“Wood is one of this world’s most valuable renewable commodities, but the TT wood industry treats it as if it were almost worthless,” says Peter Ebdon, a leading international consultant in timber drying.

The local wood producing and furniture industries must become more competitive if they are to survive, he believes. Ebdon, who is based in the United Kingdom (UK) was recently hired by Caribbean Business Services Limited (CBSL) to facilitate a timber drying seminar. Adherence to proper timber drying techniques is essential to the survival of the saw milling, joinery and furniture industries in Trinidad and Tobago, he said in a recent interview with Business Day. “Manufacturers who do not have properly dried wood will not be in a position to manufacture quality wood products.” This, he said, is essential for them to remain internationally competitive.” But he also described the industry as lethargic, stressing that as a result, a number of inferior products are being found on the local market.

Ebdon said that, TT’s Caribbean Pine  could be converted into “export quality lumber,” but only if it were correctlyhandled.  TT does not value its pine resource and prefers to squander countless millions importing pine from countries that take the trouble to process its felled tress correctly, he said. “Ask TT manaufacturers why they do not use locally grown pine for their products ?” he said, noting that many point out that TT’s pine is full of blue stain and their need white pine for they products. Ebdon said, however, that with a little effort theytoo could produce white pine”. “Blue stain” is a fungi that is very similar to the fungi that is found on decaying food such as bread.

He noted that if the pine was clean and free of blue stain, he would have tp pay top dollar for the product. On Trinidadian teak, he said much has been talked about over the years, about TT sitting on a gold mine. However, he noted that this country has never managed “to make it come good” because it has never valued the commodity. “Whilst teak is a wood, it should be considered as gold and treated accordingly.”

William Vernon, a furniture specialist, recruited last year by CBSL to conduct two studies on  the local furniture industry, said in order for the furniture and wood industry to meet the challenges, it needs an environment facilitated by Government that will give it space to develop. Vernon’s study identifies the furniture industry’s inability to capitalise on indigenous materials such as teak, as the first cause of its downward spiral. He said the Forestry Division has done an excellent job in trying to conserve the natural forest. However, he noted that the teak industry has failed to generate the potential expected of it. The second problem facing the industry is competition from international producers who receive support to assist in the reduction of their unit cost. These include state subsidies at all levels in the processing chains — from raw material sourcing to export marketing, which provide the extra edge. Import levels rose well over 100 percent between 1997 and 2000, which accounted for over 50 percent of the local demand in mid 2002.

Ebdon is of the view that TT’s teak is still young and no tree should ever be harvested under 50 years of age. Once felled, it should be treated with considerable care and not just simply slashed up into boards at a sawmill without any regard to the most suitable cutting pattern that should be adopted. He noted that Europeans would rather take charge of the conversion of the logs themselves to obtain maximum yield, than allow Trinidadians to “butcher” its logs for them. As a consequence, he said, TT loses not only the added value created from the down stream processing of teak, but also the additional employment that it creates. “It is irrational and crazy.”

At present, China has seemingly, an unquenchable thirst for round logs, mainly because the Chinese government has now banned the felling of any tree within mainland China. As a consequence, China is now buying such logs from wherever it can lay its hands, including both Suriname and Guyana. He noted that Trinidadian logs may have found their way there also. As a result, he said, Caricom forests are being denuded of wood at an alarming rate. He said he  suspected that some of the wood that was originally exported to China is now finding its way back again as low cost furniture, thereby putting TT’s own domestic furniture industry at risk.

Ebdon said there should be a total export ban on round logs from any Caricom country, just as there is in many other tropical timber producing countries. At the same time though, he advised the wood industry of TT to wake up and start producing a much better quality product. Sheriff Faizool, director, Forestry Division, Ministry of Environment, agreed with Ebdon, saying that the quality of sawing and finishing, as well as the reliability of supply, timber certification and inadequate drying facilities must be addressed. Sawing quality, he said, depends upon proper saw-doctoring facilities. He said the lack of trained personnel with proper techniques regarding sharpening of saws, joining of broken blades and tensioning, have resulted in poor quality lumber. Faizool noted that most lumber used in the construction and furniture trades are sold on a ‘green’ basis. He explained that because of the insufficient drying facilities available locally, most lumber is air dried for varying periods. Due to the lack of proper equipment to monitor whether wood is properly dried, most wood finishing is of low to medium quality.

Independent bodies are being set up to certify that forests are sustainably managed and this costs money. He said that: “In the not too distant future, in order to continue exporting tropical timber and timber products from the forests of TT, we would have to be certified by the competent authority that our lumber and forest products are emanating from sustainably managed forests.” Faizool said another matter which wouldimprove this country’s competitiveness is if it speaks with one voice. TT manufacturers have called on the Trade and Industry Minister to intervene by way of imposing a tariff rate for a period of ten years on imported furniture and joinery products. Trade and Industry Minister Ken Valley, responded to the call and agreed to provide a five year period, on the condition that the industry develops a strategic plan to improve its competitiveness.

