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More gas should be sent downstream

Thu, 05/24/2018 - 01:51

Should T&T ensure that downstream petrochemical companies receive their full quota of natural gas before any is sent to Atlantic LNG? According to the findings of the latest EITI report there may be a case for the petrochemical sector to be favoured over LNG.

The 2016 EITI report reveals that while LNG accounted for 54 per cent of total gas usage, the market value of LNG out of T&T was US$1.43 billion. Compare this to petrochemicals inclusive of methanol, ammonia, melamine and urea which utilised 36 per cent of the country’s gas and its value was significantly higher than LNG at US$2.2 billion.

In the report, market value was calculated rather than the return to government since there was insufficient transparency in contractual arrangements.

“The market value of production gives an idea of how much T&T’s commodities are worth to buyers. The market value of production is calculated by multiplying the volume of production by the benchmark price for the specific commodity (eg crude oil, natural gas, ammonia, etc.).

“Importantly, these values do not reflect the actual revenue or income that an extractive company retains from the sale of these commodities because companies give the government a percentage of these receipts (as agreed to in production sharing contracts.” the report states.

These findings are in keeping with the results of the Poten and Partners natural gas master plan which revealed that the country received its highest return per molecule of gas by the sale of ammonia, followed by methanol. This seems to bolster the argument from downstream companies that natural gas allocation be sent to their plants where the country stands to get the best return for its resources.

According to the EITI report, over the past five years, the market value of T&T’s LNG production decreased significantly by approximately 68 per cent from US$3.83 billion in 2013 to US$1.22 billion for January to August 2017.

The decline is due in part to falling production as a result of the natural gas curtailment that also hurt Atlantic LNG but is also partly due to falling LNG prices at the US Henry Hub. This has meant lower returns to the country and has placed additional pressure on petrochemical companies as they compete with the US companies that are getting their feedstock for lower prices.

The report also noted that the market value of ammonia is calculated by multiplying monthly ammonia production by the corresponding monthly Caribbean ammonia market price per metric tonne quoted in US dollars. These monthly values are added for each month of the year to obtain the total annual market value of ammonia production.

“Because of higher prices and production in 2014, the annual market value of ammonia increased marginally by five per cent from US$2.3 billion in 2013 to US$2.5 billion in 2014.

“However, after 2014 the market value fell consistently until 2017. This consistent decrease reflected the collapse of ammonia prices over the period, which was mainly due to the decline in natural gas prices.

Natural gas or crude oil are used as feedstock to manufacture ammonia. As the cost of the feedstock decreased, the cost of manufacturing a metric tonne of ammonia also decreased,” the report stated.

Only last week chief executive officer of Caribbean Nitrogen Company and N2000, Jerome Dookie revealed that his company is operating way below its name plate capacity because of the continued shortage of natural gas.

Like Finance Minister Colm Imbert, he is optimistic that the issue will be resolved but in the meantime his company, like many others on the Point Lisas Industrial Estate, is experiencing challenges due to the shortage.

Dookie said over the last 15 years CNC has contributed more than $17 billion to the local economy.

“We are talking about actual checks written and money transferred and so on that has gone into the local economy, and that is of course just the direct payments and we are not talking about the multiplier effect,” he said.

Based on how the value chain worked, he explained, upstream producers like bpTT and Shell invest money to explore, discover and produce the gas. Those companies, along with the services companies working for them, generate economic activity that way. The gas is transported by the NGC which earns a profit from their activities, then it makes its way to the CNC plant which employs people, pay taxes and generates billions of dollars in economic activity.

Dookie said he is hopeful that there will be a return to full supply in the medium term and praised Proman for investing upstream to increase gas supply.

He said: “I spoke about the pioneering role that Proman has played in the country’s petrochemical sector, so building now on the downstream thrust with methanol and ammonia, Proman Group has now gone upstream in recognition of the gas shortage situation and has taken the bold step by investing heavily in DeNovo.”

Categories: News

DocuCentre launches online PrinTree

Thu, 05/24/2018 - 01:49

After two decades of providing printing services on the domestic market, DocuCentre Ltd has diversified, adding print-on-demand services through its new digital online platform, PrinTree.

Customers can upload artwork to the platform, pay with a credit card and have the finished work delivered by TTpost or FedEx. The platform allows for printing of call cards, wedding invitations, thesis, photobooks and other items.

PrinTree was launched with an exhibition at One Woodbrook Place attended by chief operating officer Jean de Silva and Nekesha Ramey, business development manager.

Ramey said the online platform allows customers to save time because they don’t need to go through traffic jam to place an order.

“We have partnered with TTpost and Fedex. TTpost does the local deliveries, while Fedex does the international deliveries. Throughout T&T the cost to deliver is $40. We didn’t want someone living in South to pay the (high) costs, so we standardised the costs throughout T&T.”

To access the service, a customer must log on to the PrinTree website, create an account and choose the service they want. If the customer does not have artwork there are free templates on the site.

On the issue of privacy, she assured: “There is nothing to worry about as the site itself is secured by Amazon web services. Just the name alone will tell you the strength and power behind that type of security.

Each end of the business is secured by people with years of experience in the industry and who currently have robust standards.”

The regular print services offered at DocuCentre have not changed.

The difference is that those services are now available to the customer who is always online, as well as the customer who wants to go to the DocuCentre to get the job done.

De Silva said research done before the platform was launched showed a trend developing in the market where people want to do printing online.

“A lot of people are starting to use online print solutions out of the US and Canada. They were looking for convenience,” he said.

A future goal for the company is to reach the T&T diaspora, as nationals living outside the country want to stay connected with their relatives here. Doing business with the diaspora also helps T&T to get US currency when the product is shipped and paid for in that currency, De Silva said.

He added that the quality of the print job will be a high quality as the equipment and technology used from Xerox and HP.

Nicholas Galt, chairman of Trinidad Systems Ltd, the parent company of DocuCentre, said PrinTree is the evolution of traditional print in the “do-it-yourself digital domain.

He added that the company “has been a forerunner in setting the pace in technology and expertise in the local print industry for more than 20 years. We recognised the need to take the service to our customers with a customer-friendly online shopping experience.”

Categories: News

The Lara look ...Cricket legend inspires eyewear collection

Thu, 05/24/2018 - 01:45

The newest eye wear brand from Ferreira Optical is inspired by cricket legend Brian Lara, known for his skills as a batsman, Lara’s legacy is being further immortalised in a collection eye wear frames that bear his name.

Sean Francis, CEO of Ferreira Optical, describes Brian Lara Vision Collection as a “first for T&T.”

“We are actually developing a brand of eyewear in the name of a local icon, a local celebrity, for want of a better word. We are happy that Brian Lara consented to do this simply because of who Brian Lara is.

He’s not just an icon, not just in T&T. Years after he stopped playing cricked, he is still recognised.”

The Brian Lara Vision Collection—which was recently launched at the cricket legend’s residence on Lady Chancellor Hill, Port-of-Spain—comprises eyewear where, according to a release from Ferreira Optical, fashion and sport collide giving birth to a new brand with international appeal.

“It embodies a marriage of sophistication, style and conservative glam with materials ranging from gold, palladium, titanium, buffalo horn and Swarovski crystal.

“Captured in the tiered range are some of Lara’s records such as The 400 and The 501. Other sections of the collection include The Brian Charles Lara and The Lara. All tiers capture elements of Lara’s career during cricket and beyond,” the company said in a statement.

Francis said the company, which has eight branches across the country, has been manufacturing their own in-house frames since 2009. A few years after that, they came up with the idea of attaching the name of a local celebrity with brand value.

“A couple people came to our mind but the person who was at the top of the list was Brian Charles Lara. We approached him, we got his lawyer, then his manager, then him. When we did share it with him, he felt that it was something he could have supported. We felt it was an honour and privilege. This was by 2016,” he said.

A designer who has worked on brands such as Tommy Hilfiger and Gucci was contracted to design the frames.

“As soon as she heard the name Brian Lara she knew who it was. The excitement was there. By early March we had the frames with Brian Lara’s name,” Francis said.

Ferreira is positioning the brand as premium to represent Lara’s class and sophistication. The high-end tier of the collection is called the “Brian Charles Lara”, while the rest of the collection captures his post-cricket life as a businessman.

The Brian Charles Lara premium category consists of four styles with frames made of platinum, gold and buffalo horn. This costs $2,995.

“When people hear the name Brian Lara they expect a sports brand. It is more than that,” Francis said.

He has high hopes that the public will buy into the new premium brand.

“We expect that there is a segment of the population that will want to come, see, look and wear. We are hoping this will attract more business to us. We want to put some distance between ourselves and the competition.”

Local innovation

The company first in-house brand of eye wear was Emmanuel Nissi.

“We do it through manufacturers in China. It is our label, our brand, our designs. In 2009, there was the global meltdown and we were expecting that would eventually find its way to Trinidad and Tobago in terms of the negative fallout.

“We felt that price would become an issue for consumers, so that pushed us to go straight to the manufacturer as opposed to going to a distributor,” Francis said

Prior to that, 100 per cent of what they sold was imported.

“About 30 per cent of the frames we sell are our own brand. We have never promoted it as an in-house brand but as a brand we have.

“It is a frame developed with Caribbean people in mind. Caribbean people like colours, the international brands caters more for a European market so you would not always get frames with a lot of colours,” he said

According to Francis, the market is highly competitive.

“Twenty years ago when I joined the company there were 50 optical stores and locations in Trinidad and Tobago. Today, it is close to 150. We are the leader in the market in terms of market share. We have seen a fall in the size of that share, but we still hold the largest market share,” he said.

Foreign markets

Francis said eventually they hope the Brian Lara Vision Collection will be sold internationally.

“The licensing arrangement we have with Brian Lara is to distribute this brand throughout the Caribbean. Brian’s name will have recognition in the Caribbean,” he said.

Emmanuel Nissi brand is already sold throughout the Caribbean.

“Our product is of a good quality. One of the learnings for us in going up the islands is that they are very price sensitive. Their first discussion is the price points, not the brand.

“The exception to that is Jamaica. The Jamaicans want a brand. We expect this new brand to do well in a country like Jamaica where they are very brand conscious,” he said.

Commenting on current economic conditions, Francis said: “There are certain tendencies that people have towards eye wear. We recommend that people have their eyes examined every two years. If people’s glasses are working for them, now they will try to extend it a long as possible.

“In a recession we see two things, people lengthening the time for which they return to change their glasses and we see people re-using their eye wear.”

Francis said in the last three years there has been a small drop in sales year-on-year.

“This year is the only year we have seen things picking back up. It is the economy and the competition. Despite what has been happening, new optical companies have been opening up,” he said.

Like any other industry, business owners have to constantly think about what they can do to add value and cement leadership position in the market.

‘What makes us different is customer service. That is something we pay attention to. What we have always tried to leverage is the customer service experience. We are always the company that has come out with the leading and cutting-edge solution in lenses,” Francis said.

Categories: News

Finding success with STEM

Thu, 05/24/2018 - 01:38

The fourth revolution (4IR) has started and it is already changing the way of life, work and how people relate to each other. It’s characterised by the fusion of technologies that’s blurring the lines between the physical, digital and biological.

