Home' Trinidad and Tobago Guardian : October 5th 2014 Contents T&T s energy wealth allows the
Government to delay the
structural reforms---in partic-
ular in the public sector---that
the country needs to continue
developing, says Elie Canetti,
the head of the last two International Monetary
Fund missions to Port-of-Spain.
Speaking at the InvesTT conference at the
Council on Foreign Relations two Thursdays
ago, Canetti commended T&T for its macro-
economic stability with a low debt load, low
inflation and high levels of employment, but
said the country faces twin challenges that
come from being an energy-dominated econ-
omy: the need to save more of the current
earnings for future generations and laying the
basis of a post-oil and gas economy.
"One of the things that the IMF missions
to T&T has focused on is the need for more
structural reforms to make the country more
investor friendly to attract non-energy invest-
ment," said Canetti.
Among the major challenges the country
faces is the need for structural reform to
improve the efficiency of the government and
the performance of the public service.
Canetti said the country s energy revenues
give it the ability to do many things, but "also
gives them a chance to stake by without reform
because the economy can keep functioning
without an efficiently functioning public serv-
The lack of efficiency in the public service
is related to challenges of attracting the right
people into the public service, promoting them
to positions where they can do their jobs effec-
tively with "the complex process of hiring"
being handled by public service commissions
that set the conditions of employment, while
separate agencies doing the hiring and setting
the job standards.
"One of the things we have been concerned
about is that it seems to be open to a great
deal of litigiousness. When we speak to the
people in charge of staffing the public service,
they are constantly living in fear of being sued
by people who did not get the promotion or
the job interview."
This fear---along with the disconnect
between the bodies setting the conditions of
employment and doing the actual hiring---has
led to a rigid public service in which it is dif-
ficult for people to get promoted.
Canetti said: "There is one agency we talked
to where 19 of the 20 senior officials were not
confirmed in their jobs. They called themselves
Hollywood because they have so many actors.
Because of that, they have difficulty retaining
"There is much talent in the public service,
but they are not given the imprimatur that
they are in charge and can make decisions."
He said during the last Article IV consul-
tation visit to T&T, Minister of Education Tim
Gopiesingh told the IMF team that he had no
authority to fire teachers; this is done by the
Teaching Service Commission.
He said the business community complains
they do not know who to speak with to get
a problem resolved; there are many changes
in senior positions in ministries and many
changes in the number and functioning of
"One thing that has been very good is the
creation of two new agencies: InvesTT and
ExportTT. These are one-stop shops and it
has become their job to resolve these bureau-
cratic impediments rather than investors com-
ing in and having to navigate their way through
the complex bureaucracy."
Speaking with Canetti on the panel, which
dealt with the diversification of the T&T econ-
omy, was Rikhi Permanand, executive director
of the Economic Development Board (EDB)
and Council for Competitiveness and Inno-
vation of T&T.
He said one of the first things the EDB did
was to look at the issue of making it easier
for people to invest in T&T. He said the EDB
put together a paper that rationalised the
establishment of InvesTT, as the one-stop
shop for inward investment, ExporTT, as the
same for outward trade and the International
Financial Centre (IFC) looking to develop
investments in the financial sector.
Permanand said: "Even if the rest of the
Government has all of these bumps along the
way, from an investor s point of view, there
should be some very clear signals coming from
the Government to investors.
"InvesTT and ExporTT are fairly new entities
but they are beginning to perform and they
are working well. The best way to determine
that is to talk to people who have invested in
"I know, from my own experiences of talking
with investors at the very early stages, that
they have had a much smoother path than
He referenced the potential investment in
T&T by Japan s Mitsubishi group in an US$850
million dimethyl ether (DME) plant as being
an example of the facilitation role played by
"Mitsubishi is a true multinational. My
interest in them is not only because they are
coming in to build a petrochemical plant. They
are also involved in many other aspects of
diversification: they are very strong in maritime;
they are very strong in agriculture."
