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Tuesday 12 November 2019
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New platform for diversification

TRINIDAD and Tobago International Financial Centre (TTIFIC) CEO Varun Maharaj is confident that the 2015 Caribbean Finance and Investment Forum, scheduled to take place at the Hyatt Regency Hotel in Port-of-Spain from March 4 to 5 will provide a platform for economic growth in this country. Maharaj views this as particularly important as TT seeks to develop strategies to help it not only weather the economic storm brought about by falling global oil prices but to emerge stronger, with an economy that is less reliant on the energy sector and the volatility it is prone to.

In an interview with Business Day at the TTIFIC’s offices, Maharaj expressed his belief that the full potential of the country’s financial services sector is yet to be tapped. He also expressed the view that with a suite of “unique IFC legislation, it would be possible to increase the contributions of the financial services sector from 15 to 20 percent of Gross Domestic Product (GDP). On how TTIFC came to partner with Latin Finance in bringing the conference to TT, Maharaj said, “This conference or this venture is the culmination of a strategy that we have been pursuing over the last 12 months.”“It’s all part of a capital market awareness strategy to position Trinidad as an emerging international financial centre (IFC),” he explained. Maharaj indicated that prior to the conference, the TTIFC has participated in round table discussions in New York and interacted with key IFC players in Toronto, London, Beijing and in Dubai.

Asked if the choice to host the conference in TT was easy or if this country beat out other countries for the right to host it, Maharaj replied, “The conference used to be held in the Caribbean, not exclusively Trinidad, that is the Caribbean Finance and Investment Forum from the years 2000 to 2008.”

However he indicated that when the world financial crisis occurred in 2008, Latin Finance decided they would no longer have the Caribbean Finance and Investment Forum.. “It probably was not feasible, given the interest that was out there,” Maharaj explained.

“What they have found, from our discussions with them, is that there is now keen interest in what is happening in Trinidad, as we are positioning Trinidad to be an IFC,” he said. “We engaged them and they were willing to partner with us, to restart this forum and for it to take place in Trinidad.

The conference will take the format of keynote addresses, important round table discussions and workshops and presentations. Reiterating that this will showcase TT as an IFC, Maharaj said,” We’ve interacted with all these investment bankers in New York, London, across the world. They have listened to the message that we have and they have a keen interest.”

“Through this conference and coming to Trinidad, they will be able to experience the business climate that we have here in Trinidad.”

He explained this will give them “a proof of concept” to actually see what happens in Trinidad. Stating this was the first benefit, Maharaj continued, “The second benefit is that coming out of the conference, we expect to develop a road map, in terms of finance and capital investment into the region but more particularly in Trinidad.”

Noting that Latin Finance’s conferences “take a unique style” because when participants register, they indicate their area of interest, and this results in one-on-one meetings being set with key people, “depending on your domain,” Maharaj this provided an opportunity for local business persons “to take advantage of that.

“I see it as deepening the diversification process,” he declared. In 2012, Maharaj observed that the financial sector contributed about 12 to 13 percent of GDP. “Today it is contributing 15 percent of GDP. So there has been some headway in diversifying the economy, over the last 18 to 24 months in terms of what financial services is contributing to the economy,” he said.

Stressing that “we can’t stop there,” Maharaj stated, “There is a lot of work to be done and diversification of any economy, must be seen as a long term process.” Observing this country has been largely an oil and gas economy for the last century, Maharaj said, “It is really within the last two to three years that we have finally started to talk about diversification and do things about diversification.

“I think that despite the downturn in oil prices, we must continue the trend of diversifying the economy.” Maharaj said the TTIFC hoped that some time in the next two years, financial services would be contributing to 20 percent of GDP. “I know that is a significant task but if we don’t try, we won’t get there.” On how this goal will be achieved, Maharaj explained, “The TTIFIC is pursuing a two pronged strategy.” The first part of that strategy is developing the country’s capital markets, more with an outward focus.

He said an important part of that, “is the legislation that we have recently completed drafting.” Maharaj hoped this legislation will “go to Cabinet shortly and make its way to Parliament.”

Describing the legislation as “unique IFC legislation,” Maharaj said it will create a whole suite of laws, under which any international firm which comes to TT to operate, they could register under these laws and there will be a lot of transparency in terms of doing business.

“We will do away with a lot of the inefficiencies that exist today in the domestic environment. You have the best practices, in terms of investor protection. There will be a quick turnaround in resolving disputes as it relates to commercial and financial transactions,” Maharaj said.

He explained that it currently takes “somewhere close to 1,200 days” to resolve these matters. However under the proposed legislation, Maharaj said the resolution of these issues would occur in 90 days and all the other things with the ease of doing business and best practices, will occur within these suite of laws.

Maharaj said the legislation is currently with the Chief Parliamentary Counsel.

He expected it would be Finance Minister Larry Howai bringing the note for this legislation to Cabinet. Maharaj added it would take five to ten years to implement this legislation if Government took the route of merely amending existing legislation.

He said a potential investor, under this legislation, would be able to operate a system which compared to a jurisdiction such as Singapore.

Saying the TTIFIC is also developing “a new industry in Trinidad which is focussing on middle and back end processing,” Maharaj stated TTIFC was recently able to encourage an Indian company named Quatro to come to TT.

“We are hoping that before the end of this quarter, that they start up operations in Trinidad.”

He also said the TTIFIC has previously worked with Scotiabank to set up a facility in Chaguanas which is doing work in the Northern Caribbean and other parts of the Latin region. “It’s not doing any work for Trinidad and that operation has created approximately 500 jobs,” Maharaj disclosed.

He indicated RBC also has a similar facility, where it is doing work for other parts of the Caribbean and not TT.

Maharaj envisioned that through this strategy, financial and consulting services can be provided to the energy industry, the aviation industry. He further indicated the financial services sector offers a talent pool of 1,200 to 1,500 persons in this sector and many of these persons are underemployed.

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