That is why there is an urgent need to reshape T&T’s future by putting people first and empowering them, and it must begin with critical thinking. The innovators are the ones who stand to benefit the most.

According to economist Indera Sagewan-Alli, 4IR is “mobile supercomputing, artificial intelligence, self-driving cars, neuro-technological brain enhancements and genetic editing.”

She explained: “It’s significantly changing the way we do business and therefore our understanding of competitiveness.”

The concept was unveiled when Shell T&T in collaboration with the Ministry of Education hosted the first national consultation on STEM (Science Technology Education and Mathematics ) at the Hyatt Regency, Port-of-Spain.

“The 4IR is evolving at an exponential rather than linear pace, and in so doing, disrupting industries globally and transforming entire systems of production, management and governance,” Sagewan-Alli said
She gave the example of Professor Klaus Schwad, founder and executive chairman of the World Economic Forum, who had warned that it is still unknown how 4IR will unfold and advised that the response be integrated and comprehensive, involving all stakeholders of the global polity, from public and private sectors to academia and civil society.

Good and bad

Giving an analysis of the 4IR and its potential impact globally, Sagewan-Alli said this includes a rise in income levels, improving the quality of life, increasing productivity through technological innovation, reducing the cost of transportation and communication, making logistics and global supply chains more effective, diminishing the cost of trade, opening new markets and driving economic growth.

However, there are negative consequences as well.

“At the same time, the revolution could yield greater inequality, disrupt labour markets as automation substitutes for labour across the entire economy, exacerbate the gap in returns to capital and returns to labour due to net displacement of workers and machines” Sagewan-Alli said.

She warned that inequality represents the greatest societal concern of the 4IR, adding that the largest beneficiaries of innovation are the providers of intellectual and physical capital—the innovators.

She said one of the greatest challenges of new information technologies is privacy. 

Karen Lynch, principal consultant at market research entity, Sacoda Serv Ltd, zeroing in on STEM described the programme as a tool for social change, one of the cornerstones of human capital development and one of the pillars for economic recovery.

She said STEM in industry is not new to T&T as the approach has led to successes in oil and gas, in the aviation industry and the Point Lisas monetisation of gas.

What is different now, Lynch noted, is the rapid pace of change in technology and increased requirements from the labour market which has placed further demands on the systems.

When Shell introduced the STEM programme for schools, it was born out of 21st century challenges as requirements of the information age are accompanied by greater demands from the labour market. Life skills, creative thinking, problem solving and teamwork are now key elements of workplace survival.

STEM provides the framework for the transformation the educational system needs to respond effectively to labour market requirements.

“Students are prepared for the labour market through partnerships with stakeholders in industry and tertiary level institutions,” Lynch said, adding that 8500 students and more than 60 teachers have benefited.

“Mathematics as the language of STEM is no longer abstract but embedded in all aspects of the programme delivery,” she explained.

Other outcomes are exploration of new areas of learning in subjects not taught in any great detail in the school system, including petroleum geology, geographic information systems, seismology and aviation.

“Our future expectations are that we will achieve greater success at the national level by expanding our talent pipeline through the creation of work ready graduates who can innovate.

“This, in turn, will lead to diversification, economic growth and transformation as well as a place in the fourth revolution which is already upon us,” Lynch said.

T&T to benefit from NXplorers

Shell, together with the UK-based company Shaping Learning, has developed NXplorers, a unique educational programme offering young people, future scientists engineers innovators and leaders, a fresh way of thinking and an opportunity to develop a transformational skillset.

T&T is the latest country to benefit from this programme during which teacher training programmes have already begun.

“The methodology is designed to develop what we have termed as the STEM ‘habits of mind.’ These are vital skills our scientists and engineers need such as systems thinking, problem solving, critical thinking, communication, team working and complexity analysis,” Tariq Hussain, STEM manager, ER Social Performance Centre for Excellence, Shell International explained.

NXplorers is a facilitated programme that can be run in schools, universities and learning centres. It is open to young people at various stages of their education or professional development.

“The methodology is founded on research and integrates systems thinking to explore the issues, scenario planning to create possible futures and theory of change. It is based on the principle that if you want to teach people to solve problems and become agents of change, give them the tools to help them.

“The tools and methodology can be applied to almost any challenge which is complex or not. The methodology is underpinned by a fresh way of thinking, what we call NXthinking,” Hussain said.

NXplorers is being rolled-out in several countries including Brazil, Nigeria, Egypt, India, Oman, Australia and Kazakhstan and has also been piloted in the United Kingdom, Netherlands, Singapore and Russia.

“Our goal is to impact more than one million young people around the world through participation in NXplorers by 2020,” Hussain said.

He said Shell and other related industries need talented people equipped with relevant STEM knowledge and skills, as science and technology are key to successful economic and social development of the society.

“As we take on the emerging grand challenges, including eradicating poverty, a lower carbon future, a liveable climate, and complex issues such as the food water and energy nexus, not only do we need the skills of all of our scientists and engineers, but we need all people to be able to think like scientists.

“We take this very seriously at Shell…we support education in several countries where we operate. In 2016, our education social investment spend was over US$25 million in 18 countries,” Hussain said.

He said Shell’s goal is to create shared value for society by delivering enduring social benefits and supporting host country aspirations towards a knowledge-based economy. This also provides access to opportunities for fence-line communities, help drive greater youth employment and create a pathway for social mobility.

In this era of change, Hussain advised, it is becoming more and more difficult to predict the nature of the jobs of tomorrow. Skills such as complex problem-solving, critical thinking and creativity are becoming increasingly important.

A report by the World Economic Forum in 2016 confirms that employers are citing these as the top skills needed in the future.

“These higher level skills are so important as they underpin the ability to innovate and adapt. In many regions, it’s the lack of these skills that account for a significant proportion of skill-shortage vacancies.

“Our goal is to help young people develop these vital skills that STEM employers are increasingly demanding but often see lacking. We want to help equip them for the jobs of tomorrow and enable them to prepare for and adapt to a rapidly changing world.

“We believe the question posed to young people should not just be ‘what do you want to be when you grow up’ but also ‘what problem do you want to solve,” Hussain said.

Add Math successes

Derrick Phillip, principal of East Mucurapo East Secondary School, described the marked improvement in his students via the Shell programme. He said, passes in disciplines such as Additional Maths and Physics were previously “unheard of.”

“It’s beyond our wildest imagination. Because of the programme students are encouraged to come to school and actually learn,” he said.

Education Minister Anthony Garcia said STEM education infiltrates every aspect of life.

“A STEM-educated workforce is needed to stay competitive in today’s global society. Most inventions, creativity and innovations involve STEM and their development,” he said.

Categories: News

Still not ready to fight BOBOL, BRIBERY

Thu, 05/24/2018 - 01:35

Where are we with operationalisation of the Public Procurement and Disposal of Public Property Act?

I get the impression that more than a year after the act was assented to, a lot of work still needs to be done.

Perhaps a more pointed question should be asked: why is it taking so long to get everything fully in place?

Remember that this very important legislation took more than five years and two political administrations before it became law. It was partially proclaimed during the tenure of the People’s Partnership in July 2015. Amendments were introduced to Parliament by the current People’s National Movement (PNM) administration, piloted through the Upper and Lower Houses by Finance Minister Colm Imbert, with final passage on March 3, 2017. The act was assented to by the President on March 13, 2017.

More than a year later this law—which in my view is a critical tool for eradicating corruption in the public sector—is still not fully implemented.

I happened to be part of an online exchange on the whole issue of corruption—in response to the focus of last week’s BG View—during which information about the current state of the Office of Procurement Regulation (OPR) came up. My sources tell me it is not yet fully functional, so we’re still moving at snail’s pace on this very crucial matter.

As one of his last official acts, outgoing President Anthony Carmona appointed the board of directors for the OPR. However, that was in March and it was only about a fortnight ago that advertisements were posted for staff.

That isn’t all. Operational regulations for the OPR still need to be finalised before submission for parliamentary approval and there are many administrative details still being sorted out: outfitting offices, installing telephones, printing letterheads and even purchasing vehicles.

If this proceeds at the normal pace of the public sector, it could be a few more months before systems are fully in place to put into effect this new, vitally important system of public procurement which is long overdue.

The thing is, when this legislation was making its way through Parliament, the signals from the Government was that it was an important piece of legislation which needed to go into force quickly.

When he would up the debate in the Senate, Imbert underscored the importance of appointing the regulator. In fact, he described that one step as “very, very important” in terms of the tenure of the person appointed to the position and the terms and conditions of engagement.

He told the Upper House: “We are virtually complete with the proposed compensation package and we need to fix this issue before the President can proceed to complete this exercise.

“This procurement legislation is very, very important. It was the subject of deliberations by this Parliament for five years actually, and in order to meet our deadline of implementation in 2017, we need to resolve this issue of establishing the term of the regulator at five years, rather than seven years.”

Based on the minister’s own words, the 2017 deadline for implementation is now long past. We are now almost halfway through 2018 and systems for a fully functional public procurement regime in this country not yet in place.

Am I the only one completely flabbergasted by the lack of urgency in dealing with this critical matter? Why can’t we be more serious about matter like this which could help put a stop to rampant corruption?

Before the recent passage of the Public Procurement and Disposal of Public Property Act, such matters were governed by the 1961 legislation for establishment of the Central Tenders Board—introducing a procurement regime that is now archaic and terribly flawed.

I don’t think it is necessary to underscore the importance of public procurement which has to do with the purchase of goods, works or services by public institutions. Unless properly regulated, the process can be very vulnerable to integrity risks where undue influence, conflicts of interest and fraud can occur.

No need to remind law abiding citizens how much we have been hurt over many years by bobol and bribery involving well-placed public officers who found it all too easy to plunder the Treasury.

Over the years, there have been too many claims of bid-rigging, complaints about contracts being awarded on the basis of proposals, rather than tenders and other questionable arrangements, often resulting in millions of dollars in public funds being spend with little to show for it.

The act is the first opportunity in T&T for transparency in tendering and awarding of contracts. The hope is that will a fully functioning OPR, a long last there will be efficiency and accountability in the use of taxpayers’ money, which can have a positive effect on the economy.

Public procurement regulation, as valuable as it is for fight corruption considerations, is important for many other reasons, including creating a competitive process in the public sector which ensures we get best value for taxpayers’ money.

With this new system, a structured competitive process should ensure the country gets best quality at the lowest price in the purchasing of goods, services and works.

Now that the Central Tenders Board Act, Chap. 71:91 has been repealed and replaced with the new law, a new framework has been established, based on the principles of good governance, with accountability, transparency, integrity and value for money.

The act brings all bodies spending public money under a single regulatory framework covering all stages of the procurement process.

However, a critical aspect of the system is the OPR, headed by the procurement regulator and managed by a board, which is responsible for oversight and control. The OPR is empowered to conduct audits and periodic inspection of public bodies and issue directions to them.

There are severe penalties for procurement of goods, works or services or retention or disposal of public property that is not done in accordance with the Act shall be void and illegal. Breaches could result, on summary conviction, in imposition of a $100,000.

The OPR will have the power to investigate alleged breaches of the act and make reports to the Director of Public Prosecutions.

