As any other country in the world, Trinidad and Tobago suffered the consequences of the global financial crisis with the collapse of Cilco. Nevertheless the country learnt valuable lessons during the global crisis and has stayed strong. Could you comment on the lessons learned during the global financial crisis and why Trinidad & Tobago has become an example for other nations?
Trinidad and Tobago prospers thanks to adequate buffers in the financial system, a strong regulatory system, and a sustainable macroeconomic outlook
We developed some factors to adjust to shocks in the economy: adequate buffers in the financial system, a strong regulatory system, a sustainable macroeconomic outlook and the fourth is to get the momentum of the country moving towards growth and creating jobs, and that’s what we have tried to do during the last 16 months. I think we have reached the point in which we can look with confidence to the future and the achievement of our goals. “Moving Boldly Forward”; please comment on the ability of Trinidad & Tobago to achieve its goals for Medium Framework 2014 and Vision 2020
Our main role has been redesigning the economic space of the country. We were restricted by a relatively narrow space, intensively used but narrow nonetheless. What we are doing is broadening that space through geographical, sectorial and international expansion.
In terms of geographical expansion, we are focusing on the areas that are yet to be developed. An example would be the Southwest, a large part of the island without a great access to development where we have built a major highway. We are also trying to provide a better access to the Northwest, especially the town of Chaguaramas, a place with tremendous investment opportunities in the field of leisure and entertainment. Chaguaramas has a special significance for Trinidad and Tobago, as it became a symbol of sovereignty during the process of independence.
We are also expanding our presence in different sectors. I refuse to use the word “diversification”, because it is something that we tried before but our mistake is that we never changed the architecture of our economic space. This is what we are attempting to do now. We are putting a lot of emphasis on the fact that we are a maritime economy and trying to take advantage of the opportunities there: we could focus on the yacht industry, the cruises and the fishing sector.
We must prepare for the eventuality of a post-oil era; we are focusing on the development of alternative energies both in terms of encouraging the use of natural gas instead of oil, and the development of solar energy, not only to use it as a source of energy but in order to become a provider of solar panels.
We are also discussing with countries in the area like Guyana and Surinam for growth. There is a natural set of opportunities: they provide resources that we don’t have (gold, bauxite) and we have the financial and energy resources to help them out.
In terms of growth potential, because of the change of strategy, we see great opportunities in the medium term. We will offer fiscal support for the upstream energy sector, providing them with a new fiscal system to encourage exploration.
We are one of the main energy suppliers for the United States, especially the East Coast from Jacksonville to Boston. There is a confirmed investment of $4 billion in the upstream and downstream sectors for 2012. We are encouraging the use of energy for the development of raw materials for the plastic industry.
Beyond that we are also focusing to ensure the availability of opportunities for foreign investment. Our framework is very successful in terms of attracting investment to the energy sector but we must prove that it also works for the non-energy sector. For example we have a number of projects to help the development of tourism: recreational and medical.
The manufacturing sector was able to cope during the crisis but it hasn’t taken off yet. Our manufacturing sector needs to go further than the Caribbean market and that’s why we are developing connections with Central America, especially Costa Rica and Panama.
The United States remains our main trade partner, in terms of budget, exports and imports. We need to go beyond what the United States has given us, because we don’t know what the long-term perspective of the country will offer us.
For example, the sector that was affected the most by the global financial crisis was tourism. Tobago depends on it and that’s why we have given them the resources to develop their tourism infrastructure. We need to deal with the pressing challenges and keep the financial situation stable.“The major challenge is to ensure a sense of stability for the next generation in the financial world”. Please comment on how the Ministry is working to ensure this stability in the financial sector and finance the development of the nation.
There’s room for expansion. The financial sector is strong and relatively well regulated. During the course of the next six months we will send new regulation to be passed by the Parliament, especially in the insurance sector with the new Insurance Act, in order to correct some inefficiencies.
We are also looking to collaborate with private partners for the delivery of public benefits (health, insurance, manufacturing, etc.); it’s our new avenue for investment. We have also set up a new regime with the banking sector to share the risk. The public and private sector can assume more risk when they work together. This is our main upcoming challenge. No country can supply all the needs to the country without going beyond the State; we need to work with the private sector.
Regulation is not the answer; synergy between the public and private sector is where we are heading to provide public benefits. The financial sector has a presence in Trinidad and we are asking them to work with us; there is not enough demand for commercial loans and we are telling them to increase the demand because there is enough liquidity. The credits have increased, the stock market has increased but it’s not enough. The country is too dependent on the public revenue for its growth.
Could you comment on the current privatization process underway in Trinidad & Tobago?
There is significant state presence in the economy so we started a process of privatization last year. We are trying to do it in a way to achieve a better distribution of income. We are not going to release the shares without ensuring that they end in the hands of the people. The Government wants to find facilities to support the business community. At this point of time we are about to engage in three major enterprises: First Citizens Bank, the Trinidad & Tobago Mortgage Company and the Home Mortgage Bank. To sum up, Trinidad & Tobago is looking for strategic partners in a number of operations.