“In terms of back office processing, we are hoping to develop centres of excellence that will create at least 3,000 jobs,” revealed Varun Maharaj, the centre’s Chief Executive Officer.
“In the medium to long term, I would like to see within the first five years, we should be able to attract 50-60 financial services institutions to set up shop in Trinidad and Tobago.” Back office processing, as distinct from the day to day services offered by financial institutions, involves the risk and treasury management, financial, accounting and data analytics that makes these daily transactions at financial institutions possible in the first place.
In an interview with Business Day, Maharaj has said the IFC is taking a multi-pronged approach to reach its target, one of which was the hosting of the organisation’s first International Outsourcing summit two Wednesdays ago. The summit was able to attract notables such as Bank of America and Starter Consulting. However, wooing international investors is slow work and the IFC CEO said it is reasonable to expect a “gestation period of 18-24 months” before negotiations between itself and any of these firms could result in a deal.
Drawing an illustration, he said, if there were 20 individual investors at any given time, at least five would be “keenly interested” in TT and out of this group, at least one will be converted to a client.
The length of time, said Maharaj, was to ensure “intensive due diligence” and working out the strategies and parameters for entry”.
The flagship project the IFC has been able to attract to TT thus far, is the Scotiabank centre of excellence, located in Chaguanas, which was set up in 2013.
Maharaj said Scotiabank spent US $15 million establishing the centre, which he said is generating some 200 million in GDP annually. Moreover, at the outsourcing summit, it was revealed that China is interested in locating a significant part of its back office processes here. But Maharaj said there may be a few more hurdles for the IFC to cross. One is legislation.
“In 2012, an agreement was signed with Scotia, to get the facility going. There had to be amendments to legislation. That took time and that is why you don’t have as much activity from the IFC,” he explained. He also said additional advice from consultants PriceWaterhouseCoopers, suggesting the creation of a “suite of legislation” to create the special economic zone that international firms needed also caused further delays.
“In 2013, lawyers were engaged and they have in fact drafted that suite of laws and it is now in the hands of the Attorney General’s Office and the Ministry of Finance.” The branding of the country as a location for back office processing has also posed its challenges as the IFC itself had a few false starts, first after the global economic meltdown of 2008-2009 and secondly, as the concept underlying the IFC was overhauled.
When asked, Maharaj said he did not have “exact figures” on how much was spent on the branding exercise but admitted that while it was a “significant amount”, it fell short of international standards.
“If we are to benchmark it against any other location seeking to be an IFC, it has been on the low side compared to some of the other countries that I’ve seen trying to position themselves as international finance centres.” Business Day then asked the CEO if he thought this was an opportunity for government to step up.
“No,” he responded, “I think we have done it in the best way, in pursuing it in a physical and disciplined fashion. Now, having built the platform and gained some international recognition as we now have a ranking, there is the need to do a couple of other things like the summit.” In addition to its contributions to GDP, Maharaj said the presence of international financial services companies in TT would serve to raise domestic standards.
“The IFC has the potential to transform Trinidad and Tobago into a global player...There will be increased sophistication in terms of our service industry and there will be exponential growth in terms of trade. People will start to work at world class standards as we have achieved in oil and gas.”