Representatives from manufacturing, tourism, the trade union movement, stakeholders from various sectors of the business community and other stakeholders gathered at the diversification conference last Friday, as the Government and its agencies highlighted plans and challenges on diversifying T&T’s economy. There is significant debate about which sector should be used as the platform for diversification? Should the services sector, the manufacturing sector or even the agriculture sector be used as a platform for diversifying the economy? Some stakeholders spoke to Business Guardian outlining their suggestions and views on methods for diversifying the economy.
Managing director of National Canners, Jeremy Matouk, said diversification would exist when there are opportunities for investment. He said for the last ten years, T&T’s spending boom has eroded T&T’s competitiveness. “There are companies in T&T that have natural competitive advantages but only a few. Most companies need to compete on the world market on level terms. Our competitiveness has been eroded and unless it can be rebuilt, then you are not going to see the economic activity,” Matouk said. As the chief executive of one of the country’s successful manufacturing entities, Matouk said there are certain things that the Government should note. “The lack of competitiveness is holding back the increase in economic activity in T&T. I think the previous government is largely guilty of overspending. The huge construction boom which took place, well, half of the buildings are still empty and everybody’s costs of building a home doubled. It went from boom to bust in the construction sector. Why wasn’t it stretched out over a longer period? Why was so much given to foreign companies? Why was that money not spent at home? It was like a mad rush to build everything one time,” he said. Referring to a possible solution, Matouk said he is not in favour of stimulus, unless “stimulus spending is going to be productive and it is going to cause increases in competitiveness in T&T. Infrastructure spending may be useful but government spending simply stimulates consumption and consumption stimulates foreign-exchange usage.” Regarding deficit spending, he said, “I don’t know you can stimulate a dead body, you have to bring it back to life first. Competitiveness is the lifeblood. They have to realise you must have a competitive economy, you can’t run a competitive company in an uncompetitive economy.”
Matouk said there is need to look at the critical factors of our competitiveness and address them. He said there is no lack of entrepreneurs in T&T and diversification would come “with the right incentives in place.”
Gerry Brooks, chief operating officer of the ANSA McAL Group, said the systems that the business community use need to be improved, especially the systems used at the Port of Port-of-Spain. Brooks said the inefficiencies must be addressed because “when we compete internationally, our products have to be able to land in an international market at the right price, be of the right quality and be able to have the market and the support to be able to continue to command ongoing marketspace and customer demand.” He said that between 2008 and 2012, the gross domestic product (GDP) had fallen. “In most cases, it is either zero or negative and we have run two budget deficits, so we have had four years of negative growth. Many countries around the world are in our position and across the region are in our position, but we cannot continue like this,” he said. With natural gas prices falling and earnings from gas prices declining on a consistent basis, Brooks contends, “If you take a look at gas, into things like ammonia and urea, because of the gas-availability issue, the output has fallen. In some cases, plants are operating between 90 and 92 per cent capacity, which means that the knock-on earnings have reduced significantly and our oil production has fallen. We have to diversify.” Brooks substantiated his point, saying diversification cannot occur in two years or even three: “Diversification, in my view, is a six, to eight, to ten-year obligation. It is not going to happen in three years.”
There is a need to look at T&T’s transportation logistics and productivity.
T&T Manufacturers’ Association (TTMA)
Diversification is not an option—it is something that must be done, said Dominic Hadeed, TTMA’s president.
“It’s not if we are going to do it or not. We have to actually do it. We have to leave oil and gas, before oil and gas leaves us. If we can’t solve our problems or diversify our economy when we have the resources to do so, how do we ever have a chance of doing it when we have less resources?” Hadeed suggested that diversification is something that must be planned because “it can’t be something that is just lip service, we have to stop lying to ourselves with respect to what is or is not really going on, deal with the brutal facts as they are, then put together the climate that puts us out of that dependency syndrome.” He is calling for the “disincentives” to doing business to be changed.
T&T Chamber of Industry and Commerce (TTCIC)
In a statement, TTCIC identified its concerns on the issue of diversification. The chamber said even though certain sectors of T&T’s economy have been identified to diversify T&T’s economy, TTCIC is concerned that “there may not have been sufficient research completed to ascertain that the sectors chosen are, indeed, the ones which will give us (T&T) the long-term, sustainable economic development that is required.”
The six sectors that the Ministry of Planning through the Economic Development Board have pinpointed for diversification are:
• Food sustainability
• Culture and creative industries
• Financial Services
“While several sectors for diversification were identified previously, no operational plans were being worked on for the development of these sectors.” Apart from the six pillars that have been set aside, the TTCIC said it is pleased that “the energy sector remains one of the sectors in which further diversification is to take place, using the skill set and resources that this country already possesses in this area.”
TTCIC said another concern it has is the quantity of investment promotion agencies that has the same goals for investment in T&T. A partnership approach is needed, said the TTCIC. “The chamber would like to be assured that all ministries will work together to ensure that the resources and infrastructure required—eg skill sets, reduction in crime, ease of doing business, good governance, etc—are all being addressed in parallel.” Regarding resources for these agencies, TTCIC said a more targeted approach to the allocation of budgetary resources is necessary “to ensure that the nation receives full value for money spent on the diversification and investment efforts.” “The chamber believes that long-term economic sustainability needs to be defined in real economic terms so that our (T&T) progress can be measured and assessed as we go along. It is our understanding, however, that such a body of work will be undertaken shortly, to validate the sectors.”
Promoting T&T as a destination starts with the State, said Kevin Kenny, President of the Trinidad Hotels, Restaurant and Tourism Association. “No money is being given to market the country. If there is no money to market the country, the odds of us succeeding is smaller.” Regarding marketing Tobago, he said T&T is spending “about US$2 million in direct marketing overseas and we need to be spending US$50 million. Destination demand is a responsibility of the State. It is not the responsibility of the individual hoteliers.” Kenny contends not enough is being done to promote tourism. He reiterated that development of a tourism development fund is required so that “all the tourism assets which belong to the State are put inside this fund and we use the assets as equity investments in new tourism facilities which is a public/private-sector partnership.” Returns from tourism would not be seen if T&T does not put the required resources in place.
Public Services Association (PSA)
Watson Duke, PSA president, said there is need for trade unions to be given more respect during the negotiation process. “If they (trade unions) are allowed to sit at (the negotiating) table with equal respect, equal opportunity, equal resources, a good part of our contribution would come from motivating the members (and therefore) create a stablised workforce.”
Chaguaramas Development Authority (CDA)
Daniel Solomon, CDA chairman, said the upcoming plans for the CDA are expected to boost the economy.
“The economy would be boosted through small-, medium- and large-scale entrepreneurial businesses across all the sectors. Food, marine and tourism—these all pertain to the CDA, all the varying activities. If you take the broadwalk as a model, it attracts people to the sea. It deals with economic benefits in terms of people who may have vendor booths operating, so the small businesses promote local cuisine, such as shark and bake and the rest of food that you find on Maracas beach is now available, not only to local tourists but to foreign tourists. You also have the safety aspect, we have close-circuit television on the broadwalk, there is solar lighting and lots more.”