"A nationís competitiveness depends on the capacity of itís industry to innovate and upgrade. Companies gain advantage against the Worldís best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home based suppliers, and demanding local customers." (Michael E. Porter Ė The Competitive Advantage of Nations)
The above quotation aptly captures the extent of the challenge facing commerce in St. Lucia. It reflects the fact that we live in an era of globalization and rapid technological change, which together present a challenge to all countries and enterprises particularly in micro States like St. Lucia. The challenge is how we can achieve competitiveness both at the national and individual enterprise levels, if we are to attain sustained economic growth.
To achieve this however, requires us to undertake far reaching changes in our approaches to commerce. Those changes must reflect the dynamic nature of the environment in which we live.
No longer can we confine ourselves within our own little world and expect that some father figure will provide us with protection from our competitors; that our local market will be preserved for us, or that we can offer whatever we like to the consumer and he is obliged to purchase. We live in a world where the consumer has choices, and where the array of goods and services available are enormous, where technology such as the Internet opens an array of avenues for shopping.
Globalization and trade liberalization imply a world which is essentially border-less, where goods and services can move freely across borders, where capital is highly mobile and where the most successful enterprises are those that can adjust and adapt to the changes that are taking place around them.
Measures that we have come to take for granted are increasingly frowned upon and rules based trading regimes increasingly dictate what we can and cannot do at home.
The World Trade Organization (WTO) increasingly dictates what goes on in the multi-lateral trading system, and whilst we continue to argue for special and differential treatment, we cannot help but prepare ourselves to be full participants, even recognizing that the odds are stacked against us.
The Free Trade Area of the Americas (FTAA) which envisages the creation of a massive free trade zone stretching from Alaska in the north to the tip of South America and embracing the entire Caribbean area with the exception of Cuba for the time being, is a process which is going to redefine the way we conduct business in these parts.
Our relationship with the European Union is being redefined along the lines of Economic Partnership Agreements, with a heavy emphasis on the Private Sector. The days of one-way preferential access to the European Market are limited and slowly but surely coming to an end.
Closer to home, we have, along with our partners within the Caribbean Community committed ourselves to the creation of the CARICOM Single Market and Economy, which will result in a single economic space, where goods, services, capital and labour will ultimately move freely among Member States. CARICOM has negotiated Free Trade Agreements with the Dominican Republic, Cuba, Colombia and Venezuela.
Even as we attempt to diversify our economies by exploring new areas of economic activity, obstacles are placed in our way. Our initiative to develop St. Lucia as an International Financial Centre has run into the OECDís Harmful Tax Competition Initiative, under which the OECD attempts to define the rules by which we must play, as always, with the odds stacked against us. The terrorist attacks of September 11, 2001 has led to even further obstacles being put in our way as the United States and itís allies attempt to trace and eliminate the sources of terrorist financing. It does not matter that St. Lucia continues to be a jurisdiction that is clean and pristine and places a premium on maintaining its reputation. We nevertheless will be affected by these measures as will every other jurisdiction.
The imperatives highlighted above constitute major challenges to the development of commerce in St. Lucia, but they also present great opportunities for our enterprises engaged in Commerce, in Manufacturing and in the Service Sectors.
The opening up of markets will present unprecedented access for our goods and services in the short medium and long term. The challenge that we face is how to position ourselves, and our enterprises, including Small and Micro Enterprises, to capitalize on these opportunities. How can we use whatever breathing space we have to prepare ourselves for open market competition? How can we as a country and as a people attain that competitive edge that will allow us to hold our own in this new environment?
