Following a period of subdued activity, a steady flow of projects in 2019 have seen Trinidad and Tobago’s construction industry experience healthier growth in recent years. However, obtaining private sector funding remains a challenge, due to a decline in banks’ lending activity. Nevertheless, in November 2019 Glenn Mahabirsingh, president of the T&T Contractors Association, told local media that the flow of projects in the industry was “reasonable”, largely as a result of public spending on roads, coastal infrastructure, schools, hospitals and housing.
Structure & Oversight
The main government body responsible for overseeing the construction sector is the Ministry of Planning and Development (MPD), which identifies four key pillars: economic, social, spatial and environmental development. Meanwhile, the Town and Country Planning Division, a branch of the MPD, is charged with processing and approving all planning applications. Another important sector player is the Ministry of Works and Transport (MWT), which is one of the country’s largest state departments. The MWT is responsible for the maintenance of the road network, as well as the construction of government buildings.
There are a number of other public sector development agencies, including the Urban Development Corporation of T&T, which manages civic projects in urban spaces. As part of the government’s National Development Strategy 2016-30, the state-owned company is carrying out renewal projects in Port of Spain, San Fernando and 13 other major urban centres. The National Infrastructure Development Company manages government infrastructure projects such as road construction, drainage, flood protection and land reclamation, while the Housing Development Corporation (HDC), part of the Ministry of Housing and Urban Development, oversees the country’s housing construction strategy, research, property management and mortgage financing.
Performance & Size
According to the Ministry of Finance’s “Review of the Economy 2019” report, the construction sector accounted for 5.8% of GDP in 2018, a slight decrease from 6% the previous year. However, the sector’s value increased from TT$9.1bn ($1.3bn) to TT$9.4bn ($1.4bn) in this period. The public sector forms the backbone of most construction activity, with the majority of investment allocated to road and coastal development projects. This is particularly the case in election years, which typically see a rise in resources allocated to construction. The year 2020 was no exception, with an estimated TT$259.3m ($38.3m) allocated to the MPD, up from TT$229.6m ($33.9m) in 2019. In December 2019 the Central Bank of T&T highlighted its positive outlook for the construction industry, citing increased local cement sales as a sign that the sector is responding to the rise in infrastructure spending.
Global Ranking
In the World Bank’s “Doing Business 2020” report, T&T ranked 105th out of 190 countries overall and 126th in the category of dealing with construction permits, with a score of 64.1 out of 100. This metric measures the average time taken to build a warehouse, including obtaining all relevant construction permits and utilities connections. In T&T this required around 16 separate procedures and 254 days, whereas the regional average in Latin America and the Caribbean was 15.5 procedures and 191 days. However, the cost of warehousing in T&T is significantly lower compared to the rest of the region, at 0.1% of the building’s total value, compared to the regional average of 3.6%.
Building Standards
Although located south of the Caribbean hurricane belt, T&T still experiences heavy rainfall from tropical storms and lies in a seismically active area. In August 2018 the country experienced a 6.9-magnitude earthquake, which caused extensive damage to the western part of Trinidad. This highlighted the lack of compulsory formal building codes, with 80% of buildings at risk of damage from earthquakes.
Many architects, contractors and engineers adhere to the International Code Council’s International Building Code (IBC), which was adopted in 2015 by the government. However, due to the fact that the state was required to pay $7000 per year for the right to use the code, it was not renewed. This decision was met with some criticism from sector players, as the IBC addresses the effects of flooding and adverse weather conditions.
Coastal & Flood Protection
Despite a lack of formal building regulations, the country has responded to environmental concerns by implementing a series of measures to improve drainage and protect communities and businesses from rising sea levels. The Coastal Protection Unit has overseen eight key projects under the Critical Coastal Protection Programme. The MWT reported that as of October 2019 two initiatives – the San Souci Shoreline Stabilisation Works and the Cocos Bay Shoreline Stabilisation Works – were 68% and 84% completed, respectively, suggesting that they will be finalised in 2020. The other projects in progress include the Cap-de-Ville Shoreline Stabilisation Works, which was 17% completed as of October 2019, and the second phase of the Matelot-Grande Riviere Shoreline Stabilisation Works, which was 46% completed.
According to the 2020 budget statement, 369 desilting projects were completed in 2019, with an additional 150 in progress, and 219 drainage initiatives were completed in the first six months of 2019 as part of the government’s flood maintenance strategy. Additional investment is being directed to rebuilding embankments in areas such as the Caroni district, which is particularly vulnerable to flooding, and improving drainage and water flow in Port of Spain to control the tidal current in the capital.
Airport Expansion
The country’s largest infrastructure development project is the expansion of Tobago’s only airport, Arthur Napoleon Raymond Robinson International Airport (TAB). The new terminal, which will be located adjacent to the existing site, is set to provide crucial additional capacity for the airport, which receives a large amount of international traffic and is an essential part of the island’s tourism industry (see Transport & Logistics chapter). According to the 2020 budget statement, the project is scheduled to be completed in mid-2021. However, the project has experienced some difficulties, as the expansion requires the compulsory acquisition of 21.4 ha of property. In January 2020 local media reported that the National Infrastructure Development Company (NIDCO), the state-owned enterprise overseeing the expansion, agreed to receive a $300m loan from Canada’s Scotiabank in order to purchase the land surrounding the airport. Although landowners will be given compensation, there has been some opposition from residents, particularly as NIDCO failed to deliver on its claim that it would process the repayments starting from October 2019.
