This sounds so simple, yet most us have not clearly articulated our real investment objective. Are we seeking growth from investment assets or income? Successful investors know exactly what their investment goals are. They can write out these goals on the back of a napkin. They are that sure of their goals. Typically, they can explain them to a complete stranger in less than two minutes. Think of the most successful investors you know. You will find individuals who have focused on what they want to accomplish. Let’s take the case of the real estate developer who knows his investment objective. He may be seeking parcels of land at an attractive price that could be re-zoned and sold for a much higher price. Perhaps he selected raw land and made added improvements such as water and sewage facilities. These improvements usually increase the underlying value of the land dramatically. In another case, a developer took inexpensive land and built homes on this property. She made a dramatic profit from the land value increasing in addition to a fair sum from the new house construction. Many value-oriented stock investors know what they are seeking. Perhaps they will look for company shares that are trading at a deep discount to their potential value. These investors put the adage of buy low and sell high to work for themselves. Simply by keeping an open mind and an open eye on the marketplace, they can find countless stock opportunities in the course of each month.

In each of these cases, these investors have decided on an investment strategy and then put it to work. These investors have focused on a set strategy for investing. They have their investment objectives and are working toward making their goals a reality. Whatever your method of investing, it helps to clarify your goals. Set out what you want to accomplish on paper and decide how you wish to measure your progress. This simple exercise is what sets the successful investors apart from the multitude of others. This simple routine of establishing your objectives and keeping track of your progress is what separates the wealthy from the average person. You must first know what you are trying to accomplish so you may profit from the lessons that are to be learnt in the pursuit of your endeavours. Not only will knowing your objectives increase your knowledge in specific areas, but you will become much more immune to the negative thought processes that abound in the world today. Many people start off on the right track only to become easily persuaded to abandon their plans due to self-doubt. These precursors to self-doubt can originate from many different sources.

The most common are:
* The news media. Most news sources are just reporting news events. The shows and publications that report on actual financial topics are forced to report on such topics each and every month. They inadvertently make financial topics confusing by writing about them from too many viewpoints, with every writer’s opinion coming across as some sort of fact. Remember, these media sources have to publish often. They may research a story for only a few days before they go to print or to film. This knowledge alone should make you cautious.
* Other investors. If all your friends are investing in conglomerates or manufacturing companies, chances are you will consider that avenue of investment as well. Likewise, if most of your fellow investors are investing in government bonds, you will possibly be looking at this type of investment. Another example is when home buyers purchase their homes with a 20-year mortgage because that is what the majority of people are doing. Most of these home buyers ignore the shorter 10-year note and do not even know that there are 15-year mortgages as well. People of all ages seem to act in a manner that is typical of their times. Some of this is the result of traditions, customs, and current trends that people assume are the right and only way to proceed.

Typically, when the majority of Trinidadians are investing in the stock market, the group talk is what dictates your investments. The group thinking is that there is safety in numbers. A saying that has been said many times, bears repeating: “Just because everybody is doing it, doesn’t make it right.” This lesson was driven home during the 1990s when investors who were used to having high time deposit returns kept trying to squeeze every last dime from their accounts. They were doing this at a time when the stock market was just starting to take off. These bank investors missed out on one of the longest rallies on the TTSE ever. Most of these investors took over ten years to finally start entering the stock market. After taking all of these questions into consideration, you may come to the conclusion that perhaps you are not only investing for income, but maybe you need to emphasise growth as well. Only when you evaluate your objectives will you start to realise how complicated real investing can become. A good relationship with an experienced Financial Planner or Investment Advisor could assist you greatly with these and many other questions that will confront you. Best of all, they could bring to your attention many questions that you have not even thought of asking.

Determine Your Time Horizon

Serious investors know their true time line. Many of today’s investors get involved in investments that they are not prepared to hold on to for the long haul. As such, they will be tempted to sell those investments, either when they rise rapidly in price or when they drop in price. Had those investors really known their true time horizon, they would have been more inclined to hold to their original strategies. Knowing your time horizon will allow you to articulate what strategy you should be pursuing. In doing this, you will also develop the ability to stick with your financial programme for the long-term. This will more than likely give you the real results you are seeking. Knowing your true time line will require that you evaluate what you are trying to accomplish both in the short term and long term. A prime example would be someone in their mid-50s saving for retirement at age 65 and assuming that their goal is roughly a ten-year goal.  Upon further reflection, they may realise that their true goal is to save for retirement at age 65 and to ensure that they can stay retired. They might also realise that they need to keep up with the rising costs of inflation. Considering that an average person in his mid-50s is expected to live for another 30 years, he may now realise his goal is quite a longer term. Be careful when evaluating your goals and selecting your real time horizon. The influence it will have on your portfolio composition can be dramatic. Short-term investors are known to favour low volatility over higher returns.  Therefore, a short-term investor would have a much higher tendency to go with bonds or money market instruments instead of equities.     
(To be continued next week)

