"The private investment sector has been a troubling situation. I have really never understood the argument of waiting or the argument of confidence. I honestly believe the argument of confidence is really an excuse for inaction and in that sense the fiscal regime that was put into place last year and continues has provided the support for that investment. The financial system has excess liquidity and, therefore, the question of getting funds is not really important. We have deliberately pursued a policy of lowering interest rates during the last year. We did it deliberately in the areas that we can directly influence, in the Agriculture Development Bank..." -Finance Minister Winston Dookeran, Chamber of Commerce, October 11
Quite an indictment by the Finance Minister on the business community and done at the headquarters of the T&T Chamber of Industry and Commerce. In effect the minister said there was no industry, and there was little enterprise and entrepreneurship within the membership of the Chamber. The unsaid, but implied, was to the effect that the businessmen were prepared to live on the profits of the energy sector without making a serious contribution to transformation and sustainable economic development.
Previous governments and ministers have not said it as directly as Dookeran did, but those governments along with university economists and a range of social com- mentators have been critical of the "buy cheap and sell expensive" mentality of the trading segments of the business community. Surely there are a few outstanding examples of corporate organisations successfully involved in the production of replacements for local and regional consumption and products for the export markets; especially so categorised are those manufacturers who survived the difficulties of the late 1980s and early 1990s.
Overall, however, the "risk-averse" tag pinned by Dookeran on the business community is deserving. Under the heading "Towards a bold new spirit of enterprise" (August 3), this columnist articulated a similar view against the background of excess liquidity in the commercial banking system; the flush liquidity status of the banks was also pointed out by the Governor of the Central Bank in July of this year. The column of August boldly stated that the excuse of "lacking confidence" and waiting for some golden state of perfection to appear before considering investing import replacement and export production was a result of the historical circumstances of being part of a Metropolitan economy which determined that T&T, like all of the Caribbean, would be producers of raw materials (sugar, cocoa, coffee etc) and the consumers of the manufactured goods of Britain.
"Those problems have to do with the absence of entrepreneurship, investment in research and technology, and the boldness of spirit to strike out in new ventures," stated my column of the above date. There is therefore agreement with the Minister of Finance that the local private sector has to advance from its state of paralysis to discern possibilities, make the investments and create products and services for export markets, including the several in which we have free-trade agreements. However, both Minister Dookeran and his colleague, Planning Minister Beau Tewarie, seem to be suggesting that Government has done enough and so the private sector is in need of no further institutional support. Not nearly so.
Every modern economy from the Industrial Age in Britain to the explosion of the American economy in the post-WWII era, to the revival of Europe based on the American Marshall Plan, Japan, the newly industrialising countries in the East, South Korea, Singapore, Malaysia and India and China over the last decade has been first guided and driven by the governments of those countries. In the instances of the industrial countries, the governments' guiding hand is, notwithstanding all the pious, almost religious chatter about the private sector and the free-market system.
Minister Dookeran in his statement to the Chamber post-budget forum ventured that the "Government cannot pick winners, investors must do." But that is only so in part. As I have written about my experience having observed first hand something of the results of the "Korean Miracle" (Business Guardian, September), it is the Government, indeed a government led by an acknowledged dictator, that has constructed over 915 industrial estates, driven the linkage between both state and private universities to research, technology and innovation for local production and transformation and been at the centre of many aspects of the transformation.
The Government here has many responsibilities to fulfil, more so with a private sector that has not historically been involved in innovation and risk-taking. In a follow-up piece to the first column, the need for development-oriented financial institutions (as the commercial banks are focused on funding commerce and consumption) was observed. The reorganisation of the foreign service (here and abroad) to serve the needs of trade, the targeting and giving support to sectors based on economic trade intelligence from the foreign missions and lending support are all outstanding developmental initiatives for the Government to spur the efforts of the private sector.
Internally, it is not sufficient; it is indeed quite wasteful for the Minister of Finance to allocate $8 billion to education without a complete revamping of the curriculum to reflect the needs of industry and production. So too must the Government reorganise the GATE programme to produce the technical and engineering skills required; and to point the local universities into areas of research and technological development that is linked directly to industrial production. Given the historical emergence of the private sector, the Government has to work with it to find ways to nurture and develop the entrepreneurial vision and skills required.
One very deleterious effect that has served to entomb the entrepreneurial spirit here in T&T had been the availability of the rents from oil and gas. Cursed with such a cushion, the rest of the economy, state and private sector, has been satisfied to live on the rents collected. In South Korea after Japanese colonialism and destruction and pauperisation by the Korean War, Korean businessmen had nothing but ambition and drive to get their country out of that state. The work of the Government and its involvement in the transformation is far from being done.
THOUGHTS
• Overall, the 'risk-averse' tag pinned by Dookeran on the business community is deserving.
• There is agreement that the private sector has to advance from its state of paralysis.
• The Government has to work with private sector.