We cannot continue with business as usual. With the threat of rapidly falling oil and gas prices the boom days are once again over and now we have to tighten our belts. The blame for our dependency on oil and gas can be shared equally between the Government and private sector. Both failed to lead the way in diversifying the economy; both seem unable to put forward realistic plans for doing so.
The US has begun exporting oil overseas and thanks to the fracking boom it is poised to become a major exporter of liquefied natural gas in the future. Things will likely get worse, not better for T&T, due to a highly competitive international market. The drop in oil prices the direct result of a growing cold war between the US and Russia, and the result of Middle Eastern producers trying to drive the higher cost US-based fracking production out of the market.
In the face of such uncertain international conditions it is imperative that every effort be made for the T&T economy to diversify and begin to obtain the majority of its revenue from non-energy sources. The Government needs to partner with the private sector and all relevant stakeholders to develop a strategic plan for moving forward with diversification.
I would like to propose the following plan of action for moving forward:
1. Encourage the University of the West Indies and the University of T&T to pool their resources and do research on which industries would be the most lucrative for T&T to invest in.
2. Based on said research the Government and private sector must then agree on a strategic plan to diversify the economy.
3. The Government should then begin to invest in any infrastructure that the new industries may require eg new port facilities, new industrial zones.
4. The Ministry of Finance and Foreign affairs should court international investors to fund the new industries. Major international corporations should also be approached to partner with our private sector through joint venture agreements so that our local entrepreneurs can gain the benefit of cutting edge technology.
5. Since our private sector seems to be risk averse, let the Government back investments made by the private sector as much as reasonably possible.
I am calling on both the Government and business community to move forward with diversification as quickly as they can. If they do not we will continue to be at the mercy of the boom and bust cycle of oil and gas as we have been in the past.
Jonathan Bhagan
via e-mail