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Keynote Address By

Senator the Honourable Vasant Bharath

Minister of Trade, Industry, Investments and Communications

at the University of the West Indies

6th Biennial Int’l Business Banking & Finance Conference

“Navigating Caribbean Business in the New Global Economy”

Monday 18th May, 2015

9:00 A.M. – 10:00 A.M.

Hilton Trinidad and Conference Centre

Port of Spain

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SALUTATIONS

Thank you Chairperson of today’s Opening Session, Mr. Errol

Simms Dean, Faculty of Social Sciences, UWI

Professor Clement Sankat, Pro Vice Chancellor and Campus

Principal, University of the West Indies

Dr. Acolla Lewis-Cameron, Head, Department of Management

Studies, UWI

Professor Surendra Arjoon, Head – Organizing Committee

Distinguished members of staff of the University of the West

Indies

Specially invited guests

Members of the media

INTRODUCTION

Good morning everyone and thank you for your invitation to

participate in this conference.

I must commend the University of the West Indies’

Department of Management Studies, and sponsors for

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organizing this 6th Biennial Conference on International

Business, Banking and Finance.

A conference focused on “Navigating Caribbean Business in

the New Global Economy” represents a very important stride.

Shifting dynamics in our economy, and changing regional and

global economic tides and ideas put a demand on us to live

up to our reputation as an industrious and productive people.

Conversations on transforming our economy to fit into a new

global environment were ranked very high by the Kamla

Persad-Bissessar Administration in 2010 and I am delighted

to note how the discussion has grown.

It is an encouraging indicator therefore when our academic

and business institutions unify their approach on deciding

how we must re-position ourselves in the new global

economy.

Therefore today’s conference tells me something very

important.

That is as a nation and region we are not prepared to simply

be assigned a role in the future; rather, we are determined

to create that role for ourselves.

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And I want you to keep that word “create” at the forefront of

your minds; I will return to it in a moment.

EITHER FOR US, OR BY US

This continuing conversation comes at a time when some of

the norms of the past have been turned on their heads, and

“business unusual” is punctuating our advance in a new

direction.

So I hope you will agree that continuing to prosecute views

on globalization and all of its merits will not necessarily be

the best use of our time, and the tremendous expertise

brought together for this conference.

Some economies have been led by the dictates of the world

becoming a smaller place.

Other economies, like Trinidad & Tobago, took a different

route.

Our discussions must discover why.

We in Trinidad & Tobago took the decision to move ahead to

finding ways to link ourselves into the global economy, in a

way that created benefit and opportunity for our people, and

indeed for our neighbours.

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This is where I come back to that very important word

“create”.

It is my strong belief that the line that separates the leaders

and followers in the new global economy will be drawn on

one strength especially – innovation.

This is not a new concept, but its application is where we find

opportunities to re-define ourselves.

Hannibal Barca, a Military Commander in ancient Rome put

forward a similar sentiment in a time pre-dating 180 BC,

when he said: “I will either find a way, or make one.”

Translated to the modern environment, it becomes, we will

either have our future made for us, or we will create it

ourselves.

Re-defining ourselves therefore means Government and

Business must establish strong collaborative links.

Such joint ventures must explore new thinking, new

dimensions of sustainability, and fresh ideas on human

development as one of the primary pillars of strength.

The future will not be achieved by merely capitalizing on the

wealth we have; it will be achieved by creating new wealth!

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CARIBBEAN ENVIRONMENT

Perhaps by the sheer force of historical customs and norms,

it took many years for the Caribbean to start reaching out to

its potential to create wealth and retain the benefits.

Today, the demands to evolve are greater than they ever

were.

Trinidad & Tobago’s economic history is written largely on the

basis of energy resources which, over the years, have come

to fuel varying degrees of development.

And, maybe by a similar force of custom and norm, for some

time the advance of economic diversification remained a

concept and mission, without comprehensive reform policies

to create the conditions to make it happen.

Today, this story is different; we have taken control of

having a future that we want.

Further afield, the latest Regional Economic Outlook of the

IMF points to tepid growth, a lack of fiscal space and high

debt to GDP levels for some Caribbean countries.

Growth in the tourism-dependent economies has continued

to disappoint.

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For this group of countries (The Bahamas, Barbados,

Jamaica, and the countries of the Eastern Caribbean

Currency Union—ECCU), output is projected to expand by

only 1.1 percent in 2014 and 1.7 percent in 2015.

Long-standing competitiveness issues and deteriorating

policy frameworks stand in the way of a robust recovery.