At year-end December 2002 Ansa McAL Group of Companies posted an after tax profit of TT$243.4m, which was a 13.7% increase over the 2001 figure of TT$214.1m.  Earnings per share increased from TT$1.1 in 2001 to TT$1.24 (13.7% increase) “Shareholders should note that the level of earnings per share achieved in 2002 is a record for the Ansa McAL Group,” reports the Chairman A Norman Sabga.

We cannot discern which industry segment is the biggest contributor to the after tax profits as the Segment Information in the Annual Report only shows the before tax profits as:
* Manufacturing and packaging “diversified supplier of beverage, glass, chemicals and paint products” —  TT$119M,
* Automotive and distribution segment which “ provides services in passenger vehicles, spare parts and household and consumer products”  — TT$118M,
* Insurance and financial services “supplies life and general insurance , vehicle financing and merchant banking business  — TT$55.8m
* Media service and parent company — includes newspaper, radio, shipping and corporate services — TT$30m
The manufacturing and packaging segment increased before tax profit by 6% over the  2001 positions, while other segments remained the same, save for the automotive and distribution figures where before tax profits declined by 5%. The financial ratios for the Group show a solid company, which is expected for a true “conglomerate.”  (ANSA McAL involves itself in different and unrelated industries to defy any single industry categorisation.)

Current ratios for the company are 1: 0.68 (current assets to current liabilities) and does not suffer with the removal of inventories. The debt to equity ratio stands at 56%, which is a reasonable figure for the local environment. In 2001 the company financed its investment and expansion projects through the issue of bonds that become payable in full in 2016. The interest rate is at a fixed rate of 12.625% payable per annum. The choice of issuing bonds instead of incurring debt allows the company a better cash flow, as only interest charges — as opposed to principal and interest with loans  — have to be paid on an annual basis. 

Utilisation rates for total assets stand at 49% which reflect the expenditure on capital investment in 2002 :
* New equipment at ANSA  Polymer and ANSA Chemicals
* A refurbished kiln at ABEL,
* TT$1m world class ICI Autocolor Training centre at Penta
* Commissioning of a new wing, Building R at Grand Bazaar,
* Rebuilding of the bar and restaurant at Club Pigeon Point. 
Expectations are that this ratio will dip further in 2003 before it can recover because of
* The commissioning of the “one of the most advanced block manufacturing facilities in the world” at Bestcrete;
* The rebuilding of the furnace at Carib Glassworks;
* The  new state of the art match line installed at Trinidad Match.
Insufficient data makes it difficult to pinpoint companies that were less than profitable for the year 2002 within the Group, but those that are reported as having “challenging” or “difficult” trading positions were: Hardware and Oilfield/ ANSA Technologies, St Kitts & Nevis Carib Brewery, Crown Industries/ Standard Equipment. Trinidad Publishing Company remains highly optimistic about prospects in the new financial year.  
 
The companies that excelled were:
*ABEL was able to achieve superlative growth in sales and managed to double its profits compared to the results achieved in 2001.
* Bestcrete surpassed both sales and profitability targets
* Carib Brewery —“successfully defended and enhanced its domestic market share.  The company increased both its sales volume and operating profits.
* Classic Motors — “in a total market that has its fourth consecutive year of decline, Classic Motors has managed to grow its profits in each of these years.”
* ANSA Finance and Merchant Bank — reported a profit after tax figure of TT$21.9m a 12% improvement over 2001 results
* Trinidad Lands/Grand Bazaar — 22% increase in gross profits over the prior year and enjoys an almost 100% occupancy.
Companies within the Group have various rates of growth, and can take risks to dominate markets e.g. Carib’s successful price wars, which other companies without the financial backing of a larger group cannot do. 

