Interview: Patricia Ghany
In what ways have the recent fiscal and tax changes affected the business community?
PATRICIA GHANY: We understand that taxes are a source of revenue for the state, but we also believe that it may have the reverse effect, especially when there is a shortfall of revenue from other sources. Overtaxation can bring about an undesirable situation where private investment is broadly discouraged and, as a result, overall revenues fall. In the global environment where T&T has to compete with the advantageous fiscal and tax policies of our regional neighbours – including the reduction of corporate tax rates in the US – there is a feeling that our economy is not as investment friendly as it once was. This perception is linked to our fiscal and tax policies in general, as well as our current restriction on the repatriation of profits in US dollars in particular. It is normal for foreign investors to want the option of having their profits repatriated or reinvested abroad. In this regard, T&T is not as appealing compared to destinations where this is allowed. This has the potential to impact inflows of investment into the country.
How is T&T adapting to digitisation challenges?
GHANY: Digitisation should not be seen as a process that will happen in the future – it is already here. Our mindsets have to change, and the country as a whole should understand where it is positioned in the global chain of goods and services. The main concern is how to gear education towards producing a labour force that can easily adapt or be trained for upcoming jobs. This is particularly relevant in the case of T&T, where our over-reliance on oil and gas has made many wary of careers outside of the hydrocarbons sector. In this regard, it is important to create a space for younger generations to thrive in the education system.
The older generations will also have to adapt. Much of this process is already being driven by the banking sector. Banks are forcing many to change the way they interact with the financial sector or how they run their businesses, particularly smaller companies. This has undoubtedly opened up a broader conversation within the private sector, where transformations initiated by the banking sector could be extrapolated to other areas, such as e-government or e-commerce. Digitisation like all other structural reform processes can be disruptive, but for T&T to move towards a place where our economy can continue growing, it is necessary to embrace and adapt to the changes it will bring.
How can the government’s economic diversification policies be effectively implemented?
GHANY: T&T’s economy has reached a turning point where we can no longer afford to be exclusively dependent on international market cycles and the fluctuations of oil and gas prices. This is particularly relevant now, since the US, a traditional oil and gas importer, became a net producer of shale oil and gas. In addition, we must be aware that the country’s hydrocarbons resources are finite. Diversifying our economy is something we need to achieve, either proactively or reactively. That said, economic diversification should not be limited to forms of import substitution, but instead be a legitimate means to generate complementary revenue and foreign exchanges outside of the oil and gas industry. While tourism, maritime services, aviation, agriculture, financial intermediation and ICT have all been identified as sectors that could drive the diversification process, focusing on all of them may not be a feasible and efficient policy.
I think that our primary effort should be to narrow our focus to a more limited number of areas. Once we do that, we can provide these sectors with the necessary infrastructure and incentives to flourish. This will involve greater dialogue between the government and the private sector, since the input of both sides will be necessary to determine what policies should be favoured and how the skills of the local population can be most effectively channelled towards these sectors.
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