Opinion
- Editorial
BG View :What
gives us our edge?
Editorial
Listening
to Prime Minister Patrick Manning on the deck of
the Ibis Deep exploration rig last Friday, I was
struck—not for the first time—by the
seeming disconnect between the success of the productive
sector and the rest of the economy.
It’s
almost as if the vast majority of the citizens of
T&T do not know where our money is coming from.
The
way some activists, politicians, newspaper columnists
and even some academics (both current and retired)
speak and write, you would believe money falls from
the heavens and the only responsibility that our
Government has is to go out into an open space once
in a while and collect it.
Last
December 8, in this space, I wrote a column headlined
“Imagine T&T without Point Lisas.”
In
that column, I asked this question: “What
would be the state of T&T at the end of 2005
if the visionaries behind the Point Lisas Industrial
Estate had decided that it would have been better
for the environment of T&T and the residents
of the area if the estate was not built?”
In
the six months since that column, nobody has offered
a coherent answer to that question.
In
subsequent columns, I directly linked the success
of the natural gas-led industrialisation thrust
to the fact that this Government has been able to
lower the rate of income and corporation taxes twice
in four years and to make tertiary education “free.”
In
attempting to answer the question that I asked on
December 8, some people have argued that we have
options that we are not exploring—such as
in agriculture, tourism, manufacturing and information
technology.
To
be successful, those who argue that T&T should
be exploring other options to natural gas-led industrialisation,
would have to convince the nation that all of the
options put together would be able to generate the
$15 billion in taxes that the Government collected
from energy companies last year.
If
the explore-other-options group cannot come up with
tax revenues that equal or surpass what the State
collects from the energy sector, then maybe what
they are in fact arguing is that tertiary education
should not be “free,” the inter-island
ferry service should not be subsidised, gasoline
should not be sold at a fixed price and income taxes
should be put back to where they were five years
ago.
I
say this because it seems so obvious to me that
the Government is taking money from the oil and
gas companies and using it (inter alia) to lower
taxes, underwrite tertiary education, build houses
and subsidise gasoline and the inter-island ferries.
And
to be successful, the explore-other-options group
would have to argue that the tourism sector in T&T
can be competitive with the tourism industry in
Barbados or Antigua.
In
effect, the argument has to be that the beaches
of Cedros, washed by the muddy waters of the mighty
Orinoco river, can compete with the pink sands and
crystal-clear aquamarine waters of the St James
coast in Barbados or Grand Anse beach in Grenada.
Or
that the scenic views and nature trails in Tobago
are superior to those in Costa Rica or Dominica.
Or, indeed, that the quality of customer service
anywhere in Trinidad or Tobago is better than anything
on offer anywhere else in the whole world.
Can
we compete with Barbados when it comes to tourism?
In
effect, those who argue that the State should be
seeking to develop new manufacturing industries
in T&T (outside the energy sector, of course)
would need to pay attention to what the Chinese
have done with their economy in the last 20 years.
The
so-called Communists of China have been able to
so arrange their economy that they can produce and
ship many, many manufactured products to anywhere
in the world and sell them to markets significantly
cheaper than local manufacturers.
China’s
edge is that it has a population of 1.4 billion
people and hundreds of millions of workers who are
willing to work for a fraction of what an employee
in Trinidad works for and do so for longer hours.
Even
given an eight-hour period, a factory in Shanghai
is likely to produce significantly more shirts than
a local factory.
I
mean no disrespect to the local shirt manufacturers
when I say that there are very few producers anywhere
in the world who can compete against the Chinese
in many aspects of manufacturing.
Can
we compete with the Chinese when it comes to manufacturing?
And
those who feel that information technology is the
way to go would need to look to India, which has
so far been successful in outsourcing jobs from
the US and EU.
Even
given the higher wages, India’s edge is in
its ability to produce hundreds of thousands of
highly educated, English-speaking engineers and
other university trained personnel who can write
software, compute taxes and answer queries for a
fraction of what it would cost in the US or in T&T.
Can
we compete with the Indians when it comes to outsourcing
and IT?
If
Motorola wanted to outsource the writing of software
for its next-generation phone/ipod, would it close
down its technology centre in Bangalore and line
up to get into the technology park in Wallerfield?
While
obviously we should be doing more to produce the
food that we eat, given our size, are we ever going
to be able to grow all of the rice, beef, vegetables
and flour that consumers here demand?
And
can we do so (without tariff protection) at a price
that would be competitive with the rice, beef, vegetables
and flour that we can import?
In
other words, what edge does T&T have?
What
is our competitive advantage?
Given
the realities of globalisation, the question can
no longer be what can we do better than anyone else
in the region or even in the hemisphere. The question
has to be what can we do here better, cheaper and
faster than anybody else in the world, or almost
anybody else?
I
would submit that the thing that we can do better,
cheaper, faster and more efficiently than anywhere
else in the world (even Qatar) is monetise the natural
gas that’s found offshore into methanol, ammonia,
LNG, propane and iron and steel.
I
would submit that the industrialisation path that
all governments in the last 30 years have followed
is the right one.
I
maintain, as well, that we have a competitive advantage
in finding natural gas, transporting it from offshore
to plants and facilities onshore and turning that
natural gas into polypropylene, polyethylene, aluminium,
melamine and other things.
And,
therefore, I submit that the future path of a modern
industrial state is the appropriate one.
Does
that mean I don’t worry?
Of
course not.
As
a nation, we should be worried by the fact that
our standard of living depends on the price of oil
and natural gas and that we have no control over
those prices.
As
a nation, we should also be worried that the prediction
that the gas province in T&T will continue to
bear fruit well into the future proves to be accurate.
The
Trinidad Guardian
is one of Trinidad most important newspapers.
Petroleumworld not necessarily share these views.
Editor's
Note: This commentary was published by The Trinidad
Guardian, on Thursday 29th June 2006 , Petroleumworld
reprint this article in the interest of our readers.
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Petroleumworld
07 02 06
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