For the Group, combining the effects of lethargic industries with high paced segments allows a smoothing of earnings, that ensures the combined bottom line does not suffer negatively.  The cash cows ensure cash flow for the group while loss leaders provide tax write-offs. For the investor, the stock affords a stable position with moderate returns. However it is self-defeating, as any gains made by a strong company will be mitigated by the losses in other companies. The investor has to take the entire mixed baggage and invest in companies in which he is interested as well as in others he is not. Group companies buy and sell goods and services from each other.  If a company needs to purchase an item, the Ansa McAL Merchant Bank may finance it, ANSA McAL (US) Inc procures it, Alstons Shipping air freights it. The larger Trinidad economy does not benefit from any group transaction and the net VAT position is zero for group transactions. The plus side for the economy is that the group provides some level of stability as it maintains companies through strategic changes or expansion processes that ordinarily may be difficult to sustain. There is a great opportunity for ANSA McAL to be involved in sustainable growth and development of a larger portion of the Trinidad and Tobago economy by involving itself with entrepreneurs and providing seed capital through joint venture programmes.  The entity has the track record of growing businesses strategically and can provide the mentoring necessary to ensure that the flagging tradition of entrepreneurship is revived.    (Most new business are selling something not creating it). Not only do they have the power to lobby for the tax incentives that would make it worth their while, but in terms of being able to buffer the fallout of one or two bad investments — who better to take the chance.

Maxine Attong is a financial and management consultant Email: enhanceink@hotmail.com

Q. I am a single woman in my late thirties, with a good career. I have no credit cards and always try to live within my means, so I never buy on hire purchase and have never taken a bank loan. So imagine my surprise when I applied for a mortgage and was told that because  I had little or no credit history my request might take longer than usual. I feel like I’m being penalised for not having any debts?
Carolyn, La Romain

A: Credit history is not the only factor a banker would take into consideration in granting a loan. Yes, having a good credit history gives an idea of your credit-worthiness on loans you would have taken in the past. But, the past is not always an indicator of the future and an astute banker would be more concerned about your debt servicing ability over the life of the new loan you are applying for. He or she would be more concerned about whether you are permanent in your current job, your performance level and future career path. In other words, the banker has to ascertain if there are any circumstances over the life of the prospective loan, which may hamper your ability to pay. Therefore, the future may be of greater relevance than your past experience with loans, so don’t think that you are at a disadvantage for not having a credit history. In fact, having no debt is a significant plus in the mind of any lender as it means that you do not have a high level of fixed debt commitments every month. This signals that you may be better able to service any debt which you may be granted. While it may take a longer time to process your application given that you have no debt experience, it does not at all reduce the prospect of you eventually being granted the loan. So to say that you are being penalised for not having a credit history is incorrect. It may take a little longer but if you are found to be credit-worthy there is no reason why you should not be successful. Given your frugality and budgetary discipline you seem to be a good candidate for this loan.

Q. I finally got approved for a credit card. So I’m going to treat the family to an overseas vacation. I plan to use the card to pay for airline tickets, hotel reservations and spending money. My wife’s father tells me I’m abusing my credit card. I don’t see it.
What’s wrong with my vacation plan?
Geoffrey, Barataria

A: If you are taking your family on a vacation only because you were just granted a credit card then your father-in-law could be right in that you may be engaging in consumerism. But, if you are using the credit card merely for transactional convenience i.e. not having to carry around large amounts of cash to pay for the necessaries then using a credit card can make sense. It’s very important to remember that a credit card attracts an extremely high rate of interest and so it is not a cost-effective way of long term financing. So you should only be going on a vacation if you have the cash ready to pay off whatever amount you use on the credit card. This cash could come from your own savings or from a vacation loan from the bank at a much lower rate of interest than exists on your credit card. In essence, the credit card should merely be an instrument of convenience and not a way of financing expenditure. This is a grave misconception amongst consumers in Trinidad & Tobago and the world over. A lot of people chalk up huge balances on credit cards living beyond their means. When the balances cannot be easily paid off, the debt on the card attracts exorbitant interest payments, which may become extremely burdensome to pay. In fact, in the United States this problem has spawned a host of new businesses, which seek to help individuals free themselves of the burden of credit card debt. Beware of this trend and do not become captive to it.

Q. What systems exist in the Trinidad and Tobago Stock Market to protect investors from insider trading?
Lennox, San Fernando

The Securities & Exchange Commission is the regulatory body responsible for the local stock exchange. They have developed rules and regulations, which make insider trading a prosecutable offence. The penalties for such activity are significant and so apart from having to hand over profits arising from such illicit activity, the offender faces the full extent of the law. This penal code thus acts as a significant deterrent to individuals contemplating such activity. Furthermore, in recent times, the SEC has also been extremely forceful about insider trading and has published newspaper ads warning about the penalties for such an offence and what one should do to avoid becoming unwitting offenders. The cardinal principle in trading is that if an individual comes into contact with private information which can have a significant effect on the stock price, that individual must make every effort to have that information revealed so that all other investors can benefit from this information at the same time. However, if an individual comes into contact with non-material, non-public information and combines this with material public information in developing a theory about stock prices then this is not construed as insider trading.

