Q. I’ve heard that refinancing my mortgage can reduce my monthly payments as interest rates are low right now, but when the rates go back up won’t I be back to square one?

Lenore, St James

A. The rates on most mortgages are fixed for the term and so if you refinance your mortgage today and rates subsequently go back up again, the rate on your mortgage would stay constant. Therefore, by refinancing now before rates increase again you effectively lock in a fixed rate for the term of your mortgage. Now a fixed rate mortgage is a double-edged sword. If rates go back up you benefit. But, if rates fall further you would be paying higher than you have to. In fact, this would have been the reason why you had to refinance in the first place. Overall fixed rate mortgages may not be the most efficient instrument. If rates fall, while in theory you may be able to refinance, the costs associated in the form of legal fees and stamp duty can be significant. These upfront costs may make it prohibitive to refinance even though there could be significant interest savings over time.

There may be a way to avoid this by getting into a floating rate mortgage, which increases or decreases in tandem with market conditions. If rates fall so does the interest cost on your mortgage. On the other hand, if rates increase so does your interest cost. However, if you expect rates to decline, this facility could be useful in that your interest cost is lowered without having to incur the upfront costs of refinancing. The only downside remains the fact that the rate can float up if rates in the market increase. Nevertheless, even this can be hedged to an extent by the use of an interest rate ceiling. While you may have to pay a slightly higher initial rate on your mortgage for this benefit, it provides protection in a rising interest rate environment. Discuss the options with your banker and shop around to get the best deal.

Q. My sister has been investing $100 every month for about two years. I prefer to save when I have some extra cash, some months $200 and other months nothing.
She tells me her regular saving, although small, will grow faster than my casual approach. Is she right?

Amoy, Arima

A. Your sister may be right. It may be better, especially when inculcating a savings habit, to set aside a fixed amount per month. This imposes a discipline on yourself which helps to promote the “staying power” needed to keep dedicated to savings. If an ad hoc approach is adopted it is very easy to drag one’s feet and keep on deferring saving for the future. In such circumstances, the extra luxury goods may become more important than the $100 in savings. Apart from building the habit, your sister may be right about the rate of growth of your savings if a regular amount is set aside. The quicker you accumulate savings, the faster you benefit from the “time value of money” and the “compounding effect”, two very important concepts in finance.

The time value of money means the longer the time period over which you save, the greater is the dollar interest earned. The compounding effect is a related concept, but specifically refers to the ability to keep on building on your initial principal. This arises from adding interest onto your principal periodically thus being able to earn “interest on interest”. This significantly increases the growth of your savings. So work out a budget and determine the fixed amount per month that you can set aside and stick steadfastly to it.

Q. I operate a small business and often get paid a retainer on starting a project. I usually keep the money in my chequing account. A large part of these funds may sit in the account for up to eight weeks. I’m wondering if there is a way to make this money work for me over this short period, yet still be able to draw on it for materials and paying the people I work with?

Rooplal, San Fernando

A. If you run an overdraft on your chequing account, as some enterprises do, your retainer would already be working for you, keeping a positive balance in your account so you don’t have to go too deep into overdraft. This would reduce the exorbitant cost of interest that has to be paid on overdraft facilities. With commercial prime at an average of 11.5% a small business operator just starting off would pay nothing less than 12.5% on a credit line at the bank, which is extremely high given the low rates on savings accounts. If you do not have an overdraft and/or you run a surplus then you would want to generate some interest revenue while the funds are lying idle.

Now, if you have the funds in an overdraft account then if you run a surplus, in most cases, you are earning no interest on your balances. This is because most of these accounts have no “credit-interest earning” feature. This simply means that while you pay interest cost on drawn balances, if you run a surplus and leave the credit line undrawn, these credit balances or surpluses have no interest being earned on them. In order to have surplus balances earn interest, some banks have employed something referred to as “sweep accounts”. As the name implies, whenever there are surpluses in the account these are “swept” into an interest-bearing account overnight and are then re-credited into the chequing account the following day. In this way there is significant flexibility in that you can write cheques, draw on your overdraft and still be able to earn interest on positive balances if and when they do arise. Talk to your banker and work out the best option for you.