The regulator is required to submit annual reports to Parliament, with information on the total number and value of contracts awarded by public bodies, the number of unfulfilled procurement contracts, and bodies that have failed to comply with the act.

This is the level of transparency and scrutiny needed in this country. It’s time to step up the pace and ensure on this very critical matter we don’t fall into the trap of delayed enforcement or failure to enforce.

Categories: News

US mission explores trade opportunities

Sun, 05/20/2018 - 01:07

The United States continues to explore opportunities to further trade relations with T&T. A trade delegation from that country recently visited to explore new prospects, create additional linkages and expand networks.

Trade Minister Paula Gopee-Scoon told the eight-member delegation: “In the western hemisphere, T&T is ranked as the United States’ 59th trading partner and the largest importer of American goods in Caricom.

“The United States exported over $16 billion worth of products to T&T and imported approximately $19 billion worth of our products.

“Over the last decade, we have maintained a trade surplus with the United States which is in no small part due to the United States Government’s Caribbean Basin Initiative (CBI).”

The CBI facilitates development of stable Caribbean economies through provision of duty-free access to the US market for select goods.

Gopee-Scoon said: “The current system of the preferences expires in 2020 and it is anticipated that the United States’ Government will seek a renewal of the waiver of its WTO obligations in order to continue to provide duty free treatment and access to products from Caricom member states including T&T into their market.

“The Government has also commenced work in this regard with the intent of maintaining the arrangement by engaging our regional and international counterparts.”

The United States delegation comprised marine; safety and safety equipment; road building infrastructure; beverage; information and communication technology and professional services firms.

Nirad Tewarie, CEO, American Chamber of Commerce of T&T (AmCham T&T) affirmed that this country “has a very sophisticated business environment and is the place to do business.”

He said the US trade relationship with T&T is of utmost importance to AmCham and the organisation is committed to working with the US Embassy to help US companies take advantage of trade and investment opportunities.

Dexter Payne, deputy chief of mission at the US Embassy, said the trade mission signals US confidence in the economy.

“This mission is in keeping with our mission to increase US exports; support the diversification of the economy in T&T and build bilateral relationships between both countries,” he said.

Categories: News

Here’s how T&T can compete

Sun, 05/20/2018 - 01:05

There have been suggestions as to the industries which should engage our attention as we seek to diversify the economy. These include marine (with a port to service the traffic of the expanded Panama Canal and, more generally, the blue economy), agriculture (including our fine cocoa to which we can add our prize winning honey), financial services ( given our population of well-trained accountants), energy services for export, expansion of the on-shore manufacturers, support of start-up SMEs via the innovation fund, business process outsourcing, even the manufacture of aluminium motor car wheels, improved tourism and the creative industries.

This is quite a varied list. However, the philosophy is that every drop earned in foreign exchange goes to filling the bucket. Some commentators point to the industrial mix of Germany, which shows that some 68 per cent of that country’s export activities, the Mittelstand, comes from its SMEs, as a justification for such a diverse basket of industries. Import substitution is another string to the diversification bow, particularly food.

Still, the economic history of our country, even of the region, is one of the plantation where capital and technology are imported and the output commodities exported to earn the foreign exchange that the local private sector uses to import/markup/sell goods and services to the population.

Hence, diversification would be a major paradigm shift, one which for the past 50 years is recognised as being desirable given the volatility of our petroleum-based economy.

Yet it has not been achieved. Is this because of the rigidity of the private sector, its inability to adapt from sourcing/selling imports to exporting? Whatever it is, there has to be a government driven initiative to construct this new economy.

Evidence for this kind of initiative is the economic transformations of Singapore, Malaysia, Taiwan, S Korea that all depended on strong, determined and enlightened leadership of the respective governments.

The question then arises whether government policy should simply be that of a facilitator, for example, providing funding for serendipitous industrial projects of the population at large, eg the “i2i” of the PP Government—a sort of bottom up approach to diversification- or simply encouraging foreign investment?

The basic specification for our diversification as a small open economy is that we have to export to earn the foreign exchange we require, at least to fund the imports that we cannot/do not produce ourselves. Hence, in these export activities we have to be globally competitive and this differentiation is today achieved/maintained via the use of knowledge, its creation and invention/innovation in the products/services we export.

Therefore, one wonders if building a transshipment port locally in competition with Jamaica, Bahamas, Port Houston—Texas, Dominican Republic, Cuba, all clustered in the larger Caribbean area and/or a dry docking facility with the Chinese, make economic sense.

Maybe the real immediate opportunity is in the near-sourcing that reduces transport costs and time, given the rising costs of manufacturing in China, Asia.

There are three ways in which we can achieve such competitiveness: exploiting local comparative advantages, business conceptual innovation and by creating structured advantages.

T&T’s natural/comparative advantages include tropical agriculture, tourism, some oil/gas, culture, an educated and trained labour force with moderate wage/salary demands and even its location.

Business innovation is about the deconstruction and reconstruction of existing business, the use of existing technologies to create new Internet based businesses.

Structured advantage is the use of the results of R&D with the IP protection offered by patents etc.

What is important to note is that simply having a natural/comparative advantage or being able to do something does not make the country globally competitive in the associated industry.

For example, we indeed have a very fine cocoa, Trinitario, but apart from selling the beans on the global market, it needs more if we are to compete with the likes of Cadbury or Toblerone. We need in-depth knowledge, novel products and global market development and marketing.

Still, we have been told by Richard Baldwin in his book, “The Great Convergence”, that instead of an emerging economy building the whole value chain of an industry locally or even initiating it, the globalisation of the value chains by the developed economies (splitting the production process into different modules that are performed in various countries) allows the developing nation to join international production arrangements to become competitive and then industrialise by getting more good jobs inside the international value chain.

Moreso, the highest rewards in the value chain also goes to branding, market development and marketing. This is a natural advantage of the T&T on-shore sector; however, its market focus is local.

Hence, this on-shore sector is a prime choice for business innovation, its deconstruction and reconstruction to focus its activity instead on the regional and global markets.

Indeed, attaching oneself to a link on the global market chain based on local comparative advantage is a quick way to diversify into the export market.

However, in order to move up the reward value chain the developing country in the longer term has to have built its own structured advantage by indigenous R&D, innovation or by branding, marketing and sales.

The playbook for our diversification then is first to identify the natural advantages we possess and their possible uses as leverage to join related global value chains. It is interesting to note that the growing trade model of China with the developing countries, particularly Africa, is not about distributing its product value chain among these countries but in selling cheap goods and procuring from the developing countries, commodities (see Chinese Imperialism in Africa).

Together with this, joining a product value chain, we must start our R&D activity, which should aim at creating knowledge towards innovation into novel products and services.

The immediate task now is a selection exercise, foresighting, since our limited human and capital resources do not allow many disparate areas of endeavour, especially as competitiveness is maintained by R&D/innovation. This approach may be more structured than the serendipitous path, but it does not inhibit the loner who may have a world beating idea, a potential SME.

Still, it is important to note that countries that use knowledge as a competitive advantage are richer/capita that those that use, say, cheap labour.

MARY K KING
St Augustine
 

Categories: News

Better incentives = more investments

Sun, 05/20/2018 - 01:02

Part I

To become the next ‘hot’ investment opportunity, we need to offer the best incentives available anywhere.

1 Hotel investment fund

The Government needs to establish a hotel investment fund (HIF) of between US$1billion to US$5 billion of equity financing to be used to invest in new hotels on both islands.

It can start by transferring all its existing hotel investments into the fund making up the balance with cash. Raising equity capital for hotel projects is difficult at the best of times. Throughout the Caribbean, there are numerous projects that never get off the ground because prime real estate owners did not have access to equity funding.

These funds should have a fixed low rate of return and could be offered for the first ten years of the project.

The average equity investment from this source should be in the range of 25% of the equity requirement, but should not exceed 49%. This minority shareholding leaves the entrepreneur in control of his project.

Earnings from these investments are returned to the HIF for future investment in other new tourism projects. At the end of ten years, the owner would be required to purchase the government’s investment on very reasonable terms, thus freeing up capital for reinvestment back into the sector.

2 VAT exemption on all materials used in new projects

To attract outside investors to the islands, the cost to build a new plant must be on the same terms as exists in other Caribbean countries.

Failure to remove VAT from new construction means that it costs 12% more to build a new resort in T&T when compared to other Caribbean destinations where VAT does not exist.

Since hotels or land developers do not generate significant VAT invoices, they have no way of recovering the VAT.

3 No duty on FF&E (furniture fixtures and appliances)

All taxes should be removed from the purchase and importation for FF&E on all new and refurbished projects. This is a common practice in all Caribbean destinations.

Although it exists in T&T for hotel investments, it is not available to villas and condominium projects that form a significant part of current trend. The concession should be accessible every 3-5 years.

The key to access this benefit is that the unit must be in an approved rental pool for a minimum of three years.

4 Infrastructure rebate

If a developer is required to put infrastructure in place that would normally be the state’s responsibility, he should be entitled to a tax credit or grant, equal to 100% of the expenditure.

This benefit should also relate to the cost of conducting EIA studies, pre feasibility studies, as well as construction of sewers, roads, water, drains and electrical infrastructure, etc.

5 Tax credit of 25%

This amount, 25%, should be allotted to individuals or corporations on equity investments in new capital approved projects in the tourism sector. They should be deductible in the year that the investment is made.

This would attract equity investors who would normally place their funds elsewhere, perhaps in the stock market where the return is higher or on fixed deposits where the return is certain.

Since it is not expected that any equity investment in the hotel industry will pay dividends in the first 5 years of operation, this tax credit substitutes the lost return during the early days of the enterprise, making the investment competitive.

6 Five-year tax holiday on profits earned from new Investments in the service sector.

Many service institutions are key to the development of a vibrant hotel industry. These include: restaurants, dive shops, boutiques, etc. The tourism authorities will have to develop a list of targeted service companies that are necessary to drive the development of the sector. Concessions should be limited to a fixed number of startups in each sector.

7 Training grant

There should be a 50% matching funds (grant) on all training of workers for new projects.

One of the great challenges in getting projects off the ground is the lack of skilled workers in both the construction and service industries.

Companies need to be encouraged to invest in these areas. All great service companies have continuous training programs, the benefits of which are clearly visible when we interact with them.

Incentives to existing tourism facilities

To encourage growth and the re-vitalisation of existing hotel operations, it is necessary to carry over some of the incentives suggested for new projects. These incentives are additional to what is already offered.

1. TRAINING GRANTS as with new projects, existing hotels and service providers need the 50% matching training (grant) to keep their service outstanding. Perhaps the greatest challenge to the industry is the need to continuously train staff. T&T is not known for great service. To overcome this challenge, the country needs to encourage continuous investment in training. These programs should be approved by the tourism authorities, with the grants distributed on the attainment of the certified skills.

2—DUTY & VAT-FREE CONCESSIONS DUTY and VAT-free allowances on all approved upgrades to existing plant and equipment. This should be a benefit offered on a continuous basis and should be available to all approved industry service providers, accessed every 3 to 5 years depending on the item. This is particularly important to non hotel companies that service the tourism trade.

