Business groups: SMEs face uncertain times

TWO business leaders said on Monday that businesses now face major uncertainties such as lower consumer demand and higher costs, reacting to UNC Senator Damian Lyder's complaint that foreign exchange (forex) woes and tardy VAT refunds would close some small and medium enterprises (SMEs) by Christmas.

San Juan Business Association past president Vivek Charran said TT had an overall poor business environment for SMEs.

Greater Tunapuna Chamber of Commerce president Ramon Gregorio told Newsday he partly agreed with Lyder.

"It is really a combination of issues," Gregorio said.

"Of course the forex thing is one thing in terms of persons' ability to bring in products and service.

"But demand and overall consumption is one of the biggest challenges."

He said consumer demand was not where it was pre-pandemic. "A lot of the companies are still reeling from settling back into that post-pandemic mode."

Businesses, he said, were still trying to ascertain what the post-pandemic scenario looked like.

"A lot of the businesses haven't come back to the pre-pandemic figures."

"While they are getting there slowly but surely, it'll be an interesting Christmas to look at from a demand standpoint."

He mulled the Government's promise of $1 billion in back pay for public employees like teachers, plus police, prison and fire officers, but which the Prime Minister recently said a permanent secretary said could not be paid until May.

"You have the proposed back pay from Government that is supposed to be happening before Christmas, if the politicians have it right.

"If that is in fact so, we should see a heightened local demand."

Gregorio added that this was the first time since the pandemic that TT was fully free of covid19 restrictions.

He said it was 2023, rather than 2022, post-pandemic, which was now a better predictor of consumer demand for this Christmas.

Asked about the payment of VAT refunds, he said he had not had any feedback on that.

"But any support the Government could provide for SMEs, I always support that."

Gregorio said some larger firms such as oil and gas sector companies were having challenges with their VAT refunds, to the tune of millions of dollars, if not billions.

"At an SME level, we welcome the Government's intent to settle the VAT refunds to those outstanding organisations but we know it's not a quick fix but it is inherent in a number of other implications. But what I would say is that we support it.

"I think the Government really is trying to meet some businesses half-way and in some instances we just have to kind of wait and see."

Charran for his part said he identified with Lyder's original concerns.

"Are we building a nurturing environment for SMEs? Are we building an environment for growth? The answer is no."

He listed recent factors threatening businesses still in a recovery mode, post-pandemic.

They were rising electricity prices, property tax, unavailability of forex, a 50 per cent cut in the limit of US dollar denominated credit cards, and a rise in the minimum wage.

Charran said those factors affected large businesses but rendered SMEs vulnerable. Many SMEs had closed down during the pandemic, he added.

He said in retail, access to forex was critical, but access had been declining since 2012 to present.

Charran was concerned about falling revenue from the natural gas sector, a main source of forex.

He said the Government's non-payment/delayed payment of VAT refunds to energy firms had let these companies use their earned forex to pay local bills, thereby causing disruption to the broader forex supply.

Charran explained October-December was a critical period for SMEs to pay for their Christmas imports, but this year many were unable to complete their purchases.

He said many SMEs were now in a difficult position, such as having to pay a one-three per cent late-payment charges to their suppliers on items past their due date.

"Many small businesses, many family businesses are very worried about their future."

Charran said some businesses have received VAT refunds but most have not. He reckoned big energy firms would be paid first, then manufacturers, then importers and finally SMEs. "It won't happen quickly in the short term."

He recalled the Prime Minister stating problems to pay $1 billion in back pay to public employees by Christmas.

"Between now and Christmas, not everything is going to be paid out by the Government, I think it's safe to say."

He wondered if any payment of public sector bonuses might impede the payment of back pay. "That would increase their expenditure."

In a general conclusion, Charran said, "The situation is dire."