FTAA good for financial sector

Deputy Central Bank Governor, Shelton Nicholls, said yesterday that opening the doors to free trade is good for competition  in the financial services industry.

Liberalisation, he said, will be good for the customer who stands to benefit from the financial products that will become available on the market. He was speaking at a breakfast seminar entitled “FTAA — Challenge or Opportunity, or Opportunity with Challenges,” held by the Institute of Banking of Trinidad and Tobago at TT Chamber’s headquarters in Westmoorings. “Competition can be a good thing or  it can be a bad thing,” he said, noting though that influx of new products was bound to benefit the customers of the banking and insurance sector. Stressing that the financial services sector was going to see the entrance of new players, Nicholls said that one might also see the loss of market power by those who operate locally. He said what he expected to see was strategic alliances to accommodate those changes.

The Deputy Governor said TT must be prepared to have a proper legal and regulatory infrastructure in place to deal with FTAA and also stressed the need to have a flexible work force to deal with the changing financial landscape. He made the point that as far as negotiators are concerned, telecommunications was an integral part of the financial services system, and noted that it was time to start looking at it as a cluster of services. Telecommunications, he said, was one issue that was not extensively explored and it was something the region should look at. Kelvin Sergeant, director of Research, Securities Exchange Commission (SEC) said TT had to be careful that it does not discriminate against companies wishing to do business locally when FTAA comes around in 2005.

Referring to the Foreign Investment Act, he said one may have to re-examine the provision that a foreign company can not earn more than 30 percent than a local one. “We need to go back to the legislation and see what the impediments are,” he said.  He told members of the business community that while there will be casualities, there will also be opportunities. He said with liberalisation of the financial services sector, companies in TT are going to have to become more transparent in the way they do business. He spoke about consolidating the supervision of the financial services sector, saying that the linkages that had developed between banking and the insurance sector was now quite visible. To deal with this, Sergeant suggested that both the SEC and Central Bank play a more active role.