Guardian Life Business View

Despite a host of incentives and initiatives, apart from the energy and financial services sector, the private sector in Trinidad and Tobago continues to disappoint in the creation of jobs with good income potential and in the creation of long-term economic growth.

This is of particular concern during this period of economic prosperity when the resources are available to do almost whatever we want. Our inability to rise to the challenge is reflected in our continual slide in the Global Competitiveness Ratings published by the World Economic Forum.

In the management discussion and analysis published in the DFL Caribbean Group’s 2005 Annual Report, they point out that companies “are also handicapped by the inability of countries to increase competitiveness by improving infrastructure, delivering appropriately trained entrants to the work force and creating conditions that allow markets to function effectively.” They continue to point out that the availability of finance in a constrained environment would not result in successful companies. The problems have to be fixed first.

The situation with our infrastructure has been well ventilated, and certain elements, such as the situation at the port, are kept in the spotlight continually by organisations such as the Trinidad and Tobago Manufacturers Association (TTMA).

Infrastructure constraints are of increasing importance in global competitiveness as the world economy is reordered around global supply chains. Purchasers now look at the overall cost of acquiring a product, and a relative high wage rate can be offset by low delivery costs, rapid delivery and reliability of service. Widely available state-of-the- art technology has lowered the unit labour costs of many products, and the significance of supply chain costs, both for inputs as well as outputs, has become a key determinant of competitiveness. While we are doing a lot of work on our physical infrastructure, we also have to work on the processes that surround and facilitate the infrastructure if we are to receive the full rewards.

in years gone by, Trinidad and Tobago boasted of a well-educated and skilled workforce. Sadly, even though heavy investments have been made in education, we cannot make this boast again. In addition to not having kept up in certain areas, we have even slid backwards in terms of basic levels of literacy of the general population. The situation has reached the stage of who is going to teach the teachers, as maintaining the system requires not only a continual investment in facilities, but a continual upgrading of curricula and teaching methods.

TALENT POOL

Trinidad and Tobago now finds itself in a situation where the limited talent pool has become a buyer’s market, creating large wage disparities and driving up wages even in sectors where supply is adequate. Since our educational facilities cannot provide what we need in the short term, it is clear that we either have to import skills or be left further behind. Recent acknowledgement of this need has meet with hostility from some quarters, as it is seen as a thin wedge that will be used to attack the interests of the labour movement. The more we delay over dealing with it, the more serious the problem will become, as there has already been an unregulated inflow of foreign workers, which could compromise future efforts to resolve the shortage of skills in the best way for the country.

The third issue raised by the DFL Group is related to conditions that allow markets to function effectively. To a large extent this relates to the regulatory environment in the country and how laws are enforced. Too much regulation and business activity gets bogged down. In addition excessive regulation creates challenges for enforcement and opportunities for corruption.

The uncertain regulatory environment in the local quarry sector, for example, has led to underinvestment and the low capacity that has directly resulted in the aggregate shortages we are experiencing today.

Too little regulation creates the opportunity for unreliability and inconsistency in business transactions. Investments are based on forecasts and expectations, and investors, whether institutional or private tend to avoid uncertainty or charge high risk premiums to compensate for them. Too little regulation could also impact on perceptions of product quality in an environment where product safety and performance is paramount.

Trinidad and Tobago has been prohibited from exporting fish to the European Union until our food safety regulations are harmonised with theirs.

Participation in the global supply chains requires regulatory environments that facilitate trade and investment, and a good investment climate is more than just tax holidays and easy repatriation of profits. The sanctity of contract, the speed of the legal system and the enforcement of standards all play a part in competitiveness.

Our business community needs to have a clear understanding of these issues, and make informed contributions as to how they could be best resolved for the future of the country.