SPEECH BY: PATRICIA GHANY - PRESIDENT, AMCHAM T&T
EVENT: AMCHAM T&T ECONOMIC OUTLOOK 2019
DATE: TUESDAY 22ND JANUARY 2019
We thank you for coming out today for our annual Economic Outlook event, as we bring you the opportunity to interact with some of our country’s most prominent thought leaders. AMCHAM T&T continues to host forums such as this because we believe that it is important to facilitate open dialogue with our members and the wider Trinidad and Tobago.
Many people, from all walks of life take time out of their business and family time, year after year, to build organisations. We do this because we see it as a way not only of getting – increased knowledge, contacts, relationships – but of giving back. Giving back to a country that has given us so much. A country that is unique. A country that, in our opinion should be the epicenter of hemispheric, if not global trade.
So, we can lament where we are and why our country is persistently under-performing. We can debate whether the glass is half full or half empty. Whether the liquid in it is red or yellow. Or we can acknowledge that the country is under-performing and has been for quite a while. We can look at the glass and accept that the colour of the liquid in it doesn’t matter. Nor does whether it’s more full than empty. We can look at the glass and realise that it can always be re-filled. So too can our country and our economy, become more dynamic if we want it to be. If we make it so.
Each day brings with it the opportunity—and the excuse—to make a new start. With the right mindset, there is substantial optimism to be harvested from the idea that starting afresh is possible, and that new beginnings can create new and successful outcomes.
As we look to the future, we see some of the most dramatic changes in human history—social, technological, and economic—changes that offer unprecedented opportunities – at least if that’s our perspective and if we are willing to act today to secure tomorrow.
The reality is that Trinidad and Tobago is at the centre of these changes- or if we don’t act, the centre of the effects of these changes. Our main economic driver, the gas industry is changing. Once our largest recipient of gas, today the United States is poised to be a major gas exporter. We have to be cognizant of what that means for the future of our petrochemical industry. With Venezuela in virtual chaos, just miles away from us, we have to be mindful of the geo-political and military games being played there. We therefore need to be deliberate and strategic in our responses. With trade wars, walls and barriers as well as moving targets being set by developed world institutions, the only way a small state like Trinidad and Tobago will thrive is if we have a clear plan, be proactive and are both deliberate and nimble in our responses.
In that regard, a quote by the 2018 Nobel prize winner in Economics Paul Romer is instructive. He said, “Growth springs from better recipes, not just more cooking.”
He went on to elaborate by saying:
“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.”
When we look at this quote in the context of our national economy, we need to ask our leaders, ‘Are we doing more of the same with the hope of getting better results?’ It often feels as if we are. So, what and how can we do things differently?
As we integrate the notion of the Fourth Industrial Revolution into the definition of competitiveness. We recognize that emphasis on the role of human capital, innovation, resilience and agility, are not only the drivers but also defining features of economic success in the 4th Industrial Revolution i.e. today and into the foreseeable future.
Trinidad and Tobago is ranked 105 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Our rank has deteriorated to 105 in 2018 from 102 in 2017 and from 34th in 2000. Although there were only 75 countries in the survey that year, such a rank would still have put us in the top half of performers.
For us to reverse this dangerous slide the state and our businesses need to modernise. We need to proclaim loudly, not by words but through action, that Trinidad and Tobago is open for business. That our politicians and public service operate efficiently and transparently. That our businesses are dynamic and internationally competitive.
Therefore, in my view, digital transformation is the most critical component that will determine the future relevance of our firms and our economy.
In the World Economic Forum (WEF) Future of Work report, they state that:
“As technology develops at an accelerated pace, cognitive abilities and tasks that were once thought to be reserved for humans are increasingly being carried out by machines, causing growing concern about the impact on jobs and the subsequent risks for government, business and people. In addition, globalization, demographics, climate change and geopolitical transformations are already making a significant impact on the work landscape. There is a window of opportunity now for individuals, business and government to understand and proactively manage the transition to a new future.”