Prospects for commodity exporters (Belize, Guyana,

Suriname, and Trinidad and Tobago) are somewhat more

favourable, with growth projected to rise from 2.7 percent in

2014 to 3 percent in 2015.

These projections are lower than previously envisaged,

reflecting softer commodity prices and protracted growth

challenges in the non-commodity sector.

Inflation has been muted in most countries, amid pegged

exchange rates and negative output gaps.

External imbalances have also mounted, prompting reserve

losses in some countries.

And dependence on PetroCaribe is seen as presenting a

further risk.

REGIONAL FINANCIAL SERVICES

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If we looked more specifically at regional financial services,

the IMF describes the financial sector in the Caribbean as

large, relative to the size of the economies.

The total assets of the financial sector, excluding offshore

banks, amount to 124 percent of the regional GDP, with the

banking system accounting for some 91 percent and non-

bank financial institutions such as credit unions and

insurance companies accounting for the rest.

The Bahamas and Barbados have significant offshore banking

sectors, equivalent to 72 times and 11 times their respective

economies, far outstripping the size of the onshore sector.

Some of the ECCU countries also have offshore banking

sectors, although on a smaller scale of 45 percent of the sub-

region’s GDP.

The Bahamas has the largest onshore banking system,

equivalent to 150 percent of its GDP, while Jamaica is at the

other extreme, with a banking sector equivalent to just under

50 percent of its GDP.

The ECCU’s banking sector, as an aggregate, amounts to

about 176 percent of the union’s GDP.

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Foreign banks, primarily Canadian, play a leading role

throughout the Caribbean and account for about 60 percent

of banking system assets.

European and U.S. banks are also important but their

activities are concentrated in the offshore centers of the

Bahamas and Barbados.

In this context, the Trinidad and Tobago banking sector

remains the best capitalised, most profitable and most

dominant in the region and plays a significant part in regional

capital flows.

THE TRINIDAD & TOBAGO ENVIRONMENT

But the Trinidad & Tobago story has changed quite

substantially over the past five years.

The vision adopted by the Government, and underlined by its

medium term policy framework, since 2010 is “prosperity

for all”.

Concurrently with our progress in the rebirth of energy,

economic diversification has picked up the pace on three

fronts:

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By reforms and incentives for the business environment

that will support new economic sectors; as well as ‘ease

of doing business’

By new training programmes for our young people to

build the skills-base to support these sectors, and

By reforming the energy environment to promote new

investments in exploration and production.

Considerable economic reform and national transformation

programmes which define our new direction also include:

New channels to benefit from our century old experience

in energy infrastructure through a knowledge focus;

Foreign Direct Investment is at the highest levels in our

history;

Legislative and regulatory reforms for corporate

governance and public procurement;

Infrastructure has been comprehensively advanced to

support human development, entrepreneurship and a

deepened industrialization thrust;

The business environment has become far more

competitive in meeting the needs of local and foreign

investors

These are the broad areas that define our new direction.

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In the past, energy resources were used to bankroll our

capital investment programmes with little direct relation to

value-creation and sustainability.

Today, energy resources are being used in a manner that

builds a platform for sustainability, by driving the creation of

new sectors and increasing our knowledge capacity.

Our economic metrics are also robust:

As at the end of 2014, our external position stood at

US$10.8 billion in international reserves (representing

an import cover ratio of 12.2 months of imports);

The Heritage and Stabilisation Fund now stands at

US$5.6 billion, ensuring that today’s wealth can benefit

tomorrow’s people;

Inflation is well contained and in single digits;

Unemployment remains low, and

More recently, Government accounts achieved surplus at

the end of the first half of the current fiscal year, at a

time of adjustment when we originally projected a $3B

plus deficit.

Despite the recent adjustment to our sovereign debt rating,

we are still an investment grade destination fully capable of

meeting our debt servicing obligations.

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Our external position is expected to remain strong with

current account surpluses and strong FDI inflows particularly

into our energy sector.

As you know, two major energy investments are BP’s Juniper

platform, and the Mitsubishi/Massy Corporation investment in

a methanol and dimethyl ether plant.

CHALLENGES FACING CARIBBEAN BUSINESS

Competitiveness

This favourable picture, however, does not mean that we are

above risk.

Events in North America, Europe, Africa and the Middle East

have a direct impact on Caribbean businesses depending on

the nature of the disturbance.

Our strategies must therefore focus on understanding the

nature and cause of risk, finding the weaknesses that are

among the first casualties of impact, and shoring up our

resilience as nations, and as a region standing together.