It is precisely against this background, and in keeping with the policy of economic diversification that the St. Lucia Labour Party Government, through the Ministry of Commerce, International Financial Services and Consumer Affairs, has, after the widest possible consultation with the Private Sector, formulated a comprehensive Industrial Policy, the first of itís kind in St. Lucia. This blue print has the specific objective of enhancing enterprise competitiveness, increasing exports of goods and services, and the promotion of St. Lucia as an international financial centre of world repute. This policy, whilst focussing on individual enterprise competitiveness on re-engineering of firms, will also enable us to use avenues available under the various trade agreements to take defensive measures in favour of our firms where necessary. For example, we have on two (2) occasions within the last three (3) years invoked the Provisions of Article 29 of the Treaty of Chaguaramas in favour of domestic enterprises.
We will utilize the provisions of the various funds such as the Enterprise Competitiveness fund of Caribbean Export and the Private Sector Windows of the new COTONOU Agreement to cause our enterprises to retool for increased efficiency and quality. Already the St. Lucia Bureau of Standards has been re-organized to assist manufacturing firms in quality enhancement and will soon embark on a major certification programme that will ensure quality and standards for locally manufactured goods.
As we move towards a new year (and general elections soon) let us concentrate our efforts on how best we can gain a competitive edge within the new world dispensation. We have been told our size is an impediment, but can it not be transformed into an asset? We have heard of niche products and niche markets, we have been told for years that our agro-industrial sector is one with the greatest potential for further development. Opportunities exist for firm linkages between Agriculture, Manufacturing and Tourism. Opportunities also exist for further diversification and by extension further investment within these three main sectors. Will we take on these challenges, or will they pass us by? One of the major challenges of every open economy is the competitive spirit. Delays in making decisions are costly and most times detrimental to ones business particularly in market positioning and ultimately in profitability.
I must congratulate those members of the Chamber who continue the cycle of expansion and re-investment, who continue to maintain employment levels in the country while coping with the ever changing face of trade. This clearly demonstrates a confidence born of the entrepreneurial spirit that is in all of us, and the prerequisite for repositioning in the CSME. Government appreciates your contribution and will continue to provide an enabling environment for your continued growth.
If we assume a positive collaborative approach to the several problems before us, we can face the future. Access to finance is sometimes costly and impact negatively on the cost of production. Our banks have a strategic role to play in this recovery and must not charge exorbitant interest rates on loans and working capital overdrafts, or bank charges that are not commensurate with service. I have noted some welcome movement in interest rates even before the urges of the ECCB. Other avenues have now been created for our use. The advent of the Eastern Caribbean Stock Exchange gives all of us an opportunity to explore other means of financing. Floating shares on the stock market calls for business discipline. There must be for example forward and strategic planning, the timely production of audited financial statements and annual general meetings of shareholders are a few that come to mind.
Other areas to be considered by the local business community are pooling of resources to meet market demand, the use of technology to improve on quality and delivery and sectional approaches to utility companies for seasonal reduction in rates, commensurate with usage and production. Our people and businesses must be encouraged to purchase locally produced goods and it is inherent on our producers to deliver quality at competitive prices. For this to happen all of us must play our part. Government has ensured through prudent fiscal policies endorsed by international bodies and even in these times the system has not been stripped of liquidity by local borrowing.
Input suppliers must guarantee the quality and consistency of raw materials at competitive prices. Service providers must be discretionary in pricing and must not appear to be a disincentive to investment. We must make use of technology in a productive manner to transform our small economies into highly productive avenues of investment using all creative means at our disposal.
What will be the role of the Chamber in all this, you may ask. To my mind it will be the repository of information for its members, a learning organization where educating members on all aspects of trade and commerce will be ongoing exercises at various levels. Members will learn to deal with complex trade matters, diversification and even bilateral relations within a developing CSME. The real world of business has no place for emotion and in time a dispassionate chamber will emerge continuing to provide St. Lucia with the exceptional service it has provided since 1884.
I have great faith in your abilities. I am assured that with minor adjustments, you possess the capacity to overcome those challenges the future presents. I wish you every success and to congratulate you on the occasion of your 117th AGM. On behalf of the Government and people of St. Lucia, again I thank you for your sterling contribution to the economic development of our beloved island home.
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