What is your insight into the current state of the economy and the biggest priorities of your Ministry today?
If you look at our macroeconomic levels, Trinidad and Tobago has been able to withstand the shock that hit the financial system very well. We've come out of it as a very strong, resilient economy. The numbers speak for themselves, for example, our Heritage and Stabilization Fund is at the highest ever at over 5 billion US dollars. We are one of the few countries in this region that has consistently had current account surpluses. International reserves of foreign exchange are currently at about 12 months import cover at 10 billion US dollars. Our inflation and unemployment rates are around 5%. Our debt to GDP is relatively low at around 45%, which is outstanding when compared with our counterparts in the region and other developed nations. In addition, Moody’s and S&P have consistently given us very high performance ratings at BAA1 and A respectively.
When all of that is coupled with our natural advantages like our geographic location, we haven’t had a hurricane in over 100 years, we are in a sheltered position. We also have cheap energy at 3.5 cents per kw hour while most countries we compete against are almost double or triple that rate. We have a very literate population at over 90%. We have a stable political and economic climate. All in all, we are a perfect investment destination. We are truly the Gateway to the Americas. We have1.3 million people in Trinidad and Tobago, which isn’t very attractive when looking at all of the economies of scale abroad, but we are the gateway to over 600 million people in the Americas which opens completely new possibilities for potential investors. Because of these factors I’ve just mentioned, we’ve started to look into sectors in which we can be competitive. We’ve identified several of those sectors: financial services, ICT, tourism, maritime, agro-processing, and downstream energy services. These are the areas we have been focusing on as for our diversification. Identification of the sectors is one thing, but we are also setting up the infrastructure to create an enabling environment to allow people to invest in those sectors. In the past, it wasn’t easy to invest in Trinidad and Tobago, however, our motto today is “Red tape to red carpet”. Two years ago we ranked 97th globally in the ease of doing business, now we are at 66, and we hope by the end of this year we will be 50th. You will see the most obvious improvements when trying to start a business. For example, in the past, if you wanted to start a business, the entire process would take about 43 days; today it takes about 3 days. By taking the bureaucracy out of the process, we’ve made it easier to do business in Trinidad and Tobago.
Our institutions must also be in a position to be customer-ready. In the past, the state institutions were set up to work within our own borders. Today, our agencies fashion themselves against the benchmarks of international competition to welcome investors. Previously, we had 13 agencies spread across 3 ministries to handle international trade. Now there is one, InvesTT. We are getting lots of exposure through these measures which are part of the transformational change in Trinidad and Tobago.
The majority of our readers are from the US which is still the most reliable partner for Trinidad and Tobago. Last year, Vice-President Joe Biden was here to discuss ways to increase trade with Trinidad and Tobago. What are the main sectors where you see opportunities for American investors?
Clearly, I’m mostly interested in the diversification areas such as financial services which is one of the areas we are putting a lot of emphasis on. Very recently, we’ve had both Royal Bank of Canada and Scotia Bank put their “back-offices” in Trinidad and Tobago. Business process outsourcing in Trinidad and Tobago is very promising; we are looking at it very aggressively and we hope to see more multinational companies implementing “back offices” in Trinidad and Tobago. We are more or less on the same time as America and Canada and we speak English, so it’s essentially near-shoring instead of off-shoring. Many companies are now pulling their services out of India and bringing them back to the US. We offer a much cheaper service than the US much closer to home than India. Tourism; previously we hadn’t paid much attention to tourism because our main focus was on oil and gas. Tobago is essentially an unspoiled beach paradise. We haven’t put much emphasis in the past on the development of the tourism because it was easier to put a drill in the ground for oil and gas. However, it has tremendous potential for American, Canadian, and European investors.
Another area with tremendous potential is downstream energy services. We have a cadre of highly skilled people in the sector which has been developed over the last 100 years. We’ve never really packaged it and sold it as an industry in a more formal manner before. We want to provide those services in a more formal manner to the world.
What do you feel have been the biggest challenges of the diversification so far?
When I did my Thesis for my Master’s, it was entitled “Hostage to Crude”. You may have heard of “Dutch Disease” where you put all of your eggs in one basket because you have this fabulous resource. Eventually, it turns out to be a curse because when something catastrophic happens, you have nothing else to fall back on. What has happened in Trinidad and Tobago is that we’ve suffered from boom and bust economics dependent on the market for oil and gas which we have no control over. In the meantime, our cost of living is pegged at a fixed price, which tends to be higher than it should be due to the Oil and Gas. Our expenditure in the budget is based on an estimated price for oil and gas. If we don’t get that price, we have a significant shortfall. We’re trying to limit the significance of oil and gas so we aren’t dependent on that one commodity. However, we’ve always managed to get through those times, so it’s hard to convince people that we need to change it. There are cultural issues involved which means we have to force change through the work ethic. For example, when we wanted to change the process for business licensing from 43 days to 3 days, there was a lot of resistance. When we went through the individual processes, to become more efficient, there had to be justification every step of the way, and then I went into Parliament to force cultural change. Now, by law it must be done within that 3 day period. It was not easy, but it needed to be done. Sometime we get too comfortable and it takes a lot of hard work to make necessary changes.
You are doing so much to promote investment and make it easier. But what are doing to communicate this message to foreign investors specifically in the US?
Probably not enough. It’s been a process that we wanted to get deeply enough into before we starting to sell it. The last thing we want to do is to have an investor get excited, come to TT and we’re not ready for them, and what you’ve sold them on the label is not what’s in the box. We’ve been working to feel really comfortable that what we’ve sold is what we can do consistently. We are trying to get that right so the word-of-mouth is going to be positive all the time. That’s not to say we’ve done nothing in the meantime to promote ourselves. In September, we’re hosting a forum with a magazine called “Foreign Affairs” in Washington for business people in a joint venture. We have done some type of advertisement in the US through other magazines although we haven’t gone out there with a big bang. We’ve got it right enough now to feel comfortable to get out there and start to market our services. Recently, I was a feature speaker at the American Chamber of Commerce in Washington where I had the opportunity to speak to business people at a very high level.
What are your thoughts on the CARICOM single market and the potential impact on the region?
Originally it was set up as a trading block to face the outside world. I’m not sure how relevant that model still is today. There are a number of countries which are at significantly different levels of development while Trinidad and Tobago is highly developed. What is good for Trinidad and Tobago might not be good for a lesser developed market which might decimate the local manufacturing sector. It’s a fine balancing act, and it is the reason why we’ve had to have bi-lateral agreements with Guatemala, Panama and El Salvador rather than having CARICOM arrangements. We’ve got to understand the nuances of the new global trading order and have policy decisions that work accordingly for each country, so the very small countries/economies don’t pull the larger ones down.
Let’s imagine you are in the business lounge at JFK and you strike up a conversation with a potential investor. What would you tell him to make him reroute his trip to come to TT right away?
Trinidad and Tobago has the right mix of almost everything that you would classify as the perfect investment environment. There are no restrictions on foreign exchange. There are no restrictions on repatriation of profits. There are significant investments on our books to encourage foreign investors. We have “free-zone areas” linked to a market of over 600 million people. Our electricity is cheap and our energy prices are very low. There are frequent flights in and out of Trinidad on a daily basis to Canada, the US, and the UK. We are a fun-loving people, with a fascinating culture, perfect beaches, and you can’t forget carnival. Really, we are a perfect mix of everything you would want as far as setting up a successful business.
0 COMMENTS