Home' Trinidad and Tobago Guardian : May 15th 2014 Contents BG10 FEEDBACK
BUSINESS GUARDIAN www.guardian.co.tt MAY 15 • WEEK THREE
Cable and Wireless Commu-
nications (C&WC) has put
a proposal to our govern-
ment to allow it (C&WC) to
purchase two more shares,
giving it majority sharehold-
ing (51 per cent) in TSTT and also control
of the management of the company.
The impression given, though C&WC has
an impressive showing on the board of TSTT,
is that the latter s management is so poor
that in C&WC s view TSTT is losing market
share because of its incompetence. C&WC
believes instead of being one of our jewels,
soon the Government will need subsidy to
Hence, C&WC management of TSTT with
gifts to the Government is the white knight
galloping in to save us from ourselves and
make TSTT into the competitive commu-
nications giant of the nation.
If the Government were to fall for this
ruse, then it is saying to us---with all of our
management schools, with the continuing
stellar performance of First Citizens Bank
---that we are not up to the task. We can
conclude that the Government will also be
saying, management wise, we cannot build
a globally diversified economy.
Why should anyone think that C&WC
has the management skills or vision to build
anything competitive given the mess they
have made in their own backyard.
Listen to Telecom TV One of the United
"To old (the original C&W) and established
to be a thrusting upstart, too sub-scale and
unfocused to be a solid incumbent, C&W
spent the next 30 years (from 1980) flipping
and flopping from one strategy to another,
each one just a tad more late or misdirected
than the one before. The usual problem was
that by the time the next big thing had been
identified, intercepted and invested in, the
market had lurched on, leaving C&W holding
another white elephant and looking for a
buyer, a new strategy and (often) a new
C&W made such a mess of its local UK
and its international business that it demerged
the company into C&W Worldwide (its local
UK business) and C&W Communications,
its international business.
Further, C&WC could not hold its own
in the UK market and its share price col-
lapsed. The new strategy was to sell and
Vodafone bought up C&WC after TATA of
India bowed out of the bid.
Listen to The Economist:
"The Indian press referred to the British
telecoms firm as a giant , a label that is 15
years out of date. C&WC today is more of
a joke, or a tragedy, a living rebuke to British
capitalism, or maybe a disgrace. One former
chief executive of C&W recalls arriving to
take charge of the firm and finding himself
making his own spreadsheet late at night to
try to work out where its profits were.
Nobody in the building knew.
His conclusion was that in the core UK
and global businesses, there were none. Per-
haps the Indian firm, TATA, wa s just having
a quick look at C&W, once one of the indus-
try s great firms, to remind itself of how bad
things can get.
C&WC has, true to form, appointed a
new CEO, Phil Bently, at a yearly salary of
£800,000 ($8,800,000) and a maximum
bonus of £1.2 million. Again, it has continued
selling off assets in Macau, Monaco, after
selling in Bahrain and Bermuda.
This is the company, C&WC, with its poor
legacy as an innovative telecom company,
both in management and telecoms endeav-
ours, is telling us that we cannot manage
TSTT, that like what they themselves did in
the UK, we will run TSTT into the ground.
It is time that we believe in ourselves, ask
C&WC to leave TSTT and let s form a new
relationship with the union, one that is not
us and them, but us.
I refer to a letter written by John Bell of
Maraval in the daily media.
Bell lamented the total lack of tourism
investment in T&T, especially Tobago,
despite its obvious potential, despite the $7
billion locked in its banks, despite the des-
perate need for resort rooms to maintain
existing airlift and to replace deteriorating
room stock, and to complement the metro-
accommodation of Port-of-Spain with resort
rooms and a twin-destination approach to
He stated that the complete lack of new
investment can be attributed to poor invest-
ment incentives uncompetitive with
Caribbean equivalents; a closed labour mar-
ket and claims of full employment; non-
existent brand image keeping our "secret
destination" too secret to be found by
tourists; and finally, "the absence of any
demonstrable government commitment to
tourism" as the overarching reason for this
lack of new investment.
I write as a real estate agent in Tobago
with 20 years experience of its market and
a good understanding of its tourism, which
is, frankly, the one and the only engine of
our local economy.
I would like to endorse Bell s statement
whole-heartedly and add just one thing in
support of his argument.