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

TRINIDAD and Tobago faces an economic challenge that comes from both an internally prescribed objective and the need to adjust to the global movement of trade liberalisation. At home, the government has identified the achievement of developed-nation status by the year 2020 as the principal developmental goal of the country. At the same time, we must also gear ourselves to deal with the imperatives which the establishment of the Caricom Single Market and Economy and the Free Trade of the Americas will impose upon us. While this dual thrust will have its impact on the manufacturing or productive side of the economy, an equally important role will have to be played by the country’s financial sector which will also have to be strengthened, to be streamlined, to be shaped into a far more effective mode to meet the standards of a developed nation and the increased competition that will inevitably come from these globalising events.

What is the present status of the financial sector and just how much has to be done in this area to meet the double challenge ahead are outlined in the timely Green Paper recently issued by the TT Government. The comprehensive document, in fact, is the report of the 13-man committee appointed by Cabinet to review the country’s financial sector. The Green Paper, in our view, is a valuable document not only because its presents, for the first time in one study, a critical profile of TT’s financial infrastructure, dealing with all its sub-sectors in a diagnostic fashion, but also because it sets out recommendations for policy action to meet the strategic economic challenges of this changing time. The Green Paper deals with each sector in orderly way, giving its architecture, its performance, its major weaknesses and then the challenges and opportunities it faces. The report concludes with general recommendations and policy recommendations for each sector. It seems significant that many of these recommendations are for improvement and integration of the regulatory and supervisory systems of the various sectors.

Among the many recommendations for banking is one that would “encourage reliable and regular information disclosure to the public which should form part of the overall regulatory and supervisory process.” The report would also like to see measures instituted “to encourage a more competitive environment by facilitating the entry and exit of new players in the sector.” As for the capital markets, the report recommends, among other things, the improvement of standards for good corporate governance in accordance with international best practices “by establishing rules to deal with inter-locking directorates, voting rights of trustees and management of collective investment schemes.” Also, the Paper advocates the implementation of international standards for information disclosure and reporting so as to improve transparency. With respect to the insurance sector, the report points to a variety of weaknesses including the inadequacy of overarching legislation and the limitation this places on growth and development, and the need to increase the powers and technical and human resources of the Supervisor of Insurance to enable him to conduct effective oversight of insurance companies.

Among its general recommendations, the report calls for an upgrading of the sector’s legal framework and the country’s telecommunications infrastructure in terms of bandwidth and Internet connectivity plus the development of a national competition policy which should include the definition of monopolistic and unfair practices and rules to protect consumers. The Green Paper on the financial sector reads like an urgent call for action in an area where development, although considerable, has been haphazard and uncoordinated. Let us hope that it stimulates the necessary response.

Trinidad and Tobago with its embrace of a vision for 2020 will have to enter the post-industrial economy. Perhaps the Wallerfield Park will be an integral part of this vision.

The business world is fully familiar with the development of Silicon Valley in California, USA from which sprung the leading high tech firms operating today such as Microsoft and its competitors. In Trinidad and Tobago, the Pt Lisas project, based in our California in Couva, is built on natural resources extraction and conversion. The new high tech parks are based on the application of brainpower to create new technologies and products and finding solutions to economic and social problems.

The latest model from which we can draw lessons is from another so-called third world country — India, where Bangalore, the capital of the state of Karnataka, is the home of infotech companies and a biotechnology industry whose products offer tangible solutions for medical and agricultural industries. World leaders and corporate executives regularly make proposals for investment in Karnataka. The reason is simple. An enlightened government has displayed its comittment to improvement in the agricultural and industrial sectors and the brief is straightforward — get as much investment in the state in as short a time as possible. The state provides an atmosphere conducive for business. Investors know their investment is safe and a skilled and peaceful workforce exists. The climate, both industrial and natural, is highly investment friendly which explains the presence of acknowledged global corporate giants  in the automobile, power, steel and construction sectors.