3. DUTY FREE ON CONSUMABLES. There is a new trend in the region to offer duty-free concessions on consumables for hotels, restaurants and bars which are all now being defined as export industries. This is particularly being requested by all inclusive hotels (such as Sandals) who are constantly looking at ways to improve profit margins. In granting this type of concession, one has to look at the total offering of tax incentives made available to the enterprise before deciding on eliminating the import tax on consumables.

4. TAX HOLIDAY ON REFURBISHMENT. All too often, incentives are directed at encouraging new development with little thought given to revitalising the existing stakeholders. Today, much of the tourism plant on both islands is tired and needs to be refreshed. A 10-year tax-free holiday on earnings should be offered for existing hotels that undertake major refurbishment. These costs can run as high as 25% of the original capital employed. This incentive will encourage owners to reinvest their profits back into their properties.

5. FOREIGN EXCHANGE FINANCE. Around 0.1% of all foreign exchange earned should go into a grant to be used to support the running cost of the islands hotel and tourism associations. These trade associations are the life blood of the industry. This benefit rewards productivity and helps build a sustained fund to grow the industry This incentive rewards performance of those who build the foreign exchange earnings of the country. It will also help reduce the leakage of foreign exchange.

6. PROMOTION AND MARKETING FUND. For the next three years, all of the hotel room tax earned by the state is placed in an advertising and promotion (A&P) fund and bumped up to a max spend of $100 million. It is to be jointly spent by the tourism authorities and the two main hotel associations. This fund will provide a level of stability in terms of sustainable promotion of the destination.

It places marketing funds in the hands of those who have the most to gain, and makes the industry responsible for its own performance. It also ensures that these funds are spent in the most productive way. At the end of the first three years, the guarantee should be removed leaving the room tax collected as the only source of marketing funds. No cap should be placed on this fund for the next ten years.

Whatever changes are agreed to, it is important that the process become dynamic. The new system of incentives must be easy to operate and easy to modify and update, because the industry is constantly evolving. Cutting-edge incentives today can become uncompetitive and obsolete overnight.

KEVIN KENNY
 

Categories: News

Too early to tell, says tax expert

Sun, 05/20/2018 - 00:59

Higher energy prices and increased gas production are indicators that the economic climate in the country is improving but Arun Seenath, partner at Deloitte, is adopting a wait-and-see posture on whether T&T is fully in recovery mode.

He wants to see trends over the next two quarters of 2018 before making a definitive statement on the matter.

As he gave his assessment on the mid-year review of the 2018 Budget delivered by Finance Minister Colm Imbert earlier this month, he said: “Unless the minister can give some projection—when they start paying their corporation tax, their petroleum profits tax—that’s when you would see the true impact of revenue coming back from oil and gas.”

In an interview at Deloitte’s Ariapita Avenue headquarters, Seenath said increased gas production could have a trickle-down effect to create employment and trigger increased spending. In fact, at Deloitte, which provides auditing, tax and advisory services to a large local clientele, they have started seeing some signs of growth in sectors of the economy.

“There could be some level of turnaround, but it difficult to say in which sector that has happened,” he said.

“We are mindful that tax rates increased in 2016, 2017 and 2018. The first quarter of 2018 would have been March 2018, you would have seen the impact of the increased taxation rate on the banks which went from 35 per cent.”

This increase might have caused a spike in revenue, he added.

Commenting on the projected reduction in the deficit, he said: “There is need to understand how much Government owes in terms of service providers, in terms of contractors, as well as VAT returns.

“There have been cases where VAT refunds have been paid some have not been paid.”

Millions in property tax lost

Seenath said property tax is a fair source of revenue but, for years, there has been a lot of evasion. He estimates that T&T lost about $300 million for each of the years property tax was not collected.

“Every dollar counts in terms of our deficit and where we are at,” he said.

“When politicians act in this way it is not simply because they are managing the finances, they are also managing their term as a government and those terms come to an end.”

While is hopeful that implementation of the Revenue Authority will lead to improvements in tax collection, Seenath warned that the same issues which hampered the Board of Inland Revenue—corruption, poor productivity, poor efficiency—could lead to leakages.

These inefficiencies must be eradicated of there is to be any real change in T&T’s system of tax and tax collection, he said.

Seenath said consumers have to adjust their spending patterns to accommodate property tax and the possibility of less disposable income. It can no longer he about impulse buying. Instead the focus should be on price versus preference.

He said it was prudent decision not to devalue the dollar since the price of basic items.

“A devaluation would result in a larger price for inputs. The revenue would go up obviously. The net effect would not be as significant, and that is just on the manufacturing side.”

He is of the strong view that those who can afford to pay taxes should be made to pay more, including more of the self employed, such as taxi drivers and doubles vendors.

He advised that the authorities look at ways to include more people in the tax net:

“If a doubles man must sell doubles, he needs to get a food badge. Instead, of a food badge costing $250 it should be $5,000.

“The taxes should be collected through the licences, through the permits.”

Seenath also suggested increasing the fees for taxi drivers to renew their permits.

He fully supports the idea of a National Investment Fund which he said could help to soak up liquidity. The strategy, he said, is to encourage savings by including individual investors.

While he see challenges in the area of foreign direct investment, Seenath is confident that improvements in the economy will attract more investment.

Categories: News

Perfecting her craft

Sun, 05/20/2018 - 00:57

Fashion and jewelry designer Cheryl Ryan-Mohammed is proudly flying the T&T flag high in the Middle East with the recent establishment a store at the famous Taj Mall in Amman, Jordan, showcasing her C-Designs collection.

“To be in a location with some of the most famous designers in world is really a privilege. Thank God I got the opportunity. I’m into my second collection at Taj Mall which has my entire line including cashmere pieces blended with crystals,” she said.

It was about 12 years ago that Ryan-Mohammed began her journey into the world of jewelry, designing earring, rings, chains, pendants and full sets using silver and gold-plated material as well as precious and semi-precious stones.

A lover of nature, especially the ocean, Mohammed-Ryan draws on that inspiration for much of her work.

“I have been in fashion for a number of years and what inspires me is our beaches, oceans, rivers. I am also inspired by women. I believe every woman is unique and every woman is beautiful and sophisticated.

“We are a cosmopolitan society where there are various races…all that I draw inspiration from,” she said.

Her designs are also influenced by her love of Middle-Eastern culture and some of the pieces are crafted in collaboration with international designers.

“I am deeply involved with the Middle East. That’s where my attraction is in term of how I think because my stuff has a lot of bling and a lot of working on it and that region appreciates that kind of work in terms of design of jewelry,” Ryan-Mohammed explained.

Crafting jewelry isn’t her only talent.

Ryan-Mohammed also designs beach and Islamic wear which are increasingly in demand internationally. Her hijabs and abayas are elegant and intricately woven, yet fashionable.

“Abayas are the main stay of the Middle East. I love modest wear and in my research the women of the Middle East, they hunger for fashion even though they are covered. They are very sophisticated in covering and it speaks to me. I can easily look at someone and capture an image in my mind of what to sketch and what will appeal to them. “

Having linkages in the Middle East made it easier for Ryan-Mohammed to penetrate that market and this is her second successful year there.

“Before going into it I did my research regarding the market aspect of the Middle East. Also, I have friends there, so when I went in I was well received. I shouldn’t say surprisingly so because we of the Caribbean, we are exciting people and we love colour and they in the Middle East want colour and want to embrace it. 

“When I went into the market they wanted pieces showing that colour. The women of Saudi Arabia and Kuwait are into lots of blacks but they also want colour,” she said.

Ryan-Mohammed has just returned from Jordan where she is collaborating with agents in those territories to design coloured Islamic wear.

“There is a segment of women out there who want some excitement in colour. Of course they must cover and I appreciate that as well but especially the young demographic, they want colour. There’s no movement away from the blacks because that tradition is very strong. It will always remain but there is a movement to include colour depending on the occasion,” she said.

C-Designs is set to expand even further as Ryan-Mohammed has just entered the sporting arena and is producing uniforms for one of the largest football clubs in Amman.

“We have two other clubs waiting for us to do designs. They saw my designs and wanted this translated into sport, a shirt specifically,” she explained.

Ryan-Mohammed said her design style is classic. She does not go for fads.

“If I go with a piece I will want my client to wear the piece ten years from now. It has not aged,” she explained.

“Everywhere I go I look for fabric, trimmings. These are the things that excite me and that is where I also draw my inspiration. If I go to an environment and I’m having tea or coffee by the ocean I will rush to get my pen and paper because something triggered me,” she said.

Her love the ocean inspired one of her clothing lines, It’s Ah Wrap, Beach Concepts.

“C-Designs is inspired by the beaches of T&T. I love to be by the beach or the pool with my lipstick and make-up and my jewelry but I must look classy.

“I could not find anything to buy anywhere. What I saw was too mundane. I decided to do it myself and my friends also loved it. The more I travel, the more I got more ideas and the more my brain expanded,” Ryan-Mohammed said.

Apart from markets in Tobago, parts of the Caribbean and the Middle East, Ryan-Mohammed is also expanding to Ghana where there is an agent marketing her pieces.

Although she faces some challenges, including difficulties in obtaining foreign exchange, Ryan does not allow anything to deter her from building on the success of her business. She said the key is to be creative and stay within one’s means.

“If things happen the way it ought to foreign exchange will be coming into Trinidad but, in the meantime, you simply work with what’s available.

“Think big but start small. Take it step by step. That’s what I have been doing. My thinking is wide but in terms of climbing, it’s incremental because as you go along, try to perfect the craft. Don’t take a big junk that you can’t handle.”

Categories: News

Govt’s failure to diversify...

Thu, 05/17/2018 - 00:25

The current criticisms of this government as it seeks to emerge from the recession due to our economic model and the drop in petroleum prices and their local production, centre on government’s focus on rejuvenating the energy sector with no discernible parallel activity in diversifying the economy. Indeed, government is accused of being handcuffed to the energy sector.

In another space I indicated that in the short term all any government could do was to weather the storm of adverse energy sector prices/production while using its fiscal control, renegotiation of contracts, resources and reserves to make life on-shore tolerable as the storm continues to batter our economy.

Energy prices and production appear now to have lifted somewhat and our government gleefully proclaims that the economy has turned around, even the dependent on-shore economy.

However, the economy has remained exactly the same in structure, though its local comparative advantage may have been reduced as the petroleum asset depletes. The economy has not turned around; the economic storm may have lifted a bit as the wider global happenings in politics and financial investments continue out with our control.

What one may say with some truth is that the boom-bust-boom cycle is continuing its merry way with the additional constraint that we are down due in part to old petroleum resources that are expensive to lift and those in deep waters expensive to recover.

This model of our economy, the plantation, is all that we have known throughout our history and since independence we also know that we have to change it, to reconstruct it, to diversify it.

Yet some 50 years later the refrain continues with little progress to show—an abject failure of the governance of the country, the failure of the triad of successive governments, the private sector and the knowledge based institutions to create a sustainable economy.

Prof John Foster of the University of Queensland, Australia, tells us that normally the stakeholders in a complex adaptive economic system can adapt and change their activity as required. However, the history could be such that adaptation, change, becomes virtually impossible due to certain rigidities developed. Is this true of T&T?