Other issues affecting the industry, Vernon said, included the lack of quality assurance systems; plant and equipment maintenance; product designs; plant layout and appropriateness of equipment and management information systems. Additionally, he said the TT furnishing industry does not do any worthwhile marketing. “It does not research the opportunities nor does it promote itself adequately.” He noted that retail selling access is dominated by a few large retail chains including Courts, Standards and American stores on which the manufacturers depend without any initiative of their own.

Vernon said while his results would appear to be, and are somewhat damning of the industry as a whole, they are not unusual for the scale of the industry involved. “It is a craft based industry, relatively easy to enter and with little outside controls. A similar survey of the furniture industry done in many developed countries would yield not dissimilar results.” However, he said, in a country facing the kind of competitive pressures that TT is facing from outside, it is vital that the industry learns to perform substantially better than the norm. He warned that if it fails to do so it will fail to survive.

With the click of the mouse, almost anything on the net can be yours. In these days of plastic money, however, you can be easily sucked into the vortex of online shopping.

While the US takes the top spot in a survey of Internet shoppers, Trinidad is not to be left out. Republic Bank, in collaboration with TSTT, recently launched its Republic/TSTT Visa Internet Shopping facility, the first and only facility so far in TT designed exclusively for Internet shopping.

According to Republic Bank’s Assistant General Manager of Card Business, Anthony Wong, “Today’s technologically savvy customers demand increasing levels of value while seeking security, efficiency, convenience and high quality service.” “When you shop online,” he said in an interview, “you want a secure, convenient and hassle-free way to conduct your transactions.” The Republic/TSTT Visa Internet shopping facility, he said, is the first of its kind to cater to these specific needs. In TT there are presently 60,000 credit card holders, according to a survey conducted by Republic Bank six months ago.

When Republic did its analysis on credit card usage in TT, Wong said the bank was surprised to find out the number of cardholders who shop on the Internet with hardly any advertisement. He noted that more than 30 percent used their credit cards to shop on the Internet for goods and services. “With significant growth in both e-commerce and credit card usage over the Internet, as well as increased credit card Internet fraud, we felt that customers would appreciate a more secure form of payment over the Internet,” Wong maintained.

This, he said, was the major motivation behind establishing this facility, noting that Republic chose TSTT as its strategic partner because it had the largest ISP market share in the country – approximately 80 percent. The facility, it was revealed, provides daily fraud-monitoring services, lower credit limits and a stronger focus on payment safety allowing customers to shop confidently online at any time. Wong stressed that the facility was not a credit card, but rather a reference card which included the customer’s name, the expiry date of the facility and an account number. It also has a special code which is used to identify that the card is present when doing Internet transactions.

When the customer is ready to complete his Internet transaction, Wong explained, he simply has to key in the account number along with the CVV2 code on request and his account is debited. Customers can also very easily track their internet expenses via a separate monthly statement. There are a number of benefits to this arrangement, Wong said. “Apart from the fact that you get a special facility with a lower limit, there is no plastic which means that if the card is lost or stolen it cannot be used or counterfeited.”

The Visa Internet Shopping facility is designed exclusively for TSTT NetXpress users, who will receive a 15 percent discount on their monthly internet dial-up package once their subscription to the Visa Internet Shopping Facility is active. Additionally, new NetXpress customers will receive free activation, one-month’s free rental and the additional benefit of the 15 percent discount on their monthly internet dial-up package. Customers with the facility will also earn valuable bonus points on all purchases made online.

Internet shopping does have its benefits: the opportunities to save time and money, greater choice, the convenience of shopping when you like and having goods delivered, as well as the ability to find and compare information, products and prices. According to Miles Faulkner, Principal with Ernst and Young’s Consumer Collections and Strategic Service, “Shopping on the Internet is no longer a luxury. It’s a competitive necessity for retailers, consumers and manufacturers.” It is projected that electronic commerce is expected to grow from the $3 billion figure of 1997 to $1 trillion by the year 2010.

However, many people have been deterred from shopping online because of the fear of credit card fraud which has been a major teething problem for the online shopping industry. Credit card fraud affects thousands of people on a weekly basis. While consumers are significantly affected, statistics show that it is the online retailer who suffers the most. Credit card company figures show that 90 percent of consumers are reimbursed when their cards are used fraudulently. However, 75 percent of online retailers basically have to bear the cost when they are victims of fraud.