Resident companies like Infosys Technologies and Wipro helped in putting the state and Bangalore on the international map. Concurrently, the massive recent growth in the IT industry has been assisted by government’s support for entrepreneurship, an approach which can lead to solid financial growth. These initiatives have been undertaken side by side with development of agriculture and rural communities. Land records have been computerised and more than two thirds of these records have been digitised for access by farmers on-line. The state has aligned and empowered local bodies and NGOs to successfully improve rural housing, one of the most pressing needs of the population.  The government is now considering introduction of a single window facility for housing to enable all paperwork relating to ownership of houses to be under one roof.
 
In the early conceptualisation, it was recognised that biotechnology was an emerging area of opportunity for Karnataka. The state already had a critical mass of biotech companies and good research institutions. The challenge was how to nurture that innovation, promote entrepreneurship and facilitate effective transfer of technology to the end users. The government gathered a cohesive team from industry, academia, MNCs and other stakeholders to implement programmes.  The state too was instrumental in expansion of infrastructure through development of three biotech parks, a biotech corridor in Bangalore, a centre for human genetics and an institute of agri-biotechnology.

Karnataka is also developing its garment industry potential as a major apparel sourcing destination with global appeal. Leading brands like Arrow, Allen Solly, Lacoste, Louis Philippe, Van Heusen, Dockers and Levi-Strauss are made in Karnataka because of the favourable infrastructure available ie a salubrious climate, reasonable housing costs, access to a quality workforce, professionally managed marketing organisations, affordable commercial accommodation. The National Institute of Fashion Technology (NIFT) provides world-class human resources for the apparel industry and because of Bangalore’s growing reputation for fashion design, two Apparel Parks are to be established specialising in high fashion, value-added export garments and denim-based garments.

Collaboration between government and industry towards education and training geared at specific industries are a priority. This is apparent in the apparel industry as well as in the biotech industry where government and ICICI established an Institute of Bioinformatics and Applied Biotechnology (IBAB) which will produce degree graduates as well as offer short-term training and run incubation centres for entrepreneurs. Free education has been offered for young women and a school adoption programme involved corporations with government in improving infrastructure in thousands of schools. In January 2003, a consortium agreement was signed for the construction of the Bangalore International Airport including the potential for future commercial development targetted at passenger traffic, retail and amusement sectors, as well as development in IT, transportation and distribution industries.

An international competitive bidding process and evaluation methodology was carried which identified Germany’s Siemens-led consortium in joint venture with the Industrial Investment and Development Corporation and the Airports Authority. The airport is to be completed by September 2005 at a total cost of US$230M, with no provision for time or cost overruns. The design is modular with a runway and terminal building to be built in the first phase to be followed by a second runway and terminal building in tune with demand. Can we fashion a similar vision and plan for Wallerfield learning from some of the lessons from the state of Karnataka?

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

Trinidad and Tobago’s first office, equipment and furnishings superstore, Office 1 was officially opened by the Mayor of Port-of-Spain, Murchinson Brown, at the Retail store 14-17 Victoria Square. Guests were invited to view the extensive range of products available, including office equipment, furnishings, PCs, peripherals and practically every gadget needed for the office environment.

Jerome Marquez, Man-aging Director, welcomed the business leaders to the launch and outlined Office 1 Superstore’s commitment to offering superior quality, complemented by its global “everyday low price” programme. Asked about the difference that Office 1 would bring to the local marketplace, Marquez reiterated that Office 1 would guarantee same or next day delivery and flexibility in ordering for the home or office via fax, phone or website. Office 1 Superstore Trinidad and Tobago is part of a franchise of over 5,000 stores across the globe.

ASPHALT PROCESSORS INCORPORATED (API), which controls the entire local asphalt market in Barbados, is preparing to pave a path into the region thanks to a new grade bitumen.

