Home' Trinidad and Tobago Guardian : July 11th 2013 Contents The economy of Barbados seems
to have fallen from the height
of prosperity it enjoyed ten years
ago. In 2003, a survey by United
Kingdom-based The Economist
magazine showed that only the
United States, Canada and the Bahamas had
higher incomes per capita in the western hemi-
Barbados was ranked as a middle-income
country with high wages and a stable econo-
my.Today, those times seem like a distant mem-
ory.The Barbados Central Bank of Barbados
reported on Tuesday that the economy there
was estimated to have contracted by 0.6 per
cent in the first half of 2013, following no real
growth in 2012.
The rate of unemployment was 11.6 in 2012
compared to 11.3 per cent in 2012, its Central
Against this bleak economic background,
companies from T&T are finding it difficult to
operate in Barbados.
Gerry Brooks, chief operating officer, ANSA
McAL Group, told the Business Guardian on
Monday that the economic situation in Barbados
"Barbados finds itself in a difficult economic
position. Growth has been less than one per
cent over the last three years. The challenge is
an annualised problem of spurring growth,
which can become a systemic problem. That
is one of the challenges. Right now unemploy-
ment is 11.6 per cent and it is certainly high
and not declining. There is even the potential
to go even higher," Brooks said.
He said Barbados has multiple problems of
low growth, relatively high unemployment and
high debt levels and that ANSA McAL s oper-
ations in Barbados are not immune from the
country s problems.
"Debt level is around 83 to 85 per cent of
gross domestic product (GDP). If you look at
tourist arrivals, remittance and financial services,
none of those has been able to revive sufficiently
to continue to spur this growth and to continue
to sustain it. In this context, all businesses is
Barbados are challenged. Our business is not
immune from that."
Brooks said that the ANSA McAL group had
made significant investments in Barbados,
including the acquisition of Brydens Barbados,
new technology, (Tech One ERP) and the recent
repurchase of shares.
He said that the investment represented mil-
lions of dollars in vital foreign exchange going
into the Barbados economy.
Brooks said: "We are committed to the devel-
opment of Barbados, our people and business
there. We recognize that the economic model
in small, vulnerable states must change. Bar-
bados must also look again at its model to
ensure that a cyclical economic challenge does
not become systemic. Each territory must also
relook its cost profile as it seeks to be attractive
as a destination to attract future investment
flows and foreign direct investment."
The ANSA McAL executive said countries
like Chile, Columbia Panama and other regional
destinations including Trinidad have sharpened
both fiscal incentives and "ease of doing busi-
ness" to attract more capital.
Brooks said: "Respectfully, all of the social
partners in Barbados must look again at the
costs and productivity relationship. Quite sim-
ply, costs are too high comparatively. We are
prepared to be part of a constructive dialogue
on this. We have taken this approach and will
continue to try to be innovative as we work
with our teams to better service our customers
and add value and ensure the longevity of our
ANSA McAL s distribution arm in Barbados
"Our distribution business is formerly Brydens
and Sons, A&R Tempro, and Stokes and Bynoe
have been rationalised into Brydens. One of the
reasons we did that is to improve the efficiency
around the business, take cost out of the busi-
ness and allow the business to be more com-
petitive and to be able to provide greater value
Brooks spoke of the group s financial services
business in Barbados, which has the insurance
arm and financial services company.
"One is Consolidated Finance Company
(CFC) and the other is Brydens Insurance, and
we are actually making some changes in those
businesses where they will be closely aligned
and come under ANSA Merchant Bank, which
will allow us to be far greater efficient and
The third arm of the business in Barbados
is McEnearney Quality, which sells cars, he
"The businesses have been working hard to
sustain their current positions, but there really
has been an absence of growth in those busi-
nesses as has been the case with many other
businesses in Barbados," Brooks said.
He said that the cost of operating in Barbados
is very high.
"Barbados has to make a decision around its
labour rate increases because nobody is going
to increase their investment in Barbados,
whether it is in ICT or tourism, unless it makes
sense cost competitively."
