The Report: Trinidad & Tobago 2015
As the most important Caribbean producer of oil and gas, Trinidad and Tobago (TT) has experienced slow but stable economic growth, averaging 1% from 2000 to 2013, according to the Central Bank of Trinidad and Tobago (CBTT). Economic growth is expected to accelerate in 2014, with the CBTT and the IMF forecasting a figure of 2.5%.
Country Profile
Discovered by the Spanish at the end of the 15th century, Trinidad was seized by the British 300 years later, while the smaller island of Tobago was fought over by the Spanish, British, French and Dutch. With uninterrupted democratic rule since independence in 1962, T&T is today characterised by strong democratic traditions, an ethnically diverse population, and a vibrant local cultural and sporting life. Comparatively wealthy and economically diverse with active finance, manufacturing and transport sectors, T&T is also the largest Caribbean oil producer and the world’s sixth-largest exporter of LNG. While Tobago is a haven for tourists, with a laid-back atmosphere, Trinidad is famous for mixing business – particularly in the oil and gas sector – with pleasure, most famously in the form of the annual carnival. This chapter contains interviews with Kamla Persad-Bissessar, Prime Minister; Irwin LaRocque, Secretary-General, CARICOM; and Cecilia Álvarez-Correa, Colombian Minister of Trade, Industry and Tourism.
Explore chapterEconomy
With a hydrocarbons-based economy, T&T ranks highly on a number of economic indicators, despite its small size. According to estimates from the IMF, T&T’s per capita income was $21,310 in 2014, the third-highest level in the Americas, after the US and Canada. The World Bank categorises T&T as a high-income nation, while the World Economic Forum classifies it as an innovation-driven economy. The strength of T&T’s energy sector has enabled the country to maintain a stable and strong currency, and post persistent current account surpluses. However, with weaker oil and gas prices and reserves expected to be exhausted by 2025-30, according to the World Bank, economic diversification will be high on the agenda for policymakers. Though lower hydrocarbons prices are set to reduce government revenues, the country’s economic fundamentals should remain strong in 2015 and beyond. This chapter features interviews with Larry Howai, Minister of Finance and the Economy; Vasant Bharath, Minister of Trade, Industry, Investment and Communications (MTIIC); and Gerard Johnson, General Manager of the Caribbean Country Department, Inter-American Development Bank (IDB).
Explore chapterEnergy
With commercial production of crude oil dating back to 1908, T&T’s long history in the energy industry has helped the country punch above its weight in regional and global terms. In 2013 T&T produced 1.5trn cu feet of natural gas, making it the world’s sixth-largest LNG exporter and largest LNG supplier to the US. T&T is also the world’s largest exporter of ammonia and second-largest exporter of methanol. In recent years natural gas has overtaken oil in importance, with crude oil production declining from a high of 144,674 bpd in 2005 to 81,278 bpd in 2013, reflecting maturing oilfields and operational challenges. Even so, the oil and gas sector remains a key pillar of T&T’s economy, accounting for 42% of GDP in 2014, 80% of exports from April 2013 to May 2014, and 34.8% of fiscal revenues for the period from October 2013 to September 2014. This chapter contains interviews with Kevin Ramnarine, Minister of Energy and Energy Affairs; Norman Christie, Regional President, BP Trinidad and Tobago (BPTT); and Indar Maharaj, President, National Gas Company (NGC).
Explore chapterBanking
The commercial banking sector is one of the many sources of stability in T&T’s economy. With eight long established banks, backed by major international groups or the government, T&T’s banking system is well capitalised, well regulated and conservative in its lending practices. According to the Central Bank of T&T, at the end of October 2014 the eight banks had total assets within the country of $20.2bn, with deposits and lending (except for mortgage loans) growing at single-digit rates. Though the system is awash with liquidity, efforts by the central bank to encourage a reduction in excess reserves have already had an impact in the first half of 2015. At the same time, downward pressure on net interest margins will continue to be an issue, with banks likely to remain focused on boosting fee income and/or controlling costs to maintain growth.