As a small open economy we cannot produce locally all that we need to live a comfortable life. Hence, we must import, must export to earn the foreign exchange to fund these imports; the bulk of the foreign exchange comes from the energy sector.

We had a spectacular example of how such foreign exchange could be earned by some local entrepreneurs. They were able to use local low-risk capital via the energy sector’s earnings to acquire a diversified economic cluster of companies spread throughout 35 countries and activities ranging from the manufacture of alcohol beverages, petrochemical, financial services to real estate.

Such an enterprise should have been able weather an economic storm in any one of its investment areas/ markets given the diversified portfolio of the conglomerate.

Unfortunately, given the high global prices of oil compounded with the global sub-prime mortgage fiasco, all of the markets in the world economy collapsed together causing a failure of this local entity.

These entrepreneurs approached our government for help, as others in similar positions went to their respective governments in, say, the US and the UK.

In these foreign countries governments provided a safe harbour, advanced the funds to weather the storm. When the storm abated most of these companies resumed their global businesses, repaid their debts over time and the owners/entrepreneurs survived.

We all know what took place locally with CL Financial. The endpoint today is that some of the cluster companies have weathered the storm with government help, some have been sold.

The remaining discrete assets retained by government are to be put into an investment fund which will sell shares to the public; the monies so earned by the fund is to be used to repay the government for its advances to the original entrepreneurs and to eventually repay the local low risk EFPA investors.

Ownership and entrepreneurship will pass out of the hands of those who had built something we have been crying out for, for decades: they had built a financially integrated and diversified cluster that earned foreign exchange.

The justification by the government for its destruction of the cluster appears to be that those who had built the companies were indeed the cause of their own failure during the economic storm and hence gave up any right to owning and using the surviving companies to repay debts.

The objective was that government, by selling the companies, was preserving also the investments of and returning them to the public that had initially invested in these companies.

Surely, it is more than rigidity that was engendered by history. It was more ignorance of the idiosyncrasies of global trade, global financing, risk and lack of entrepreneurship by the governments involved as they claim that they are retrieving tax payers’ money that was lent to these companies.

MARY K KING
St Augustine

Categories: News

Energy Minister shares plans to revamp extractive sector

Thu, 05/17/2018 - 00:23

Over the last few months, the Government has been making efforts to have open and frank discussions regarding T&T’s extractive sector through initiatives such the Natural Gas Master Plan and Spotlight on Energy Forum.

Minister of Energy, Franklin Khan, at the launch of the Extractive Industries Initiative (TTEITI) steering committee’s fifth T&T EITI Report for fiscal year 2016, reiterated the Government’s support of the EITI’s focus on transparency and accountability in the country’s extractive sector.

Minister Khan, during his feature address at the launch gave an overview of the current state of country’s extractive sector and shared some of the Government’s plans to combat some of the issues currently impacting the sector.

Below is an excerpt of the address given by the Energy Minister at the launch ceremony of the T&T EITI Report 2016, on Friday, May 11, 2018:

The EITI’s key words are “extractive” and “transparency” as the name suggests focuses on transparency and accountability in how a country manages its oil, gas or mineral resources. As a government, we subscribe to the principles of transparency and accountability and therefore the EITI has our full support.

Recent events in the form of the Gas Master Plan and the Spotlight on Energy are testimony to our commitment to transparency and accountable. We also laid the Gas Master Plan in Parliament and for the first time citizens had access to that level of detail into our energy sector policy.

Through the Spotlight on Energy Conference, we highlighted the country’s energy sector challenges and gave a lucid overview of how this Government plans to deal with these setbacks decisively. It is the first time in the history of T&T that such a fundamental issue for the sector was discussed with the people. The energy sector has been a sector always in secrecy.

The EITI process is relatively straightforward, but its importance cannot be understated. For a particular year, companies submit data on their tax payments.

The Government submits information on its tax receipts, while an independent auditor verifies the information, reconciles the differences and explains the reason for the differences between the figures submitted by both government and companies. Companies, government agencies and ministries must provide supporting data to the independent auditor to support their claims as well, whether actual receipts or audited financial statements.

Over seven years of EITI implementation, the difference between government and companies’ revenue have been reconciled and the independent administrator/auditor has confirmed that all revenue has been accounted for.

This independent verification is very important, as it provides an impartial account of the payments made by companies and revenue received by the Government.

The records will show that there has been full reconciliation of the payments made by companies with Government’s receipts from the extractive industries from the inception of this report.

FINDINGS

This latest EITI Report confirms the decline in government revenue from the energy sector, a downward trend that has impacted us all. For 2016, the report shows that we received total receipts of $8.8Bn, compare this to the $28.6Bn for 2014. This is a 70 per cent decline. This is not only due to lower prices and lower production but also very generous tax concessions.

In 2014, the then government agreed to the grant of accelerated allowances which entitled companies to write off development costs against revenue in three years: 50 per cent in year 1; 30 per cent in year 2, and 20 per cent in year 3, as compared to a period of five years.

Companies were also allowed to write off 100 per cent of exploration costs in the year incurred. The combination of these allowances and the loss relief of 100 per cent of losses, contributed to the substantial reduction in government’s take from the sector.

As a consequence, the government is in discussions with two of the major gas producers—bpTT and Shell to ensure a more equitable sharing of revenue earned from the monetisation of our hydrocarbon resources is attained.

The State has a sovereign right to an equitable share of the economic rents derived from its wasting resources. This Government intends to ensure that this right is respected and honoured.

For 2016, these totals were reconciled against the payments disclosed by 43 reporting companies.

There were minor differences amounting to $26 million, which were due to foreign exchange differences; timing differences and insurance premium tax payments on foreign policies paid by insurance brokers.

For the third year running, the NGC is the largest taxpayer contributing $5.7 billion to government revenue, followed by EOG Resources with payments of $1.3 billion and bpTT with payments of $480 million.

This statistic is most revealing.

The obvious question is how can EOG with a production of 400 to 450 Mmcf/d contribute $1.3 billion in taxes and other receipts to government whereas bpTT with five times the production in the amount of 2.2 Bcf per day contributed a mere $480 million or one-third of EOG’s contribution.

In the extractive industry, there cannot be taxation based on profits only. This wide disparity in revenue has indicated, among other matters, a lack of consistency in royalty regime and is the justification for the introduction of 12.5 per cent royalty rate across the board for gas.

The positive impact on revenue has already been realised as royalty receipts from gas for first quarter calendar 2018 amounted to $534 million, which was substantially higher than quarterly payments in the previous year.

This gives credence to the conclusion drawn by Poten and Partners in the Gas Master Plan Report that T&T was systematically being denied of its revenue entitlements.

They estimated that the country lost up to US$6 billion annually from transfer pricing practices for the period 2010 to 2014 and continues to lose US$1.5 billion annually. They deduced that the revenue leakage was sustained primarily through the LNG business.

In the Spotlight of Energy Conference held by the Ministry of Energy and Energy Industries (MEEI) in March 2018, the revenue challenges faced by the Government and the findings of Poten and Partners were brought to the attention of citizens of T&T.

In the face of such disclosure, it was disappointing that agencies charged with overseeing the public’s interest such as EITI did not see it fit to interrogate the matter and to assume a position on Poten’s assertions. It is my expectation that as the EITI develops it would take a more active position on such matters.

Categories: News

More government services go online

Thu, 05/17/2018 - 00:09

The Ministry of Trade and Industry (MTI) has been spearheading implementation of the Single Electronic Window (SEW) for Trade and Business (TTBizLink), a project which began in 2009 with the first e-service launched in January 2012.

It is a secure, neutral and user-friendly IT platform—accessed online at http://www.ttbizlink.gov.tt—that allows various trade and business transactions to be conducted electronically

Currently it facilitates 46 trade and business related e-services offered from across 24 unique agencies in seven ministries, together with the T&T Chamber of Industry and Commerce (TTCIC). It is a collaborative effort between government agencies and the private sector.

The project has an estimated cost of US$25,000,000 and is expected to be completed by 2021. For fiscal year 2018-2019, the estimated budget is $54,509,973.

The aim is to improve the trade performance and business facilitation environment in T&T through the enhancing of SEW.

Allison Bidaisee, manager, stakeholder adoption, SEW, explained that the project in now in its fourth phase.

“That phase is strengthening and expansion of SEW, funded by a five-year IDB loan,” she said.

The SEW/TTBizLink is underpinned by passage of the Electronics Transaction Act No 6 of 2011 and the Data Protection Act No 13 of 2011.

There has been progress in reduction of the processing time for licences and permits which can now be completed within one to three days. It used to take between three to four weeks.

There have also been noteworthy improvements in service delivery times for collaborating agencies:

• e-certificate of origin: time reduced from one day to 30 minutes

• e-company registration: time reduced from seven to three days

• e-fiscal incentives: time reduced from six weeks to 11 days

• e-import duty concessions: time reduced from six weeks to 12 days

• e-import/export permits and licences: time reduced from 4 weeks to 1 day

This directly affects the ease of doing business in T&T, which is of particular interest to investors and is proving to be an important mechanism for growing the economy, which is in tandem with the mandate of the MTI.

Issues and challenges

There are challenges the biggest having to do with change management, Bidaisee said.

She admitted that transitioning to an electronic system after years of a manual system requires a mindset change, along with acquiring new skills.

“This applies to both the applicant and the approving agencies. The MTI/TTBizLink has sought to address this on different levels but we are getting more and more adoption as there have been more agencies coming on board to use the system. There is more interest in it,” she said.

Stakeholder engagement activities and consultations have helped build awareness and trust in the system. Some kinks regarding resources still need to be ironed out.

“Many ministries face human resource, equipment and even technological constraints. While the MTI cannot directly address the first issue, every effort is made to ensure that staff are properly trained. The MTI has also provided key pieces of equipment to various agencies, including laptops, scanners, printers, tablets and bar code readers,” Bidaisee said.

She reiterated that since introduction of e-services in 2012 training has been consistent as SEW specialists provide expertise to approving agencies and arrangements are made with various private sector organisations for training. These have included the American Chamber of Commerce, exporTT Ltd, the Shipping Association and the Manufacturers’ Association.

Some agencies have been hesitant about making a full transition from manual to electronic, while other still operate parallel systems, which causes the problem of people gravitating to the manual system.

In cases where important documentation needs to be retrieved in the event of an e-system malfunction, Bidaisee assures TTBizLink has a back-up function.

“Since TTBizLink has been up it’s been 99.9 per cent operational. There are various monthly reports done both by the unit and the vendor. That’s mandatory and that is to track,” she said.

Legislation needed

Electronic Funds Transfer (EFT) Consultancy is an initiative of the Treasury Division of the Ministry of Finance. However, because of the goal and objectives of the SEW IDB loan programme, there is an effort to partner with the Treasury Division to develop the framework.

Stakeholders to the initiative include the Central Bank, Finance Ministry and all receivers of revenue in the government service.

Gaynelle Abraham-Brathwaite of the project implementation unit—Strengthening of the Single Electronic Window for Trade and Business Facilitation, explained that the impact of all relevant legislation is being considered.

She said the EFT will be implemented in two phases: Linx facilities at the offices of all receivers of revenue so debit and credit cards can be used, followed by introduction of other payment options, including automated clearing house (ACH) and real-time gross settlement (RTGS).

