When on Mon-day night, US President George W Bush gave Saddam Hussein, 48 hours to leave Iraq or face war, many TT business people started praying for a short war. A long war, they said, could disrupt trading links and increase the cost of doing business.

Newly elected president of the Trinidad and Tobago Manufacturers Association (TTMA) Anthony Hosang, said there is no doubt that a war will affect TT. He said the terrorist attacks in the US caused a serious decline in tourist arrivals to this country, noting that war against Iraq could further depress the tourism industry. He noted that while there was an increase in the number of visits out of Europe, this time around, war will  not only affect the US but other  countries around the world. “We can only hope that this does not do further damage to our tourist industry,” he said. Hosang added that local manufacturers who import raw materials and other inputs for their products are also going to be affected. However, he said many of them have not implemented any contingency measures in the event that there is an outbreak of war. “It’s a wait and see situation,” he said.

In a televised address to the nation, Bush said  it was time for “decades of deceit and cruelty” to come to an end in Iraq. “Saddam Hussein and his sons must leave Iraq within 48 hours. Their refusal to do so will result in military conflict, commenced at a time of our choosing,” he warned. The warning has put many nations on alert. Businesses around the world are also bracing for the worse as trade around the world will no doubt be affected. Hosang  added that with war, the movement of goods and services will be impeded. “It is a matter of waiting and seeing what the fallout of war is going to be,” he said in an interview. “Clearly we need to look at it carefully and work with all stakeholders. We do not know what we have to deal with as yet, at this point it is all guess work.”

The biggest victims of war and terrorist attacks have been the airlines, which are particularly vulnerable to rises in energy costs. While national carrier BWIA West Indies Airways is still trying to come to terms with the losses it experienced after the terrorist attacks in the US, it refuses to be caught off guard this time. “This time BWIA has a plan in place,” said Clint Williams, corporate communication director, BWIA. He said the airline has implemented a number of contingencies in the event that war is prolonged. These plans, he said, include special security for its flights, flexibility for passengers who need to change bookings and security for its employees at various stations around the world. “We are quite confident that we have everything in hand,” he said, noting “we can start rebuilding since the airline is already in a precarious position from September 11. War at this time only exacerbates the weak financial position that many carriers find themselves in,” he said. Williams said he cannot say how much money BWIA stands to lose, noting it all depends on how long the war lasts. “We can survive a bad week. But a terrible month is going to have a bad effect on us.” 

Central Bank Governor, Ewart Williams has said that war by the US and its coalition forces against Iraq will seriously affect Cari-bbean economies, many of which are still recovering from the fallout of September 11 terrorist attacks in the US in 2001. He also said while energy-rich TT is in a position to collect increased revenues from the spike in oil prices, decline in tourism in Caribbean countries will hurt exporters in the twin-island state. “It is seriously going to affect the economies of the region. One cannot simply assume that because we are an oil producer, we will benefit, certainly there is going to be an increase in oil prices and it redounds to a healthy revenue position,” said Williams. Bush’s war drums has sent the price of oil crashing to its lowest level for three months.

The cost of benchmark Brent crude slid more than $2 a barrel in the first hour of trading in London on Tuesday. It fell ten percent to $26.40 before edging back up to about $27.30. Williams added that he is not sure that investors can continue making investment decisions in a condition in which there is war.  “I am not sure that trade relations would be the same if there is prolonged war,” he said. There is also continuing discussions among regional leaders about a Stabilisation Fund to help prop-up fragile economies. It is envisaged that such a fund will have an initial capital of US $50 million in the first year rising to US $180 million within five years. Williams suggested that countries that are facing major economic disruptions as a result of a war could approach the IMF;  the Inter-American Development Bank (IDB) and other multilateral organisations which have facilities for emergency assistance. He warned though that they may have danced to the tune being played by these institutions.

Peter Clarke, managing director, West Indies Stock Brokers Ltd (WISE) said investors will exercise some caution with their investments. “I do not think that the war will impact fundamentally on TT’s economic prospects of going forward. However, at a time like this, one needs to exercise some caution and watch and see how things develop in terms of the war itself and the impact it has on us.”  Courier services are already counting the costs of war. Dana Mackie, a customer service representative at Federal Express (Fedex), noted that according to the restrictions put in place by governments, there may be some problems where flights are concerned and this may ultimately have an impact on their service. “There may be some changes where ‘commitment days’ are concerned as well as to the flight plans, but that is all we can see happening for now,” she said.