Explore chapterCapital Markets
Conditions in T&T’s capital markets continue to be shaped by the central bank’s tightening of monetary policy. In line with the expectations of the financial sector, the central bank moved ahead with a fifth consecutive increase in its repo rate of 25 basis points to 4% in late May 2015. The increases have begun to have an impact on domestic money market rates, or commercial banks’ prime lending rate, which rose to 8% in May 2015, up from around 7.5% before the repo rate hikes. Activity in the primary and secondary markets was moderate in the first nine months of 2014, with four issuers raising $639.93m through six separate securities in the primary market. In the secondary market, government bonds with a total value of $140.2m were traded. With the exception of government bonds with short to medium tenors, yields generally moved in an upwards direction.
Explore chapterInsurance
In global terms, T&T ranks as a small but well established market for insurance. According to figures from the Association of T&T Insurance Companies, general insurers wrote gross premiums of around $494.1m in 2013, while life and health insurers wrote gross premiums of about $524.3m. Over the previous five years, the general trends in profitability have been favourable. Life insurance companies’ expense ratio declined from 40.6% in 2009 to 36.4% in the period to September 2013, while return on equity for general insurance firms increased from 16.7% to 18.6%. At 3.7% in 2013, insurance penetration in T&T is broadly in line with regional averages, suggesting further room for growth. A new insurance bill set to be passed in the near term will incorporate a minimum continuing capital and surplus requirement regime, and contribute to the strengthening of the industry’s legal framework. This chapter contains an interview with Ravi Tewari, Group CEO, Guardian Holdings.
Explore chapterTourism
Though tourism plays a significant role in T&T’s economy, unlike other Caribbean economies, it is not the most important sector. Its total contribution to GDP in 2013 was $1.26bn, or 3.1%, and the industry directly and indirectly employed 27,500 people, or 4.5%. In the past decade, arrivals have fluctuated between a low of 388,000 in 2010, reflecting the global slump in 2008-09, and a high of just over 460,000, achieved in 2004-05, before the financial crisis. In 2014 a total of 461,267 visitors came to T&T, down 1.2% from the previous year. Even so, tourism remains the top services sector revenue earner, generating $1.29bn worth of receipts in 2013, equivalent to 4.8% of total exports. In the light of the recent rapprochement between the US and Cuba, the larger Caribbean tourism industry could be set to see some realignment in the coming years. This chapter contains an interview with Keith Chin, CEO, Tourism Development Company (TDC).
Explore chapterConstruction & Real Estate
An important contributor to T&T’s economy, the construction industry accounted for an estimated 5.2% of GDP in 2014 and 15.6% of the labour force, according to T&T’s Central Statistical Office. 2014 was a particularly good year for the sector, which grew by 7.1%, outperforming the wider economy for a second consecutive year. In 2015, the energy-related construction sector is expected to feel the effects of the downturn in oil and gas prices, though public sector building and demand for infrastructure works are likely to remain strong. Meanwhile, in the real estate sector, the political uncertainty arising from the forthcoming election is likely to put a damper on the volume of transactions and have a slight effect on prices, while the supply of affordable housing for low- and middle-income families is expected to remain below pent-up demand through 2015 and 2016. This chapter contains an interview with Roodal Moonilal, Minister of Housing and Urban Development.
Explore chapterIndustry
Although an important part of T&T’s economy, the manufacturing sector’s performance has been disappointing in recent years. According to the T&T Manufacturers’ Association, the value of manufacturing output declined at an average annual rate of 4.3% from 2010 to 2014. In its “Review of the Economy 2014”, the government noted that economic activity in manufacturing fell by 5.8% in 2012, 1.8% in 2013 and was expected to register a further contraction of 0.7% in 2014. Even so, T&T has the largest manufacturing sector in the Caribbean, with an estimated output value of around $1.2bn in 2014. The second-largest non-oil sector within the economy, manufacturing represented about 8.5% of GDP in 2014, and directly employed more than 60,000 people. Following the fall in global hydrocarbons prices, 2015 is expected to be a challenging year for the industry, marked by fiscal austerity and a potential reduction in household consumption. This chapter contains an interview with Racquel Moses, President, InvesTT.
