IN THE 2021 budget, the Minister of Finance announced two far-reaching decisions for Trinidad and Tobago, signalling the intention to transition towards a market economy. Firstly, the decision to privatise the operations of the port of Port of Spain represents a philosophical shift from a mindset that has been present for decades. Secondly the liberalisation of the retail fuel market represents divergence from government’s 46 year-old economic policy regarding the liquid petroleum market.
Although the Covid-19 pandemic has indisputably played a role in the decisions, it has only laid bare what was inevitable. Amidst declining oil and gas revenues and the Government’s target to reduce its deficit by 2023, it became necessary for the State to remove itself from “running businesses”. There may have been a time when the State had to take the lead in the provision of some services. However, today the business sector has shown that it is more than capable of playing its role in the economic development of the country. Additionally, privatisation of ports and liberalisation of fuel markets are features of modern competitive economies with a high standard of living.
The T&T Chamber has always maintained that the role of Government must be to facilitate, not to compete with the private sector. This means that the State should act in the realm of policy formulation and implementation as it pertains to the efficient and effective provision of services to enable smooth business operations.
Some critical aspects needed at this time for business facilitation are a well-functioning port, a transparent and predictable Customs and Excise regime, fair tax administration and the provision of e-government services. Of course we recognise that not all services mentioned can be readily privatised and some must remain State-controlled in the interest of the public.
At our post-budget analysis meeting held on October 6, learned economists and business leaders underscored that T&T cannot move forward unless we have meaningful conversation about our productivity, particularly in the public sector. Persistently low levels of productivity are a serious impediment to the ease of doing business and to economic growth. The private sector of Trinidad and Tobago is willing to lead the charge in economic growth, however, it will not amount to much if there is a lethargic response from the public sector.
The privatisation of government businesses must be pursued with sensitivity, but determination, if T&T is to be given a real chance at economic recovery. There will have to be appropriate change-management programmes. Regionally, Jamaica’s government, in 2015 concluded a deal to divest itself of interests in Kingston Container Terminal and hand over to private company Terminal Link/CMA CGM Consortium, in keeping with its goal of making it a major transshipment hub in the Caribbean. The concept of private ownerships in ports is not entirely new to T&T, as 49 per cent of the Point Lisas Industrial Port Development Corporation (PLIPDECO) is privately owned. Therefore an analysis of these experiences can provide a starting point for this new transition.
The sale of all gas stations owned by the National Petroleum Company of T&T has the potential to unlock some of the liquidity in economy by allowing for greater private sector participation in the economy. Government has limited financial resources and means for revenue generation; therefore where the private sector is willing to invest and collaborate with government-public private partnerships are a win-win.
We have to underscore that it is not simply about privatising State-controlled enterprises or assets, but about selecting competent service providers to achieve improved performance and offer services at globally competitive rates.
The T&T Chamber encourages the Government to engage in a State enterprise rationalisation exercise to identify additional divestment opportunities. Divestment can result in greater return from enhanced corporation tax.
It is worth noting that divestment and privatisation cannot be treated as an end in itself but as part of a broader programme of reforms designed to promote better allocation of resources, foster competition, a supportive environment for entrepreneurial development and even capital market development. It is not going to be a quick fix to all our institutional challenges.
Trinidad and Tobago has been caught in a loop of holding on to practices that the world has long abandoned. If nothing else, the pandemic has brought to light the need for reduced bureaucracy, the elimination of archaic processes, the repeal or revision of outdated legislation and combative negotiating processes. For example, it is unconscionable that T&T is still operating under a Customs and Excise Act that was initially crafted in 1938.
Collectively, we believe if these can be implemented and regulated appropriately alongside the increased thrust towards digitisation of government services, they can redound to an increased ease of doing business and competitiveness.
It has been noted that many laudable initiatives have been announced this year and in previous budget statements, some of which have not come to pass. One recommendation would be to establish an implementation committee to monitor and provide advice on timely execution of the various initiatives.
T&T Chamber commends the shift in the tone of the Budget where Government finally appears ready to engage the private sector collaboratively. We stand ready to work with them to transform our economy, and reiterate that successful businesses are the foundation of a prosperous Trinidad and Tobago.