10, I sell it for 12, 50 or something and wow, we're not.
Do you expect things to get better?
[00:20:49] Speaker B: I think that's like the million dollar question. Right. And I'm telling all our members don't expect anything to get better, quite frankly. We want as much cash as possible because we don't know global factors now. Right. We don't know what Trump is going to do. Yeah, we, we know for a fact though that he wants the increase.
So that means supply is going to increase.
On the other side of things, the European Union is going full steam ahead with their renewables. So the more renewables they introduce into the market, demand is going down. That puts an overall downward pressure on the price of oil and gas. Commodity prices, ammonia, methanol, those prices are also on the decline right now.
So on the energy side of things, prices are going down. So don't expect us to get more. US Even if production increase, the price is still down. So the amount of USD the country is going to be earning would be substantially less.
The overall economic climate is expected to go on the decline. Now you would hear people say, but GDP goes up and.
But are you really feeling it? I is, has there been an overall increase in wealth to the citizens of Trinidad and Tobago?
And I would say the answer is no. You could go walk on any high street Any mall? No, no businesses. And the majority of businesses, yes, you will hear. And to your point where people will demonize some businesses, it is frustrating to the citizens when you hear Republic bank makes a billion dollars in nine months profit. Right. That is extremely frustrating. But I tend to remind people both Republic bank and First Citizen bank are owned by the government. For as bad as Massey is, they are majority controlled by the government of Trinidad and Tobago.
So which we try it is. It is a tough position to be in. Other citizen of Trinidad and Tobago, quite frankly.
[00:23:30] Speaker A: Yeah, I, I often tell people, even this morning I had a conversation with someone that there's people suffering in this country and I tell them that we are living in a bubble and the reason why the majority of us are not seeing the writing on the wall is because we still have money in the pocket. We could still afford to, regardless of prices going up. There are plenty of us who could still afford to buy this and buy that and buy what we want and not necessarily have to focus on only what we need.
But that's the longest rope has an end and it's going to come to a head pretty soon that things are not as good as we are. Being told by some people that they are. If I were to say to you, Mr. Das, as Vice president of the Couva Pointless Chamber of Commerce and as a business person, as somebody who is involved, if I say to you, give some advice to the citizens of this country when it comes to how they handle their finances moving forward, what would you say to them?
[00:24:37] Speaker B: Pay off all the debts. Do not.
If you don't need a credit card, don't have one.
You know, don't let that credit card interest is 20 something percent. It might seem convenient now, but if you let that credit card interest rule, you will be in a never ending cycle trying to pay your credit card.
If you have house or land, try to pay off, put extra money towards your mortgage. Because the sooner you pay off all your debts, the better it is for you. If you have children, young, young children, let them write the SATs, let them write the English exams, let them get foreign education. Because we are an oil and gas economy, whether we like it or not. In 10 or 15 years there will be a transition away from oil and gas.
What will happen to your children in 10 or 15 years?
And that's what we have to look at, right?
Looking at a, a two year horizon or a five year horizon. That in my humble opinion is inaccurate. We need to look much further down the road and until there is significant changes to how our economy is currently set up.
Fifteen years is probably the max amount of time we have in Trinidad and Tobago before we have no choice. We literally have no money to subsidize the foreign exchange in Trinidad and Tobago. And at that point in time, I, I don't even want to know what the real exchange rate is.
[00:26:37] Speaker A: Yeah, well, writer Scott has. They've been setting out a timeline that's in tandem with what you're saying because Ryder Scott has been putting our proven and probable reserves at about 10, 12 years.
And you're talking about 15 years down your road, which is not far apart. I want to thank you for being with us here this morning. It's probably not the note that people would like us to leave the discussion on, but sometimes you need a dose of reality. You need that kick in the behind now and then to say, listen to me, this thing ain't exactly where it should be or where it's going. And it's only when you acknowledge that there is a problem that you could possibly find a solution. And I don't know if as a nation we've acknowledged that there's a problem yet. Thank you so much for being with us here this morning. I'm. I'm assuming that we'll have further conversations because this thing look like you'll get worse before you're going to get any kind of batter. So I want to thank you once again for being with us here this morning.
[00:27:28] Speaker B: Take care.
[00:27:29] Speaker A: And that's how we end the drop the kitchens with on our interview with vice president of the Kuva Point Lisa's Chamber of Commerce. That's I'm a dash the best insight, instant feedback, accountability, the all new Talk Radio Freedom 106.5.
