Enhancing Trinidad and Tobago's business climate for investors

The government has dedicated considerable time and energy in recent years to improving the business climate for manufacturing firms and for the private sector in general. The aim is both to make the Trinidad and Tobago economy more competitive, and to attract increased inflows of foreign investment. “Three to four years ago we had no fewer than 13 separate state agencies dealing with investment, with overlapping areas of work. So in response to the need for a single agency, InvesTT was created. The idea is to make the local marketplace easier to understand,” Randall Karim, director of policy and strategy at the Ministry of Trade, Industry, Investment and Communications, told OBG. InvesTT operates as a one-stop-shop, taking care of all major steps involving foreign investors, starting at registration and running through to final project approval. The agency publishes a detailed “Cost of Doing Business” guide with information on energy tariffs, salaries, property rentals, tax rates and other business costs.

Ease of Doing Business

The government has also concentrated on improving T&T’s standing in the World Bank’s ease of doing business rankings. “In the Ease of Doing Business report 2015 we have jumped up 12 places in the ranking and we are one of the top 10 improvers in the world. It is a recognition and a validation of how we are doing things,” Karim told OBG. In the “Doing Business 2015” report, T&T was ranked 79th out of 189 countries, having moved up from 91st in the preceding year. Within the Caribbean, T&T was second only to Jamaica (ranked 58th) and ahead of the Dominican Republic (84th), Antigua and Barbuda (89th), and Dominica (97th), which were its nearest peers. T&T was also comfortably ahead of the Latin American and Caribbean average (equivalent to 100th in the world).

T&T’s highest ranking was in the category of getting electricity, on which it was ranked 21st in the world. It also scored well for getting credit (36th), protecting minority investors (62nd), resolving insolvency (66th), starting a business (71st) and trading across borders (76th). The country did less well on the ease of paying taxes (113th in the world), dealing with construction permits (also 113th), registering property (159th) and enforcing contracts (180th). The World Bank calculates that to start a business in T&T seven procedural steps are necessary taking on average 11.5 days, a sharp reduction on the 35.5 days required a year earlier. However, there has been very little movement on getting construction permits, which still requires 13 procedures and takes 250 days.

The government has a very ambitious objective – getting the country into the global top 25 in the overall ease of doing business ranking by 2020. To do so it will need to work across the board but also to focus on its worst-performing indicator, the enforcement of contracts. Karim acknowledges that getting improvements in this area is proving difficult. “We are trying to get the judiciary’s cooperation in an attempt to speed up the resolution of commercial cases, but naturally the immediate focus for the judiciary will first be on clearing up criminal cases,” he told OBG.

Cost of Crime

This would appear to be one of the indirect costs of what is perceived to be a high crime rate in the country. Karim notes that the Doing Business reports do not measure crime, but another important global survey – the World Economic Forum’s (WEF) Global Competitiveness Report – does, although this is by assessing perceptions. From an economic point of view he says crime is a problem for the country in two main respects. “The security ministry takes the largest share of government spending,” he told OBG. “This money could be spent elsewhere, it is an opportunity cost which is huge.” Secondly, crime affects investor perceptions. “Crime always appears as a business concern in the WEF surveys,” he said, while adding that it is difficult to measure its real impact. “We haven’t actually seen any hard evidence that crime is deterring investment decisions,” Karim told OBG.

Global Competitiveness Index

The WEF’s annual global competitiveness index (GCI) assesses each country across 12 pillars or categories, which include headings such as institutions, infrastructure, macroeconomic environment, labour market efficiency, and so on. In the 2014-15 WEF report, T&T was ranked 89th out of 144 countries surveyed. In terms of its overall score, measured from 1 at the low end to 7 at the high end, the country came in at 4.0. It has been at roughly that level in the past four years. In the Caribbean and Central America T&T ranked behind Puerto Rico (32nd in the world), Costa Rica (51st), Barbados (55th), Mexico (61st), Guatemala (78th), El Salvador (84th) and Jamaica (86th). It was ahead of countries like Nicaragua (99th), Honduras (100th), Suriname (110th) and Guyana (117th). In terms of the different categories, in the 2014-15 WEF survey T&T had its highest scores for health and primary education, the macroeconomic environment and infrastructure. The most problematic factors for doing business were identified as “inefficient government bureaucracy” (19.2% of respondents), “corruption” (18.4%), “poor work ethic in national labour force” (17.9%) and “crime and theft” (15.5%).

Progress in E-Government

One way in which the government is trying to improve the ease of doing business in the country is by increasing the number of transactions that can be carried out online. At the centre of this effort is the concept of a single electronic window (SEW). Karim says the administration has been working on the SEW project since 2010 and by 2015 had managed to take 40 e-government services online. “We are working on the ease of starting a business, Customs clearance and work permits,” he told OBG. “Up till 2014 the process for carrying out trade was hugely timeconsuming. There were all sort of physical forms that needed to be filled in and submitted to six separate government agencies. It is now all done online,” he added. One of the agencies involved in implementing the SEW is iGovTT, which reports to the Ministry of Science and Technology. Selvan Ramroop, deputy CEO of iGovTT, told OBG that the agency was involved in the technical challenge of seeking to interconnect different ministerial IT systems and databases, a back-end project required to make the SEW work. Confirming the importance placed by the government on international benchmarks and country rankings, he said, “T&T has dropped 24 positions in the e-government rankings, as measured by the UN e-Government survey, and we need to correct that.” Ramroop added, “We need support from all agencies. We need to offer seamless service delivery. We need to transform our relations with citizens. We need to empower them. And we need to connect together all the government agencies.”

In effect, according to UN Public Administration Country Studies (UNPACS), in 2014 T&T slipped to 91st in the world in the e-government development index, down 24 places from the 67th position in the previous survey in 2012. UNPACS compiles an index as a weighted average of three dimensions: scope and quality of online services, status of telecommunications infrastructure and existing human capacity. T&T’s strongest performance was recorded in the human capital index, followed by telecoms infrastructure, with the lowest score in the scope and quality of online services.