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The trappings of independence revisited

Published: 
Sunday, November 24, 2013
Business Eye

In the years after the end of World War II, in the heyday of newly-won independence, it was the accepted wisdom in newly emergent countries that entrance into the society of nations needed a national flag, a national anthem, a national airline and a sports stadium. These were the trappings of independence.

 

T&T did much better than that. In the oil boom years of the early 1970s to the early 1980s, the country built up a large public sector funded by petrodollars. It bought out some foreign oil companies and set up large petrochemical and steel plants. The collapse of oil prices brought in the IMF. Back in 1983 Prime Minister George Chambers announced that “the fete is over.” An article in the Chicago Tribune of December 13, 1992, records what happened next:

 

“Trinidad and Tobago is aiming to go private. Faced with a severe fiscal crunch, the Government plans to sell some or all of its shares in the prized fertiliser, oil, petrochemical, and steel companies. It is also seeking a partner for its debt-strapped airline and is unloading a bunch of money-losing operations, including packaging, fisheries and tourism ventures, among others.

 

Privatisation is not new to the oil-exporting country of 1.2 million people off the coast of Venezuela. The outgoing administration sold some shares in the State phone and cement companies, and also a commercial bank starting in the late 1980s.” By the late 90s that benevolent deity with a T&T passport once again answered the prayers of his fellow citizens, and the gas boom was on.

 

Enthusiasm for privatisation had waned; however the “State Enterprises and Investment Programme 2014” now informs us that the Government has some 60 state companies, of which 48 are wholly-owned, seven majority-owned and five have minority shareholding. 

 

Some of these companies such as Tucker Valley Agricultural Enterprises Ltd (March 2006) and Trinidad and Tobago Entertainment Company Ltd (May 2005) are recently formed and seem to be devoted to activities that the Government deems beneficial to the country, and which they believe would be better performed within the framework of the limited liability company.

 

There are other companies which would have been divested long ago if the gas boom had not provided the dollars to continue funding all inefficiencies. It might be time to revisit the old debate. Can Government run business? Is state ownership a good thing? Can Government do it better?   

 

Thomas Sowell, American economist, social theorist and political philosopher, currently the Rose and Milton Friedman senior fellow on Public Policy at the Hoover Institution, admits to having been a Marxist “during the decade of my 20s” when he worked as a federal (USA) government intern during the summer of 1960. This experience caused him to abandon his support of state ownership, state capitalism, call it what you will, in favour of the free market. He completed his internship convinced that “the Government can’t run anything.”

 

Is Thomas Sowell correct? Is the collective view of the people of T&T over the years correct? Certainly, when the shortcomings of some government companies become public knowledge as they should, as public funds are involved, the headlines do not assist the Government of the day in any way. For example, “NP loses $190m;” “Larry Howai fires the chairman of National Quarries;”  “The Minister has fired the entire Caribbean Airlines board.” Not nice reading with our morning coffee.

 

These headlines provoke embarrassing questions for the Government of the day, whichever government it is, for these issues have been around through several changes of administration. 

 

The questions asked are, is it really the Government’s business to retail gasoline, run quick shops and lose $190m of the people’s money doing so? Has it not been State policy to divest the NP service stations for years? Why is that taking so long? Mr Kenneth Mohammed, CEO of NP marketing, has been reported in the Express of October 30, 2013, as having said that “new retailers are essential to NP’s profitability because the company was in the business of fuel distribution and not in running stations.” I could not agree more.

 

Was not Bee Wee losing millions a year when the plug was pulled decades ago? Will Caribbean Airlines avoid the same fate? Boards of directors playing musical chairs are not reassuring. What on earth is the Government doing in the quarry business?  

 

The much-trumpeted public offer of First Citizen’s bank shares was a hesitant sale of 20 per cent of the shareholding. One wonders what the Government is afraid of. There are other larger banks in the country efficiently going about the business of national banking in the national interest as laid down by successive administrations.

 

I am certain that First Citizens will continue to do well in that environment. To put a proper perspective on this issue, let us bear in mind that there are 111 commercial banks, 49 merchant banks, and 45 representative banks with offices in Singapore.

 

 

—Everard Medina is former president of the Trinidad and Tobago Chamber of Industry and Commerce

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