Home' Trinidad and Tobago Guardian : June 20th 2013 Contents The CariCris communication
that went out late Friday last
was titled A Tale of 2 Sover-
eigns. It spoke to the reaffir-
mation of the AAA credit rat-
ing on the Government of
T&T. To put it simply the rating was a reflec-
tion of "the strong, resilient and well diversified
economic structure" of T&T.
In the same communication it was
announced that the government of St Lucia
was downgraded to BB with the lowered rating
due to the "persistent and severe deterioration
in the government s fiscal position."
A couple weeks ago the outlook for Brazil
was downgraded to negative by the interna-
tional rating agencies and at the start of the
year the credit of Barbados was relegated to
below investment grade by the International
The comparisons may cause one to be pos-
itive about the outlook for T&T going forward.
Of course, it is a question of how we choose
to compare ourselves and for what purpose.
We cannot on the one hand suggest that we
are the economic heavy weight of the
Caribbean and then seek to compare ourselves
to the seemingly lesser mortals in the same
region. Our approach should be to benchmark
to others that have similar opportunities to
us and see where we are compared to them.
If we were to do so we would realise many of
On more than one occasion including just
last week I have highlighted successes ema-
nating from Chile in South America. While
much of the focus is on Brazil and because
they are right next door, Venezuela, if we want
to take example of what we should be aspiring
to and the missed opportunities we really
should focus on Chile. Not Singapore, Dubai
or Ireland but right in our hemisphere: Chile.
In the 1970s where in T&T "money is (was)
no problem", Chile was a literal basket case.
Since then they have not only reformed their
economy but has passed us and every other
economy in this hemisphere.
Last week I referenced the performance of
the Chilean airline LAN and maybe someone
in the media could take the time to compare
this airline to some of its peers including
Caribbean Airlines Ltd. If you do the analysis
you will realise the extent of the malaise that
we operate from and the opportunity that we
miss with each passing day.
A few years ago a minister of health went
to the United Kingdom to lure nationals of
T&T back home to service the local health
care sector. Nothing was ever heard again in
terms of results so one can only conclude this
was another joy ride and waste of money. We
have also been discussing innovation and eco-
nomic diversification for years with little to
show for it.
In discussing the 2012 Budget I wrote the
following in October 2011.
"We have lots of rather obscure proposals
to promoting innovation and entrepreneurship
....For a blue print of a clear focused pro-
gramme that has won international acclaim
Google the term, Start Up Chile."
"Chile has a programme that invites world-
class early stage entrepreneurs to compete for
the right to locate in Chile inclusive of start
up capital. This is the business stage where
innovation and entrepreneurship is at its peak.
There is a focus on replicating Silicon Valley
in the US, in other words one specific target
that is competitive. Graduates from top US
universities are scouted and if their projects
are selected they are offered a grant and allowed
to operated for a defined period."
"Effectively this model can channel the
knowledge from the global technology institutes
to T&T and allows locals to experience the
process of innovation and entrepreneurship
from the ground up. This is no different to
the model used in Silicon Valley that has result-
ed in all of Google, Apple and the like."
There have been a few more joy rides since
that trip to the UK and lots of talk on inno-
vation and diversification. In fact we are still
talking. But while we are fraternising with for-
eign leaders Chile is visiting every technology
institute in the US and around the world to
sell a programme that beings the real innovators
to their shores.
While T&T has focused on tax amnesties
as a key element in shoring up tax collections
Chile is one of the leading lights worldwide
in moving towards e-invoicing where invoices
are issued electronically and integrated with
the tax authorities so that VAT is better
accounted for and company tax audits more
effective. Overall tax compliance and collection
In terms of healthcare Chile has a system
of public and private health facilities, but there
is a certain level of means testing so that pay-
ment is required even for public health facilities.
There "novel" concept is that your health care
costs make you accountable for your lifestyle
For education there is a voucher system in
operation, which enables the proliferation of
private schools, and while there is some con-
troversy regarding the universal right to free
education there are many positives to the pri-
vate/public competition as it allows for choice
and potentially higher standards for both stu-
dents and teachers.
The above example reflects the difference
in approach and I dare say ultimately the
reason for their success over our lack of success.
Chile has focused on a program of pro-market
reforms where market forces have been and
continue to be the thrust that has propelled
the economic growth of the country.
T&T, on the other hand, has been about
"big government" where the political parties
in government have sought to control and dic-
tate rather than cajole and enable.
So rather than create an environment for a
world-class healthcare sector to evolve and
develop we instead centrally plan what has to
be built, where and by whom. So removed are
we from the market reforms that are needed
that now we hear that the labour and funding
for some of these projects will actually come
from another government.
The result is that we are now faced with a
total disconnect between productivity and
output, between investment returns and infla-
tion, between project feasibility and execution
and between Government initiatives and private
These gaps are filled by subsidy after subsidy
and seems set to continue until the oil and
gas money runs out.
The sad part is we seem to know what to
do but lack the political will to execute. The
current Minister of Finance speaks about the
removal of subsidies.
Let us see how this unfolds in the run up
to a general election. A former prime minister
during the middle of the last decade spoke
about people taking responsibility for funding
their retirement instead of relying on the state.
Little has been said or done on this matter
since that statement in a budget presentation
despite our aging population and reduced fiscal
Yet making people responsible for their wel-
fare and accountable for their lifestyle such
as retirement, health and education are some
of the key reforms that have enabled Chile to
be the highest rated credit in Latin America.
T&T is the next highest rated credit, but we
have traded off individual responsibility for
collective subsidies and this will only last for
I want to close by referencing again the
Start Up Chile initiative with some quotes
from around the Internet. Reference this to
our programme of technology parks that still
has to get off the ground.
"At its inception, this unique government
programme had been lauded internationally
in publications such as Forbes, The Economist,
"From the outset, the programmes goal has
been to create a strong system and culture for
"The first programme had only ten per cent
Chilean applicants, while the most current
round was 37 per cent Chilean."
"Entrepreneurs, in addition to developing
their startup, will also create and foster net-
works within the local entrepreneurship ecosys-
tem to share their skills and contacts. During
the programme s six months, participants have
to earn 4,000 social capital points. Points are
earned by hosting workshops, mentoring local
Chileans, organising meet ups or teaching a
"This concentration of entrepreneurs work-
ing together in a co-working space promotes
peer mentorship, rather than the typical men-
torship networks found at other accelerators."
"Entrepreneurs also dedicate time to help
stimulate entrepreneurship in the local com-
This programme is successful to the point
where other countries are seeking to emulate.
I highlighted this programme 21 months ago
when it was unique. Instead, we let the
moment pass us by as we remain fixated with
an antiquated approach.
Ian Narine is a broker registered with the
Securities and Exchange Commission.
BG18 | COMMENTARY
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