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close this book The Courier N°139 May- June 1993- Dossier: Factors and development - Country Reports: Trinidad and Tobago : Zimbabwe
close this folder ACP-EEC
close this folder Trinidad and Tobago
View the document Refocusing the energy
View the document 'Trade reforms essential', says Prime Minister Patrick Manning
View the document Open for business
View the document Energy will remain centre-stage as big changes are made to the set
View the document Emergency treatment for the sugar sector
View the document Profile
View the document Opposition leader warns against alienation
View the document Tobago wants more tourists but not too many!
View the document Cooperation with the European Community

'Trade reforms essential', says Prime Minister Patrick Manning

In 1986, after 30 years in Government, the People's National Movement (PNM) of Trinidad and Tohago was heavily defeated in a general election, retaining only three seats in the 36-member House of Representatives. Five years later, they swept back to power with a six-seat majority, an achievement due in no small measure to the efforts of the PNM's youthful leader, Patrick Manning.

Of course, winning elections is one thing. Winning the battle for economic prosperity - as democratic leaders throughout the world have discovered - can be a much more cliff cult proposition. While Trinidad and Tobago may be a prosperous country in ACP terms, its heavy reliance on oil and the related energy sector means that it has been riding an economic roller coaster in the three decades since independence and this has thrown up some formidable economic challenges.

Today, the free-market philosophy prevails and strenuous efforts are being made to adapt to the new order. Protectionism is out and free trade is in. State enterprises are being 'divested' and foreign investment encouraged. Fiscal responsibility is stressed and social programmes are under pressure as a result.

In this interview, Prime Minister Manning explains his government's economic strategy to The Courier and sets out his vision for the future.

- Prime Minister, the Trinidad and Tobago economy has performed sluggishly since the end of the oil boom. How confident are you that the Goyernment's policy of economic liberalisation will lead to sustainable growth ?

- I am very confident about it. In fact let's argue it from the other standpoint. If we do not have a trade reform programme, we will find ourselves in a situation where the economy will collapse. We will not be able to trade with anyone and that is not an option available to us.

In the context of trade, we have had to pursue a pattern of reforms that gives our country the best chance of economic survival and revival. We have stretched these reforms out over a period and are now coming to the end of the process - it should tee completed by the end of 1993 or in early 1994. We are also actively taking steps in a number of sectors to ensure economic growth. Principal among these is the energy sector, in respect of which we have made a number of announcements recently. And we are seeing quite a bit of interest and investment coming in as a consequence of our actions. Also, we are moving ahead in agriculture and in a number of other sectors. We are quite confident that we are on the right track.

- How realistic do you think it is to pursue a diversification policy in an increasingly open world market. You now have policies which, within five to seven years, will reduce the tariff barriers very signifcantly for entry to the Trinidad and Tobago market. Are you convinced that local companies outside the energy field will be able to compete?

- Companies in the energy field have always been able to compete. Trinidad and Tobago is the second largest exporter of ammonia in the world. We have five large plants here and our domestic consumption can take only a very small fraction of the output of only one of those plants. We are also competing quite successfully in methanol, urea, iron and steel. Now that is the energy sector as opposed to merely the oil sector and I think it is important to make the distinction. One of our strategies is to continue diversification within the energy sector where we have already proved ourselves of world class and competitive. We will continue in that direction and have no doubt that our efforts will continue to bear fruit. We also have a major thrust, of course, specifically in the oil sector.

Diversification, in our view, should never mean failing to maximise the benefits to the country of its natural resources. If oil is a natural resource, our responsibility is to maximise the benefits from it. The same goes for natural gas. But while we are doing that, we are also paying greater attention to development in other areas such as agriculture, tourism and industry more generally. Our view is that the jobs the country requires can only be created by a large number of firms - mainly small firms - and we are pursuing a policy designed to achieve that.

- Another sector of the economy which is very important and which appears to be facing long-term decline is the sugar industry. What do you think is the future for sugar?

- Early last year, the management of Caroni Ltd, 1worker representatives and the Government sat around a table and hammered out an arrangement designed to ensure the survival and growth of the sugar industry over the medium to long term. We have started to put that programme into place and expect to see viability in about seven to eight years' time. On the basis of the work that has been done, I have every confidence that we will see some progress.

At the moment, our sugar industry is very uncompetitive and it survives only because of our arrangements with the European Community and - to a very minor extent - because of the access that we have to the US market. What we now have to do is recognise, in the changes taking place within the EC itself and, more specifically, in its relationships with the ACP countries, the possibility that these special arrangements will come to an end. There is no reason to believe that they will last forever. That means that we have to move to viability and competitiveness.

- Your Government is committed to the divestment of a wide range of state owned enterprises and agencies. How is this programme progressing and how far do you intend to take it ?

