T&T withstood the ruinous effects of the global financial crisis from which many world economies, not as fortunate, are only now showing signs of recovery. Ian Narine, general manager of Guardian Asset Management, has questions about the new strategies being drafted and, ultimately, implemented to safeguard T&T's stability as well as the rest of the Caribbean, should the global economy again tumble.
He was not convinced that T&T, being one of two of the largest economies within Caricom, had learnt all the lessons needed to cushion the local economy from such a recurrence.
"The global economy is only now emerging from a financial crisis on a scale never before seen. With the issues in Europe still unresolved, many are now suggesting that we may be on course for another crisis. Here in the Caribbean, we must ensure that we learn the lessons from the last crisis such that we do not repeat those mistakes, because unlike the global powers, we simply do not have the resources to withstand another round," he said. He was speaking at the launch of the Fourth Annual International Conference on Business, Banking and Finance held at the St Augustine campus of the University of the West Indies, on June 22, with the theme Restoring Business Confidence and Investments in the Caribbean.
Buoyancy factor
Narine said the goal of the meeting would benefit the financial services industry beyond measure, but questioned if the buoyancy factor was being too easily magnified. "The first objective towards restoring confidence is to define confidence itself. It is often taken for granted, but simply put in our context, confidence is the conviction that tomorrow will be better than today." He expressed hope that the papers presented and discussions held would fuel the debate necessary to lay the path that would lead to a future that was better than the present. He said such a future required the cooperation and constructive interaction of all stakeholders: governments of the region, regulators, market actors and the public.
"We are one of the largest investment management and advisory firms in the country. We boast funds under management of over $8 billion and manage the investment portfolio of Guardian Life of the Caribbean which is the largest indigenous insurance company in the English speaking Caribbean.
"The role of Guardian Asset Management is, therefore, instrumental in the lives of every insurance policyholder within the Guardian Holdings Group, and this list includes thousands of persons and companies in T&T, Jamaica, the Eastern Caribbean and the Dutch Antilles." While the investment climate across much of the Caribbean was vital, Narine said it was time for regional leaders to follow through in a timely manner on the policies they had promised to adopt.
Proactive regulation
"Our inability to proactively address regulatory issues and the lack of urgency regarding legislation dealing with the financial services industry will not serve to inspire confidence. In T&T, the updating of the legislation regarding the Securities Industries Act and the Insurance Act is long overdue. The lengthy timeline towards the updating of the Financial Institution Act has cost us dearly. Let us not repeat that scenario with these two other critical pieces of legislation. "Even though passage of these individual pieces of legislation was integral to restoring confidence, it was just the first step, since the only way to maximise our potential was to quickly harmonise industry legislation across the region. We can't afford to have a population of six million people operating under multiple frameworks. This increases the cost of doing business not just intra regionally, but extra regionally as well and once again the status quo does not inspire confidence."
He questioned why several initiatives geared toward strengthening regional economies were still in stasis. They included: the Caribbean Single Market Economy (CSME); the Caribbean Stock Exchange; and the Caribbean Court of Justice. He praised UWI in conjunction with the Sir Arthur Lewis Institute of Social and Economic Studies and the Caribbean Centre for Money and Finance for taking the mantle of engineering these discussions. He said that without public discourse, the community remains rooted in fear, which is the antithesis of confidence.In Narine's opinion, confidence thrived when there were reasonable and known parameters in assessing an outcome. He noted that one's inability to implement clearly articulated goals and objectives will not inspire business and investor confidence.
"If business decisions are truncated by intended governmental and regulatory actions, which are always late in coming to pass, then business will simply go elsewhere because time is money. We operate in a global economy where capital over the past decade is more mobile than at any time in history. "Such mobility creates intense competition and growth of many emerging market economies have resulted in a larger pool of attractive investment projects for investors to consider. This creates a profound challenge for the Caribbean region, because we are not considered emerging market, but rather we stand further out on the investment spectrum listed as frontier markets. Our hurdles are, therefore, far greater and our opportunities more fleeting."
The asset management official pointed to the fickle nature of the global capital market and recalled how the oil and gas prices plummeted from US$147 per barrel and US$13 per mmbtu respectively to US$30 (for oil) and US$4 (for gas). He wondered if these prices were purely on the commiserate fall off in global demand. He said, the decline was not the result of a fall in physical demand, but rather, it was due to the impact of global finance. "Such fickleness makes for a very fragile definition of financial success and prosperity and so, we must always be on guard, never take our position for granted and always be on the look out for tail risk or the proverbial black swan event."