With the election of Donald Trump, the USA is set to leverage vast shale resources to further their energy independence agenda. That means that any reduction in OPEC production will most likely be offset by increased production from the shales.
Finance Minister Colm Imbert must be racking his brain and scratching his head. Or scratching his head and racking his brain.
The reason for his obvious disquiet is that the medium-term result can be a prolonged period of reduced oil prices. The case for diversification in T&T is, therefore, made since our revenues from the sector may not return to the fat and wealthy days anytime soon, if ever!
With the dependence on energy revenues, we became a spoiled nation. But, to be fair, the Finance Minister has been clear about the daunting economic challenges now facing the nation. And I believe that the average citizen with open eyes has seen ample evidence around him/her that supports the Minister’s position. The time for diversification is now!
But diversification of the economy has been the elusive component in our economic development policy over the last few decades. The burning question is no longer ‘What are we to do?’ but ‘How are we to do it?’
I think we now have a call to action. Speaking in Laventille relatively recently, Prime Minister Keith Rowley urged citizens to recognize the conditions and reduce their reliance on government.
I could not agree more. The days of the lazy private sector, rich in subsidies and government protection and lacking in innovation, are over. For this reason, I would have liked to see Dr Rowley repeat his message, perhaps more stridently, both in the Western Peninsula and in the South, where many of our corporate titans—T&Tians?—are based.
Contrary to apparently popular belief, diversification does not require major government investment. What is required is out-of-the-box thought and a willingness to build effective, efficient organisations. Government’s role can be limited to the provision of a facilitative environment for business. Twinned with this facilitation enterprise will be zealous efforts to encourage the private sector—including SME’s—to take risks, be innovative and allow itself to be weaned off the teat of governmental goodwill and largesse.
The role therefore seems to require the creation of an agency that would bring into being the business development frameworks for each industry segment. The agency, call it what you will, would take overall responsibility for the promotion of Brand T&T to investors, foreign and local, and for attracting FDI.
This last element is critical as some of these industry segments may indeed provide opportunities for large plant and technology investment and transfer.
As I envisage it, the agency will be a genuine “one-stop shop”—the locus where investors will receive all of the facilitation assistance, business plan support, utility and amenity approvals and commitments they may need. In short, the agency provides the handholding that is often required when kick-starting a new business and, moreso, a new industry.
Our strategic location close to a large and captive Latin American and Caribbean market, where we already share beneficial trade agreements and commercial relationships, is a comparative advantage. As indeed is our strong cultural affinity to many of the target markets and the close links we already enjoy with the diaspora markets in nearby North America.
And we should not forget that some of the groundwork for the establishment of just such an agency has already been laid. As part of its business facilitation mandate, the now defunct TIDCO identified seven industry sectors where Trinidad and Tobago has a comparative advantage, which translates into the ability to perform efficiently and profitably.
These sectors are tourism and hospitality; agro-business and food processing technology; leisure marine and boat building; specialty chemicals, plastics and packaging; metals processing and manufacturing, specialty plastics and packaging; man-made industries—IT and digital businesses—and culture and recreation-based industries.
The tourism sector has the potential to create large numbers of sustainable, direct and indirect jobs. So Ministers Cudjoe and Gadsby-Dolly might want to begin serious engagement with the NCC, NCBA, Pan Trinbago and artistes and other stakeholders about repackaging Carnival.
And Tourism might want to say more than a word or two in Darryl Smith’s ear about developing serious sport tourism. Certainly the imminent re-opening—oops! It’s an opening, almost ten years late!—of the Brian Lara Stadium in Tarouba provides an immediate fillip for any such initiative.
It’s not hard to see how by bringing the same kind of thinking to bear on the other areas, we can do the same thing there. In agro-industries and technology, for instance, the thrust might be towards adopting and adapting technology to advance the production, processing and canning of local produce and seafood to meet local demand and for export regionally and into diaspora locations.
The other industries listed will engage the curiosity and interest of our young population, already steeped in the various technologies and ready to apply such interests to serious commercial pursuits. Many of these industry sectors can benefit from modern cluster arrangements so as to drive sharing of best practices, specialized inputs and efficiencies, as illustrated by several of the Swedish technology clusters.