Questions can be sent to : PO Box 1830, Wrightson Road, Port-of-Spain.
Email :cmmbsecurities@mycmmb.com

IN LIGHT of what has been revealed about the FW Oil-Soldado scandal, the Prime Minister’s announcement that anti-bribery clauses are included in the contract for construction of ALNG Train Four is both timely and welcome. According to Mr Manning, these clauses were inserted “to make the future of this country as secure as possible” and to ensure that, if improper payments are ever detected, the contract will be voided. In our view, such a provision should have been embedded in the conditions of every contract signed between TT and a foreign company, but in any case it is better late than never. Such clauses would serve as strong deterrents to the kind of corruption which we are now hearing about with respect to the contract awarded to the Texas oil company for development of the South West Soldado oilfield. According to Attorney General Glenda Morean-Phillip, a total of $800,000 has been paid to a former UNC minister and his wife as an “improper consideration” for influencing the award of the contract.

In addition, the AG released documents which indicate that certain officials in TT had demanded a US $1.5 million bribe and “threatened to block FWO’s proposals unless the bribe was paid.” Another document told of an attempt by former Junior Energy Minister William Chaitan withdrawing the contract awarded to FWO secretly and without authority because he apparently wanted to “guide” the project to a Canadian energy company in which he had an interest. The Attorney General says that all these instances of corruption, including the InnCogen affair, are being investigated but it seems to us that these investigations are taking an unduly long time. The FWO-Soldado scandal, for example, was first exposed by an investigation done by ISS in 2000 and since then investigations have led apparently to nowhere. Over three years and no action whatever. This apparent impotence seems even stranger when we now learn that the AG has in her possession four cheques for the US$130,000 which she said was paid into a Jersey bank account in the name of a former UNC minister and his wife.

An abundance of evidence to support the reports and allegations of corruption under the former government has been produced but up to now no one has been held accountable and, as a result, the Opposition can continue blithely to dismiss the charges as concocted attempts to embarrass them or as election gimmicks by the PNM. The level and extent of corruption that has so far been revealed amounts to a horrendous and intolerable blot on the country’s public life, and our apparent incapacity to deal decisively with it makes a mockery of our law enforcement capability, our system of justice and the necessity for us to maintain the highest standards of integrity in public life. Indeed, the more evidence that emerges now seems to send an unfortunate message to the rest of the country, that inspite of all the rhetoric and anti-corruption posturing we are not really impelled by a repugnance of such wrong-doing and a commitment to bring the culprits to justice. Milllions, perhaps billions, of taxpayer’s money have been siphoned off into private pockets, or rather bank accounts, huge bribes have been paid for granting mega-project contracts, and we seem unable also to deal with this kind of crime. The powers that be seem content with merely exposing the malfeasance. However welcome it may be, the anti-bribery clauses inserted in the Atlantic LNG Train Four project by the PNM government may be seen as closing the stable after the horse has bolted. And the energy and desire needed to retrieve the horse seems somewhat lacking.

This idea came to mind last month, when one of my staff asked me to sponsor his son on a walk-a-thon to raise money for his school.  I read the form. “He’s walking four kilometres only?  Sure, no problem.” I offered $5.00 per km. and signed the form.  My project officer continued to stand and look expectantly at me. “Can I have the twenty dollars please?”  “When he’s done the walk”, I replied. “No, we have to hand in all the money beforehand.” “But what if he doesn’t complete the walk?”  I was still thinking that the pupils were exerting  themselves for the school, so that the reward would be proportional to the effort. “No”, my staff replied. “That’s not how we do it.  We get all the money beforehand” Now I’m intrigued.  “But what if, on the day, some of the pupils don’t do the walk?  They still get the money.”  I have this vision of the school, with percipient foresight, training the next generation of URP ‘workers’. “The money’s for the school.” “Yes, I know it’s a good cause, so why not just ask for donations?  Why dress it up as a walk-a-thon?” The conversation continued without resolving what was, to me, the sort of logical inconsistency I love to get my teeth into, and my staff wish I wouldn’t.  However, it’s a new school in need of support and I happily made my donation, whilst remembering another place, and another time.

