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Letter: The face of our private sector
Published on August 28, 2017Email To Friend    Print Version

Dear Sir:

Mr Gervase Warner, CEO of Trinidad and Tobago’s Massy, a regional conglomerate, tells us that a Sandals (all inclusive) hotel, proposed for Tobago, would be a game changer for Tobago’s economy; Sandals will transform Trinidad and Tobago!

Besides the short term provision of jobs in construction and of course the low level skills required to run the hotel (most of the major management and commercial activity will be done either by foreigners or abroad) for which it will be awarded significant tax incentives, denominated in foreign exchange, Mr Warner tells us that such a hotel will need massive amounts of fruit and vegetables, which Tobago can supply, so earning foreign exchange.

One wonders why Tobago, if what Mr Warner says is possible, is not supplying these massive amounts of local fruits and vegetables to the 1.3 million people of Trinidad and Tobago and saving foreign exchange. Further, at one time Tobago exported food to Trinidad but is now an importer of food from Trinidad as the present sea-bridge fiasco has highlighted. Also, the THA is the largest employer in Tobago, helped by the 50% of the national budget allocated to subsidies and transfers.

Mr Warner also told us that Massy would be interested in supplying the hotel with goods. When one looks at Massy’s offerings in its supermarkets one wonders why Massy has not been able to encourage local production of fruits and vegetables. Maybe the plan is to also import goods to supply Tobago Sandals. Today, even in the recession, Massy imports lettuce, sweet peppers, cabbage, asparagus spears, apples, plums, pears grapes... you name it, Massy imports it.

Mr Warner also says that Trinidad and Tobago has to encourage foreign investment, which will provide jobs. However, he says that the current problem is that these companies will not be able to repatriate their profits given the shortage of foreign exchange.

But, surely, the uppermost idea in inviting foreign investment should be to build exporting entities in Trinidad and Tobago, which earn foreign exchange, from which its profits in US$s are assured. We should not be inviting foreign investment into Trinidad and Tobago if their repatriated profits depend on foreign exchange earned by others.

When asked why did Massy sell its telecommunications section to TSTT (a telecommunication provider in Trinidad and Tobago), Mr Warner said that, though Massy now has a substantial amount of cash in its hands, its corporate policy is not to invest in or hold investments where the return is years into the future. Hence, Massy is also looking for investments in, say, Colombia, Costa Rica or Panama, in what it is accustomed to – investing in fast returns – i.e. in shops, motor car sales, energy services; nothing relating to innovation and creating global competitive companies.

Mr Warner also complained that, though Massy has liquid cash available, it is difficult to use this to invest abroad in countries whose economies are doing well, given the shortage of foreign exchange locally. Massy also intends to open a cambio – money exchange outlet – in Trinidad and Tobago, hopefully to help earn, buy, some foreign exchange.

Mr Warner went further, saying that local investors will also move capital to projects that earn US$s but this may not be in Trinidad and Tobago, hence a possibility of capital flight. However, he says, not everyone will be able to get their capital out.

The corporate policy of Massy is not about higher risk investment in Trinidad and Tobago for longer term returns, but about low risk, short term returns on investment in economies that are doing well.

This is indeed a confirmation by one of our major private sector players of the prevailing risk averseness of its class, a situation that has been encouraged by the history of the plantation in the region: So much so that the current private sector does not see its role as the lead player in the global diversification of our economy by the use of innovation in technology and market development.

The TTMA tells us they need incentives instead to purchase plant and machinery to increase productivity. The recent acquisition of Berger Paints in the region by Ansa MCal, another regional conglomerate, speaks to this mindset. This is not an unusual situation for developing countries. For example, the Chilean government had to partner with a foreign investor to build its highly successful salmon farms, in order to teach its private sector about economic diversification based on innovation.

Mary K King
St Augustine
Reads : 1998

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