Canetti said he wanted to make it clear
when he spoke about the problems of T&T s
public service, he was not referring to the
"They have a well-functioning energy min-
istry that has built on its success over the last
two to three years in building a better tax
regime. We should not lose sight that although
diversification is an important goal of T&T s,
that there is more scope to develop the energy
sector, in particular, offshore gas."
OCTOBER 5 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG3
IMF mission chief to T&T...
holding back reform
Elie Canetti, head of the last IMF mission to
T&T, speaking at the investment conference
hosted by InvesTT at the Council on Foreign
Relations in Manhattan on September 25.
PHOTO: ANTHONY WILSON
Less than two weeks ago, on September 23, the board
of Trinidad Cement Ltd terminated the company s former
CEO, Rollin Bertrand "following a review of his perform-
Apparently undaunted by his dismissal, the combative
Bertrand has taken exception to comments made by Wilfred
Espinet, in an interview published in Thursday s Business
GuardianIwould like to submit some comments on an article
published in the Business Guardian of October 2, 2014
entitled "TCL requires drastic restructuring." At the
onset, I would like to advise Mr Espinet to keep quiet
for at least six months until he understands the business
before he broadcasts plans for the company. He will
learn there is a wide gap between "theory" and "imple-
mentation" as I hope to outline in this response.
Mr Espinet was non-committal on the company s
recent foray into the high-yield markets to restructure
the company s US$300 million in debt. He will soon
learn the US high-yield market is still the best opportunity for
the company to reduce interest rates (below 8.0 per cent) and
have a more covenant-friendly arrangement with lenders. Local
and regional capital markets are simply too thin to cope with
restructuring TCL s US$300m in debt at reasonable rates. He
expressed surprise after the last debt restructuring in 2012, TCL
came away with "high principal and higher interest rates" but
that is exactly what the last board was complaining about,
much to the chagrin of the existing lenders.
This, in turn, led to some of the lenders organising a group
of shareholders (Espinet included) to change the board at the
2013 AGM. In fact, the Guardian editorial of August 23, 2014,
criticised the last board "who never had anything good to say
about the financial institutions that lent the company money."
Be careful, Mr Espinet, or you may find your stay at TCL to
Mr Espinet noted that the company was "doing the
same thing and expecting different results." That is
a very ill-informed statement and he should review
the recent financial history of the company, which showed a
dramatic improvement in performance over the past three years
(2011, 2012 and 2013). The group s EBITDA improved from
US$15.4m in 2011 to US$26.3m in 2012 to US$62.6m in 2013
and was on track for US$70m in 2014. These results were not
achieved by "doing the same thing".
Apart from general cost control, TCL won new markets in
Venezuela, Brazil, and the French West Indies and expanded
market share in Suriname, Guyana and the OECS. In capital-
intensive industries, with high fixed costs, asset utilisation is
critical to success so mundane cost cutting does not get you
very far. Management presented the lenders with a comprehensive
turn-around plan, which was being executed---before being
interrupted by Mr Espinet & Ors---and that is why there were
"no demands for change in management." Management did
not cause the global economic crisis, but TCL s management
led the company through very difficult waters and back into
Mr Espinet talks about jettisoning things that "dragging
down the company" and talks about "core" and "none
core" assets. The TCL group is a typical vertically inte-
grated cement company with investments in "non-core" assets
that are mission critical. He talks about closing down Arawak,
but that is a "core" asset.
Cemex is currently operating several core assets with operational
losses while waiting for markets to improve (such as their plant
in Puerto Rico, which was recently managed by the new acting
group CEO). Cement assets are not easily sold and, once shut
down, are very difficult to re-activate. A company could lose a
significant market by closing capacity during a downturn and
handing the market over to importers, who would be very difficult
to dislodge once the economic climate improves. He then refers
to the packaging companies and readymix as non-core, but they
are also strategic and profitable.
TCL's fired CEO fires back...
Continued on Page 6
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