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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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How Trinidad & Tobago Is Benefitting From The Venezuelan Crisis

In June the UN estimated that 4m people had fled Venezuela as a result of the crisis. Of these, some 40,000 have arrived in T&T.

Although this is far lower than the 1.3m who have gone to Colombia, migrants now make up 2.86 percent of T&T’s population. This is the highest rate in the region, above the 2.65 percent recorded in Colombia, and concerns have been voiced over the possible economic consequences of the recent influx.

Citing figures which state that hosting migrants and refugees has cost Colombia 0.4 percent of its GDP, Alvin Hilaire, governor of the Central Bank of Trinidad and Tobago, said in May the twin-island nation’s economy could be similarly affected, estimating an economic cost of around $620m a year.

There are particular concerns over the impact immigration could have on the labour and housing markets, as well as public sector programmes such as national insurance and health care.

While Colombia received a World Bank grant of $31.5m in April to help with the costs of housing new arrivals, T&T has yet to receive external financial aid. However, the governor flagged the possibility of tapping into a $100m grant from the Inter-American Development Bank, designed to assist neighbouring countries receiving Venezuelan migrants.

Legal uncertainty

In addition to economic issues, questions have been raised over the legal status of Venezuelan immigrants, given that T&T does not have an official asylum policy.

While T&T requires Venezuelans to hold a valid passport and visa, it recently offered a brief amnesty to Venezuelans already in the country.

Some 16,500 people registered with the authorities during the two-week period, which ran from May 31 to June 14. Those who registered received work permits for either six months or one year, along with basic medical care and a photo ID.

Notwithstanding this attempt to document migrants, there is a level of uncertainty associated with the lack of asylum legislation, not least for those who arrived after the two-week window.

Potential productivity and macroeconomic benefits

While politicians and members of the general public have expressed concerns over the recent wave of migrants, business leaders have highlighted possible positive outcomes.

“Venezuelans see T&T as their next opportunity and, on the whole, arrive with highly ambitious mindsets. This could have a noticeably positive impact on the economy overall,” Sudesh Botha, director of local geospatial and engineering design company Giscad, told OBG. Related: Big Oil Profits Lag Despite Rising Production

The increase in the overall population could have beneficial effects in a number of areas, including the food, beverage and tobacco industry, the country’s largest manufacturing subsector.

“An increasing demographic trend – as long as it is not at too fast a rate – is a good thing. An increase of 4 percent in the formal labour market creates a net contribution to society and has the knock-on effect of more consumers looking to buy packaged goods,” Dominic Hadeed, managing director of beverage company Blue Waters, told OBG.

This sentiment was echoed by Mitchell de Silva, chief country officer of Citibank’s T&T operations, who said the influx of migrants would lead to a “net benefit”.

“Not only will migrant workers assist in filling the gaps in traditional low-skilled sectors – by taking on jobs in the construction sector, for example – but the retail sector will also receive a boost,” he told OBG. “If handled correctly, this could help kick-start the economy.”

Building Latin American connections

Furthermore, an increase in Venezuelans in T&T could help build stronger trade relations with the rest of Latin America.

Separated by just 15 km of water, Venezuela and T&T enjoy close ties, as evidenced by their close collaboration on a series of offshore oil and gas projects.

Beyond this, however, T&T has limited trade links with South American countries, with some suggesting that an increase in the number of Spanish-speakers could help create greater engagement with the continent.

“There are a number of companies based in T&T that are looking to enter Spanish-speaking markets. Some look favourably on the migration issue and therefore welcome the arrival of native Spanish speakers,” Dirk Prudent, commercial manager of Giscad, told OBG. 

“T&T could position itself as a launch pad for other markets in the region, which would provide more scope for trade. Many companies are hiring hard-working Venezuelans to help them bring forward their expansion plans in the continent,” he added.

By Oxford Business Group

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