I recalled my secondary school; the place, Zimbabwe; the year, 1970.  The same school from which Zimbabwe’s little powerhouse of a wicket keeper hailed, some 30 years later.  We were a school of some 700 to 800 boys, as always in need of money.  So we organised a sponsored walk.  The route was from the school, to the airport, and back, a distance of about 22 miles, but officially labelled as 20 miles for sponsorship purposes.  This is similar to walking from Port of Spain to Piarco and back! And we were sponsored by the mile.   Get twenty sponsors at  50 cents a mile, and you raise $200, if you finish.  Thirty years ago, a dollar was worth much more, and even sponsorship at 10c/mile was worth it.  One of my father’s colleagues (probably not a friend) sponsored him for nothing, for the first 12 miles, and at $10 per mile for miles 13 to 20!  Every mile along the route there was a verification station that stamped our walking record sheets with the distance completed.  The money we raised was in direct proportion to the effort we made.  No one ever considered any other possibility. More than 600 pupils, parents and staff undertook the walk, beginning in the cold, slanting light of a Saturday morning in winter, and ending between 21/2 and 8 hours later, depending on age, fitness and endurance. My old school magazine reports that almost $9000 was raised, sufficient to build two tennis courts, two basketball courts, shelters on various playing fields and improve the frontage of the whole school.  I cannot recall any of this, as by then I was in my final year and more concerned with ‘A’ Levels than school infrastructure.  But I have one outstanding recollection, a picture of crystal clarity burned indelibly into the chemical code of my memory. 

As a prefect, one of my responsibilities was gate duty, manning the entrance to the school to control the conflicting flows of traffic and pupils, and monitor late-comers.  That’s where I was on the Monday after the Walk.  It was as if we had been transformed into a school of invalids, as if some all-encompassing disaster had struck down the pupils and staff.  En mass, they, we, hobbled, limped, shuffled, to assembly; a school of the halt and the lame, with bandaged legs and feet, sticks and crutches, a community of mutual aches and pains. But there were no unhappy faces.  Pupils, teachers, siblings and parents had achieved a common target, and as we chuckled and laughed at each other’s infirmities, we were bound up and buoyed up in a burning glow of mutual sacrifice and achievement that swept away all the academic, sporting and authority barriers that normally characterise school life.  I watched the school pass before me that morning, and whatever time the pupils arrived, I recorded none as being late! The image and feelings of that morning have been with me, undiminished, for over thirty years. I hoped that the son of my projects officer would have the chance to experience some of this, though 4 km was hardly stress. On beginning this article, I remembered to ask about the walk-a-thon. (What’s wrong with the word ‘walk’, or are we trying to covertly create the impression that the equivalent of once round the savanna is akin to running a marathon?) Yes, the school held it’s walk-a-thon, but neither my staff member nor his son were there, as he had lessons that day. Are we bringing up our children to expect remuneration whether or not they do the work?

The views expressed in this column are not necessarily those of Guardian Life. You are invited to send your comments to guardianlife@ghl.co.tt

The Government of Grenada scored a major victory with the World Trade Organisation (WTO) following the recent announcement by its Prime Minister, Dr Keith Mitchell, that his government will increase tariffs to 100 percent on imported poultry, beer, stout and malta to protect these local industries. The Grenada Government was supported and assisted by the ANSA McAL Group which is the majority shareholder in Grenada Breweries Limited (GBL), brewers of Carib beer, Shandy Carib, Malta Carib, Royal Extra Stout and other popular beverages. With the collaboration of ANSA McAL, the Government of Grenada successfully renegotiated the imposition of higher tariffs on nine imported products so as to safeguard the products of Grenada Breweries, as well as other local products. GBL is Grenada’s major beverage manufacturer. ANSA McAL’s Group Chairman and Chief Executive, A Norman Sabga, said  the WTO victory  for the Government of Grenada represents the first time that any developing country has successfully completed re-negotiations under Article XXVIII: 1 of the WTO. It is an important development for the Caribbean beverage industry, he said.

Dr Patrick Antoine, a trade economist and Strategic Policy Advisor to the ANSA McAL Group and to the Government of Grenada, led the negotiations. He described the collaborative effort between ANSA McAL and the Grenada Government as “the best example of smart partnering” that he was aware of in the trade policy sphere. Antoine went on to urge other governments and private sector entities to follow the path, which has been demonstrably successful in advancing the interests of small states and small manufacturers. The lesson here is that private sector collaboration with regional governments needs to be appreciated not solely in relation to renegotiations, but in the area of trade policy formulation to facilitate private sector activities on the whole, a statement from the company said.

Anthony Hosang, president, Trinidad and Tobago Manufacturers Association (TTMA) said the move was made to protect those industries in that country from the increased competition which globalisation will bring. Additionally, he said this might also be necessary for some sectors like poultry and some agricultural products in TT. “Because of the Free Trade Area of the Americas (FTAA) we are going to be up against the United States (US) which still maintains substantial subsidies on their agricultural products and based on that, the competition is not fair.”