Reviving the economy
For the Barbados economy to be revived,
Brooks said there are steps the government
"Whether it is the financial services model,
whether it is the tourism model, the government
has to find a formulation to return the economy
to growth," Brooks said. "Part of that includes
how Barbados works with other economies and
positions itself to move the economy forward."
Brooks said the group s business in Barbados
continues to remain challenged.
He said the ANSA McAL Group looks at its
Barbados operations strategically.
"We look at Guyana, we look at Suriname,
we look at the Eastern Caribbean territories,
we look at non-Caricom territories and ask:
where does it make the best sense to locate a
new business? In terms of new business, we
are going to have to take a look at the business
and see which island is most cost competitive,
with the best capacity for growth and make
the investment on that basis."
Brooks said the ANSA McAL Group wants
to do more than survive in Barbados.
"We want growth, we are in the business of
expansion and leveraging our capacity. We want
to use our regional footprint to move it for-
Derwin Howell, executive director, Republic
Bank, told the Business Guardian on Tuesday
by phone that the Barbadian economy is going
through a "storm", but added that Republic
Bank s subsidiary there is holding its market
share during these challenging times.
"The economy has been pretty stagnant last
couple years. The figures of Barbados Central
Bank are not very encouraging. The challenge
is: how do we manage a bank in that type of
situation?" Howell said.
He said whether an economy is going through
a boom or bust, the banking sector is always
one of the last to feel the effects.
"When we entered in Barbados eight or nine
years ago, it was at the tail of a good period.
We had a couple good years there and then
things changed. Banking tends to lag the econ-
omy. So when the economy gets going, it takes
a little while to reach the banking sector. Sim-
ilarly, when an economy goes into decline, the
effects, like reduced credit, take a while to
He said Republic Bank Barbados market
share is just above 20 per cent.
"We are holding our own, we are starting to
gain market share, but these things move month
to month. The market is a very slow one right
now. The Government is under pressure to bal-
ance its books and balance the deficit. At the
end of March, there was an eight per cent
decline in tourist arrivals, which is the main
driver of the economy," Howell said.
He said the decline of Barbados tourist
arrivals is significant as "pretty much everyone
in Barbados depends on the tourist industry."
"Whether it is the guy who sells the air con-
dition unit to the hotel, or the people who sell
fish to the hotel or those who provide beer to
the hotel. An example is when Almond Hotel
was closed down, banks saw a big drop in busi-
ness. Those are the kinds of things that affect
He said Republic Bank has been working
with customers who have been affected by the
"A number of our customers suffered some
reduction in income, and that reduction is a
result of several things. They raised VAT from
15 to 17.5 per cent. There has also been salary
reduction. In a lot of the hotel areas, rather
than fire staff, they put them on reduced work
He said there has been an increase in non-
performing loans because people have had these
salary cuts or lost their jobs.
"The industry would have seen an upward
trend. What we have been able to do, especially
with mortgages, is to restructure loan facilities
in line with income. However, if you have no
income, there is no way to deal with that, but
that has been in the significant minority.
"The banking industry there is highly cap-
italised so we can get through the storm. It is
solid. It remains a challenge to run a bank in
any declining economy. We have very seasoned
bankers running our subsidiary here. Our staff
here is around 500 employees."
Howell said there are still signs of economic
activity, like people buying cars and building
"Of course, you have four or five banks fight-
ing for those customers. So whereas people
would have bought cars every five years, they
now buy cars every seven years."
Howell believes the Barbados economy will
remain stagnant for some time.
"Certainly, for the next year or so, things
will remain the same. We have to continue to
work hard by going out there and get the good
loans. We have to manage customer relationships
and understand their needs, both at the personal
and commercial levels. We also have to keep
our eyes open for the good opportunities that
He said Republic Bank made a good choice
by entering the Barbados market.
"Barbados is one of the larger economies in
the region. When you look at our Barbados
unit in our entire business, it varies between
the second and third largest banking contributor.
It is a good economy, but it is now going through
its challenges. One of the benefits of being in
a conglomerate is that when things are not
good in an area, another part of the group take
up the slack. The Barbados decision was a good
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Republic Bank in Barbados
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executive director, Republic Bank
T&T firms note island's high cost structure
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