Indeed, this was the plan for the Tamana Technology Park, for which a comprehensive strategy and blueprint was developed at TIDCO. A brief synopsis of some of the thinking follows.
Our protected Western Peninsula can be the hub for leisure marine and boat repair and research, thus modernizing the regional yachting industry. Engage UWI and UTT in the development of advanced, high-value boat components, for example, wireless rudders and digital mooring systems.
A specialty chemicals and plastics sector would benefit from stripping and liquefaction of the heavier components from gas streams to provide feedstock for the manufacture of specialty products. Plastics can be used to manufacture high-value medical tubing, plastic mouldings and automotive and electrical components. This will also be the catalyst for a modern, high-tech packaging industry.
Engaging UWI to develop catalysts for polymerization of smaller gas molecules can provide further opportunities if that becomes necessary.
The man-made or technology-based industries—including software engineering, call centres, data processing and medical transcription—are areas which can provide high-value jobs and skills training at multiple levels. The vision of young TT scientists, IT specialists and entrepreneurs writing software, developing apps for sale on the open market is compelling.
Further, recreating our folklore in games apps using animation to penetrate the diaspora market has the potential to prove lucrative. The resources, the brainpower and the skills are arguably already present, only the will is lacking.
The culture-based industries offer developmental opportunities in film and animation, music and recording, visual and performing arts as well as fashion and fabric production.
Beyond the obvious creation of enterprise, jobs and improvement of social conditions, these industries provide significant opportunity to further establish our small nation as a hotbed of modern industrialization and excellence—further attraction for FDI.
But not much of this is new; if we are to stay afloat, the new buoy on the block is the urgency.
Failure to make the necessary changes now may not mean failed state status but it would almost certainly be moving us that much closer to economic death. After all, even if we are able to avert the crisis by increasing oil and gas production from Juniper, Dragon, Angelin, etc before too long, shale will ensure that oil prices remain depressed.
So if we fail to act, if we continue to talk diversification but do nothing, the continuing absence of a robust timetable will merely strengthen Terrence Farrell’s well-articulated thesis that “We like it so.”
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His plan is to syphon monies from the treasury
This is an excellent article.
However, economies of scale will put a damper on many of the suggestions.
But they can be adapted to suit our economy as we cannot waste resources pursuing an elusive export market.
If the powers that be do not act quickly I afraid with more borrowings we will reach venezuelan status where we cannot even pay the interest on our loans.
Excellent article, but sounds so familiar. I agree with Mr Cadogan comments and Dr Farrell’s “we like it so” Business sector wean themselves of the government. That is unlikely. What will it take for any government to really diversify the economy? Anyway over the last 25 years we may have changed 5- governments, and with no continuity, we spinning top in mud. I have repeatedly said it is governments job to try and make us feel stupid, MR Harry you are not the first to comment on diversification. There are tons of documents over the years with similar sentiments emanating from several quarters. After 50 years of independence, we have made some strides and have developed in some areas, but the resource curse ‘oil’; still rules us. In my life time this is the 2nd recession. When oil price rebounded before no one insisted successive governments put things in place for a rainy day, Instead there was a spending spree, today we scrambling and the economy is static. I do agree the time is right, to ACT. So many things should have been in place, E-tech should have been up and running for young innovative minds. But its working for somebodies, that is to not have things functional, Crime included.Blame governments, but what are we doing as citizens. I reiterate until we recognize that we have the power in our hands, (no only voting every 5 years) to demand accountability from those in authority, whether it be politicians, businessmen, trade unionist, bankers, the President, PS, Board members etc, utilities such as WASA, T&TEC etc, another 50 years will catch my grand daughter lamenting these same issues. When will we wake from our slumber and passivity in T&T?
Understanding and harnessing that power has been our biggest challenge.
We need to diversify our economy but the world’s dependence on fossil fuels will be around long after we are gone
Nothing will be done until our politicians and their owners find a way to totally control any area of diversification.
You need oil for the wind energy mechanism to be lubricated
Months ago Mr. Goodenough, inventor of the lithium battery produced an innovation which would have future batteries with 30% more energy and which can be recharged over 1000 times. With solar and wind energy becoming cheaper by the month oil producers will soon be left out in the cold.
