Trinidad: the regional business centre

Trinidad is the business capital of the region, owing to its natural hydrocarbon reserves. With those reserves quickly being consumed, this “Caribbean Tiger” has moved to diversify its economy.

The former PNM administration (voted out in the May 2010 elections and replaced by the People's Parnership) had planned to make Port of Spain an International Financial Centre. The current administration sees that as untenable, and instead plans to restructure those plans to encourage investment and the growth of financial services.

Trinidad's natural resources, location, communication links, financial system, and strong democratic tradition have made it the Caribbean’s most secure investment location. Dozens of the world’s leading corporations are active here. The economy has been liberalised and virtually all barriers to trade and investment have been eliminated.

So while Tobago concentrates mainly on tourism, Trinidad is rolling out the welcome mat for business travellers and investors, with expanding conference facilities, high-speed Internet access, and hotels with all the amenities for a busy executive.

Still: an oil & gas economy

With double-digit growth for much of the past five years, Trinidad and Tobago has the Caribbean’s wealthiest economy, built on Trinidad’s huge (but fast declining) oil and gas reserves. These hydrocarbons contributed 62% of government revenue in 2006, and 91% of foreign exchange earnings, while liquefied natural gas (LNG) is now the largest contributor to the US$20+ million GDP. The United States receives two-thirds of its LNG imports from Trinidad and in 2007 two-way trade totalled US$10.4 billion.

The burgeoning energy sector has encouraged growth in downstream areas. At Point Lisas (the island’s massive industrial complex and port), there has been investment in methanol and petrochemical production, manufacturing, food and beverage, steel and electrical goods projects. Other industrial estates are also taking shape further south on the same coast. This is familiar territory for the island, which benefited from the 1970/80s oil boom – and suffered the subsequent recession.

Diversification

The former government identified seven sectors for special development: the film industry, music and entertainment, seafood, food and beverages, leisure and merchant marine activity, and printing and packaging. The new government's approaches to these areas will be announced in their October 2010 budget.

The Evolving TecKnologies and Enterprise Development Company (eTecK) had also been charged with developing eight new industrial parks (five in central Trinidad, three in south), primarily for organisations engaged in light manufacturing. This is another company that the new government seeks to restructure going forward. Additionally, the Business Development Company (BDC) works at fostering economic growth through assisting start-up enterprises and entrepreneurs. The Trinidad & Tobago Film Company is working to make Trinidad an attractive location for international filmmakers. The Tourism Development Company oversees the development of tourism.

Conference centre

Trinidad is also aiming to be the leading meetings and conferences capital of the Caribbean, and last year hosted two mega-events: the Fifth Summit of the Americas and the Commonwealth Heads of Government Meeting.

In addition to a vast increase over the last few years in high-quality room stock, there has been a corresponding increase in conference facilities. Most of the major hotels offer sophisticated meetings space backed up by the facilities which business travellers expect, from high-speed wi-fi to fitness centres. Most business hotels are situated near shopping and leisure facilities such as golf courses and restaurants, in and around Port of Spain, San Fernando and the airport (which is now a wi-fi area, as are some restaurants, ice cream and coffee shops).

According to former Prime Minister Patrick Manning of the PNM, the hosting of those two major international events (held at the Hyatt Regency on the newly constructed waterfront) would position Trinidad & Tobago for significant benefits, including increased investment flows in all areas of the economy – energy, tourism, manufacturing, agribusiness, entertainment, services, and particularly international conferencing and finance.

Weathering the storm

The Central Bank reported that GDP growth was -3.5%, down from the 3.5% of 2008. The robust energy sector was an early casualty of the global downturn that began in late 2008, followed by shrinkages in the manufacturing sector and the government’s budget cuts across the board. Rising unemployment, and a slow-down in real estate and construction provided a sharp contrast to the situation a year ago when all sectors were booming.

Although analysts predicted that Trinidad & Tobago would weather the adverse economic climate better than other Caribbean countries, there have been challenges. Some energy investment was lost in 2009 due to the economic downturn. With the recession in the US (Trinidad’s main natural gas client) reducing demand for LNG, coupled with competition from bigger, lower-cost suppliers, Trinidad has been seeking new LNG markets in Europe, Latin America and the Caribbean.

The government has also had to bail out three heavily indebted financial subsidiaries of CL Financial, a conglomerate with interests in media, energy, spirits, banking, insurance and real estate around the Caribbean.

Sustainable development

Massive growth has not come without the flipside of spiralling costs, and high inflation will remain a key policy concern in the coming years. Inflation had passed 15% by late 2008, the highest rate since 1994.

These inflationary pressures have impacted most dramatically on the construction and food and agricultural sectors. Between 1998 and 2008, food imports have increased by approximately 69% while exports increased by just 3%; food import costs are more than double revenue from exports. A number of initiatives, especially aimed at encouraging young people into agriculture, are now coming on stream in an effort to curb this trend.

Nonetheless, Trinidad remains a regional business hub, with a profusion of new business conference facilities, particularly at major hotels, and a government thrust to make Trinidad and international financial centre. The country continues to forge partnerships with international investors on favourable terms, and that should continue long into the future.

Looking ahead

Despite the economic challenges, Trinidad remains the business leader in the region, and has assumed the role of the regional godfather.

In 2009, then Prime Minster, Patrick Manning, announced a stimulus package to help some beleaguered CARICOM countries weather the economic storm. At a recent CARICOM meeting, however, the new Prime Minister Kamla Persad-Bissessar announced the Trinidad & Tobago could no longer be "the region's ATM card", and that all countries in the region needed to be considered equal.

The previous large-scale projects planned by the previous administration for an aluminium smelter in La Brea and infrastructure for a rapid rail system have been either been scrapped (the smelter) or placed under greater scrutiny for feasibility and efficiency (as with the rapid rail system, existing water taxi system, and construction projects like the National Academies for the Performing Arts).

Efforts are being made to boost the tourism sector as part of the economic diversification programme. In 2009, the government implemented stimulus and upgrade projects for the islands' tourism stakeholders, particularly in the accommodati

Headline inflation and high food prices remain the islands' biggest challenges for average citizens.