Errol Lynch, managing director, told Business Authority the bitumen (British name for asphalt) can be designed to meet any climatic condition. “We are using it to add stiffness to the asphalt binder which would help prevent rutting and shoving at the high stress areas, mainly roundabouts,” he said. Asked about how newly introduced concrete roads would impact on API, Lynch stated his confidence that asphalt was here to stay. In both the short and long term, asphalt would be cheaper than concrete, he said. “We have lost the urban roads to concrete, but I don’t know if that trend will continue. We are targetting outside markets to ensure that the plant remains viable,” Lynch added.

Suriname was one of the first external markets but the company, now into its second year of operation, supplies Jamaica with 40 tonnes of asphalt per month, has a year-long contract in St Kitts, made inroads into St Vincent three months ago and is looking to go further. Carmetta Wiggins of CGL Trading Incorporated, consultant to API, said that within one year API has been able to supply 100 percent of the emulsions needed locally because of competitive pricing. The company has also helped customers to avoid stockpiling.

Of the recently held regional seminar which examined Innovations in Asphalt Technology, Wiggins said the bringing together of the various contractors and ministries of public works officials served as a stepping stone to the formation of a regional association, which would have links with the United States associations in this area.  This would provide network support for those working in the industry so they could help each other deal with any problems. Lynch said the seminar should help them with entry into new markets as several regional contractors were also in attendance.  API needs additional markets to ensure that the plant remains viable. The plant is in operation only 11 days per month to satisfy current demands. “We want to run for longer periods. We keep a small staff and teach them different skills so that when the plant is offstream they could be incorporated into different areas,” he said.

As for the plant’s future there are some other plans in the works, but the managing director did not disclose them. Lynch said since operations started, API made other products apart from what are offered in Barbados, and sold to Suriname.

Imagine a regular-sized concrete block which is fifteen percent less the weight of an  ordinary block and costs almost ten percent less. It is the newest product being offered by Abel/Bestcrete concrete products, thanks to its new TT $36 million Besser Superpac manufacturing plant.

This new plant promises to transform the company into the “largest and most modern concrete block manufacturing facility in the English speaking Caribbean. The new machine has the production capacity of over 50,000 blocks per day.

Managing Director of Abel/Bestcrete, Glenn Castagne, said that the plant was commissioned with the aim of retiring some of the older machines which have been in use for over fifty years. The Superpac possesses the capacity to effectively match that of the other five plants which were in operation prior to its installation. Surprisingly enough, construction of the plant began only eight months ago. The oldest machine, he said in an interview, was purchased between 1955 and 1960 and could only manufacture about 5,000 to 6,000 blocks during a double shift of 16 hours. The new plant can produce approximately 60,000 blocks per day. The plant, he went on, further allows the company to achieve two main goals; firstly to meet the increase in demand as well as to manufacture a block that is cheaper and lighter, yet one which meets the strength requirements.

The masonry building blocks being produced in the new plant are the first metric-sized blocks in the region. Its sophisticated vibration technology allows for the manufacture of a block approximately 15 percent lighter in weight than previous blocks while at the same time surpassing ASTM strength requirements. “This means, for instance, that at the end of the day a mason will not be as tired because he is using a lighter block. Additionally, you can transport more with every truck load and still be within the weight requirements. You can also save on shipping cost if you are exporting to other countries.”

Castagne further disclosed that while the plant was only recently commissioned, concrete blocks had already been released unto the market, although in rather small quantities. Full production is expected to begin at the end of June. “Come July 1, we expect to have this plant operating at its full capacity for 16 hours per day. We eventually plan to run it for 20 hours per day, but we are still going through the learning curve,” he stated. The plant, which is fully automated with many of the processes being managed by sophisticated computer software, has additional attributes, he explained, in that it has been programmed to diagnose any problems with its ability to operate. This he said, is similar to an aircraft which is designed with computerised diagnostic equipment. He said if there is a problem the company can communicate with the manufacturer via Internet modem directly from the machine. The manufacturers will troubleshoot and find out what needs to be done.