Fedex currently has 211 offices worldwide including branches in the US, Spain and Portugal, three countries which are expected to be directly involved in the war. Mackie revealed though that the company does not provide services to either Iran or Iraq, although they do have some Middle Eastern clients. Joanne Abbas, manager of Trinidad operations for JSL Speedpak, whose main office is based in Miami, Florida, noted that one problem she could foresee would be a slowdown of orders from foreign clients. She maintained though that apart from this she could not see the war affecting the company to any great extent since they utilise cargo planes for transportation, rather than commercial planes.

Abbas noted that since the terrorist attacks of Septe-mber 11, US Customs had initiated strict security measures which required companies to be registered for courier services. Therefore, she maintained, business can continue as usual in the event of war. For Ramnarine Mohepat, chairman, Skyline Freight, war with Iraq could have “a terrible effect” on the company’s business. “Imports and exports will fall for sure,” he said. Those involved in the business of import and export will see a definite drop in business, he predicted.

Discord reared its head at the National Health and Safety Conference held recently at the Centre of Excellence, Macoya, as employers and employees alike called for the formation of a united front to ensure that the new Health and Safety Act seeks the interests of all workers.

The conference, organised by Health and Environment Solutions, was titled “Exploring the Impact of Occupational Safety and Health Regulations for Business and Industry in TT.” Government recently announced its intention to enact Occupational Health and Safety Laws  (OSH Bill 2003), which will compel all private and state organisations and departments to establish and maintain safe working conditions for all workers. The proposed laws also seek to empower the worker with the right to refuse to work with pay and with protection from dismissal or reprisal. The Act is expected to go before Parliament in the near future.

Amidst much applause and desk-thumping, President General of the Oil field Workers Trade Union, Errol McLeod, announced his union’s plan to hold a similar conference within three weeks time, where all of the concerns of local workers will be addressed. One major aspect of controversy was Section 15 of the Act which entitles an employee to refuse to do work which is likely to endanger himself or another employee. There was much speculation that such a clause would allow workers a “get out of work free card.”

However, McLeod dismissed these concerns, noting that there was no evidence to show that workers had ever taken advantage of a provision, which is now in the law, by refusing to work in a situation they believed to be dangerous. “The employer is most likely to be the one to overlook threatening situations,” he said.  McLeod stressed that the establishment of guidelines and standards should not be solely left to the employers but should instead involve all stakeholders. “We should not leave it to the employer to determine whether the employer should approve or disapprove,” he asserted. McLeod’s point was backed by President-General of the Seamen and Waterfront Workers Trade Union (SWWTU), Michael Annisette, who stated in a telephone interview that, while his union fully supported the implementation of the Act, there was  “the need to keep up with the times.” As long as a specific function endangers a worker’s life, he has the right to refuse to work, he argued. “This is acceptable worldwide,” he said.

“For the employers who believe that the workers will take advantage of this, the Act provides numerous safeguards against this eventuality where the employer can go to the unions or even to court if this problem arises,” Annisette said. Furthermore, Chief Inspector for the Ministry of Labour and Small and Micro Enterprises Development, Devnath Roopnarine, said that the present Act which was merely a revised edition of the Act of 2002, required employers to undertake a risk assessment of their entire operation in order to avoid or prevent workers from taking that kind of action. Another problem pinpointed by McLeod and Annisette was lack of the proper manpower which would allow the Occupational Safety and Health Agency (OSHA) to effectively perform its functions of enforcement.

McLeod stressed there was a lack of resources devoted to factory inspectorates. “With a lack of resources there will be a lack of qualified manpower and the inability to carry out sufficient visits to workplaces in order to discover unsafe practices or violations of the standards established by the Act,” he said. McLeod expressed his belief that the obvious solution to this problem would be to involve the workers themselves in the process of enforcement. “It is the workers,” McLeod went on, “who are exposed to the health and safety hazards of work and who have the greatest interest in ensuring the enforcement of the standards established by the Act,” he said. “Therefore, it ought to be the policy of the legislation to include and encourage as much as possible participation of workers in the enforcement of health and safety standards.”

According to McLeod, the solution to this problem lies in the organised establishment of Health and Safety Committees at the workplace. However, McLeod lamented, the Bill’s major flaw was that it did not provide for the establishment of such committees. In addition, the relevant minister is empowered, not required, to make regulations providing for the setting-up of Joint Safety and Health Committees. “The difficulty with these bare-boned provisions is two-fold,” McLeod admitted. “Firstly, it leaves the establishment of Joint Health and Safety Committees to employers and it leaves unanswered questions such as who are to be the workers’ representatives.”