This is mainly because online payment is done by either credit or debit cards and the payment protocols for these were originally intended for “face-to-face” transactions where the card holder and card are both present. It is believed that physical presence offers security based on a customer signature and card imprint. Wong agreed that internet fraud was a problem for e-commerce, noting  that when information was stored on a business site, it became susceptible to hackers who could get into the site and get hold of credit card information. However, he went on, many present practices require that any credit card information to be stored on merchant sites be in an encrypted format. Therefore if the site is invaded by hackers, the actual credit card numbers are not exposed, but rather a coded rendition of the number which has no value. “When you go to a site you want to be confident that you are not unduly exposing yourself, so that if any fraud does occur, there are sufficient systems in place to detect them,” Wong said.

Wong explained that the Republic/TSTT Visa Internet Shopping facility had a dedicated 24-7 fraud monitoring service, which also carries a lower credit limit so that customers do not have to expose their cards with the larger limits and therefore risk exposing it to possible fraud. Republic Bank is not the only organisation which has joined the internet shopping fraternity. JSL Speedpak, the Miami-based courier service, has established its own online shopping service at www.shopmetoo.com. JSL’s CEO, Linda Kendal, revealed that the idea behind the site was to allow locals to be able to benefit from the seasonal sales which take place in the US, including Christmas, Thanksgiving and the Fourth of July Independence celebrations among others. “When the sale begins,” she said, “it will be advertised on the site so that customers can stay home and still enjoy the sales.” “In addition, they can pay for the items with their local credit cards, since a number of US companies do not accept foreign credit cards now because of fraud.”

The site is hosted by Interland, which is one of the biggest names in webhosting and security. Credit card acceptance is being handled by Verisign. “We have taken great care to ensure that our customers are protected,” Kendal maintained. “We have never had a problem and hope never to have one.”

Q. Your column has always suggested that mutual funds are a good way to get into investing. But I read recently that local investors are being  advised to be more careful about buying mutual funds and look at long-term performance. Does this mean that mutual funds are becoming risky?
Sunity,  Claxton Bay

An “income and growth” type mutual fund may invest in fixed income  instruments as well as stocks and so there is a degree of risk to your principal depending on the percentage of the funds invested in shares. Therefore, within the “income and growth” class of mutual funds there would be varying degrees of risk depending on the investment policy. So it is important to match your own risk tolerance to the asset mix of the fund that you are investing in. Talk to a qualified financial advisor to get more detailed advice.The fact that advice about being careful in choosing funds is becoming more prevalent does not mean that mutual funds are becoming more risky.

Investing in income and growth mutual funds is always risky due to the possibility of share prices falling. However, it may be that the investment profession in Trinidad & Tobago is becoming more sensitised to the fact that a particular fund may not be suitable to all clients, but rather a fund should suit the specific needs and circumstances of a particular client. In short, some clients may be able to absorb possible losses while others may not. A financial advisor must therefore be sensitive to that fact before making a recommendation. There have been cases where financial advisors recommended risky investments which were not suitable to clients with low risk tolerances. It is thus critical that the investment profession be mindful of this.

The fact that there is also now an appeal to look at performance in the long term is probably to reiterate that funds must be held over a long investment horizon in order to generate the advertised performance. Remember, income and growth funds over a short interval may be actually losing money. It is thus imperative that you hold your money in the mutual fund over the long term to generate high returns. If you liquidate over the short term you may actually lose some part of your money due to occasional downturns in the stock market.

Q. With so many financial institutions trying to get people to invest, the marketplace is very confusing. How do I start turning the money in my savings account into real investments?
Rose, Tacarigua

Interest rates in Trinidad & Tobago have fallen drastically over the past year and a half and are now at historic lows. The rates on savings accounts have fallen in tandem with the market to the point that individuals are not earning more than 2-3% on savings accounts. Therefore, as a first step, you should move the money from your savings account into a money market account, which, depending on the institution, may be paying between 6-7%. Money Market accounts are just as safe or safer than a savings account and yet pay you at least 3% higher. Most of the money market accounts invest predominantly in Government of Trinidad & Tobago securities and since your funds are backed against these, the investment can be considered risk-free.

If you have a higher risk tolerance you can take some of your funds and put them into the local stock market, which has been performing extremely well over the past two years while stock markets all over the world have been down. Of course while the market as a whole has been doing well, there have been stocks which fell over the period. Speak to a number of brokers to get advice as to which shares are likely to perform well. Over time the broker with the best advice would be self-evident. However, even the best broker cannot be right all the time and there is an inherent risk in investing in the stock market.

Once you are able to take this risk for the reward of a much higher return then by all means proceed.  To summarise, there are alternatives to extremely low-earning savings account out there. All you need to do is determine the mix between money market and shares and then contact your broker to transact.

Questions can be sent to PO Box, 1830, Wrightson Road, Port-of-Spian Or email: cmmbsecurities@mycmmb.com