CEO of the ANSA McAL Group, A Norman Sabga, expressed his belief that the new facility “provides us with the capacity and processing speed to adequately satisfy the medium-term national demand for building blocks on time, at competitive prices and of the highest quality.” “We are fully aware of the changes in the global macro-economic environment and to the liberalised global market. We understand the necessity for being globally competitive, if we are to survive and grow,” he said.

Adrian Augier doesn’t really care what goes into boxes his company makes but he does care where it happens.

Augier, chairman of the Windward Islands Packaging Co Ltd (WINERA), was in Trinidad recently for the launch of WINERA (Trinidad) Ltd’s office but he also revealed that the company should soon be setting up a production plant here. The new plant and Augier’s views are a big step for a company which was set up in St Lucia in 1971 to provide packaging for the banana industry. The company is a joint venture between the Windward Island Governments and Venezuelan company , Papelera Industrial SA. Augier is adviser to the St Lucia Prime Minister in the Office of the Private Sector. Today, about 50 percent of WINERA’s production is for non-banana products. The company has been supplying packaging to local manufacturers for over 15 years, with its packaging being used for a variety of products, including food and beverage, chemicals, lubricants and household products. “We are into the corrogated box business and what goes into it is incidental,” Augier explained.

By its own account, WINERA controls about 17 percent of the local packaging market and with the new plant, is looking for more. The company’s expansion comes at a time when regional manufacturers are gearing themselves up for the Free Trade Area of the Americas. It also comes as private and public sector are exchanging words about the value of Caribbean Single Market and Economy (CSME). St Vincent Prime Minister Dr Ralph Gonsalves and Caricom Secretary General Edwin Carrington recently stressed that, despite the concerns by the private sector, individual companies are already making regional trade work for them. For Augier, there is no real choice. Regional firms cannot rely on what they consider guaranteed markets. “There’s no such thing as a domestic market anymore guaranteed to domestic producers so the more you can level the production playing field in terms of your cost of production your competitiveness you’re better off,” Augier said. “If a Trinidad company uses Trinidad based advantages to export into the domestic market in St Lucia in an area you might consider as exclusive as a banana box, I think that’s a poignant point.”

Augier said multinational companies usually have different divisions, like production and services in different areas, or even countries. “I think that logic can be applied to the Windward Islands,” he explained, adding that the region should use the strength of the individual islands. “Trinidad is becoming the capital of the region and it is increasingly important as a source of public and private financing,” he said. The infrastructure, although lashed by private sector leaders, exists. “As a matter of fact I think it’s far more ‘do-able’ than people realise,” Augier said. “I think what frightens people is that we are accustomed to doing business in an environment in which we have access to the power structure, especially in the smaller countries but I don’t think it’s any different in Trinidad. You can pick up the phone and speak to the Minister.”

For Winera, Trinidad also offers good labour and power costs, skill workers and a stable exchange rate. The company, though, does have its concerns. “If any of those were to change out of proportion, let’s say, with the others and you get an imbalance on the production cost side then we’re all concerned,” Augier said. “Everybody’s affected. So, we look on the Trinidad economy now which is supposedly entering a phase of accelerated growth and we would be concerned about the pressures this might have on wage rates.” Wage rates aren’t the only attraction but if too many factors in the equation change then, Augier said, the company will have to reconsider. If boxes coming out of Trinidad are not competitive, customers can easily look elsewhere. “The banana farmer in St Lucia by and large does not buy a banana box out of patriotism,” he noted. “He buys it out of a need to keep his post production costs to a minimum.” Winera is not alone. Other companies and countries in the region will have to look at how to survive in a more competitive environment. “The challenge we in St Lucia face to deal with the realities of a shrinking banana market and to diversify the economy as quickly as possible,” Augier explained. “The future of the Windward Islands as far as I’m concerned is the creation of a larger economic space as quickly as possible. The more objective open and transparent the market is the more I think you’ll see the free movement of investment capital.”

