Business in Trinidad & Tobago

Aired October 2004

The strategically located Republic of Trinidad and Tobago is made up of two islands just off the coast of South America at the end of a chain of Caribbean islands. Trinidad, the larger of the two, is about the size of Delaware, while Tobago, around 20 miles north of Trinidad, is fifteen times smaller.

When Trinidad was discovered in 1498 by Christopher Columbus, it already had a well established role as a hub for South American trade. Trinidad and Tobago were fought over and came successively under the rule of Spain, France and Britain. In the 18th century, Trinidad also attracted immigrants from China, Syrians fleeing persecution in Lebanon, and freed slaves from throughout the region, creating an exceptional melting pot unique in the region. During World War II, American forces established a base in Trinidad for their Caribbean fleet. Formerly part of the British empire, the country finally gained its independence in 1962.

The Republic of Trinidad and Tobago is known for its dynamic and robust economy that offers extensive opportunities for international investors. The oil and gas sector drives the economy, accounting for over one-quarter of GDP, and has helped to make Trinidad and Tobago the most industrialized country in the Caribbean.

Oil was discovered in Trinidad in 1866 and drilling began in 1907. Ever since, Trinidad and Tobago’s hydrocarbon resources, and, more recently, its natural gas have helped it escape the debt crisis, economic stagnation and political turmoil of its neighbors in nearby South America. The republic’s economy faltered in the 1980s due to crashing oil prices, but began to thrive again thanks to new oil and gas discoveries. The government is using the country’s energy revenues carefully to ensure long-term growth, and the energy sector has been attracting significant foreign investment. The sector accounts for more than 70% of the country’s exports and 21% of the government’s revenues.

ENERGY SECTOR - OIL

Trinidad’s traditional oil sector has recently been revived through new offshore and onshore exploratory drilling, and ten new production-sharing contracts are expected to be signed in 2004 to allocate new blocks off Trinidad’s east, northeast and northern coasts. These blocks will stimulate exploration in the medium-term, although they are unlikely to benefit local companies unless the government implements long-overdue tax reforms. Local companies have lately developed international-standard services and are now actively involved in both downstream and upstream activities. Working closely with all major international energy leaders, they are ready to take their know-how onto the international scene.

Trinidad and Tobago’s liquefied natural gas, or LNG, is currently sold to the US market through major international players. It is treated in the republic’s gas liquefaction plant, the largest in the world, and then distributed by tanker vessels to US markets. Due to rising security concerns, the LNG sector has adopted new measures to ensure efficient and safe delivery of gas to the United States.

The republic aims at increasing its liquefaction capacity still further to maintain its dominant position in the western hemisphere, and the construction of an extension of the liquefaction plant, called Train 5, is set to begin later this year. Some specialists, citing the need for careful management of limited proven reserves, contest this new development, but a potential cross-border partnership with Venezuela could ensure that the expansion plans move ahead.

All experts agree that the energy sector will remain the backbone of Trinidad’s economy for many years to come, in spite of the risk of excessive dependence on global oil and gas prices. The energy sector overall offers numerous opportunities for investment and strategic alliances in both downstream and upstream activities.

DIVERSIFICATION OF INDUSTRY

The petrochemicals and steel industries are also thriving, and the Republic of Trinidad and Tobago is now the world’s top exporter of both ammonia and methanol. Thanks to the government’s commitment to diversification, other sectors are now growing as well. In fact, the republic is now ranked the most economically diversified English-speaking country in the Caribbean.

The government is gradually liberalizing and privatizing the economy and has instituted a number of measures designed to attract foreign investors. For example, there are no restrictions on foreign investment and no controls on foreign exchange. These measures are working: Trinidad and Tobago attracted an average of 778 million US dollars per year in foreign investment between 1997 and 2001. While growth has remained at 4% following the aftermath of 9/11, the Iraq war and global financial upheavals, Trinidad and Tobago have established the foundations that should support further growth in the future.

The Republic of Trinidad and Tobago is one of the world’s finest examples of an open-market economy, thanks to a business-friendly government and an entrepreneurial population. The government welcomes free trade and is open to reviewing all investment proposals. Up until recently, foreign investors have mainly targeted the oil and gas sector, while domestic investors predominate in the manufacturing and financial sectors. The government is now trying to reduce this split and to promote cross-sector investment activities.

The private sector currently plays a major role concerning education and training. Many large corporations in the energy sector have introduced training and knowledge-sharing programs in line with the government’s objectives, but local corporations and companies are leading the way in developing more significant and sustainable programs for local citizens.

FINANCIAL SECTOR

The financial sector is one of the country’s success stories. With a world-class regulatory environment, it includes six commercial banks and a number of financial services companies. Under the CARICOM Single Market and Economy guidelines, Trinidad and Tobago will remove all restraints on rights of establishment, provision of services and movements of capital by 2005, thus enhancing opportunities for investors.

In 2000, Trinidad and Tobago achieved “investment grade” status for commercial paper issued by the government, and in 2003 the republic was assigned a Baa3 rating by Moody’s and a BBB rating by Standard and Poor’s concerning foreign debt, the same rating as Mexico’s. The government recognizes that further upgrading of the financial sector is crucial to achieving long-term prosperity, and has set the goal of making the republic a financial services hub for the Caribbean region.

Trinidad and Tobago’s goals for the future are outlined in Vision 2020, an ambitious development plan aimed at transforming the country from an emerging market economy to a developed country by 2020. The government and private sector are working hand-in-hand to ensure improvement in the quality of life of every citizen. Key areas targeted for development include housing, health, transportation, telecommunications, water, electricity and education.

TOURISM

In Trinidad you’ll not find your tailor-made tourist destination. Instead, you can chart your own adventure (with our help, of course!) with a choice of festivals, events and a host of other adrenaline-generating activities.

Port of Spain, the bustling capital, is filled with an enchanting myriad of art galleries and restaurants and other sites to satisfy your finer tastes.

If you prefer to be laid back, Trinidad also has its share of quiet quality. Once part of the South American mainland, the island, with its roughly rectangular shape that measures 37 miles (80km) by 50 miles (60 km), boasts of an ecological diversity unmatched in the Caribbean.

The north coast’s scenic beaches and sand provide the perfect atmosphere for seclusion, rest and recreation. Dominated by densely forested peaks, the northern interior offers excellent hiking trails, while the agricultural plains of central Trinidad provide a fascinating contrast.

The east coast features protected wetlands and miles of fine brown sand lined by groves of coconut palms. The island’s ‘southland’ is a friendly base from which to explore the island’s modern oil towns, picturesque fishing villages and calm deserted beaches.