Trade and Industry Minister Paula Gopee-Scoon says two local companies are owed approximately US$979,000 by Corporación Venezolana de Comercia Exterior (CORPOVEX) - the Venezuelan trade agency responsible for paying for TT goods shipped to the South American nation.
In May 2016, TT and Venezuela signed a trade agreement on a US$50 million revolving fund, which Venezuela would use to buy critical manufactured goods from this country for its citizens. To date, more than $800 million in TT-made goods have been sent to Venezuela since the May 2016 signing.
Contacted by Newsday yesterday, Gopee-Scoon said, “To date, US$15.5 million, or over TT$100 million, worth of goods is estimated to have been traded with Venezuela...as of (August 28), four companies have been paid in full – National Flour Mills, Old Mac Agro Supplies Ltd, Arawak Ltd and John Dickinson and Co. Ltd.”
The minister said two companies are currently owed payments which have been outstanding under the second tranche – VEMCO and Langston Roach Industries Ltd. “In total, the outstanding payments amount to approximately US$979,000 between both companies.”
“It is to be noted,” she added, “that the Venezuelan market is an important one for TT given its size and geographic proximity. The initial arrangement had sought to export TT’s products to approximately four million citizens in Eastern Venezuela with the intention of further penetrating Venezuela’s wider market, estimated at over 30 million people,” Gopee-Scoon said.
Alcazar is CEO of VEMCO but chose not to focus on that when speaking about the overall issue of TT manufacturers owed millions by CORPOVEX. He simply said “there are two companies that are at presentl owed millions of dollars that we are fully aware of.” Adding that these companies shipped “disinfectant, soaps and some basic food items requested by CORPOVEX.” The first tranche of goods was paid for upfront however payment of the second tranche was split in two – 80 per cent upfront with the remaining 20 per cent to be paid on delivery. This is where the problems began, as outlined to Newsday by TT Manufacturers’ Association (TTMA) president Christopher Alcazar.
“With the 80/20 agreement, goods were produced on a purchase order from CORPORVEX, drawing down from the contracted volumes. In some cases product has been shipped over a year ago, of which the 20 per cent has not been settled to date by CORPOVEX.
“In other cases, product was produced to purchase orders, SGS (formerly Société Générale de Surveillance) reports were commissioned and sent to CORPOVEX (yet) the 80 per cent deposits were never made. While manufacturers spent months running down these payments in order to ship the (order), goods, excess raw and packaging material then had to be sold off or disposed of at reduced costs – and in some cases with losses incurred by the manufacturer – as the payments were never received.” SGS is an internationally recognised company that assists with matters like this and many others. Alcazar said manufacturers shipping goods to Venezuela paid SGS to “confirm the product, quality, quantity et cetera, before payments are made. It protects the buyer.” Gopee-Scoon said under the second tranche, contracts were signed for nine products – tomato ketchup, mayonnaise, wheat flour, white rice, pasta, milk powder, margarine, frozen whole chicken, bath soap, toilet paper and laundry soap.
“Under this tranche, TT agreed to supply approximately US$7,763,269.88 worth of goods to Venezuela. However, to date, only US$3,068,931.84 worth of goods has been supplied,” the minister told Newsday. Alcazar previously said more than a year later, CORPOVEX has not yet replied to correspondence about the outstanding money. The TTMA had also raised the issue several times with the TT government “without recourse.”
The issue having been raised in the public domain over the weekend, Newsday asked if any update on payments had been forthcoming.
Alcazar said, “No, the manufacturers have not heard anything official from the Government of Venezuela. However, (Gopee-Scoon) has reached out to the TTMA and indicated that she would continue to pursue the matter on our behalf while this has been going on for a number of months without resolution.” While Gopee-Scoon said her ministry “is aware of the challenges facing local manufacturers and is engaging directly with CORPOVEX and other Venezuelan authorities to have the matter resolved as soon as possible.”
Alcazar also said as of August 27, four companies have been paid for the original contract but decided against further agreements after CORPOVEX moved from the first agreement of 100 per cent upfront payment to a 80 per cent on shipment and 20 per cent balance on delivery. As such, “no one has goods en route at this time.”
Alcazar argued that while local manufacturers entered into these agreements “on their own accord and at their own risk”, the original discussions on this trade opportunity began between the TT and Venezuela governments.
As such, “we continue to ask for the TT government to use its relationship and influence to secure and seek the interests of local manufacturers, which continue to take risks to grow operations for the economic benefit of the entire country creating additional jobs, economic activity and earning critical foreign exchange through exports,” Alcazar said.
Meanwhile Gopee-Scoon said in March 2018, “12 companies have expressed interest in furthering trade with Venezuela on the condition that payment is made up front” and that her ministry “remains committed to supporting and facilitating trade for local manufacturers and will continue to work to have payments expedited.”