Not daunted by the sharp economic downturn T&T has experienced in the last three years, CEO of Label House Group Ltd (LHG) David Lewis says periods of economic decline are the best times to...
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Economic diversification via maritime industry
Successive administrations have paid nothing but lip-service to economic diversification via the maritime sector. Even as the country’s GDP continues to decline, along with our long-term sovereign rating, the lip-service continues and it appears neither policy nor institutional mechanisms are being put in place to achieve this diversification. Even if efforts are being made, they are painfully out of step with the opportunities which abound now.
There currently exists a multitude of investment opportunities in the maritime sector including; bunkering (establishment of a regime rather than the current ad-hoc strategy); transshipment of commodities also known as ship-to-ship transfers; dry-docking and ship repair; and logistics.
All these activities can generate significantly large sums of foreign exchange, and do not necessarily require Government funding. However, they all require a significant level of government facilitation, be it via policy, institution, regulation, and/or legislation. This facilitation remains woefully inadequate, and absent policy and strategy, outdated regulation and legislation, and weak institution continues to stymie the growth prospects in the aforementioned maritime segments, resulting in significant loss of international competitiveness and reputation, foreign exchange, and employment opportunities.
All of this persists at a time when we are facing serious decline in the more traditional shipping related businesses, and the country’s overall GDP is declining.
A senior economics lecturer from the University of the West Indies is being quoted in a recent newspaper article as stating that the government remains focused on the energy sector but we are not seeing any aggressive plan for the non-energy sector.
The Shipping Association (SATT) has been consistently lamenting this, frequently highlighting the opportunities in the press, and also directly to successive Governments. While the Government drags its heels, we are losing significant opportunities, not to mention, millions of dollars in foreign exchange. These opportunities of which we speak are not one off, but are significant to propelling us towards becoming regional leaders in specific maritime activities, as well as streamlining and growing existing ones.
All that is needed is the will to apply the required urgency and/or aggression to facilitate maritime business through short, medium, and long term strategies, all of which when combined will cause a sea-change in this sector.
The maritime industry is a dynamic and complex one.
In our view, the continued neglect of this sector demonstrates a lack of understanding of the sector by the previous and current Administrations, and an unwillingness to embrace those with the knowledge and expertise required to bridge the gap.
The SATT has time and time again attempted to contribute towards bridging the experiential and expertise gap by direct contributions from its members, and through technical assistance via reputable international affiliates such as the United Nations Conference on Trade and Development (UNCTAD).
The Government needs to get serious about its diversification rhetoric now before we get to a point of no return.
Running concurrent with any facilitation and diversification is of course the urgent need for regulatory and legislative reform. To be more direct, urgent reform is needed in the areas of customs administration in particular, port reform and, to a lesser extent, immigration.
Institutional capacity also needs to be strengthened through a proper maritime authority versus a services entity. A significant piece of legislation, the Shipping Bill has been a work in progress for at least 10 years now. This bill, when enacted, will recall an archaic piece of legislation called the Droughers Act, an outdated piece of legislation from colonial times, which prevents vessels from calling both twin islands on one approval. In fact, due to the Droghers Act, it is easier for a vessel departing either port in Trinidad to go to Barbados and return to Trinidad than for the vessel’s next port of call to be Scarborough. It is also worth noting that the existence of this piece of legislation contributes to the need for a heavily subsidised cargo ferry service to Tobago.
In follow-up articles in this series, we will explore how each of the aforementioned impacts not just maritime business but business in general. Given its historically significant impact on trade, customs administration will be focused on first. We will explain how it is our customs administration came to be ranked among the three worst performing in the western hemisphere in a December 2017 report by the Inter-American Development Bank (IDB).