“Secondly,” he went on, “it does not state exactly what the functions and powers of the Joint Health and Safety Committees will be. In other words, the Bill fails to give Health and Safety Committees status.” McLeod commended Health and Environment Solutions for bringing together government, business, industry and labour to discuss the topic. Existing safety legislation, under the Factories Ordinance of 1948, applies only to persons employed in factories, stressing that the ordinance is wholly inadequate and outdated. “It must be the main, if not the only purpose of legislation such as the Occupational Safety and Health Act, to establish broad and detailed health and safety standards which employers are required to attain for the protection of the health and safety of their employees,” he said.

Move over Microsoft, there is a new player in town. The Linux operating system, which was initiated in 1991, has the mighty Bill Gates on his toes.

Basically, Open Source Software (OSS) or Free Software (FS) programmes are programmes whose licenses give users the freedom to run the programme for any purpose. Users are allowed  to study and modify it, as well as to redistribute copies of either the original or modified programme without having to pay royalties to previous developers. The opposite of OSS is closed or propriety software, such as that offered by Microsoft. Kevin Khelawan, the Director of Systems Development of Teleios Systems Limited and President of MS Dev Caribbean, said the key impact that open source has had on software companies is the provision of avenues for additional income, particularly with regard to providing value-added services and consulting.  

“Microsoft,” he went on, “has admitted that open source and Linux, in particular, is a threat.” This, he said, has forced Microsoft to be more open with its own source code and offer better products and services to their customers, which, at the end of the day is a good thing, he said. “I think that open source developers make their software open source simply because they see their work as art and want as many people to benefit from it as possible,” he stated. He went on to note that the Linux operating system has certainly provided opportunities for start-up software developers since it offers them a low cost of entry . “Since many versions and distributions of the Operating system (OS) are free, a developer can, for little start-up cost, begin developing software on Linux,” Khelawan maintained, adding that this benefits the software industry on the whole.

In Trinidad (and other developing countries) Linux certainly provides a great opportunity for people interested in “writing codes,” Khelawan said. According to another local computer analyst, there are a number of file sharing software programmes, similar to the Napster programme which allowed users to exchange music over the Internet. These programmes permit users to swap entire software programmes. He went on to note that it was difficult to prevent persons from downloading the software, since there are many users who have unlimited internet access. “Linux,” he went on, “is the next popular software programme after Microsoft Windows, although the two are different. People into programming tend to prefer Linux.” Professor St Clair King, local software developer and owner of Ixanos Limited, further explained that the Linux system has the advantage of allowing the more sophisticated user to fix the bugs – faults in the software – himself. The user, too, can adjust the software to facilitate a particular application he may have in mind.

He went on to note that closed software, as opposed to open software, can be traced whenever the system goes onto the Internet. “This is one of the reasons that the Government of a Latin American country has instructed all of its ministries to only buy open source software so that it is sure of what the code does in its entirety and that it contains no spy codes,” he said. “The problem is that few end users, like users of word processors or spreadsheet applications in the typical office environment know of anything but Microsoft products,” he maintained. Linux was the brain child of Finnish university student and computer programmer, Linus Torvalds, who had in mind an operating system free to all users, as opposed to costly Unix and Windows software.

According to a study done by technology consultant, Gartner, by the fourth quarter of 2002 it had powered 14 percent of the servers sold to run powerful corporate networks, up from nine percent in 2001. Presently, Linux runs 25 percent of all the corporate servers. Both Khelawan and Professor King dismissed the notion that open source software is completely free of charge.  Khelawan said that although the bits on the CD might not necessarily have a cost directly associated with them, there is still a cost for the services associated with that software.

There are many companies today that make significant profit on open source by providing value-added consulting and support services that are tied to the ‘free’ open source software they provide for their customers, Khelawan explained. Here are many significant and profitable business opportunities associated with open source that many companies have been able to capitalise on, he said. Four major companies have jumped on the Linux bandwagon — Dell, Oracle, Hewlett-Packard  and most notably, IBM. While most Linux startups have mostly struggled to get by, together these four have pocketed billions of dollars in revenues selling and servicing Linux products.

