T&T would do well to look for markets in Latin America's rapidly growing economies, says Nirad Tewarie, the chief executive of the American Chamber of Commerce of T&T (AmCham T&T).
"By 2020, Latin America's GDP is expected to reach US$10 trillion, double that of 2010, with 640 million active consumers. This can translate into a ready market for many local products. Economies such as Mexico, Guatemala, and Panama continue to experience steady economic growth," said Tewarie who spoke last week Wednesday at AmCham's seminar on "Doing business with Latin America" at the Hyatt Regency Hotel, Port-of-Spain.
He gave the example of Peru, one of Latin America's fastest growing economies.
"Another thriving economy, in Latin America is Peru. Over the period 2002 to 2012, the Peruvian economy almost doubled in size, and with continued GDP growth of even a modest 2.4 per cent in 2014, the World Bank has dubbed Peru as one of the best-performing economies in Latin America," he said.
He said local companies must look for increased trade opportunities with all countries but a special emphasis must be placed on Latin America.
"AmCham T&T believes that we must focus more on the diversification of markets with an immediate emphasis on Latin America. This is the rationale for this event. In support of this diversification of markets, AmCham T&T offers our members unparalleled access to the business community and governments in this hemisphere. From our close and direct relationship with the largest business organization in the world, the US Chamber of Commerce, which we visit at least once a year, to our 23 sister AmChams in Latin America and the Caribbean," he said.
Tewarie said despite concerns about the economic climate that the country operates in, AmCham remains optimistic about the future of T&T's economy and its growth potential.
"At home in T&T, we can at least be proud that we seamlessly transitioned from one Government to another. However concerns about the economy linger as we prepare to enter a new fiscal year with a new government.
"High on the list of concerns is revenue generation, as our energy exports account for about 70 per cent of the country's total exports, and the prices of oil and gas continue their downward trend with no immediate turn around in sight. Add to that the frustration of the business community with the perennially inefficient government bureaucracy and, more recently, periods of US dollar shortages," he said.
Tewarie quoted from Norman Christie, Regional President of bpTT at AmCham's T&T's Economic Outlook Forum earlier this year, who said: "We should never let a good downturn go to waste. If we are really clear about the circumstance we find ourselves in then we must focus on what we should do to make the best of it. We should not lose focus or get distracted because if we do the world is very competitive. In a broad sense what we should be looking at is how competitive can we get in the circumstances."
Tewarie said AmCham T&T has brought to the table the possibility of making the Piarco International Airport an airport which can be pre-cleared for entry into the United States.
He said they believe that this is not only a feasible initiative but one which will offer clear advantages in terms of fostering a better relationship with the United States as well as positioning T&T as a portal for increased business travel throughout the Western Hemisphere.
He added, if they were to be successful in this initiative, creating a real logistics cluster would be even more of a possibility.
"Coupled with that, we know that Government of Chile is keen on discussing the possibility of an air services agreement with T&T. This too is because T&T is strategically located not only for the movement of people but also of cargo throughout the Americas. AmCham T&T supports this initiative and will work with our sister AmCham in Chile as well as the governments of both countries to make this intent, a reality," he said.
Diversification
One way to improve the economy is to diversify T&T's industries and also to cut the bureaucracy in the economy, Tewarie said."While the non-energy sector, periodically records some growth, if we are truthful, as a country, we cannot say that, outside of the energy services sector, and maybe financial services, we have truly developed globally competitive industries on which we can build for growth beyond oil and gas.
"With the economic liberalization of the 1980s, our firms adapted and grew to the point where our Caricom neighbours often complained of our dominance in the region. The prospects for future growth in Caricom are not great, although there are definitely opportunities to be exploited in Haiti, Guyana and Suriname," he said.
Tewarie quoted from Jim Conway, executive director Express Delivery and Logistics Association who had to say about AmCham's work: "As someone who has worked in Washington for more than 30 years, I am well aware of the high degree of difficulty in obtaining a face-to-face meeting with senior government policy regulatory executives. I thus found it remarkable and especially valuable to be able to participate in a meeting which Amcham arranged with the Assistant Secretary of the Department of Homeland Security recently in Trinidad. Our meeting was extremely productive and resulted in an invaluable contact point for our Association in Washington. Our Association is deeply appreciative of AmCham's facilitation of this meeting and a tip of our collective hats to the organization's ability to connect directly with senior policymakers."
Referring to the issues raised by Conway, Tewarie said the local express industry, including DHL, is concerned about the impact on the business of somewhat arbitrary changes to inspections and fees.
"We therefore recommend that T&T introduce a de-minimis value of US$200 under which packages will not be subject to inspection. The cost of inspecting these low-cost, low-taxable items far outweighs the revenue derived from the searches. Should the government agree to implement this suggestion, which is contained in our 2015-2016 budget submission, the focus of the Customs and Excise Division and its limited resources can be on the higher value items, which yield more tax revenue. Efficiency of tax collection rather than higher taxation should be the goal."
He believes that raising taxes should not be the first option but increasing the efficiency of tax collection.
"While the question of revenue generation remains, we firmly believe that increased taxation should not be the first resort. We anticipate that some form of taxation may be proposed in the upcoming budget such as a return to the Land and Building tax. If so, we urge the government to be mindful of the impact on business.
"On the flipside, AmCham T&T does support increased efforts to make the tax collection system more efficient. In this regard, we want to assure the government that they will have in us, a partner who is willing to collaborate on the proposed Revenue Authority, as a means of making the tax collection system more efficient and effective."
Trade Minister
Trade Minister Paula Gopee-Scoon who also spoke at the AmCham Seminar said market access is not the same as market presence.
She referred to data from ExporTT which show that while there are more than 200 exporters to Caricom and North America where preferential markets exist, there are less than 15 domestic firms exporting to Latin America, which she said is not good.
"The Government believes that market presence in Latin America can only be achieved through a sustained programme to re-build and sustain our manufacturing and services sector," she said.
She said the new government is going to complete and fully operationalise the Tamana Intech Park and the Piarco Aero Park, upgrade all existing industrial estates and set up new industrial parks in Special Economic Zones (SEZs).
"This will be in all areas of T&T and I want to say that Point Fortin is included in that too," she said.