The Insurance Association of the Caribbean holds its annual rendezvous for the first time in a Spanish speaking territory — the Dominican Republic (DR) next week — from 8-10 June. The IAC broke new ground last year when the conference was held in Miami, USA, and now it’s on to the DR.

The IAC formed in 1974 last held its conference in Trinidad and Tobago in 2000. All past conferences until last year were held within the English speaking Caribbean so it would appear that that this regional body has recognised that it must now seek to embrace all those territories that occupy the geographical space that is known as the Caribbean. When the IAC was formed nearly 30 years ago, the insurance executives felt that they should mirror what was taking place within the integration movement on the heels of the Treaty of Chaguaramas.

It was also a time when there was a strong nationalistic feeling within the region and localisation of the banks and insurance companies was gathering steam. While in the larger markets- Jamaica, Trinidad and Tobago and Barbados there already existed local insurance associations, the IAC was seen as the body that would speak on behalf of the insurance industry in the region at the level of Caricom on matters that affected intra-regional trade and the need for harmonisation of laws. Initially, conferences were held every two years but this quickly changed to annually since they were used primarily to educate and disseminate knowledge on technical insurance matters and they became the ideal forum to share experiences on current trends in the insurance business. The IAC conference soon became a “must attend event” for persons doing business in the Caribbean and it brought insurance executives in one place so that foreign insurance and re-insurance brokers, re-insurers, software developers and service providers seized the opportunity to meet and discuss business. The alternative is a longer travel schedule to visit these executives in their own offices and it was for this reason in particular the IAC conference was seen as a place to meet and do business rather than a forum to learn and gain new insights into developments in the international market place.

For persons who attend the major international insurance conferences, the IAC conference now joins the club where the cost of attending is justified by the business done. The IAC Conference continues to attract high attendance between 500-600 registrants where approximately one-half will come from outside the region and they will only continue to come if there is opportunity for business rather than an emphasis on classroom type lectures. That is the reality and the IAC had to take this into account when they frame their programme so as to attract participants. In the light of everyone having to justify expenditure, the IAC will only be able to compete with other insurance conferences if they are able to provide a good venue, topics and speakers that will sell the conference and importantly if key decision makers in the region continue to attend.

The DR is a venue that many persons who usually attend the IAC conferences have not visited so its newness is in itself an attraction. The organisers have chosen a resort in Punta Cana so it is mixing business with pleasure. The plenary sessions have been split into life and non-life topics that run concurrently and speakers will address issues like legislative challenges around the Caribbean, fraud investigations, kidnapping and asset protection, health and wellness, new treatments and their impact on healthcare costs and pension fund management. The IAC has gone further this year in having a forum where senior decision makers can deal with the pressing issues of the CSME, GATS, FTAA and their likely impact on the regional insurance industry.

The intention of this session is to alert the region to the implications of these ongoing trade negotiations and how strategies could be developed to position the industry to cope. It promises to be informative without the technical jargon and if nothing else is achieved, it hopes that the region’s insurance leaders will take a keen interest in the future negotiations of the GATS and FTAA and even try to influence their outcome rather than be bystanders to merely implement what has been agreed. The Insurance Association of the Caribbean (IAC) which has its headquarters in Barbados has at long last gained recognition at the Caricom level from 2001. It now has status within the Caricom framework and structure for consultation on financial matters and can attend meetings of the Council for Finance and Planning (COFAP). It is therefore better positioned to make an intervention on matters of finance affecting the region and may even be able to have its views known on trade matters at COTED.

As delegates meet in the Dominican Republic to attend the IAC Conference, re-insurers will once more stress the need for good underwriting results and pricing stability in all classes of insurance business to the regional insurance industry. As the hurricane season approaches they will be viewing the weather forecasts with some nervousness until November. The region is very exposed and the continuing tightness in the supply and demand of re-insurance could be further aggravated by any major event and bring pressure on an already fragile situation. Nonetheless, it is also an opportunity to renew friendships and cement relationships. It is also a time to make new friends that may turn into a business relationship over time. It is a forum to gain new insights into the insurance business and this new overture into the Spanish speaking Caribbean could only serve to expand the IAC horizons.

