Interview: Jorge Familiar
How can Trinidad and Tobago improve its ranking for ease of doing business?
JORGE FAMILIAR: T&T has shown great leadership in improving its business climate in recent years. The Doing Business 2015 report featured the Caribbean country among the top 10 improvers worldwide. Among its key achievements, T&T succeeded in making insolvency resolution easier by introducing a new restructuring proceeding. It also strengthened the rights of secured creditors during reorganisation procedures and made starting a business easier by introducing online systems for employer and tax registration. The slightly negative change in ranking in the 2016 report is mainly due to other economies having reformed at a faster pace and because obtaining an electricity connection became more costly due to the reintroduction of connection fees.
To improve its ranking, T&T should improve some of its business regulations. In the area of contract enforcement there is no dedicated court for commercial cases and initial complaints cannot be filed electronically through an online platform. As for property registration, the land registry does not currently deliver legally binding documents on property ownership within a specific timeframe and there is no separate complaints mechanism.
What type of diversification initiatives will most immediately benefit T&T’s economy?
FAMILIAR: With the end of the commodity boom, resource-rich countries like T&T need to focus on diversifying their economy and reducing uncertainty driven by trade volatility. Moving towards a knowledge-based economy could be one strategy that achieves this, and T&T has launched an initiative to diversify the skill sets of its citizens. It currently provides free or subsidised tertiary education to about 7500 graduates a year, with the objective of increasing skills and productivity in strategic areas of growth.
In what ways can T&T’s policymakers intervene structurally to ensure more inclusive growth?
FAMILIAR: I see three main areas to promote inclusive growth in T&T. First, the country has the opportunity to use rents from natural resources and leverage its Heritage and Stabilisation Fund to invest in education and infrastructure while maintaining fiscal discipline. Second, a green growth strategy can also play an important role in promoting inclusive growth by boosting investment and job creation in the tourism and construction sectors. Lastly, continued efforts to create an environment that attracts private investment will be critical. This means providing an enabling regulatory environment, establishing greater public sector efficiency, improving public financial management and strengthening fiscal policies.
What policies can be implemented to encourage the development of regional supply chains?
FAMILIAR: One step would be for export-promotion authorities to clearly publicise the rules agreed on for different products in the region’s multiple trade deals. However, the idea that intra-regional trade is low in Latin America is a myth. Our research has shown that in 2013, the average Latin American country had active export relationships with close to 88% of its possible regional partners. But this does not mean that our intra-regional trade is as developed as it could be. The region would benefit from policies that favour a more vigorous participation in intra-industry trade and in global value chains. Part of that effort would need to focus on closing gaps in logistics and infrastructure to reduce obstacles to intra-regional trade. The average logistics costs are three to four times higher than in OECD countries. Another, more structural issue is that Latin American countries tend to integrate into global value chains only at the beginning or the end, rather than in the middle, which is where we have found the most potential for growth.
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