Home' Trinidad and Tobago Guardian : May 16th 2013 Contents BG20 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt MAY 2013 • WEEK THREE
International investors have many different options
about where they can place their investment dollars,
so it is important for T&T to benchmark our economy
against other global economies.
Benchmarking exercises not only help us determine how
we are doing compared to our competitors, but also highlight
areas of strength and weakness within the competitiveness
framework for the country.
According to Revenue Watch s Resource Governance Index,
T&T ranks tenth out of the 58 countries surveyed, scoring
relatively high for publishing timely, regular reports on oil and
gas production, prices and exports as well as sound Heritage
and Stabilisation Fund governance. Overall, T&T scored 74
out of 100 and had the highest score in the region in the
reporting practices category.
The index report also credits T&T for the quality and fre-
quency of oversight and auditing of resource revenue which
is open to both parliamentary and public scrutiny. However,
despite these strong points, the country has several areas for
improvement including institutional reform to stem corruption,
bolster the rule of law and improve budgetary transparency.
The Resource Governance Index measures the quality of
governance in select oil, gas and mining economies worldwide.
Together, these 58 nations produce 85 per cent of the world s
oil, 90 per cent of diamonds and 80 per cent of copper, gen-
erating trillions of dollars annually.
Areas of transparency
To determine how each country performs, the Index looks
at four key areas of transparency and accountability:
1. Institutional and legal setting: the degree to which laws,
regulations and institutional arrangements facilitate transparency,
accountability and open, fair competition.
2. Reporting practices: government disclosure of information.
3. Safeguards and quality controls: the presence and quality
of checks and oversight mechanisms that encourage integrity
and guard against conflicts of interest.
4. Enabling environment: the broader governance environ-
ment, based on more than 30 external measures of account-
ability, government effectiveness, rule of law, corruption and
The Latin American and Caribbean region
A global comparison and recommendations:
Of the 58 Index countries, only 11 are doing a satisfactory
job ranking high in all four criteria. In Latin America, six coun-
tries: Brazil, Chile, Colombia, Mexico, T&T, and Peru---all
earned satisfactory composite scores while Ecuador, Venezuela
and Bolivia, received only partially satisfactory scores (See
Compared to other regions, Latin America and the Caribbean
countries had some elements of transparency and accountability,
but there were still some gaps to be filled (See Figure 2).
Figure 2: Resource Governance Index Average Scores by
Note: The OECD region includes five countries; the Latin
America and Caribbean nine countries; Eurasia and South
Asia, six countries; East Asia and Pacific, ten countries; Sub-
Saharan Africa 17 countries; and the Middle East and North
Africa, 11 countries.
For the region, the enabling environment component, which
deals with rule of law and control of corruption, is particularly
worrying. Chile is the only country in the region to earn a
satisfactory score in this component. Given this and other
shortfalls, the index report listed several recommendations for
regional countries, including: implementation of clear rules
on disclosure of contracts, corporate disclosure of production
and payment data as well as becoming compliant with resource
transparency initiatives such as the Extractive Industries Trans-
parency Initiative (EITI). T&T is currently trying to achieve
full EITI compliant country status before the end of 2013.
Moving towards greater transparency
The opportunity for these resource-rich nations to experience
social and economic independence is there: the problem is
too often weak institutions, corruption and a lack of transparency
and accountability obstruct the path to development.
As mentioned before, T&T s ranking in indices like these
and our continuing involvement in initiatives such as the EITI
can have implications for how a country is perceived in the
international investor community. This is especially the case
with investors such as World Bank and linked agencies, like
the International Financial Corporation.
Increasingly, international private investors are following
the lead of the World Bank when it comes to assessing country
risk and the environmental and social impact of major projects.
In many cases, private investors actively seek involvement of
the private-sector investment arms of the major development
banks in major projects as a way of insulating themselves from
country political and reputational risk.
Even if a few commentators in T&T believe that initiatives
such as the EITI are an unnecessary exercise (and the Energy
Chamber does not believe so), not being part of the EITI can
potentially have a negative impact on our ability to attract
much-needed international investment.
Most major multinational oil and gas companies are very
much in favour of increased revenue transparency, and have
been active supporters of the EITI. While commercial con-
fidentiality is still important to oil and gas companies, they
have become increasingly open in the reporting of financial
Companies listed on the major international stock exchanges
already have to make very detailed public statements on many
aspects of their business; for example, the annual 10K reported
filed by a company such as EOG Resources listed on the New
York Stock Exchange includes very detailed information about
their business in T&T.
Given the need to keep attracting sustained investment into
the energy sector, the Energy Chamber believes increased
transparency will only increase investor confidence in T&T
and our continued involvement in the EITI is a positive move.
For more information, please visit: www.energy.tt or
The Resource Governance Index:
we stand Note: Ranks are out of 58 countries and appear in front of country names; composite scores appear above each column.
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