Emergency and GDP
Thursday, August 25 2011
Understandably, a wide range of businesses, whether small and medium sized factories, supermarkets, haberdashery stores, restaurants, bars, cinemas, hotels and guest houses, among others, will be adversely affected by the 15-day limited State of Emergency which was declared at midnight on Sunday. It is a small price though to effect a reduction in the level of crime in Trinidad and Tobago today. However, while special arrangements have been put in place to facilitate the around the clock operations of several energy, energy based and even non-energy industries as well the authorities should have regular briefings of protective services personnel who will have to interact with employees and management personnel of these places.
Nonetheless, in light of the State of Emergency, businesses required to function on a 24-hour basis should seek to liaise with the relevant authorities with respect to their levels of operations during the officially established 10 pm to five am curfew. Admittedly, special passes have been and are being issued to individuals who may have to be on the road during the curfew, on their way either to or from their work places. Nonetheless, regular liaising is important.
In turn, since a great deal of the business activities is located in areas under watch, the owners and/or managers of these enterprises will have to find a way to adapt under these circumstances.
Clearly, this applies not only to companies located in Port of Spain, San Fernando, Chaguanas and the East-West Corridor, but major industries in the Pt Lisas Industrial Esatate, Central and South Trinidad, among others. The same principle of facilitating workers during the State of Emergency applies also to those in the public sector employed with, for example, the Trinidad and Tobago Electricity Commission (TTEC), the Water and Sewerage Authority (WASA), the Power Generation Company of Trinidad and Tobago Limited (Powergen) and the Petroleum Company of Trinidad and Tobago Limited (Petrotrin), inter alia.
It is unfortunate the sudden and uncomfortable rise in crime activity in Trinidad and Tobago has compelled the People's Partnership Administration to have the President proclaim the State of Emergency, particularly in the context of the current period of an international economic downturn. It means that small and medium sized businesses are set to lose not inconsiderable income and that Government will suffer, as a result, a drop in corporation tax and Value Added Tax (VAT). In addition, should the State of Emergency be extended, although we sincerely hope not, some of the marginal businesses may very well go under for a variety of reasons as was the case during the 1990 State of Emergency.
What should not be ignored is that Trinidad and Tobago is the English speaking region's largest consumer market per capita. While we hope Government will not perceive of any need for an extension to the current State of Emergency, nonetheless the two-week slow down in business activity, including production, wholesale and across the counter sales will trigger, however marginally, a less than expected Gross Domestic Product (GDP). Private and public consumption, both crucial components of any country's GDP, will also be clearly affected.
Nevertheless, this will prove in the medium and long term a relatively small price to pay if the recently imposed State of Emergency has the desired impact in the battle against crime. Crime weakens or rather lessens productivity and in all too many cases robs all too many young people of what should be a desired initiative. And if it is linked to illegal drugs which has all too often in the past led to gang wars and battles for turfs then life is viewed as a cheap commodity and in the process entire communities could be compromised. The answer will lie both in a determined attack on the drug trade and providing the youth of Trinidad and Tobago with meaningful options, through constant encouragement to upgrade their efficiency, skills training programmes and increased opportunities for tertiary education and employment. All hands will be required to be on deck if Trinidad and Tobago is to diversify its economy as well as become a nation of achievers, the Financial Centre of the Southern Caribbean and a First World country. The State of Emergency should be a mere hiccough.