T&T's energy wealth allows the Government to delay the structural reforms–in particular in the public sector–that the country needs to continue developing, says Elie Canetti, the head of the last two International Monetary Fund missions to Port-of-Spain.
Speaking at the InvesTT conference at the Council on Foreign Relations two Thursdays ago, Canetti commended T&T for its macro-economic stability with a low debt load, low inflation and high levels of employment, but said the country faces twin challenges that come from being an energy-dominated economy: the need to save more of the current earnings for future generations and laying the basis of a post-oil and gas economy.
"One of the things that the IMF missions to T&T has focused on is the need for more structural reforms to make the country more investor friendly to attract non-energy investment," said Canetti.Among the major challenges the country faces is the need for structural reform to improve the efficiency of the government and the performance of the public service.
Canetti said the country's energy revenues give it the ability to do many things, but "also gives them a chance to stake by without reform because the economy can keep functioning without an efficiently functioning public service."
The lack of efficiency in the public service is related to challenges of attracting the right people into the public service, promoting them to positions where they can do their jobs effectively with "the complex process of hiring" being handled by public service commissions that set the conditions of employment, while separate agencies doing the hiring and setting the job standards.
"One of the things we have been concerned about is that it seems to be open to a great deal of litigiousness. When we speak to the people in charge of staffing the public service, they are constantly living in fear of being sued by people who did not get the promotion or the job interview."This fear–along with the disconnect between the bodies setting the conditions of employment and doing the actual hiring–has led to a rigid public service in which it is difficult for people to get promoted.
Canetti said: "There is one agency we talked to where 19 of the 20 senior officials were not confirmed in their jobs. They called themselves Hollywood because they have so many actors. Because of that, they have difficulty retaining good staff."There is much talent in the public service, but they are not given the imprimatur that they are in charge and can make decisions."
He said during the last Article IV consultation visit to T&T, Minister of Education Tim Gopiesingh told the IMF team that he had no authority to fire teachers; this is done by the Teaching Service Commission.He said the business community complains they do not know who to speak with to get a problem resolved; there are many changes in senior positions in ministries and many changes in the number and functioning of ministries.
"One thing that has been very good is the creation of two new agencies: InvesTT and ExportTT. These are one-stop shops and it has become their job to resolve these bureaucratic impediments rather than investors coming in and having to navigate their way through the complex bureaucracy."
Speaking with Canetti on the panel, which dealt with the diversification of the T&T economy, was Rikhi Permanand, executive director of the Economic Development Board (EDB) and Council for Competitiveness and Innovation of T&T.
He said one of the first things the EDB did was to look at the issue of making it easier for people to invest in T&T. He said the EDB put together a paper that rationalised the establishment of InvesTT, as the one-stop shop for inward investment, ExporTT, as the same for outward trade and the International Financial Centre (IFC) looking to develop investments in the financial sector.
Permanand said: "Even if the rest of the Government has all of these bumps along the way, from an investor's point of view, there should be some very clear signals coming from the Government to investors."InvesTT and ExporTT are fairly new entities but they are beginning to perform and they are working well. The best way to determine that is to talk to people who have invested in T&T.
"I know, from my own experiences of talking with investors at the very early stages, that they have had a much smoother path than previously."He referenced the potential investment in T&T by Japan's Mitsubishi group in an US$850 million dimethyl ether (DME) plant as being an example of the facilitation role played by government agencies.
"Mitsubishi is a true multinational. My interest in them is not only because they are coming in to build a petrochemical plant. They are also involved in many other aspects of diversification: they are very strong in maritime; they are very strong in agriculture."
Canetti said he wanted to make it clear when he spoke about the problems of T&T's public service, he was not referring to the energy sector.
"They have a well-functioning energy ministry that has built on its success over the last two to three years in building a better tax regime. We should not lose sight that although diversification is an important goal of T&T's, that there is more scope to develop the energy sector, in particular, offshore gas."