Monday, Dec 18, 2017
Finance | North America & Caribbean | Trinidad and Tobago

Financial epicenter of the Caribbean


3 years ago

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Trinidad and Tobago has successfully navigated the turbulent global economic crisis with long-term growth and a clear vision for the future. Its economy recently expanded by 1.6% and such steady, reliable growth has helped transform the country into a regional powerhouse.

The Caribbean republic of Trinidad and Tobago has established itself as one of the best places to invest over recent years with manageable economic growth, a consistent political set-up and a developed financial industry.

Following steady growth during the global economic crisis, it is now looking to bolster its position as one of the Caribbean’s most reliable investment destinations. In 2013 the economy grew by 1.6% and inflation remained stable at 2.2%, enabling Larry Howai, the country’s Minister of Finance, to go to the international market for a benchmark issue of a bond of about $550 million.

“It was pretty well received by the market and was 10 times oversubscribed,” he explains, but adds that demands to upsize were refused in order to keep a tight control over expenditure and debt levels. What it proved however was the confidence that global markets have in his nation’s economy, a fact reflected by credit agencies such as Moody’s and Standard & Poor’s, whose ratings state the country is the fourth best in the Western hemisphere after the U.S., Canada and Chile.

Steady and managed growth in this country of just over 1.3m people has also produced sizable dividends, not least foreign exchange reserves totaling $10 billion and a significant heritage and stabilization fund of around $5 billion.

A key factor in the expansion of Trinidad and Tobago has been its energy industry, which remains vital to the nation’s growth. Since the current government took power, investments have risen from $500 million annually to nearly $2 billion last year, which is set to rise further following the green-lighting of projects by energy giants BP and BHP. Such plans have helped to keep unemployment at exceedingly low levels – currently around 3% – and Mr. Howai admits that there are labor shortages in place.

“We need to find ways to increase our labor force, possibly through immigration,” he says, adding that building on the country’s highly educated workforce is also key to future growth.

In addition, T&T has been seeking to build up its non-energy sectors, with plans to improve its port and shipping facilities, for example, as well as creating around 1,000 new jobs in the financial services industry last year.

Such developments could assist the country’s increasingly important role in the region as a financial hub between the U.S. and Latin America. U.S. President Barack Obama and Vice-President Joe Biden have both visited in recent years, and the country plans to strengthen ties further to bolster its financial hub status and increase industrial relationships.

A new securities act and expanded insurance regulations have been put in place to support this development, while a Financial Intelligence Unit has been set up to deal with anti-money laundering and counter-terrorism financing.

The country has also launched a variety of stock market floatations and intends further IPOs to power more growth, including those of gas firm Phoenix Park, the Home Mortgage Bank and Trinidad and Tobago Mortgage Finance (TTMF).

One of T&T’s oldest financial institutions is the Republic Bank, which has been offering services for 176 years. Executive Director Nigel Baptiste says the growth of his institution shows the potential for the country’s financial services sector to expand abroad. Republic Bank’s total assets rose by nearly 7% from December 2012 to December 2013, and it is now in the process of expanding into Africa with the acquisition of shares in Ghana’s HFC Bank.

“Today with technology, nothing is far away,” Mr. Baptiste says. Republic Bank had been working within the gas and oil sector for some time locally and he says moving into Ghana, which also has natural resources, provided obvious synergies. “We saw an opportunity to offer similar services in Ghana, while at the same time helping to link Trinidadian and Ghanaian companies together,” adds Mr. Baptiste.

Experiencing such expansion, it is no surprise that Mr. Baptiste agrees with Mr. Howai’s vision of developing T&T into a major financial hub, linking Caribbean nations with U.S. citizens and companies. And with a solid democracy, a highly educated workforce and low operating costs, both men believe T&T offers competitive advantages that will enable both investors and the country’s citizens to prosper.

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