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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.
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