Not business as usual for Barbados’ private sector

BRIDGETOWN, Barbados, January 24, 2008 – It will not be business as usual for Barbados’ private sector over the next five years of the David Thompson-led government administration.

This was made patently clear by the new prime minister in his first meeting with the sector since coming to office a week ago, when he sat down with over 250 members of the Barbados Chamber of Commerce and Industry (BCCI) at their first luncheon seminar for 2008, which was held at the Savannah Hotel in Christ Church on Wednesday January 24th.

Lack of competition causing high prices

During his campaign leading up to elections the Democratic Labour Party leader repeatedly said the lack of competition in the retail and distribution sector on the island due to the small number of players in the market was part of the root cause of Barbados’ high food prices and rising cost of living. A point he returned to yesterday as the feature speaker at the BCCI event.

“While rising oil prices are beyond our control, that is not the only contributory factor to inflation in our economy. I have said before, and I repeat, that lack of rigorous competition in the market also drives up prices. In an effort to enhance competition the Government will facilitate conditions that foster the creation of more enterprises both in the manufacturing and distributive sectors. The underlying philosophy is that where business competes for the buyer’s dollar, the result is better products and more affordable products,” said the new Prime Minister.

Thompson let the various captains of industry and their juniors who packed the conference room, adjoining foyer and restaurant upstairs, know while they were in business to make a profit, their “desire” had to be “tempered” by an “obligation to co-operate, not just compete”.

Commitment to deliver lower priced goods to consumers

Thompson added he was committed to getting lower priced goods on the shelves through inter-regional sourcing and he expected the private sector to work with the Government in achieving this since reducing the cost of living were his number one, two, and three priorities as Minister of Finance.

Thompson promised the gathering that he would soon be calling a forum to have a “free and frank discussion on this matter”, adding that “the buck will have to stop somewhere and of course the time will come for decisive action that balances your rights with your obligations”.

He also told the gathering that he would be looking for the broadest representation when soliciting views from the sector.

“I am committed to the stance that the private sector will play an integral role in major national initiatives but,” he cautioned, “my definition of the private sector and yours might be slightly different. By the private sector, I mean the private sector in the widest possible sense as comprising all of the actors not in the public sector. You can therefore expect that I will be calling on some non-traditional or non-formal players to be involved at the table of our deliberations from time to time.”

Thompson added that he was wary that going through the private sector’s “formal organisations” might “further solidify entrenched interests and alienate non-formal views”. There are several organisations in Barbados that represent the private sector’s interests, including the Chamber, the umbrella group the Barbados Private Sector Association, the Barbados Employers’ Confederation and the Barbados Manufacturers’ Association.

In the question-and-answer period after his presentation, Thompson also hinted that there would be changes coming to the way the tri-partite social partnership functioned. He said that it seemed the agenda for the partnership had become too large, leading to a loss of focus, and that would have to be remedied.

Choppy waters ahead

During his wide-ranging address, the Prime Minister also cautioned that Barbados and other regional economies could be facing “choppy waters ahead” as economic recessions loomed for major trading partners the United States and Europe. This, said Thompson, who also holds the portfolio for economic affairs, had prompted expectations that there would be a slow down in Barbados’ economy later this year.

“The Central Bank report at September 2008 has predicted real economic activity to grow by four percent to 4.5 percent for 2007, and by about 3.5 percent in the first quarter of 2008. Expectations at that were that growth would be realised in both the non-traded and traded sectors. But, of course with the sluggishness of the US economy, these expectations may be too optimistic. There will be growth, but it might be less than was expected,” he said.

Thompson added his government would be “begin to adopt prudent but targeted fiscal management to keep the economy stable while encouraging growth in the traded sector as much as possible”.

Willingness to work with regional counterparts

The Barbados leader has already signalled his willingness to engage his regional counterparts to find solutions to national problems having met with Roosevelt Skerrit, the prime minister of Dominica, last Sunday to discuss the possibility of sourcing a greater amount of fresh produce from Dominica in order to bring down the retail cost of such produce on Barbadian shelves.

Thompson’s speech yesterday further cemented his leanings toward regionalisation as he let the private sector know that he would continue to lead the thrust toward integration at the CARICOM level. Noting that Barbados “has much to gain from a well-managed single market and economy”, the new Prime Minister said he would be relying on the private sector in Barbados to engage with its regional counterparts “to help chart the course for our deeper integration”.

However, he said it was becoming “difficult to reconcile our integration efforts with what is unfolding before us daily in terms of costs of transportation and also the limited options for travel. Thompson also put management of merged regional carrier LIAT on watch. Acknowledging that Barbados was one of the major shareholders in the airline, he said his government would “do all within its power to address the problems which persist”, but cautioned, “since travel is the lifeblood of CARICOM, we cannot put all our eggs in one basket”.

Economic Partnership Agreement (EPA)

On the international trade front, when pressed during the question-and-answer to say whether his government would go ahead with signing the new economic partnership agreement (EPA) with Europe into effect in March, Thompson said he would do what was in the best interest of all Barbadians, but could not say whether he would sign on to the agreement in its current form. He said new foreign affairs minister Chris Sinckler – who had been vocal in his call for a slow down in EPA negotiations while the head of the Caribbean Policy Development Centre – was likely to raise “red flags”, but a Cabinet decision would have to be made on the matter.