Home' Trinidad and Tobago Guardian : June 18th 2015 Contents BG10 VERBATIM
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2015 • WEEK THREE
It is widely accepted that for natural resource-
rich developing countries, economic diver-
sification is the best way of ensuring sus-
tainable growth and development over the
long term. This is particularly relevant to
countries where the natural resource reserves
are of limited duration.
At one stage, the conventional wisdom was that
industrial development (manufacturing) was the logical
route towards economic diversification. However, a
few countries that have recently been successful at
diversifying their economies have shown otherwise.
Thus, while Brazil, Malaysia and Indonesia imple-
mented a diversification strategy, which turned them
into industrial giants, Chile used its rents from copper
to develop its salmon and wine industries. Some other
countries--- most notably Dubai, Bahrain, Singapore
and Mauritius---have diversified through the develop-
ment of their transportation, tourism and financial
The conclusion has to be that there is no one blue-
print. Rather, diversification essentially has to do with
exploiting one s comparative advantage through tech-
nological innovation, prudent macro-economic policies
and appropriate human capital and institutional devel-
T&T s early diversification strategy had the devel-
opment of export manufacturing as the major driver.
However, while our manufacturing sector made impor-
tant strides during the 1990s, the export thrust was
largely confined to the highly protected Caricom market.
Meaningful export penetration of extra-regional markets
has proven to be illusive because of lack of compet-
itiveness, due to high labor costs and low productivity.
While policymakers still recognise scope for the expan-
sion of niche manufacturing, most concede that com-
peting with the low-cost manufacturing exports from
China, India and other countries in emerging Asia has
become an insurmountable challenge.
In recognition of this reality, at the beginning of the
last decade, the then Administration decided to pursue
the establishment of an International Financial Centre
as an integral part of the T&T s diversification strategy.
The underlying rationale was that, given T&T s geo-
graphical location and its considerable macro-economic
strengths, the creation of a international financial
centre linking North and South America by delivering
a meaningful value proposition to global financial insti-
tutions was an economically feasible and a desirable
After energy, the financial services sector has been
the fastest growing of the economy and has risen to
account for 13 per cent of GDP, second only to petro-
leum. With its strong foreign reserves position and as
headquarters of all the foreign banks operating in the
region, T&T had already been recognised as the de
facto financial centre of the English-speaking Caribbean.
This was considered an important stepping stone to
becoming a truly international financial centre.
Much preparatory work was completed on the proj-
ect, including the construction of a Waterfront Tower
to house the TTIFC. Official reports also indicated
that several international financial institutions had
expressed interest in the centre. Unfortunately, the
international financial crisis of 2007/2008 put inter-
national banking in retreat and momentum on the
TTIFC project came to an abrupt halt.
The new administration---which came to office in
May 2010---revisited and redefined the scope of the
TTIFC, in light of the uncertain international banking
outlook. The new mandate emphasised two main
• Financial institution support services: targeting
the provision of process outsourcing services, with
specific focus on middle and back office processing;
and• Capital market development: which seeks to posi-
tion T&T as a preferred location to issue debt.
There has been initial success with respect
to the first mandate since, in the short two-
year period since the initiative was launched,
a few institutions operating in the region
have moved to set up processing zones, cre-
ating an estimated 1,000 jobs through finance
and accounting back-office processing oper-
ations such as Scotiabank s BPO hub in
More recently, the TTIFC administration
has been actively involved in creating training
opportunities for banking, finance and
accounting professionals and in the prepa-
ration of a legal and regulatory framework
to attract foreign investment in the interna-
tional financial centre. As indicated in the
TTIFC s promotional brochure, the prepara-
tory work is aimed at "turning T&T into a
future-ready financial services hub."
The question now being posed is: Does
China s increasing engagement in Latin Amer-
ica and the Caribbean present a unique
opportunity to be leveraged by the TTIFC?
Could this engagement be exploited to
accelerate the establishment of a full-service
successful international financial centre?
Could TTIFC s future be now?
In pursuit of economic diversification
Partnering with China on an expanded international financial centre
Continued on Page 11
Ewart S Willliams
Richard P Young
Links Archive June 17th 2015 June 19th 2015 Navigation Previous Page Next Page