The biggest beneficiary of the bunch to date has been IBM which garnered one billion in Linux-based revenues in 2002 – double that of 2001. Hewlette-Packard follows one step behind having generated two billion in Linux-based revenue from the sales of hardware, software and consulting over the past four years. Analysts conclude that Linux will seize an increasing percentage of the key market for operating system software in corporate data centres and in so doing will eventually take a bite out of Microsoft. According to George Gobin, Microsoft’s Territory Manager for the Eastern Caribbean, Linux’s competitor, Sun Microsystems, may have suffered the most.

“Linux does compete against Microsoft in the server space, but it is the UNIX market which has received the strongest hit, as far as competition goes,” Gobin maintained. “What has really happened,” he went on, “is that Linux grew fast through these last few years and now there are more software sources in the enterprise market.” “Linux basically is now as strong as our other competitors such as IBM, SUN, Oracle and Lotus Notes among others,” he said.  When asked Linux’s impact on Microsoft, Gobin stated that there were concerns with all of the company’s competitors. He said, “when we listen to the Linux enthusiasts, they point out precisely what Microsoft needs to do differently to satisfy their expectations.”

This time, Gobin noted, the message comes from a community that has taken action and has been successful in creating an alternative to Microsoft and established UNIX platforms. Responding to the belief of many that Linux is “unhealthy for the technology industry,” Gobin stressed that this was far from the truth. “Linux is competition,” he asserted, “and every competition is welcome since the one who benefits at the end is the customer.” “The more the competition, the more choices there are in the market for IT solutions. We at Microsoft do believe that there is a wide opportunity in the market to grow and improve. “What really matters is who gets there first. Linux is basically another runner in the race,” he stated.

Q: What is the percentage of tax that has to be paid on profits made through investments in the stock market?

Jason, Point Fortin

A: While we are not qualified to act as tax advisors our information is that in Trinidad & Tobago there are no taxes to be paid on dividends. Similarly, our information tells us that the capital gains, which arise from investing in stocks, are also not subject to taxation in Trinidad & Tobago. However, there are certain instruments on which the capital gain component is taxable if it is derived in a less than six-month period. The principle being applied in determining whether investment profits are taxable or not has to do with the risk exposure taken.

When one invests in stocks there is significant market risk to the funds invested. The value of the share can go up, but it may also decline significantly in down markets. Therefore, in order to compensate the shareholder for bearing the risk, all of the return is passed on without being taxed. The effect of this is that investors are encouraged to invest in shares and so capital is made readily available to companies listed on the stock exchange, which helps the growth of the business sector and as a result increases employment in the country.

Q: I keep seeing lots of ads on cable television claiming that investing  in gold is the best bet at this time. Would that also be true for us in this country and how would I go about investing in gold?

Sharmala,  St James

A: Gold is indeed a good investment at this time for many reasons. Gold is a safe haven in times of economic and financial instability, a good hedge for inflation and reduces the overall risk of investment portfolios through diversification. For currency investors the price of Gold has an interesting relationship with the price of the US dollar, as the value of  the dollar starts to depreciate they can switch to gold to preserve the value of their funds. There are many ways in which one can invest in gold. These are Gold bullion bars and coins, gold statement accounts, gold accumulation plans, gold mining shares, gold options and gold mutual funds. Financial institutions such as banks and brokerage companies in the international markets offer these.

Gold statement accounts and gold accumulation plans are similar to a savings account, but the underlying return is based on the price of gold. Gold mining shares is the process by which you invest in companies which mine gold. Gold options are basically contracts to buy or sell gold in the future at fixed prices, a premium for which is paid upfront. Gold mutual funds involve investing in different companies involved in gold mining. It is possible for investors in Trinidad & Tobago to access these instruments through a local broker, which has a relationship with a US broker that trades in gold. Talk to your local broker as to which instrument is most suitable for you.

Q: What is the difference between a Chartered Financial Analyst and a Certified Financial Planner and which one should I be looking for to help me invest money I recently came into following the sale of some property?

Ashram,  Sangre Grande

A:These are two professional designations in the field of finance. They require the candidates to invest considerable time and energy in learning and acquiring knowledge about the different aspects of investing. For example in order to become a Chartered Financial Analyst, candidates must sit one six hour exam at each of three levels testing the knowledge in different areas such as accounting, economics, asset valuation ethics and portfolio management, to name a few. A Certified Financial Planner also has to go through similar requirements to attain the designation. The only difference that can be discerned between the two qualifications would be based on the quality of advice, which clients receive over time. In essence, you would have to judge for yourself, over time, the quality of advice you receive from an investment professional regardless of the designation that he or she holds. The best way is to get a referral from someone who has had a good experience with a particular investment professional.

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