“We’re looking at what exists in the environment and making recommendations in the legislation where processes need to be changed and actually developing a framework. From there we will look at implementation,” Abraham-Brathwaite said.

“The legislation is across the public sector but affecting trade-related policies and business to some extent. We need to ensure we have more efficient and cost effective trade and related business activities and an environment which is more attractive to investors.”

Review of the legislative and institutional framework for trade and business in T&T, which is scheduled to begin in July 2018 with a duration of 14 months, will result in a modern legislative framework and appropriate institutional framework for trade and business.

“In essence, the consultants will conduct a comparative scan of the domestic legislative framework with the legislative framework of at least three relevant developed countries and at least three comparative developing countries, as agreed by the client, identify the gaps in the domestic trade and business related legislation and present findings on the proposed list of legislation to be amended or drafted,”Abraham-Brathwaite explained.

Consultation is taking place with the Planning Ministry, specifically the Town and Country Planning Division, on construction permits.

“We’re looking at the current paper-based trail that has to be followed when someone applies for a construction permit. The storing of those files is outdated and we’re looking at digitisation of those files, as well as sharing that information with different stakeholders and ultimately reducing the application period for a construction permit.

“That’s important because it’s one of the business indicators for T&T. If we are able to reduce time and cost we will see an improvement overall in our ranking,” Abraham-Brathwaite said.

Launch of e-permits for construction will take place in the coming months.

Highest volume from import, export

The import/export sectors constitute the highest volume of users of the system, followed by those registering a business or incorporating a company.

Use of SEW/TTBizLink is increasing. As at March 31, there were 2,867 businesses and 8,795 individuals registered to use the platform.

Agencies that have transitioned to SEW/TTBizLink include:

• The trade licence unit: import/export applications

• exporTT: applications for e-certificates of origin

• Plant quarantine services, Ministry of Agriculture, Land and Fisheries: plant import permits

• The Pesticides and Toxic Chemical, Chemistry, Food and Drugs Division, Ministry of Health: applications related to pesticides and toxic chemicals

• Chemistry, Food and Drugs Division, Food and Drug Inspectorate, Ministry of Health: export health certificates

• The work permit secretariat, Ministry of National Security: applications for work permits and extension

The e-Work Permit Module was launched on March 1, 2012, and there have been 2,783 applications with the top five nationalities of applicants from United States, United Kingdom, Canada, Philippines and India.

Phased adoption of platform

The Health Ministry has adopted the e-services of SEW/TTBizLink that are relevant to it.

In 2013, the food and drug inspectorate of the Chemistry, Food and Drugs Division (CFDD) came on board for the e-permits and licences module. Then in October 2016 the Pesticides and Toxic Chemicals Inspectorate of the CFDD, and the Pharmacy Drug Inspectorate came on board.

Similarly, Plant Quarantine Services, Ministry of Agriculture, Land and Fisheries, came on board with the e-permits and licences module in 2012, e-goods declaration in 2014 and e-mobile inspection in 2016.

As a result, TTBizLink has provided interconnectivity among various state agencies, enhanced the ease of doing business and facilitated real time data capture critical to policy and decision making, with enhanced oversight and security.

More info

Ministries using SEW/TTBizLink
• Ministry of Agriculture, Land and Fisheries
• Ministry of the Attorney General and Legal Affairs
• Ministry of Finance
• Ministry of Health
• Ministry of National Security
• Ministry of Public Utilities
• Ministry of Works and Transport
• Ministry of Trade and Industry

Categories: News

CNC invests $110m in plant upgrade

Thu, 05/17/2018 - 00:02

Caribbean Nitrogen Company (CNC) will be spending more than $110 million on maintenance and upgrades to its N2000 plant at the Point Lisas Industrial Estate in Couva. During that turnaround hundreds of temporary jobs will be created.

CEO Jerome Dookie said the decision to invest was a direct result of the signing of a new natural gas agreement with the National Gas Company (NGC) after protracted and tumultuous negotiations with the state-owned enterprise.

“The signing of the contract has given us the confidence to continue to invest in N2000 and Trinidad and Tobago’s downstream sector,” he said.

“You may recall historically, when plants are having turnarounds people would turn up at the gate looking for work. Well that show-up-at-the-gate model no longer holds but it is the same concept where there is a lot of additional employment created. At peak times the employment on site will go up to as many as 1,000 workers.”

Dookie said petrochemicals is a long-term business that involves periodic turnarounds where the plant is shut down to carry out major maintenance that wouldn’t be possible while it is operating.

“The last turnaround at CNC, we spent $340 million and prior to that we also had to do some upgrades, so the actual spend was closer to $850 million. That commitment to keep spending is part of the business model. You have to invest that capital and maintenance funding to keep the plant running safely and reliably,” he explained.

Dookie was speaking for the first time since negotiations between his company and NGC caught national attention. NGC cut off the gas supply to CNC and the matter reached as far as the Prime Minister.

While Dookie made it clear that the time had come to move on from the standoff, he said T&T faced real challenges with competitiveness in an increasingly difficult global petrochemical market.

Traditionally, he explained, this country’s natural gas export market has been the US but that is now changing due to the availability of low-cost shale gas.

“There was a time when Trinidad production was causing production in the US to come off line. Now that trend is being reversed. You would find cheaper more abundant shale gas available in the US. You find production being increased there and our natural market is disappearing.

“As a result we have had to reach out more globally to sell our product. I will give you an example, our first shipment of product since we resumed production actually went to Belgium,” he said.

“Certainly the higher gas prices in T&T places us in a less competitive position in comparison to the US producers and that is something that has to be recognised.”

Asked what lessons were learnt from the negotiations, Dookie said such talks have to take into account the fact that “we all have to survive because if the price is too high for us to compete globally then there is no market for the gas. So going forward the negotiations have to consider that it has to be win-win and you have an equitable return to all the players.”

“We are selling product into a highly competitive global market and we need to be cost competitive to compete against the USA which is now a low cost producer because of the shale gas. The idea is to have a value chain that supports everyone along the way because we all need each other in order to survive because if the upstream producers don’t have the downstream consumers to sell the gas to then there is no point in producing it.”

Dookie talked about the relief felt by CNC’s management and staff when the new agreement was finally signed off on Easter Sunday.

“We had worked through most of the Easter weekend to finalise that deal and when we sent out word to the employees to come back out now there was that real sense of relief in the organisation,” he explained.

The CNC plant came online in 2002, so it has been operating for 16 years. CNC is part of the Proman Group which, over the years, has been involved in construction of 13 petrochemical plants in this country.

However, it is not well known is a major player in the downstream sector. 

CNC has a capacity of 650,000 metric tonnes a year but with the gas supply not fully available, like all the other plants on the Point Lisas Industrial Estate, they are well below that capacity.

Dookie said over the last 15 years the company has contributed more than $17 billion to the local economy.

“We are talking about actual cheques written and money transferred that has gone into the local economy and that is, of course, just the direct payments, we are not talking about the multiplier effect.”

In the value chain, upstream producers like bpTT and Shell invest money to explore, discover and produce gas and through the services companies working for them they generate economic activity.

The gas is transported by the NGC which earns a profit from their activities, then makes its way to the CNC plant which employs people, pays taxes and generates billions of dollars in economic activity.

Like Finance Minister Colm Imbert, Dookie is hopeful there will be a return to full supply in the medium term. He praised Proman for investing upstream to increase gas supply.

“Building now on the downstream thrust with methanol and ammonia, Proman Group has now gone upstream in recognition of the gas shortage situation and has taken the bold step by investing heavily in DeNovo,” he explained.

However, Dookie is concerned that not enough people in the country understand the relationship between the energy sector and their everyday lives.

“One of the things that became apparent to me recently was the little connection people had between the quality of life and what the petrochemical sector means to the country. You go about Port-of-Spain and you see people living their lives as normal and the majority of the money that is generated to support that lifestyle actually comes from the energy sector and the petrochemical sector in particular,” he said.

Ammonia feeds the world, Dookie said, so he is optimistic that CNC will be able to continue in business, although that depends on a recognition that the world has changed and we all have to work together to ensure the local industry remains competitive for the long term.

Categories: News

Stifled by unchallenged corruption

Wed, 05/16/2018 - 23:55

People who have been around a long time will remember former PNM minister Johnny O’Halloran, a high-ranking member of the Eric Williams Cabinet, who lined his pockets with millions of dollars from foreign firms wanting to secure local contracts.

Among these was the Caroni Racing Complex project, where tonnes of steel and concrete worth close to $100 million disappeared into the Caroni Swamp in a scandal in which Texas construction firm Sam P Wallace was also implicated. That project that was never completed.

Another scandal erupted during the time that he held the portfolio of Industry and Commerce in 1956 and reportedly collected kickbacks for a $43 million sewerage scheme, then as chairman of the Chaguaramas Development Authority, O’Halloran—a close confidant of Williams—rented out state lands to companies without proper procedure.

Some of these incidents date back to before I was born, while other took place in the years just after Independence in 1962, the year of my birth, so I had to rely on historical records for some of these cases.

However few decades later, just as I was completing secondary school, there was another case of corruption which I can remember because it occurred in the latter part of the Williams administration in July 1980. I remember reading all the newspaper accounts of the DC-9 scandal—a questionable deal for purchase of four new DC-9 aircraft for BWIA from the US-based McDonnel Douglas Corporation. A $1.3 million bribe was reportedly paid to another senior government official, Francis Prevatt, for securing this deal.

I recount some of these corruption scandals just to illustrate the fact that here has hardly been a time in this country’s modern history when there hasn’t been that taint over one political administration or another.

In recent times, corruption has shrouded mega projects such as the Brian Lara Cricket Academy (Tarouba Stadium), the Scarborough Hospital and even the Guanapo church scandal.

The jury is still out on the Piarco Airport scandal, which erupted during a UNC administration. Two decades later, former public officials and business figures are still before the courts in cases arising out of that matter.

These cases have cost T&T billions of dollars that could have gone toward development of this country, construction and maintenance of infrastructure and other important state projects. Taxpayers funds which should have been used for the benefit of the wider population, funnel into private bank accounts, siphoned off and accumulated as ill-gotten wealth for a select few.

These incidents—and there are many others that space does not allow me to recount here—fit into the World Bank’s definition of corruption, “the abuse of public office for private gains.”

The World Bank expands on that explanation as follows:

“Public office is abused for private gain when an official accepts edicts or extorts a bribe. It is also abused when private agents actively offer bribes to circumvent public policies and processes for competitive advantage and profit. Public office can also be abused for personal benefit even if no bribery occurs through patronage and nepotism, the thereof state assets or the diversion of state resources.”

The fact is so many cases of corruption—in most instances the perpetrators have been caught or convicted—have been serious hindrances to T&T’s development.

Prospects for prosperity have been reduced over the years because an environment has been allowed to develop where there has not been a consistent demand for transparency and accountability in the conduct of public affairs.

The World Bank and Transparency International have found that in countries like ours where there are higher levels of corruption, less funds are used for the public good and investment. It is just too easy for criminals of the white collar variety, as well as gangs, to circumvent and undermine laws.