There is more than one resort opportunity
in Tobago ready right now for activation.
There is at least one serious and qualified
investor right now waiting for confirmation
of the availability of the much-vaunted
investment incentives we offered through
the Ministry of Tourism/Tourism Develop-
ment Company and the Ministry of Finance.
And that investor would add some 300 high
quality rooms to the Tobago inventory and
relieve our most pressing shortfalls where
airlift is concerned.
That investor was invited to look at Tobago
for investment opportunities by a previous
tourism minister (of which there have been
many). One can be forgiven for asking, in
the circumstances, why after many months
of persistent waiting outside the hallowed
doors of government, they are still without
those guarantees and incentives?
As a broker, I appreciate fully the impor-
tance of these investors to Tobago, not just
to the real estate market, not just to the
tourism sector, but to the health and sus-
tainable future of the entire island and its
citizens. This is what we have been working
towards for the past seven long and painful
years. I have to ask: what is the problem?
How difficult is it to say yes to an investor
who is only asking for what we have on so
many occasions offered?
And, in return, he will bring to an end
the drought of Biblical proportions which
we have endured for far too long.
SeaJade Investments, Tobago
Tobago investor awaits Govt guarantees
and the economy
In the May 8 Business Guardian article, "Who really
benefited from the FCB IPO?" Guardian s chief editor,
business, Anthony Wilson, says, in essence, that the
need to accrue capital by the Government (by default,
since the private sector has no such interest) to diversify
the economy is separate and distinct from the apparent
aim of the Government to transfer wealth; its First
Citizens Bank capital generating source at some 75
per cent capital gain to the purchasers, so as to enrich
the financially enlightened middle class and ensure
that National Insurance Board, Unit Trust Corporation
and the nation s credit unions, have investments
returns that outstrip the rate of inflation.
I put it to all that the single most important task
ahead of us is economic development and growth,
which falls almost singularly at the feet of the Gov-
ernment to initiate in this energy-dependent plantation.
Further, this task depends on capital accumulation
and its investment into providing the required human
capital, improving its technological capability and not
on sharing the little wealth accrued by the Government
among, or, releasing this wealth-generating resource
at knockdown prices to the population so that we
can increase our spending on consumables and living
expenses. This policy is well established in the work
of Robert Solow, an MIT economist and Nobel Prize
At the level even of the family, noted economist,
Daniel Etounga-Manguelle of the Cameroon, tells us,
"extreme pressure to redistribute wealth to less for-
tunate members of the family (read the financially
enlightened middle class, the UTC the NIB and their
beneficiaries) to the point of impeding capital accu-
mulation, a feature of African Culture, serves as an
obstacle to economic progress."
A similar comment was made by Lawrence Harrison
in his book; The Central Liberal Truth, in relation to
the slow development of India for four decades until
capital accumulation in the form of foreign investment
via sweeping economic reforms was able to counter
the previous political pressure to redistribute the little
wealth the economy produced.
The point is---particularly in an underdeveloped
economy---the redistribution of wealth that does not
fund human capital growth and technology, that
reduces the possibility to focus and direct this capital
to such investment, but rather disperses it into pro-
viding higher returns on local investments that do
nothing for economic reconstruction or even into
improving pensions, also does nothing to facilitate
What is also unfortunate is that the wealth generated
by the FCB and the like, together with the rents from
the energy sector that accrue to Government, are not
now being directed into capital accumulation and
hence the development of human capital and tech-
nology; therefore, the creation of new economic assets
The energy rents accruing to Government as part
of its budget allocation go to subsidies and transfers;
making our lives, for now, more pleasant. Even the
energy sector rents that accrue to the private sector
are apparently now insufficient to satisfy the pop-
ulation s demands for imported consumables.
Wilson s analysis appears not to recognise the inter-
relationship, almost a zero-sum game, between redis-
tribution of wealth that improves living conditions
in the now and capital accumulation to foster longer-
term economic growth.
This drives the continuing recommendations of,
say, the IMF that subsidies should be removed and
the implication that such savings should be used for
The lesson from this note is that economic devel-
opment of our country demands, in part, the post-
ponement of economic gratification from the now,
towards the creation of a more abundant future based
on hard work, savings, investment, acquisition of
knowledge, its creation and utilisation.
Mary K King
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