Sanch Electronix Managing Director, Simeon Sandiford, is not going to let the pirates get the better of him and his music. Like cockroaches, he knows they are not going to go away and accepts the reality that they are here to stay. Pirating accounts for over $100,000 in lost revenue a year for Sanch, he says, adding  that this is inevitable. But to beat the pirates, he tries to increase the demand for the original product rather than the copy. What he has going for him, he says, is the fact that he targets a niche market and tries to ensure that the product is of such a high standard that it surpasses any immitations. Both, he acknowledges, take time and money. The CD booklets, for instance, are made up of high quality pages which include current research and theory on pan both in English and translated into different languages. The HDCD system he uses also allows him to encode more information than on a conventional CD and this acts as a watermark to facilitate tracing of pirated material. Future releases will most likely be recorded using Super Audio CDs, “the next generation of audio” as Sandiford calls it. This technology consists of a high resolution 24 bit CD developed by Sony.

Sanch Electronics, located at 16 Riverside Road, Curepe, successfully records and markets local music but Sandiford has a penchant for pan. At the Trinidad and Tobago Manufacturers Association (TTMA) Trade and Investment convention at the Hilton, he was trying to explain to both buyers and interested parties just what went into getting a CD out to the market. “Piracy is a multi-billion dollar industry,” he says, noting that he had to try and stay ahead of them. Sandiford, 55, who is from St. Joseph, says that music was a part of his life from an early age, having studied the piano in childhood. With academics a priority, his interest in music waned a bit but never died. After helping to set up the Bureau of Standards and working there for eight years, Sandiford with partners George A. Charles and the late Ruskin Punch formed Sanch in 1979, the name itself derived from their combined surnames.

They began with high-tech imports and speaker manufacturing but the downturn in the economy in the mid-eighties took its toll on them. Sanch turned to the recording industry. In 1984 they bought equipment and three years later, they had their first commercial recording. “Any kind of recording is a combination of art and science,” says Sandiford, who has an MSc in Physics. The science, according to him, consists in having the right equipment whereas the art consists in using it with precision. His preferred recording process is to first use two sets of microphones and a special non-electronic console that allows one  to mix the signals, said Sandiford. The sound is then amplified and run through the High Definition Compatible Digital (HDCD) converter which improves the clarity and vibrancy of the music. Asked whether the recording process is different for smaller ensembles as compared to larger ones Sandiford says it all requires balance and listening. The estimated cost of  producing an album is between $35,000 and $100,000 but Sanch has about fifteen corporate sponsors to aid in various projects. Corporate support is never about  begging for sponsorship, Sandiford says, but rather a symbiotic relationship between the corporate investor and Sanch. “The investor understands the needs of the culture sector and is proud to support a product that has some kind of international appeal,” he reasons. In turn they are rewarded by having their logos featured on the CD cases and having the CDs themselves advertised in top global magazines for world music such as Soundlines. Assistance also comes from Caribbean Export, based in Barbados, which helps exporters to become globally competitive by reimbursing one half to two-thirds of a company’s expenditure through grants.

Sanch has received over $75,000 US over a four year period in this manner and it has enabled Sandiford to do various promotions and attend trade fairs. The steelbands featured on the albums are “paid” with the CDs, which are then sold by the members of the bands. This is the preferred method of payment, Sandiford says, because sales only become profitable when one has a large enough catalog to attract international business. This catalog may take ten to fifteen years to compile. Sanch itself is just beginning to make waves in the international market. Its international partners include CAM (Italy), Delos, One Music Library, Blue Rhythm Records (USA), Koka Media (France) and Panyard Posse Productions (USVI). CDs are available in North America, Japan, France, England, Barbados, South Africa and St. Thomas. Also, according to Sandiford, Sony is showing interest in the simpler pieces of  pan music now whereas a few years ago they felt it was not profitable. But the real hurdle is marketing, says Sandiford who has run the gamut of the internet, calendars, tee-shirts, mugs to magazine advertisements and  derivative copyright, whereby three-minute excerpts of established local compositions can be used to advertise consumer goods and services. How many local steelbands has Sanch recorded? “Everybody,” he says matter-of-factly. He has also recorded bands in St. Thomas and acted as a consultant in the Virgin Islands, where pan is used in an anti-delinquency programme for the youth.