The author clearly knows about diversification…he is currently living and working in Texas while we here ketchin we…He definitely diversified.
Think about it this way … if you have been genuinely trying to achieve a particular goal for ten years at some point chances are that you would have achieved some small measure of success even if inadvertently. The fact that this republic has existed for 50 years having pretty much the same groups of individuals alternating as ruling party and all have failed to diversify the economy in even the slightest way proves that no ruling party has ever genuinely attempted to diversify the economy, in fact it suggests that they’ve been working to prevent it.
So much I want to say on this topic. First, I disagree completely on this statement:
“Contrary to apparently popular belief, diversification does not require major government investment.”
It absolutely requires a major shift in government spending and public policy. Here’s why:
1) We have an education system that does does nothing to promote the creative thinking and entrepreneurial spirit that he identifies as a building block. We need to seriously relook at our education system and how it operates across the board including the tech voc levels. Nothing in our present system addresses the risk averse nature of our culture and learning from primary level is reduced to memorising by rote. Creative thinking isn’t encouraged or nurtured at all.
2) He mentioned the need to diversify into downstream polymers. The technocrats agreed and recommended same decades ago. Small problem – the government did not see it that way. Silly ideas of aluminium smelters and expansion of existing lines of business were pursued instead. That includes expansion of LNG production.
3) Government investment and incentives are required both to build the infrastructure necessary to operationalise the natural gas deal with Venezuela and encourage further investment in exploration. Make no mistake – it is absolutely critical that we sustain our gas economy while we seek avenues of diversification.
4) I agree wholeheartedly that the current ease of doing business in T & T is ridiculously poor. Even the simple act of dealing with routine matters at the Registrar General is a nightmare. And less said about the BIR, the better.
5) One thing that we need to do an a priority is to tighten the tax net. Far too many businesses are not paying the taxes that they should. We are leaking tax revenue and it has to stop.
It’s really late so I will stop here and hopefully this conversation can pick up later on.
I do think that, although little has been done to promote entrepreneurial spirit, there is still evidence of it at small or medium business level. A company like Jus Juice comes to mind.
How to encourage them is an interesting discussion.
When we started in 2012, people pointed to a government grant or two I could try to access. But I was obviously skeptical about sharing my business plans with any arm of the govt or that I would get a fair shake. So I decline.
I wonder how many businesses really get benefit from the Govt grants. I can definitely think of other ways that State might be more helpful to entrepreneurs.
I totally disagree with Kendall. Everyone of the things Kendall wants government to lead should ideally be the rubric of civil and private society.
If there’s an investment in polymers to make, why can’t the private sector do it?
It’s like the different players that make a high street a success: the road and pavement? That’s givernment’s responsibility. the development of storefronts is the landlord’s responsibility, and the running of a compelling store is the retailers’ responsibility.
But in national development we want the government to also be the landlord and retailers.
I think most industries start with some level of gov’t support Kwesi Prescod. And I’m talking about all around the world. Nobody expects the government to bankroll it indefinitely. That seems to be the disconnect between what you and Kendall are saying.
You were Jus Juice?!
Nope. But I think it is a delicious product. And I met the owner once.
I fail to see how educational policy, government policy surrounding the granting of gas contracts, the legal framework for doing business and the optimisation of the collection of tax revenue isn’t the government’s responsibility to lead.
well we can agree there…because none of the things you mentioned above require direct government cash investments in to the sector.
so you agree with Brian Harry then, because that is the basic premise of his argument – there is a role for government – but not as the cash investor.
He’s been there as CEO of this and Chairman of that under two PNM governments. He thinks he now has the answers? Steups. Good luck!
You savage KP?
I doh really have time. No longer. I fed up of the same old people that have us in the current mess all of a sudden get epiphany and found religion.
Im wondering how so many know so much and the education system poor or dysfunctional as we say. I hear the saying “people aint stupid again”.So which education system made them smart? Just asking.
I don’t think the issue is the education system making people stupid; I think it is that the education system as it is now does not adequately prepare us with the life skills to function in the global and competitive world of work. We need to harness our creativity, for example, to encourage entrepreneurship, when our system is rewards learning by rote.