Explore chapterTransport
The transport sector is becoming a priority for the government of T&T, as it works to establish a network of transport links capable of supporting economic growth throughout the country. A series of projects are now under way, including the Galeota Port project and the San Fernando-Mayaro highway, both of which are expected to support economic development and contribute to the decentralisation of activity. Though lower hydrocarbons prices and policy uncertainties connected to T&T’s 2015 election are having an impact on transport and logistics, the outlook for the sector remains positive, with significant investment in infrastructure either currently moving forward or already in the planning stages. The trends supporting passenger and freight demand are set to continue, and while the next government may reassess some policies, it will be able to do so in the context of moderate growth. This chapter contains an interview with Michael DiLollo, CEO, Caribbean Airlines.
Explore chapterTelecoms & IT
The telecoms and broadcasting markets in T&T are both dynamic and profitable. The two major mobile operators – Digicel and TSTT, operating under its Bmobile brand – are benefitting from rapid growth in mobile broadband internet access. A shake-up in the duopoly is expected following a government announcement in 2014 inviting bids for a third mobile licence, as well as offering spectrum in the 700-MHz, 800-MHz and 1900-MHz bands. While industry revenues are likely to continue growing at a moderate rate, the move from a duopoly to one with three main players is expected to exert downward pressure on rates and accelerate the move from voice to VAS, with operators seeking new ways to promote mobile usage. In the ICT sector, reduced government revenues resulting from the fall in oil prices could have an impact on some of the ICT development programmes currently under way. This chapter contains an interview with Cris Seecheran, CEO, Telecommunications Authority of Trinidad and Tobago (TATT).
Explore chapterEducation & Health
Buoyed by revenues from the oil and gas industry, education is one of T&T’s strengths. In its “Global Competitiveness Report 2014-15”, the World Economic Forum ranked T&T 44th for the general quality of its education system, 43rd for primary education, 35th for maths and science, and 33rd for its management schools, out of 144 countries. Unsurprisingly, the government has made education a priority, allocating 15% of total spending to the sector in the 2015 fiscal year. Meanwhile, as the prevalence of non-communicable diseases rises, T&T’s public health care system is working to expand services while coping with labour shortages. A move to a National Health Insurance System, in which health care is largely funded by a levy on the working population, is being contemplated by authorities. In the meantime, deficiencies in the public system are likely to generate opportunities for health insurers as wealthier Trinbagonians seek better and faster care.
Explore chapterAgriculture
The agricultural sector accounts for a tiny portion of T&T’s overall economy. It contributed an estimated 0.5% of GDP in 2014, according to the UN’s Food and Agriculture Organisation, while agricultural exports contributed just 0.01% of GDP. In labour terms, the sector accounted for 3.5% of total employment in 2013, or some 22,000 jobs, according to the central bank. While this is largely in line with other Caribbean island states, it exposes T&T to a degree of vulnerability in terms of its import bill. To help mitigate this risk, the country has been working to bolster domestic production levels to achieve food security. Though production increases remain limited by structural inefficiencies, weaker oil prices have the potential to reinvigorate non-energy sectors such as agriculture in the years ahead.
Explore chapterTax
This chapter provides an overview of T&T’s tax regime, covering areas of particular interest to investors such as corporate and individual income tax, value-added and Customs tax, as well as tax exemptions, among other aspects. In addition, it features a viewpoint with Angela Lee Loy, Chairman, Aegis Business Solutions, on the tax incentives supporting economic diversification.
Explore chapterLegal Framework
Featuring a viewpoint with Mark Laquis, Managing Partner, Pollonais, Blanc, de la Bastide & Jacelon, on the financial services regulatory framework, this chapter provides an overview of T&T’s legal framework, covering a range of topics from intellectual property rights to labour laws and immigration, among others.
Explore chapterThe Guide
This chapter contains information on hotels, government agencies and other listings, as well as useful tips for visitors on a range of topics such as visa requirements, currency, communications, dress codes and business hours, among others.
Explore chapterTable of Contents
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