Significantly, for bands in Trinidad and Tobago, these recordings also serve in preserving the memory of arrangements that have never been scored. Also, through the restorative work of Soundreaction, a subsidiary of Sanch run by Sandiford’s son, nineteen-year-old Sean, new life is being breathed into old, faint and distorted recordings through the use of new and superior technology. The future looks bright for Sanch and its fans. Within the next few months Sandiford hopes to release eight new CDs. Another item on the agenda is a project for the Pan In Schools initiative using six-minute arrangements and Sandiford is hoping to get financial support for this from the Ministry of Education. Noting there is need for more corporate support, he says TT needs to get tied in to a big international conglomerate instead of operating in pockets. He advocates minimum local content regulations for the airwaves and the creation of a public radio station. As for right now, Sandiford is focused on the launch of the new album Reid, Wright and be Happy featuring Ron Reid, Orville Wright and David “Happy” Williams. The idea for this project was conceived one night after Reid, Wright, Shannon Dudley and Sandiford had eaten dinner at Sandiford’s home. They recalled a duet that had been recently performed by Reid and Wright which received a standing ovation from a room full of musicologists. On that basis, they decided to produce “a pan-jazz album of solos and duets featuring the steelpan and piano” and to ask “Happy” Williams to join Reid and Wright on the bass. This CD costs $15,000 US to produce, Sandiford says, noting that the objective is to let the project pay for itself.

The Insurance Association of the Caribbean (IAC) held its 23rd conference last week in the beautiful resort of Punta Cana in the Dominican Republic. This resort is approximately three  hours from the capital, Santo Domingo but there is an airport only 20 minutes away that services this tourist area. Within a two mile strip, there are five hotels — one being 5 star and the four others 4 stars — operated by the Barcelo chain providing just over 2,000 rooms with a Convention Centre and an 18 hole golf course. The Dominican Republic has a population of eight  million which is more than the sum total of the English speaking Caribbean. In terms of the tourism plant, it is clear that a single resort with 2,000 high quality rooms probably exceeds the total room capacity available in all of Trinidad and Tobago and any plan that this country has in terms of the tourism product and a thrust into tourism must be viewed in the context that we simply do not have the capacity and capability of our Caribbean neighbours to be a serious competitor. This is not to say that there might not be some niches that we could explore but to offer the traditional tourism product would find us severely wanting. The Organising Committee decided that they would take the opportunity at this Conference to focus the region’s attention to the FTAA, GATS, and the CSME and one full session was devoted to the current negotiations. What emerged demonstrated clearly that Trinidad and Tobago had a continuing leadership role to play in the region since the Trinidad and Tobago private sector had been actively following the negotiations for almost two and a half years  years and had in fact been a participant in trying to get its views known and heard. It is somewhat unfortunate that many of the key players in the region had only a superficial knowledge and a passing interest and knew very little of what was going on in the negotiations and worse how they were likely to be affected.

Discussions and negotiations are carried out by governments but governments do not trade — it is industry and business that trade. The developed countries have the resources — both human and capital — whereas developing countries continue to struggle to cope with all the world issues that are taking place and therefore they are always in a better position to win out in these negotiations. For instance, even in Trinidad and Tobago the insurance companies have been putting forward their position while other elements of the insurance industry (eg insurance brokers, intermediaries, adjusters etc) seem to have little or no interest whatever and it is very possible that decisions could be taken which are inimical to their interests. The developed countries, more specifically the USA, have been fully briefed by their private sector industries to request issues of market access, cross border trade, open market conditions etc and the government negotiators are articulating in the negotiations what their private sectors want. These are not the government negotiators’ views but industry and private sector and that is what the negotiators are trying to win for their people. In Trinidad and Tobago in particular, the private sector has been at the forefront of putting their position to the negotiators in the FTAA and GATS but it is still limited to only some industries although initiatives have been taken to include a much wider interest group and over time more businesses will be involved. However, the risk is that it could all come too late as the timetable for the conclusion of negotiations draws nearer. Too often, negotiations are concluded, positions adopted and the people who would ultimately be affected find out when the “ink has dried” and thereafter they have to make the necessary adjustments and live with the consequences. Of even greater concern is that, many of the persons involved in the insurance business in the Caribbean, have little understanding of what is taking place in the FTAA and GATS. In this regard, the Insurance Association of the Caribbean (IAC) as an umbrella body that can speak on behalf of the region at the level of Caricom has decided that it will obtain feedback from its member territories and then formulate a common position for the region which can then form the basis for a regional approach at the Regional Negotiating Machinery (RNM). It is my understanding that the IAC will convene a meeting no later than mid-September to consider all the views as a follow up to what emerged from the conference.