E-mail: daquing@cablenett.net

Stocks rallied across the Board last Friday to close the month with a strong performance. And the rally continued through to Monday. The United States Dow Jones Industrial Average briefly crossed the magical 9000 barrier on Monday before closing at just under 8900. The NASDAQ and S&P too neared their 52 week highs as positive economic numbers boosted investor confidence.

The biggest index gains were in the NASDAQ and German DAX with both indexes rising more than 5% for the week. The Asian markets also recovered as SARS fears faded away. To reflect on the month, the DOW was up 4.4%, the NASDAQ up 9.0% and the S&P logged its third straight month of gains. Improving US consumer confidence (now at 83.8, a five month high and up from 81 in April) and the Chicago May PMI index rising to 52.2 (a figure above 50 indicates economic growth) along with better than expected new home sales in the United States helped boost investor confidence. Strong consumer spending in the US caused the GDP for the first quarter to be revised up from the expected 1.6% to 1.9%. Even the German Business Confidence figure rose in May, coming off a 16 month low in April. The slow and steady rise of stocks over the past 10 weeks (the US DOW is up 16% from mid March) along with the fact that the stock markets always anticipate economic recovery 2 to 6 months in advance augurs well with the improving economic statistics now released.

There has been much discussion about the status of disinflation in the Euro Zone and in particular, Germany. Most analysts now see general currency devaluation’s continuing along with a strong need for the European Central Bank to lower rates. French unemployment picked up in May, reaching its highest level in three years, putting more pressure on the ECB.Not all the economic news was good though. Durable goods orders fell in the US in April by 2.4%, mostly due to a fall in demand for autos and business equipment.  Personal spending in the US was off in April as well, down 0.1% after March’s 0.8% rise. However, at Costco, the US’s largest membership wholesale chain, profits for the quarter rose 18% with net income reaching 153.8 million, up from 130.4 a year earlier. Spending was strong in the UK with the most recent Bank of England inflation report stating that the fall in consumer confidence, house prices and borrowing was seasonal and/or war induced. House prices rose 1.3% in May according to Nationwide after a flat April. New home loans have also picked up (now at its best pace for six months) along with remortgaging, equity withdrawal and credit card lending. The UK consumer confidence figures from GFK show a second straight month of increase, a clear statement from consumers about their future income streams. As for retail stocks, HSBC has revised its estimate of retail sales growth up from 2.7% to 4.5% in line with the improved consumer spending picture.

We note that some UK stocks have faired well, or at least better than our own West Indies Cricketers. Cable and wireless started the year at a measly 41pence to have now broken over the GBP 1.0 mark on Friday. Deutsche Bank are forecasting a share price of GBP 1.3 if the new C&W management can solve the carnage in its global telecom business. Japan also had a great May as regards the economy and stocks. In fact, Japan had its best equity trading month in four years. Housing starts rose by 1.4% over the previous year (a decline of 2.5% was forecast), and construction orders at the top 50 construction firms rose by 16.5%. The Latin American markets also enjoyed solid equity trading performance. The Venezuela central bank lowered interest rates by 4% to 32%. a two year low in a move to spur investment after the economy contracted sharply in 1stQ 2003. Looking ahead, there will likely be interest rate adjustments, especially in Europe, so expect some excitement as the next round of central bank meetings approach. Consumer spending continues to be the key factor in driving the economic recovery with many of us hoping to see improvements in the business spending figures.

e-mail: darcy@investments-intl.com

Reed Monza (Trinidad) Limited bottled water comes from a well at the foothills of the Northern Range and manager Roger Downer insists that the standards it adheres to are impeccable. The company first started bottling a local brand of water in 1994. The brand was then  known as Pure Water, now its Reed’s Pure Water. 

