The global coronavirus pandemic is leaving visible scars not only on the tourism sector but also on the manufacturing sector. Let us not focus on tourism alone but acknowledge the potential of the manufacturing industry particularly as production has come to a halt due to lockdown, global supply chains are broken, and protectionism and shortages are likely to ensue at least in the short-term. Consumption is at an all-time low, squeezing cash flow and revenue. The micro-, small- and medium-sized enterprises (MSMEs) are the hardest hit, with many of them close to bankruptcy.
The following imperatives should be addressed as a top priority by the Caribbean nations – locally and regionally – to kick-start and/or revive their manufacturing sectors. It is important that the Caribbean has a strong value proposition for attracting new investments.
Carry out essential reforms: The governments need to focus on implementing business processes reforms for licenses, permits and approval to increase the ease of doing business in the respective nations. It is time that the most results-oriented and useful business practices across CARICOM are mandated in all the nations uniformly to increase the overall attractiveness of the region as a whole and not necessarily the country only. The time is also ripe to introduce long pending reforms in labour laws, bankruptcy laws etc. Another critical reform is guaranteeing consistency in government policies.
Create industrial infrastructure as a mission over next year: The best unique selling point of China has been its large-scale industrial parks with the highest quality of infrastructure. While the Caribbean may not be able to compete at that level, it needs to strive to match such international standards if it is to be compared favourably to other investment locations and attract international businesses or foreign direct investment. The regional organisations and governments should work to upgrade and/or develop industrial parks in the respective countries. Also, the countries need to refocus on mobilizing a trained workforce in large numbers for these industrial parks and incorporate world-class information technology infrastructure (ITI) in its offering.
Improve competitiveness of exports: It is well-recognised that the Caribbean’s global footprints in the form of exports are quite low and perhaps, far below its potential. Export markets offer a good opportunity for domestic manufacturing to tide over the present crisis in a short period of time. To pursue this objective, one needs to carefully identify the main factors have pulled down the region’s export and offer targeted solutions for each one.
This also requires an aggressive scouting of markets and creating a deal better than what competing nations offer. To enhance the quality of products that are going to be exported, soft loans for procuring best quality machinery are needed, along with training of staff to maintain international standards in production. An attractive package of incentives on exports is another must.
Bailout for SMEs: The most obvious prescriptions are direct financial assistance for some SMEs and easy and very soft credit for others, along with a deferment of statutory payments. Another easy way of helping SMEs is to place priority government orders. The present circumstances are such that we can expect some SMEs to shut down leading to job losses. Governments need to cushion the impact as much as possible.
Empowered Strategy Group: Methods to revive the manufacturing sector as well as attracting new investments to the country require a bold and pragmatic vision as well as a detailed implementation plan. This requires a national consensus (and a regional consensus) as well as the best minds and talent available. An Empowered Strategy Group comprising government representatives, industry leaders, bankers, policy experts can be tasked to work on this urgent imperative.
DISCLAIMER: Views expressed above are the author’s own.