However, time is of the essence as we are only 18 months away from the coming into being of the FTAA. Meanwhile, developed countries have already made requests of individual territories in the region for greater commitments to a more liberalised trading environment that will further expose domestic companies to the possibility of increased foreign competition. While the Heads of governments have a structure for achieving a degree of uniformity and commonality in the RNM, it must be remembered that individual countries sign the agreements and requests and offers are decided at a bi-lateral level. Importantly, it came out very forcefully that as the region moves towards negotiating the FTAA and GATS, there is a realisation that it is imperative for the much — talked about Caribbean Single Market and Economy (CSME) to be fully operational in the shortest possible time. It is urgent that a single market and economic space is created that will treat with six  million people without borders as a priority even before the coming into being of the FTAA but it seems most unlikely that the CSME will be a reality any time soon as much work has to be done. The lesson learnt from the Conference is that the region is largely inadequately prepared for the FTAA. There remains insufficient preparation to face the negotiations and many sub groupings within the private sector are simply uninformed and disinterested and will only find out the impact when it is too late. Nonetheless the work must go on and the negotiators will be better served if they can be provided with positions that they can take to the negotiating table.
e-mail: daquing@cablenett.net

Global markets paused this week as investors took time to evaluate whether stock prices were getting ahead of the predicted (and hoped for) economic growth. The Nikkei was the only market to make bigger gains last week but it could not break through the magic 9,000 barrier. The DOW gained 54 points to close up at 9,117. The other US indexes didn’t move as weaker than expected US economic data disappointed investors. The University of Michigan consumer confidence index fell to 87.2. for May, down from 92.1. US exports also fell, hitting a 13-month low in May. Oil prices retreated on news of higher inventories, Brent closed last Friday at USD 26.43. Many Caribbean businesses are strongly linked to the United States Dollar, either through purchases of materials and products or through sales into the western hemisphere. As such, we feel it prudent to put forth some detailed research on the US Dollar and how major exchange rates are likely to move.

Our longer term forecasts predict the US Dollar will continue to weaken against the other hard currencies. Recently, honest comments by the United States’ new Secretary for the Treasury, John Snow, initiated a sell off which was then countered by strong dollar comments from President Bush. We do not believe the United States will do anything to stop the slide of the dollar. Nor is there much that the US Government could do, even if they wanted to. The USA does not keep any significant reserves of US Dollars to put on the market to defend the exchange rate, only about 35 billion, just enough to facilitate foreign trade matters and only 7% of what Japan has on hand as a comparison. Plus, all the USA’s debt is held in USD. Looking at foreign trade, the US is a net importer right now, thus more US Dollars are going out of the country than are coming in, increasing the US Dollar debt held by foreigners. In fact, the US current account is now at about 5% of GDP, and increasing by about US 1.0 billion per day. Thus it is reasonable to conclude that the dollar will float to a market determined level to balance off these debt and trade pressures. The only way it will get stronger is if the US economy settles into solid sustained economic growth rate higher than the other hard currency countries, a situation we do not feel too likely at this point. Also, remember that a lower dollar, lowers the standard of living of Americans, makes imported goods more expensive for US residents and increases the price competitiveness of US manufactured goods abroad.

In corporate news, Freddie Mac hit the news when it announced it had removed three of its most senior executives for allegedly failing to cooperate with the US Securities and Exchange Commission. The stock dropped 18%. Freddie Mac is to restate its results for the past financial year to more accurately account for its extensive use of derivatives. In the UK, Royal Bank of Scotland, purchased Churchill the insurer, for GBP 1.2B in cash from Credit Suisse. As for investment strategies, we believe that shifting assets into longer term bonds carries significant inherent risk of capital loss as interest rates will certainly rise with economic growth. We also note that many investors, especially the baby boomers, have been shifting significant assets into bonds (2.4 billion USD last week) as a result of the shell shock performance of equities over the past three years. This is a strategy that we would not consider prudent at this time. The recent bond rally was predicated on fears of deflation and a rate cut, thus the markets have already priced in a 25 to 50 basis point rate cut from the US Fed within weeks. Thinking longer term, a review of market performance immediately following bear markets where a 40% or more correction has occurred, shows the average equity return above inflation has been 8.6%, well above the typical yield of 6.5 to 7%. Although many investors don’t want to hear it, equities are the favoured asset class as we move forward with this economic recovery. We continue to support a strategy invested in large cap value based equities, keeping a watchful eye out for small to mid cap growth oriented companies in the financial, health care, consumer discretionary and tech sectors.
e-mail: darcy@investments-intl.com