O’Halloran, Prevatt and others fled the country, finding safety from arrest and conviction in other jurisdictions. In fact, their easy escapes is highlighted in David Rudder’s 1987 hit, Panama.

Sadly, cases like those, where corruption goes unchallenged, are the norm rather than the exception in this country.

In addition to hampering efforts to fight poverty and inequality, corruption stifles economic growth and diverts desperately needed funds from essential public services, such as education and health.

According to the World Bank, approximately US$1 trillion is siphoned off through bribes every year.

In our corner of the world, corruption allows the illegal drug trade to flourish, as across the region bribes are paid for government, law enforcement and justice system officials to “look the other way.”

Bribery and other corrupt activities have a major economic effect on developing countries like ours, decreasing overall economic GDP per capita and reduces capital formation.

Here in T&T, there are several pieces of anti-corruption legislation. The Integrity in Public Life Act requires public officials to disclose assets throughout their time in office and the Prevention of Corruption Act provides for punishment of corruption in public office. However, to turn things around, there must be enforcement of these laws

But laws are only part of the framework needed to detect and deter acts of corruption. Unfortunately, in this country, many challenges persist. For example, procurement processes are not fully transparent and there have been claims that they can still be manipulated or bypassed.

The Government needs to try harder to prove that it is indeed committed to systems of transparency by setting a time table and pressing ahead with long promised laws and other reforms. The recent improvement in T&T’s ranking in the Corruption Perceptions Index is just not enough, not in a country where the all-time high was 101 in 2016 the record low in 2001.

There is need for improvement in the management of public resources, ensuring more efficiency and fairness with subsidies, tax exemptions, procurement of goods and services and other process. T&T needs more open and transparent processes so that there is less chance for malfeasance and abuse.

Cutting away the miles of extremely burdensome bureaucratic red tape that make it so difficult to conduct business will eliminate many of the practices that breed corruption.

Reducing subsidies, also reduces opportunities for corruption. It has been proven that subsidies can encourage hoarding, shortages, and the emergence of black markets, leading to corruption-generating schemes.

In terms of operating systems and processes, available technologies can be powerful weapons in the fight against corruption. In other parts of the world, online platforms have been successful for tax collection, public procurement and reducing red tape.

Public procurement is also a fertile breeding ground for corruption because purchases of goods and services and awarding of contracts, facilitates graft, kickbacks and collusion. This is an area of particular concern since long-awaited legislation is yet to be fully implemented.

Not too long ago, Prime Minister Dr Keith Rowley lamented the high level of corruption that persists in the country. His PNM administration came into power on manifesto promises of tackling corruption. It is time to keep those promises.

T&T can move beyond its current developing country status and finally achieve long-term economic stability but to get there, cutting out the corruption is essential.

Categories: News

cmb strikes gold in regional Addys

Sun, 05/13/2018 - 01:03

The Addy Awards is a three-tiered system. After winning 33 Addy Awards at the local Addy awards where cmb competed against other agencies in the region, the advertising agency was automatically entered into the district level of competition and also qualified for the national level where the agency will be vying against top agencies from across the US and the Caribbean. Gold winners always go through to the next round of competition.

One ad in particular caught the attention of the judges. A dramatic and emotive ad, that opens with police officers and civilians jostling and shouting.

As the scene builds in intensity in the “I am Citizen” ad, instead of a crime scene everyone is playing basketball. For this ad for the Citizens Security Programme (CSP), cmb has been getting significant recognition.

At the regional Addy Awards, cmb won the Judges Choice Addy Award, Gold in TV, Gold in Public Services, Silver Addy in audio visual, Silver Addy for the CSP Basketball and the CSP Walls ads. For that ad, cmb was also nominated for the Charlie Award.

The CSP ad also garnered cmb recognition at the recent Angel Awards which honours the very best in public service advertising. The Angel Awards, hosted by the American Advertising Federation Fourth District, was held on April 13, celebrated ads that addressed community issues in Florida and the Caribbean.

Mark White, cmb’s managing director, recently attended the American Advertising Awards District Gala on April 14 in Orlando, Florida. He said the agency only submits “real work” ie material developed based on a client brief that is aired or published as part of a strategic campaign. So, Addy Awards are a manifestation of advertising discipline—namely strategic pinpointing—as the starting point of effective communication.

The awards, to him, are about much more than trophies and bragging rights.

“Ours is an exacting but not exact science, at least not yet. Until such time as bots write better creative than we do, human subjectivity prevails.”

Categories: News

iGovTT partners with ALTA

Sun, 05/13/2018 - 00:53

The National Information and Communications Technology Company Ltd (iGovTT) is working with the Adult Literacy Tutors Association (ALTA) to create a system that will allow literacy students to learn to read online.

Celebrating its 25th anniversary this year, ALTA is an award-winning organisation that has been lauded for its efforts in addressing the adult literacy challenge, not only in T&T but also in Grenada. ALTA provides literacy instruction for approximately 2,000 literacy students every year and has trained more than 2,500 volunteer literacy tutors since its inception.

To further extend its reach, ALTA is now working with iGovTT to commission the design of an e-platform that will provide potential students with the option to register and access various levels of reading and spelling instruction online.

Over the years, time constraints and the stigma associated with low levels of literacy have kept potential ALTA students away from the community classes and limited ALTA’s reach into the population.

A virtual classroom can go a long way in helping to remove these barriers. People will be able to access literacy instruction in their own space at their own pace. This will also benefit current ALTA students attending classes at brick-and-mortar venues, who may opt to use ALTA Online to reinforce skills learned in the classroom.

M’aisha Thomas, a key member of the ALTA online team from conception, explained the rationale behind the development of ALTA Online: “At ALTA we see our expansion into e-learning as a natural progression. We have observed through our students that non-readers have increasingly come to rely on tech devices, tapping into ICT both for leisure and to stay informed. Leveraging this existing internet use, ALTA Online will enhance the ability of emergent readers to connect with their world via the written word.”

iGovTT has been tasked with providing the terms of reference for the e-platform and overseeing the procurement process. Since the users will have limited reading skills and be of all ages, a mobile, user-friendly interface is of key importance.

Matthias Hypolite, team lead at iGovTT’s solution architect office said iGovTT is committed to achieving a positive sustainable outcome.

“Our relationship with ALTA does not end once we find a vendor; we hope to guide the process until the e-platform is up and running, and will be checking in with ALTA regularly to gauge the efficiency and overall success of the e-platform,” he said.

Categories: News

Are you a social entrepreneur?

Sun, 05/13/2018 - 00:45

In my inaugural article, I focused on exposing another breed of entrepreneurs called social entrepreneurs.

As a society, we have and continue to place emphasis on commercial entrepreneurship that possesses the capabilities to innovate and grow and known to contribute to job creation and consequently economic development.

However, for our country to improve the quality of life for citizens, we need entrepreneurs who can focus on the needs of those at the “base of the pyramid,” targeting the underserved or marginalised groups where government programmes cannot reach and where traditional private sector firms are not interested in serving. These entrepreneurs are called “social entrepreneurs.”

What distinguishes a commercial entrepreneur from a social entrepreneur?

I suggest that this breed of entrepreneurs differs from commercial entrepreneurs in three typologies: motivation; value proposition and socioeconomic transformation.

The first typology looks at the “motivation” perspective for social entrepreneurship.

The Stanford Social Innovation Review in 2008 defined social as the value of the product, service, good, process is titled toward the benefits the public or society as a whole—rather than private value —gains for entrepreneurs, investors and ordinary consumers. A key differentiator between business and social entrepreneurs is therefore motivation with the former focused on money while the latter on altruism.

Social entrepreneurs are therefore persons who possess qualities and behaviours of business entrepreneurs but whose focus is on caring and helping society rather than maximising profits. The differentiator is that the aim of the social entrepreneur is to create social value instead of personal or shareholder wealth. Social entrepreneurs focus on social mission and therefore perceives and assesses opportunities differently from corporate entrepreneurs.

The second typology relates to the value proposition of social entrepreneurship. Researchers, Martin and Osberg pointed out while most theories distinguished entrepreneurs from social entrepreneurs by profit maximisation, a critical differentiator is that entrepreneurs create value for an assumed market that would buy the product or service whereas social entrepreneurs’ value proposition is aimed at creating a better quality of life for the underprivileged and neglected.

The value proposition therefore serves as another critical differentiator between business and social entrepreneurs. It is expected that business entrepreneurs would maximise the profits of its shareholders.

The social entrepreneur’s value is to improve or transform an underserved, neglected or highly disadvantaged population that lacks the means to create a better quality of life for themselves or their families.

This does not mean that social entrepreneurs shun the profit-making value proposition.

Ventures created by social entrepreneurs can certainly generate income, and they can be organised as either not-for-profits or for-profits.

What distinguishes social entrepreneurship is the primacy of social benefit, what Duke University Professor Greg Dees in his seminal work cited on the field characterises as the pursuit of “mission-related impact” as cited in the Stanford Social Innovation Review, 2007.

The third typology relates social entrepreneurship with socio-economic transformation. For social entrepreneurs to be truly socially innovative it is not enough for them to simply address a social need.

Being socially innovative requires the individual or organisation to identify a previously un-addressed social issue.

This could be the development of a new green technology, the support of a disadvantaged group of people who are not currently being supported or even creating a more productive or efficient method for dealing with a current social need. However, this approach must provide something new.

Once a social need has been discovered the organisation must then be able to exploit this need in a sustainable way. The organisation must be able to identify a sustainable business model which enables them to meet this need in a financially viable way.

Lastly, for social entrepreneurial organisations to be truly innovative they need to generate disequilibria within their market.

Disequilibria refers to an organisation creating disruption and imbalance within their industry in a way that forces the market to replicate and follow in their foot-steps.

The common theme across the typologies in conceptualizing social entrepreneurship revolves around the motivation to fulfil the value proposition of improving or transforming an underserved, neglected or highly disadvantaged population that lacks the means to create a better quality of life for themselves or their families.

Having put forward three key differences between commercial and social entrepreneurs, I ask this question: are you a social entrepreneur in T&T?

Nirmala Maharaj

Categories: News

Has the paradigm shifted?

Sun, 05/13/2018 - 00:41

The following is an excerpt of KPMG’s commentary on the Minister of Finance’s 2018 mid-year budget review on May 10, 2018.

In this piece, KPMG seeks to examine hereunder some of the recurrent and topical tax initiatives pronounced by the Finance Minister and offer our perspective on where we are.

The Minister of Finance, Colm Imbert, has expressed with great confidence that the economic climate of T&T has made a “welcoming turnaround” due to the economic expansion in both the energy and non-energy sectors. The estimated GDP growth rate is 2% in 2018, rising to 2.5% by 2020.

He indicated that the main factors contributing to this turnaround were the increased revenue collection, non-oil sector growth and increased production in the energy sector.

Over the last few years, the economic climate in T&T has been constricting—to put it mildly.

Both individuals and companies alike have been subjected to austere fiscal measures and have been asked ‘to do more with less’—as the nation seeks to navigate its way through the current recession.

The country faces the conundrum of maintaining T&T’s economic engines of productivity and investment, whilst it is in the midst of foreign exchange issues, new and increased taxes, and reducing government funding and subsidies.

