Titters circulated in the Senate yesterday when Opposition Senator Wade Mark slammed down his latest declaration to Government.
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Who’s investing in T&T?
To the untrained eye, it would appear that the sentiments of doom and gloom are all that there is to the T&T economy right now.
While concern about our nation’s economic future may certainly be warranted, anyone willing to peer more deeply would realise that amidst the current economic contraction, there is a spate of investment activity presently taking place in the country. This could not have been made more obvious than at the recent launch event for the Brix Hotel in Port-of-Spain.
John Aboud—chairman of the Superior Hotels investor group (the local owners of the hotel)—noted quite proudly, that collectively, he and his partners were putting roughly $1 billion of capital to work across various projects in the country.
By no stretch of the imagination is Mr Aboud alone.
Many others are ploughing money into malls, hotels, car parks, office buildings, mega stores and even housing projects across the country.
Within the energy sector, for example, roughly US$10 billion is expected to be invested over the course of the next five years—good news.
Such investments demonstrate, on one level, a certain amount of confidence by the private sector in this country’s ability to weather the current economic storm. It also implies that the installed capital base of the country is strong.
Put differently, there are deep-pocketed agents in our society looking to generate returns on their resources; whether personal or borrowed.
Truthfully, as “bad” as T&T is, and while there is unquestionably much that needs to be fixed, a stable political system, and a relatively skilled labour force still render the country attractive—easy access to capital and relatively cheap energy also help as well.
That said, while investment is typically welcomed, there is a question that needs to be asked that has been somewhat ignored as our economy has evolved: outside of investments in the energy sector, are we as a country presently receiving the type of investment that’s best for us?
Such a question may seem to fly in the face of conventional wisdom that investment, generally, is a “good thing”. But, in T&T’s case, we are known to defy generalities.
Here’s the rub: while investment dollars will always flow to where the best possibility of a return is perceived to exist, if such dollars are going to areas that will, in the long run, destroy our dwindling supplies of foreign exchange rather than help produce more of it, perhaps it would be wise to reconsider the notion of “investment” in our context altogether.
So, for every mall that opens up or foreign fast-food franchise (or coffee shop) that spreads its doors to the public, weighing the net effect on our country’s financial position merits some sort of consideration.Will such investments create jobs? Certainly.
Will they lead to a better economic position for T&T in the long run? Not necessarily.
If these investments drive consumer behaviour that demands more imports to support our lifestyle—imports that drain our coffers of forex—one must, of necessity, question the overall value of such investments.
This is, perhaps, one of the paradoxes of wealth in our society.
The reality is that as a country, going forward, trade-offs may have to be more holistically considered moreso in light of the fact that many believe our primary engine of growth (and US currency generation), the energy sector, is likely to be firmly rooted in a “new normal” characterised by low commodity prices.
Further, if we are depending on an increase in energy sector output to sustain our habits, we are doing ourselves no favours in the long-run. Therefore, while it remains extremely important to promote this country as a place to do business, it may also be wise to make certain kinds of investments less profitable if they do not serve some long-term, practical vision for the country. Perhaps such policy decisions will also create the basis for changes in patterns of consumer behaviour as well.
To be clear, by no means is it being suggested that individual businesses be singled out, drawn and quartered. All shades of enterprise make an economy tick. Also, given our small size and wealth in relative terms, built-in demand for foreign goods will always exist. We will never be completely self-sufficient.
Rather, creating an environment that stimulates more of the right kind of investment (those that will either conserve or grow forex) should be the order of the day for T&T as we move forward.
Are we getting enough of that? Time will tell.
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