Next, technology must be embraced as the growth-driver and game-changer that it is.
Technology is not a single, all-powerful industry. It is now a part of every industry. It will continue to change the way we work, communicate, and live—at a rapidly accelerating pace. Even with these changes, technological advancement is an opportunity, not a threat.
All the recent projects announced by the Honourable Prime Minister are all focused on infrastructure. One key part of infrastructure - and I would posit the most important part for the future is missing. The country’s digital and technology infrastructure.
The reason we talk about digital transformation is because technology is disrupting every industry – from the common example of hotels and taxis to ones you would never think of such as the measuring tape industry.
For Trinidad & Tobago to be competitive as we enter a new decade, we must have a strong digital infrastructure. From the human capital in terms of coding, which must start at the early childhood level and general ICT skills to a robust telecommunications infrastructure and digital government services to facilitate this transformation.
One area of diversification often highlighted is financial services – the future of financial services is Fin Tech – yet we have no discussions on attracting/developing or incubating fin Tech companies nor any discussion on effectively regulating this industry. We must move beyond just back office services and move into the attraction and development of cutting-edge, fintech firms operating in T&T.
The opportunity to take advantage of this disruption is there – are we going to be like other small countries and find a niche for ourselves like Malta which is becoming a global center for coin offerings based on block chain.
Many of the developing countries of the world are all taking advantage of the effect of disruption – which is to level the playing field for all – will Trinidad & Tobago do the same, or will we be left behind while this new wealth is created elsewhere.
To do this effectively we need to drastically and rapidly improve our ease of doing business. Linking digital transformation to improved government services: e-procurement and the drafting of legislation offer two possible quick wins.
Let’s face it, at the very least, the perception of corruption in this country is too high. TSTT has already developed a product that can be utilised for a robust e-tender process and of course there are other solutions. Implementation of such a system will speed projects along and reduce the opportunity for corruption. On the other hand, our legislative process is too slow and cumbersome. Just across the Caribbean Sea in Jamaica, the government has introduced an e-legislative process, to speed the drafting of legislation and allow stakeholders to see the progress and comment on legislation throughout the drafting process.
The implementation of a unique national identifier for every citizen will speed up the process of accessing government services, reduce the opportunity for duplication and easily flag instances of corruption within the system. We can do that quickly and easily. Whether we do these or other things, we must do something to reduce the slide. We must act decisively and implement efficiently.
As we do these things however, we must reduce the deficit. Already it is costing too much to service our debt.
Legacy debt continues to be an issue that we grapple with for successive governments. We continue to borrow to build and borrow to pay. We do acknowledge that there must be some level of borrowing in an economy, but this must be used, as we do in our businesses, to fund growth and revenue generating initiatives not just recurrent expenditure. AMCHAM T&T has continually voiced its concern with the level of borrowing and the ramifications this will have for future generations. Children who will live in a future far more uncertain that the one we live in today, will be burdened by the results of the choices we make today. We noted with trepidation when the 2018-2019 National Budget showed that expenditure would increase by the same rate as the expected revenue while the country would again be running a deficit. With the Minister saying that the Government was comfortable moving toward a 70% debt to GDP ratio.
However, we all know that this ratio will fall if GDP is increased. Therefore, in more ways than one, returning to growth must be the main focus of government policy over the next few years.
In this pursuit we need to attract local and foreign investment. We remain committed to working with the Government to do just that and are confident, with some refocus and a little adjustment, our country can achieve this. AMCHAM T&T will continue to connect with potential partners, mentors, and investors to help take ideas and businesses to the next level. Our continued commitment to you, our members, is to focus on how we can support your growth and be an effective voice on your behalf.
We look forward to hearing from our presenters as they discuss ways to do just that and to working with you all as you strengthen and grow your businesses to contribute to what we all hope is the beginning of an economic and social renaissance in T&T.
Thank you for your time and attention.
As I close, I again refer to Paul Romer who said “Every generation has underestimated the potential for finding new ideas . . . Possibilities do not add up. They multiply”.
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