- Our economic policy was clearly set out in a document that we published in 1988. In this, we outlined the role of the state essentially as that of facilitator but also as that of investor in certain circumstances. We feel that the state should have a participating interest in industries of strategic importance, in public utilities and in certain other prescribed areas. Beyond that, we believe that it should, in an orderly fashion, divest itself of its current interests. We have, in the initial phase, identified 27 companies for divestment and the first two went through this process last year. You know that there is a learning curve involved here and it is bound to take some time for us to get the handle of it but the process will accelerate this year.

We are about to undertake divestment in the methanol company, which is currently 100% state-owned, but we have a different objective in mind in this particular case. Our aim is to increase our industrial base by adding an MTBE2 plant to the existing methanol facility. What we are proposing to do, therefore, is find a joint venture partner. We will put in, as assets in the joint venture company, our holdings in the methanol plant while our partners would put in an appropriate amount of money. This will allow expansion into MTBE production with the Government having a reduced shareholding in the new set-up and our joint venture partner owning the rest. This kind of approach is consistent with our policy of divestment.

In other areas, we are getting out altogether. For example, in the ammonia/ urea sector, Fertrin, 3 which has two ammonia plants, is owned 51% by the state and 49% by Amoco. The state also owns a urea facility which takes the entire output of one of the ammonia plants. Both ourselves and Amoco are seeking divestment of all of our holdings in these companies. In effect, we are looking to pass them over to a third party - for an appropriate fee of course. We don't consider the industry to be of strategic importance and, therefore, we can get completely out of it. So you can see that

the pattern of divestment we are pursuing depends on the particular circumstances in each case.

- A number of people I have spoken to say that 1993-94 will be a crucial period for Trinidad and Tobago because debt repayment is reaching a peak and this will impose severe constraints on the budget. What are you doing, at this cliff cult time, to preserve the social equilibrium of the country ? You clearly have a serious unemployment problem.

- We are trying to do quite a bit in that regard. First of all, we have increased our allocation to unemployment relief programmes this year by almost 50%. The effect of this will be to increase, by about the same percentage, the number of jobs available under these programmes. Secondly, by putting Caroni Ltd on a sounder footing, we are helping to stabilise the social situation in central Trinidad. Thirdly, we are embarking on job creation by stimulating the construction sector. Fourthly, we are working on a programme of land distribution, giving people an opportunity for the first time to get into productive agriculture. The beneficiaries of this scheme include bona fide farmers and high-quality agriculturalists who have been educated at local institutions. Fifthly, we are pursuing a policy which is designed to make Trinidad and Tobago the business and financial centre of the Caribbean, and again that means job creation. Sixthly, in the social sector itself, we are entering this year on a major programme of training for young people. By the end of 1993, we believe that this could be catering for about 5000 persons, rising to 10 000 in 1994 and subsequent years. We are also embarking on a programme of public works focusing mainly on community centres. Finally, there are the unemployment relief measures which we put in place last year and will continue this year. We have given priority to the maintenance of schools under this programme.

- Turning to a political question, what effect do you think the attempted coup in 1990 has had on the country ?

- It is hard to say. I know there is a greater sense of vigilance in the society itself. There were, of course, fires in Port of Spain, and a number of buildings were burnt out. As a consequence, we are now moving to rebuild so, in a practical sense, you will see some activity arising out of the events of 1990. That apart, I cannot see that there has been any major effect.

- Would it be fair to say that it was something of an aberration which does not really reelect on society more generally ?

- I think that is correct. You know we have a history of democracy and I don't get the sense that the people would like to see any system other than a democratic one. It was an aberration, I accept that, but one which could have been spawned out of high unemployment and that is something that we have to recognise.

- Tourism is relatively underdeveloped in this country yet, in the course of my discussions here, the subject keeps cropping up, even when I am talking to people who aren't involved in the sector. I get the impression that there is quite a lot of hope being pinned on the development of tourism.

- That is true but I should say that the Government's expectations for this industry are far more modest than those of a lot of others. We have never had a history in Trinidad - as opposed to Tobago - of major involvement in the tourism sector. One of the reasons for this is that there is no consensus about the pattern that tourist development should take. What we now feel is that there are opportunities based on eco-tourism and on the cultural diversity of the people of Trinidad and Tobago. It is, after all, a very rich culture. We see a future in 'evens tourism' as exemplified in last year's very successful 'Carifesta'. Arising out of that, we are now contemplating some kind of cultural event, either annually or every two years, to be held in August, which is in the low season for tourism. At the same time, we are trying to marry that with opportunities in the sporting field, taking advantage of the fact that we have some very good sports facilities. And of course, there is Carnival.

- One final question Prime Minister. What is your view of current relations between Trinidad and Tobago and the European Community?

- We have not been able to draw down our allocations under the Lome Convention and that has resulted in a lot of dialogue between us. But we are now moving more expeditiously on that front and, overall, I think relations are quite good. Interview by S.H.

Interview with Foreign Minister, Ralph Maraj