Demand Drivers
In light of lower government spending, many projects have been scaled down from their original plans. As a result, the government has largely focused spending on the construction, upgrade and extension of the road network, a crucial part of the country’s infrastructure as there are more than 1m vehicles registered in T&T. Major projects include the TT$7.4bn ($1.1bn) San Fernando-Point Fortin Highway in the country’s south-west, which is expected to be completed in late 2020; the 33-km extension of the Churchill Roosevelt Highway to Manzanilla; and the Toco-Valencia roadway scheduled to open in 2021. Another large-scale initiative is the TT$221m ($32.6m) Curepe Interchange project, which is set to be completed in March 2020. The interchange will eliminate the need for traffic lights and should significantly reduce travel time.
Social Infrastructure
Public spending on social infrastructure such as housing, hospitals and schools has also remained relatively strong in recent years. The 2020 budget allocated TT$1bn ($147.7m) for the construction of 27 new schools, while the Accelerated Housing Programme aims to build 6000 homes by December 2020 and an additional 3000 units per year from 2021.In terms of health infrastructure, the 100-bed Sangre Grande Hospital is scheduled to be completed in November 2021, providing care to around 110,000 people in the surrounding rural areas. The project was funded largely by the Austrian government, and construction was managed by Austrian firm Vamed Engineering. Tobago will also see the completion of the new $60m Roxborough Hospital in 2021.
Sangre Grande
One of the country’s most underdeveloped regions, Sangre Grande, has seen an uptick in construction activity, particularly as part of the government’s road-building strategy. In addition to the Churchill Roosevelt Highway and Toco-Valencia roadway, another upcoming project is the construction of a new port at Toco, which will provide an additional link from Trinidad to Tobago. In August 2019 local media reported that, due to the reduction in travel time between Port of Spain and Sangre Grande, the number of homes purchased in the area is beginning to rise in anticipation of the highway’s completion. Moreover, at least five developers have shown interest in undertaking major housing projects in Sangre Grande, providing a boost to the local workforce. The construction of new roads is also expected to open up additional land in the east and north-east of the region for the development of hotels, restaurants, retail units and warehouses. The surge in construction activity in the area prompted local media to describe Sangre Grande as the country’s “next economic frontier”.
Financing
Although private sector investment remained subdued in 2019, the sector has seen a steady flow of government funding for infrastructure projects. The Public Sector Infrastructure Programme is expected to receive TT$2.3bn ($339.8m) in 2020, a slight increase on the previous year’s TT$2.2bn ($325m). According to the 2020 budget statement, the government plans to raise the HDC’s budget through a TT$1bn ($147.7m) fixed-rate bond, which will allow more units to be constructed and provide citizens in the low- and medium-income brackets with greater access to affordable housing.
Belt & Road
Several infrastructure projects in T&T are also received funding and assistance from international investors. In May 2018 Prime Minister Keith Rowley signed a memorandum of understanding with the government of China, which committed T&T to participation in the Belt and Road Initiative (BRI), with the aim of boosting infrastructure investment, China’s large-scale infrastructure programme. The BRI was originally planned to develop road and maritime connections on the former Silk Road, but its scope has expanded to include other parts of the world, including the Caribbean.
Although the full scope of the agreement has not been made public and only a small number of initiatives had been announced as of January 2020, the major project currently under development is a $500m dry-dock facility in the south-western port of La Brea, which is being built in partnership with the China Harbour Engineering Company. In addition, the Beijing Construction Engineering Group (BCEG) is leading a project to build the Phoenix Park Industrial Estate in nearby Point Lisas, with a scheduled commissioning date of September 2020. According to local media, the government paid the BCEG $104m to develop the park, which is expected to attract some 60 Chinese companies in the long term, as well as firms from Central and South America.
Building Materials
The majority of building materials in T&T are imported, which can cause delays in the construction process due to excessive bureaucracy and difficulties clearing Customs. According to the most recent figures from the Observatory of Economic Complexity, a visualisation engine for global trade data, the country’s top-five imported building materials in 2017 were iron piping ($38.2m), coated flat-rolled iron ($31.4m), raw iron bars ($26m), prefabricated buildings ($25.9m) and unglazed ceramics ($14.6m).
Local companies are also faced with the challenge of obtaining foreign currency, impinging on their ability to import building materials. “The lack of foreign currency is often an issue for local contractors,” Roberto Rios Cordero, design coordinator at US-headquartered firm AECOM, told OBG. “Larger multinational companies have to support their local partners by supplying the resources they need.”
Outlook
Construction activity still remains confined to a small number of projects, which are largely driven by public sector spending. Nevertheless, major developments such as the TAB airport extension, road network upgrades and housing construction initiatives should help the sector to recover, particularly with a slightly higher state budget in 2020.
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