Our populations combine to create a global resource of

tremendous potential in the context of knowledge sharing

and competitiveness.

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Clear areas for collaboration and unifying aspects of

economic policies can help to create a larger fiscal space that

is stronger to risk and impact, and provides more competitive

breadth to compete in the global markets.

We must find the points of convergence in our policies that

can allow us to combine our expertise and resources in order

to achieve higher value outputs.

And we must find the opportunities for unification of our

strategies in what are now considered geopolitical risks.

Lack of innovative capabilities

In finding those points of unification, we will also find greater

possibilities for supporting and sustaining a new era of

innovation.

The import and distribution orientation of our business

sectors must be pushed into a direction of innovating for new

markets.

While at the present time, we find ourselves being net

importers of goods and products from larger countries, we

must create the conditions to make it profitable to expand

local production for export.

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The University of the West Indies, and other academic

institutions, also play an important role.

We must develop ways to achieve the shift from training

professionals for jobs, to incubating entrepreneurs for

corporate leadership.

Tremendous benefits and efficiencies are brought by

technology.

We must explore how we re-fashion our businesses and

industries to shift onto ICT platforms to become visible and

active stakeholders in a networked global economy.

As a region, we must continue to comprehensively advance

training and skills development to provide the world with

knowledge capabilities on two major fronts:

Expanded services which provide expert support for

foreign companies and countries, or

A sufficiently large and diversified human capital base

that create the economies of scale needed by large

companies to relocate to our region.

We must also be bold enough to consider whether we are at

a tipping point where our growth metrics must shift to

different indicators.

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We must find the answers to key questions, such as whether

it is good enough for us to assess GDP purely in dollar terms,

rather than GDP in human development, people terms.

NATIONS TOGETHER

As a region standing together, we all know that collaboration

brings great benefits, but also brings great challenges.

Those challenges are caused in great part because of

disparities which our short to medium term policies must

seek to correct, including:

Access to tertiary, technical and vocational training;

Employment and job creation;

Economic diversification and new industries;

ICT access and availability, and

The competitiveness of our industries.

Addressing these disparities may not necessarily mean that

we must adjust our vision or policies, it may mean that more

fortitude and will is required to push vital policies to its

intended purpose.

The pursuit of these new conversations must also be on the

basis of a different kind of thinking.

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We ought not to see ourselves just as small-island

development States, with competitiveness challenges.

We must instead see the potential for collaboration as giving

us a diverse, well-engineered and highly skilled unified

platform that carves its space in the global economy.

As a region, we must be clear on whether we have fully

explored the trading potential among nations.

The total market space for Trinidad & Tobago is accounted

for by 1.3 million people.

But when one considers that the total population of Central

America and the Caribbean is over 84 million, there must be

space we have not yet explored, value that can be unlocked

by collaboration.

Right here in our backyards may be the solutions for us to

increase capacity simply by sharing more of our space.

We must consider whether historical antecedents are really

the best pillars upon which our economies must stand.

It may be that our pillars need restructuring in order for our

economies to be faced towards the future, not the past.

THE DIVERSIFICATION AGENDA

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Perhaps here as well, Trinidad & Tobago’s potential to be a

strong partner in sustainability could be further explored.

The approach to economic diversification involves key sectors

which may well achieve sustained expansion if our nations

enhance our already good trade and bilateral arrangements.

The pursuit of this diversification agenda is also taking place

on a platform of one of the world’s lowest energy/utility

rates; seven fiber optic landing stations; stable and reliable

electricity network reducing back-up requirements and costs,

and a high level of mobile and broadband penetration

CONCLUSION

These broad areas represent the manner in which the

Government has approached economic reforms and

development over the past five years.

We have not allowed ourselves to be stymied by habit, but in

fact gave ourselves the freedom to believe and explore that a

fresh approach might be the spark that ignites an entirely

new course of progress.

And as I close, I return to Hannibal’s defiant statement in the

face of challenges.

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We all no doubt agree that as sovereign nations and as a

regional bloc, we will not have our future made for us by

the changing dynamics of the global economy.

For that to have any tangible meaning, we must then agree

that we will create the future ourselves.

I hope that my words have motivated a departure from

discussions on the past and what used to be, to embrace a

discussion of where we need to go, and the things we must

do to get there.

Trinidad & Tobago is on its way, and we welcome

partnerships at every level so that as a region, we can all

enjoy that forward movement together.

Ladies and Gentlemen, I thank you.