Port of Spain: International Financial Centre (IFC)?

Economist Jwala Rambarran on the moves to make Port of Spain — Trinidad’s capital — an International Financial Centre as part of the country’s diversification thrust into financial services

Trinidad eyes financial services as part of diversification efforts

[First the former PNM and then the coalition PP administrations intended to] establish the Trinidad and Tobago International Financial Centre (TTIFC) despite the ongoing global financial crisis and its many casualties. By exporting financial services to the world on a competitive basis, the TTIFC is expected to further diversify the economy away from energy.

In recent years, many emerging market countries have sought to set up international financial centres (IFCs). At present, Dubai is facing competition from Bahrain, Abu Dhabi, Qatar and Muscat, which are all competing for IFC status in the Gulf. In southeast Asia, South Korea has thrown its hat into the ring, and India is contemplating a similar move. The well-established IFCs such as London and New York are working aggressively to maintain their traditional market space.

Financial services

Trinidad and Tobago has several characteristics which could be viewed as prerequisites for establishing an IFC. First, the economy is vibrant, with a financial sector that has already contributed importantly to development of the non-energy base. Financial services account for more than a third of non-energy GDP, and the financial sector employs some 12 per cent of the labour force.

Regional links

Second, the Trinidad and Tobago financial sector has become a financial centre in the Caribbean, giving it a natural hinterland advantage from which to consolidate its position as the financial services gateway for Latin America.

Local banks account for about 60 per cent of total bank assets in the region; insurance companies account for a similar share of total regional insurance business. Banks have about 15 per cent of their portfolio in offshore loans, the bulk of which is in the Caribbean. A vibrant wealth management industry has expanded significantly in recent years. About 25 per cent of the funds under investment in the mutual fund industry are denominated in foreign currency. Bond issues for regional sovereigns and companies have amounted to close to US$1 billion over the last five years.


Third, financial sector legislation is being upgraded to bring the regulatory regime in line with international best practice.

The recently approved Financial Institutions Act (FIA 2008) is based on the principles of consolidated supervision of groups, risk management and corporate governance. This new FIA would also apply to companies wishing to operate in the TTIFC. Anti-money laundering legislation is critical to any IFC, and Trinidad and Tobago is compliant with the relevant international benchmarks. Draft legislation to combat money-laundering and the financing of terrorist activities has been completed.

Work is well advanced on the preparation of new insurance and pensions legislation, both of which will further open the scope for foreign investment. A new draft Securities Industries Act (SIA) has also been completed.

Financial infrastructure

Fourth, steps have already been taken to upgrade the supporting financial infrastructure, in line with the requirements of an IFC. The infrastructural framework now comprises electronic clearance and settlement systems, a regional credit rating agency, an online auction system and integrated securities depositories. A good base exists in terms of the availability and quality of supporting services such as accountancy and auditing practices, and law firms with experience in financial law.

Other prerequisites

Finally, Trinidad and Tobago scores well on other criteria which global financial firms seek: economic stability, democracy, a credible legal system, cultural comfort with foreigners, strong use of English, a well-placed time zone, a fairly high-quality work force, and some tradition of risk taking.

Completing the package

While these are necessary conditions, they are not sufficient for building enduring competitive advantage in the provision of international financial services. The government will therefore have to close several gaps which exist between Port of Spain and established IFCs. It must build the following:

  • An extensive network of financial firms with corporate and government client connections across the world
  • A high-level human capital base specialised in quantitative finance, supported by a numerate, paraprofessional labour force
  • A world-class telecommunications infrastructure with connectivity around the clock and around the world
  • A state-of-the-art IT system, and the capability to maintain and manage the IT infrastructure of global financial firms, trading platforms and regulators
  • A well-developed, sophisticated, open financial system with proficient, liquid markets in all segments—equities, bonds, commodities, currencies and derivatives
  • A system of financial regime governance that operates along global “best-practice” lines.

Apart from building these competencies, the government has to upgrade Port of Spain’s urban infrastructure. Port of Spain has to be seen as a cosmopolitan metropolis that embraces workers from everywhere with lifestyle facilities (health, education, culture, sports, entertainment) managed up to world standards and catering to global tastes.


Each successful IFC develops a distinctive role. London has been at the centre of the British Empire. New York emerged as the gateway to the New World. Hong Kong remains the international gateway to mainland China and Taiwan. Geneva and Zurich have a reputation for discretion, stability and low taxes. Chicago is the world derivatives centre, given its closeness to America’s agricultural heartland.

Trinidad and Tobago is seeking to differentiate itself as the gateway to Latin America and the Caribbean, given its proximity to North, Central and South America. It is also seeking to act as a bridge to the Middle East, given the country’s strong energy resource base—it is the largest exporter of liquid natural gas to the United States.

Successful IFCs usually start with a narrow, deeply specialised offering and broaden their capabilities as they mature. Examples are Geneva (private banking), Zurich and Bermuda (insurance and reinsurance), Chicago (futures and options), Qatar (infrastructure finance), and Bahrain (Islamic finance). The TTIFC’s product offerings will seek to promote commercial banking and investment opportunities in downstream energy projects; commodities finance and trading based on the country’s energy sector products; large-scale real estate development, resorts and tourism; and transportation projects such as ports, airports, shipping and support facilities.


Trinidad and Tobago has the potential to leverage its inherent strengths into a viable IFC, but the government will face some daunting challenges in the context of the global financial crisis. Nevertheless, the TTIFC initiative, if properly implemented, will place Trinidad and Tobago in a position to maximise many of the opportunities that will arise in the new global financial landscape beyond the current crisis.

Originally published in the Trinidad & Tobago Business Guide 2009-10. Republished with permission from Media & Editorial Projects Ltd. (MEP)

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