Trade Minister Cadiz: Building local content needs balance

The issue of developing local content is a complex one, said Trade Minister Stephen Cadiz. Cadiz said the root of the problem seems to be having the ability to strike the right balance to establish a local content policy for the energy sector. He admitted that the energy sector was the most difficult sector to impose local content because it is difficult to strike that balance.  Cadiz identified several factors that impacted on striking the right balance:

• Legislation

• Issue of standards 

“Who are going to set these standards?” Is there an institution established for this? Is the Bureau of Standards capable of such a responsibility?

• Financing: Are financial institutions willing to finance with the high risk?

• Are companies willing to invest in research and development (R&D)?

 

Cadiz said there is little investment taking place in research and development.

It’s about striking this balance and how we get to do it. How do we build capacity to be able to have local content and where does that capacity start? How do you start building that capacity? There is deficiency in many areas. They either don’t have the technical support to do it, they don’t have the finance to do it, and they don’t have the inherent expertise in that particular field to do it.

Cadiz said Brazil is a hard market to break into because of its strong local content.

He said while the Government has a role to play, how is the sector to go forward if there is legislation, but a lack of standards, capacity and little investment in R&D.

Cadiz said, in some instances, it’s not the fault of the local companies which have to compete with foreign companies that come to T&T and do not have to pay any duty or VAT. 

 

“It becomes hard for the locals to build capacity when they have to compete at a disadvantaged position.” He said what would help is for companies to start branding T&T. The concept of local content starts with believing in oneself and the local brand. Cadiz drew on his own experience travelling on Caribbean Airlines Ltd (CAL) while in New York and noting that no local produce was served. He said CAL must ensure that the T&T presence is maintained in all of its lounges. The Business Guardian posed the question to CAL’s chief executive officer Robert Corbie, who said he spoke with the minister and that the situation has been rectified. Passengers, Corbie said, could now have a full range of options, including local rums. He explained that the lounge belongs the JFK Airport, not CAL. Corbie said CAL is working with them to ensure our products are included. He said they are also looking at all their lounges throughout the system. Another example, Cadiz mentioned was the T&T cricketers’ uniforms that are made in India.

“Unless, we address these issues, then we would be talking about local content policy for the next year.”

 

Attitude change

Suresh Gangabissoon, general manager of Trinidad Offshore Fabricators Unlimited, advised his business counterparts that local content must be taken more seriously and they must be willing to change. “We must take a stock of what we are doing wrong and genuinely want to improve our approach to the issue.” Part of the solution is investing in employees. “We have to invest in our employees and equipment in order to improve our overall productivity. Our productivity needs to reach world-class standards.” He said there has been a longstanding demand for experienced craftsmen. He said the industry has been employing young and inexperienced craftsmen, and employers have had to spend much time on training them.

 

Gangabissoon said while the onus is on the private sector to improve, part of the responsibility lies with the Government to help the sector strike that balance. He appealed to Government to level the playing field regarding foreign companies coming in to compete against locals for products and services. He said some contracts are structured to exclude locals. “Not to mention that foreign companies, which do not have to endure ocean fright and taxes in some cases, while locals have to pay these heavy cost for imported material and ocean freight. “We are challenged to remain competitive.” Gangabissoon said he wanted to see “more bite” regarding more efficient monitoring systems, proper systems in place for work permit requirements, accountability and transparency.

 

Local content policy

Roger Packer, president of the Energy Chamber, said for experts with more than 100 years in the energy industry, they have not done a good job in driving local companies. “We have 104 years’ experience in the upstream area and 50 years in the downstream and we are highly respected for the level of services we provide as drillers, drilling supervisors, to name a few, so I am proud of what we have done.” “But with our long history, we have not done a good job—we have not really drive our local companies more.” He said United Kingdom, which is relatively new in the energy sector, has already implemented a strong local content policy. “Countries like Brazil and Norway are ahead of us.” Like Gangabissoon, Packer said T&T’s energy sector needs  to look at what it’s doing wrong and correct it. He noted that since moral suasion hasn’t work, the sector needs to work differently to develop a stronger presence locally.