“Trinidadians are becoming more conscious of the quality of the water they drink,” he said, noting they are turning to bottled water as an alternative. That translates into increased sales, he said. Downer insists that the water from its well is tested and approved by WASA. It is also put through the mill by an ISO 9002 certified independent laboratory and also one of their own trained in-house quality control staff. While Reed Monza takes its bottled water seriously, Downer said that there  are still no standards for bottled water in TT. In December 1999, when then Minister of Consumer Affairs, Mervyn Assam, revealed the names of four brands of water, which he claimed, were “unacceptable,” he sparked controversy and a wave of criticism followed. The brands of bottled water were sampled and tested by CARIRI for microbial content and chemical contamination. The tests were completed in September 1999, and revealed that certain brands had unacceptable microbiological content.

Some of the brands, Assam said, had unacceptable levels of heterotrophic plate counts, while others had an unacceptable level of faecal coliforms. He explained that the heterotrophic plate counts indicated the general cleanliness of the water, such as the treatment processes applied and how the water was handled and stored. However, he noted that this was not indicative of a health problem. “The presence of faecal coliforms was more indicative of threats to the health of the consumers,” he indicated. Following CARIRI’s findings, the Consumer Affairs Division was mandated to pursue several initiatives to ensure that the consumer’s well being is adequately safe-guarded.

One of these initiatives included the liaising with the Chemical Food and Drug Division (CFDD) of the Ministry of Health to ensure the expeditious completion of a mandatory standard. Downer said while there are no specifications for bottled water to adhere to in TT, his company’s brand works in tandem with the internationally recognised body responsible for establishing standards for bottled water throughout the world, the International Bottled Water Association (IBWA) based in the United States (US). It is also been affiliated with NSF International, an independent body also based in the US and designated by WHO to establish drinking water standards and regulations.” Downer said he is not sure whether checks are made by any Ministry to ensure that health specifications are met by bottled water producers. He said water tests should include testing for bacteria, pH, chlorine content, hardness, totally dissolved solids (tds), taste, smell, conductivity, ozone residual if such is used in process and varying parameters for organic and inorganic contaminants in the source as well as the final product water. He advised the Ministry of Consumer Affairs to urgently look at establishing guidelines and standards not only for local brands but also for imported ones as well. “This will place our bottled water industry on par with other countries,” he said.

In December last year, Blue Waters, one of the more popular bottled waters in TT was fingered in an incident at Grafton Beach Resort in Tobago where cases of food poisoning were found among guests. However, the local manufacturers were later cleared as investigations revealed that the water was not to the cause of the incident. Dominic Hadeed, managing director, Blue Waters, declined an interview but his company does adheres to the rules and regulations set by the IBWA. SM Jaleel and Company Ltd, bottlers of Oasis water, said they were not able to provide any information on the matter because that part of their business was contracted out to a private bottler. They refused to give the name of the bottler. Local bottled water manufacturers have to compete with international brands like Evian, Zephyrhills, Aberfoyle Springs and Dasani, among others.

Another bottled water manufacturer, who spoke on the condition of anonymity, agreed with Downer, saying he has been bottling water for the past four years and is still waiting on the Consumer Affairs Ministry or the Food and Drug Division to set proper standards and regulations for bottled water in TT. “Implementing regulations on bottled water will promote honesty and fair dealing in the market place,” he said. He said in the US the bottled water industry is regulated on three levels, federal, state and trade association. The US Food and Drug Administration (FDA) gives consumers the assurance that the bottle water they purchase is stringently regulated, tested and of the highest quality, he said. Bottled water labels in the US are labelled “artesian,” “distilled,” “drinking,” “mineral,” “purified,” “sparkling,” and “spring,” and questioned why the same could not be done here. “We do not have any  kind of regulations for bottled water here in TT and we need to get some to protect consumers,” he said. The absence of regulations has not deterred consumers, he said. “Consumer do not appear ready to give up their bottled water any time soon. Younger, health-oriented people are driving the market’s growth,” he said.