Given that the Central Bank announced in December 2015 that T&T is in an economic recession, the government’s message of prudence and austerity must be examined in light of the ability of the country to see tangible return and progress for sacrifices made.

However, in his 2018 mid-year budget review the minister stated that T&T is now witnessing a welcome upturn. Following the presentation, a pulse check of the progress made since the 2018 Budget is necessary.

• Implementation of Property Tax

Property Tax has been a hot topic for some time now. It has been met with legislative controversy, disagreement as to its imposition by some portions of the populace, as well as an acceptance to pay but uncertainty by others.

In recent times, uncertainty was noted with respect to the applicability and ability to access exemptions from the property tax as noted in the Property Tax Act (PTA).

Commendably, the government has sought to clarify to whom such exemptions apply in the Property Tax Amendment Bill. The bill also proposed dispensing with the obligation to pay property tax for income year 2016.

With respect to the obligation to pay property tax the minister in his mid-year review has assured the nation that the waiver of said taxes will be extended to 2017—which means that property tax will be payable for 2018.

This will be welcomed by companies that have been struggling to make accounting provisions for property tax for 2016 and 2017. However, the business community and the general populace await the enactment of these pronouncements.

• T&T Revenue Authority (TTRA)

The current administration has mentioned from its inception that it intends to constitute an integrated Revenue Authority that would see strengthened collaborative efforts between the present Inland Revenue and Customs & Excise Divisions, amongst other benefits.

The proposed TTRA has also been met with mixed views by citizens and businesses in the midst of government promises that the TTRA will bring improved efficiency and administration, as well as a more robust compliance and collection system.

The TTRA is also being proposed as a solution to the alleged high revenue leakages, inefficiencies in the administration process and general dissatisfaction amongst taxpayers.

Countries such as Jamaica, Guyana and Barbados have consolidated their national revenue collection institutions into one central Revenue Authority in an aim to mitigate revenue leakages by having a 360 degree view of taxpayers’ transactions.

Much to the commendation of the government, tangible transition and progress can be seen by the relocation of Inland Revenue and Customs Division offices to new and improved facilities.

Despite prior pronouncements by the government that the TTRA will come into effect in fiscal 2018, the minister has now indicated that legislation is imminent and that the benefits of a TTRA should crystallise in the next fiscal year.

It is to be hoped that, by the time of the 2019 Budget Speech, all infrastructural mechanisms for the TTRA, inclusive of legislation, would have been put in place so that a bestowing of a functional TTRA to T&T would be completed by then; there should be no further delays.

While T&T awaits the official operation of the TTRA, we wish to take the opportunity to stress to the government the importance of specialised training of personnel and a shifting in culture to one of diligence and excellence—both of which will be key to ensuring the success of the TTRA.

• Transfer pricing

It is well known that T&T currently has no transfer pricing regime. As a result, there is a common suspicion that related party transactions may not be at arm’s length. As such, the Board of Inland Revenue (BIR) reserves the discretion to invoke provisions of the Income Tax Act where they believe transactions to be artificial and/or fictitious-- particularly between related parties.

In recognition of the fact that many multinational companies have complex related party structures, which can be used as a medium for legitimate tax reduction, the government has acknowledged the need for T&T to develop a transfer pricing regime.

It is our understanding that the BIR has been and continues to engage in consultations with regard to transfer pricing. However, to date we have not seen any tangible development in this area.

Given the current economic climate, where there is a need to maintain and increase revenue, the development of a transfer pricing infrastructure is essential to managing and reducing the outflow of taxable revenues in the long run.

We had hoped that the minister would have updated the nation on this long outstanding pronouncement.

• Access to Foreign Exchange

The availability of foreign exchange continues to be a sore issue for businesses and citizens alike.

Companies are under continued pressure to source foreign exchange to meet supplier obligations and, in some cases, have ceased operations where ingenuity could not be implemented.

The average citizen continues to struggle to source the most minimal of foreign currency even where foreign currency accounts are owned.

Recently, the Export Import Bank (Exim Bank) was granted a licence to trade in foreign exchange. The minister announced that the Exim Bank was provided with a capital injection of US$100 million, which it is authorised to distribute to manufacturers for the purposes of export expansion. This was further emphasised in the review.

While this is indeed commendable, it does not address the difficulty encountered by companies that do not manufacture for export, nor the hassle faced by citizens in accessing the smallest amounts of foreign currency.

Whether we care to admit it or not, some companies and individuals out of desperation are turning to alternative source options, fearing that there is no end in sight to the shortages through official markets.

• Lottery Winnings Tax

The minister, in an effort to remedy the shortfall in revenue collection, sought to introduce a new Lottery Winnings Tax at the rate of 10% on all cash winnings, in excess of $1,000, paid out by the National Lotteries Control Board (NLCB).

Whilst it was noted that the NLCB would be responsible for withholding and remitting this tax to the BIR—this tax is not yet in effect.

It is our view that the NLCB may be grappling with how best to collect and administer this tax as the infrastructure to do so may be virtually non-existent.

Not to mention, the current National Lotteries Act provides that the NLCB is exempt from tax but under the new lottery winnings tax to be imposed under the Miscellaneous Taxes Act the said NLCB will now face steep penalties and interest for failure to withhold and/or remit the tax to the BIR.

It should be noted that the minister did not provide any guidance on when this tax will come into effect or when various legislative gaps would be remedied.

• Gambling Industry

The requisite bill is before a Joint Select Committee of Parliament for review; such bill will hopefully be finalised by the end of 2018. It is expected that a well-regulated gambling industry will be in force by 2019.

• Oil and gas taxation regime

The minister proclaimed the revitalisation of the energy sector, evidenced by significantly higher levels of average gas production—up 20% from 2016 levels.

Both the Trinidad Region Onshore Compression project and the Juniper Platform, which came on stream in April and July 2017 respectively, were the main contributors to this boost in production.

Production volumes are expected to further increase due to enhanced activities among major oil and gas producers such as Shell, bpTT, BHP and EOGR as well as access to additional gas from Venezuela.

The minister reported that the increases in production levels, unwavering negotiations with the international oil and gas companies, and appropriate adjustments to the oil and gas taxation regime are already bearing fruit from a revenue perspective. No further details were given by the Honourable Minister on these adjustments to the taxation regime.

In his 2018 budget speech, the minister recognised that there were important issues to be addressed with the fiscal regime for the energy sector and that a start of the review of the energy tax regime was made in order to simplify and rationalise the terms of both exploration and production licences (E&P) and production sharing contracts (PSCs).

The main objectives of the reform were to encourage investment in the energy sector and to raise the Government’s revenue take. Certain critical areas mentioned included:

• making the supplemental petroleum tax responsive not to price but to underlying profitability;

• extending the supplemental petroleum tax to gas;

• reconciling and simplifying of the fiscal regimes applicable to the E&P Licence and PSC systems

• standardising and applying uniformly a 12.5% royalty rate on the extraction of oil, condensate and gas—proposed date December 1, 2017.

Recognising that this will be a gradual process, we are not aware if the necessary legislative changes are in train to give effect to the implementation of the measures mentioned above; we would have appreciated an update from the minister on this.

We await the much anticipated overhaul of T&T’s oil and gas fiscal regime which should provide incentives to the energy sector to stimulate investment, encourage exploration and, ultimately, securing a fair share of the value for T&T.

• Other Matters

We would have appreciated an update on the following matters, namely:

• The National Statistical Institute; and

• The re-establishment of the export allowance

Conclusion

We are hopeful that the worst is over and some light has begun to emerge at the end of the tunnel. Based on the Minister’s 2018 mid-year review it seems this is the case and expect the country is pleased with this good-news.

There was very little in terms of progress on key tax measures that should have been implemented.

Nonetheless, the positive outlook combined with no further increases in tax is a relief.

As T&T seeks to shift the paradigm and restore economic prosperity, it is questionable whether we have as yet made the progress and reaped the benefits envisaged as a result of embracing the austere fiscal measures that the current administration pronounced as necessary.

We therefore need to continue to be very prudent for when it’s not “a bright sun-shining day.”

Categories: News

Opportunity of a lifetime

Sun, 05/13/2018 - 00:35

It is an opportunity of a lifetime for any entrepreneur—pitching an idea for a business to a member of the royal family.

Jody White, owner and founder of Slimdown 360, and Alpha Sennon, founder of WHYFARM, got to do just that when they participated in [email protected], an event that gives entrepreneurs the opportunity to meet global industry leaders who can assist in boosting their business.

[email protected] was held at several locations, including Buckingham Palace, St James Palace and at Facebook’s London headquarters.

White, whose business is about meal plans for healthy living, earned the People’s Choice Award and ended up in a third place tie with another international entrepreneur.

Sennon, who was produced a comic book about agriculture, said he found out about the competition when a friend emailed him an entry form. White, on the other hand, heard about it through the Ministry of Trade.

For White, walking the red carpet to enter Buckingham palace on the opening day felt strange. He had never been to London before and had never taken part to an event of that kind.

However, Sennon, who has been to events similar to [email protected], recalled:, “I travelled to London many times before, but I never had a reason to go to Buckingham Palace.”

The two met for the first time in the room where the delegates gathered for the event—the same room from which Queen Elizabeth II goes out on to balcony to wave to the public.

In the first round of the competition, delegates has to give 30 second pitches about their company.

“You begin to feel as though it’s your one chance. Don’t lose it, don’t mess, is what I was telling myself. It was like the biggest chance you can get. I was nervous, this can make your business,” White said.

Sennon, who had very little time to prepare for the competition, was bumped out in the first round. Still, he was happy for the experience.

In the second round, White did a three minute pitch about Slimdown 360.

“After Buckingham Palace, the next day we went to Facebook’s head office where we were assigned elevators who were past alumni of the competition,” he said.

“They talked to us, they looked over our pitches, then out of 42 people, 12 were selected to do three-minute pitches the next week at St James Palace,” he said.

White found out he was in the top 12 on a Friday. Everyone else had gone sightseeing but he stayed in his hotel room to practice his presentation and edit it.

“I did nothing for the weekend except get food and come back,” he said.

Every participant in the second round had the opportunity to ask for something for their business, and to say why they attended the event in the first place. White said he asked for a meeting with large distributors.

He felt relieved when it was over but had to wait outside of the room for the results. After that, there were interviews and meetings to attend.

White was provided with a list and asked which two global industry leaders he wanted to meet. It was difficult as hardly anyone present was in the food industry. He eventually asked for meet the head of innovation for PepsiCo.

However, the crowning moment for White was when he got to present his product to Queen Elizabeth.

About [email protected]

[email protected] Commonwealth is a platform to showcase entrepreneurs from the 53 Commonwealth countries, connecting them to local and international networks and helping amplify their businesses.

The objectives are:

• Promote the importance of and provide key support for entrepreneurs from Commonwealth countries and early-stage businesses

• Foster more entrepreneurial talent within the Commonwealth

• Engage and inspire local communities

• Assist innovative businesses to boost the economy

This year’s event, which took place as part of the Commonwealth Summit, was an opportunity for entrepreneurs to pitch their business to CEOs, influencers, angels, mentors and potential investors and business partners.

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