Opinion
- Editorial- Commentary
BG View: Point Lisas needs tune-up
On
Monday Finance Minister, Prime Minister Patrick
Manning announced in the budget speech that the
T&T’s total production went from $55
billion in 2001 to $114.5 billion in 2006 and
per capita income increased from US$7,100 in
2002 to US$14,790 in 2006.
I
have written on a number of occasions, and in
various ways, that I consider Point Lisas and
Point Fortin to be outstanding successes in their
contribution to the local economy.
And
I am clear in my own mind that the economy would
not have doubled in the space of six years had
it not been for Point Lisas and Point Fortin.
I
am also clear that were it not for Point Lisas
and Point Fortin the economy would not have created
about 84,400 jobs in the last six years, sending
the rate of unemployment down from 11.7 per cent
in 2001 to five per cent at the end of 2006,
the lowest in our nation’s history.
The
fact that the State has been able to lower corporation
taxes from 35 to 25 per cent and individual taxes
from a top marginal rate of 35 per cent to a
flat rate of 25 per cent is largely due to the
contribution made by Point Lisas and Point Fortin.
As well, the fact that there are 300,000 more
people today whose income is tax free must be
attributed to the contribution made by the exports
of LNG, ammonia, urea, methanol and steel.
So
while these industrial estates may be part of
what Professor Dennis Pantin describes as the
rentier economy, even in the absence of audited
accounts and full State accountability, one would
be hardpressed to argue that Point Lisas and
Point Fortin have not contributed significantly
to the $69.7 billion in tax revenue from the
energy sector collected in the last six years.
And
one would be hardpressed, therefore, to argue
that Point Lisas and Point Fortin have not contributed
to the $162.7 billion in total tax revenue that
the State has collected in the last six years.
If
the industrial estates contribute as much as
20 per cent of total revenues, it would mean
that about $32 billion would have come from Point
Lisas and Point Fortin in the last six years.
One
wonders whether the rentier economists or the
plantation theorists or the proponents of diamond
clusters could come up with a package of non-resource
industries which could have contributed $32 billion
in the tax revenues in the last six years. And
if there would have been private sector investors,
either local or foreign, willing to fund these
non-energy ideas.
Having
said that, the Point Lisas model is by no means
perfect. In fact, in many ways it is a model
in need of a thorough and efficient tune-up so
that it would be able to operate as smoothly
in the future as it has done in the past.
Tune-up
#1
As
recently as Monday, during the budget speech,
the Prime Minister boasted that T&T was the
leading exporter of methanol and ammonia in the
world and the leading exporter of LNG in the
hemisphere.
He’s
right and there is no doubt that the economy
has benefited tremendously from its exports of
these products, especially at a time when these
products command high prices.
It’s
nice to be the No 1 exporter of methanol in the
world, but why aren’t we the No 1 exporter
of biodiesel fuel in the world or the top exporter
of dimethyl ether, which burns like natural gas
and handles like LPG (cooking gas) according
to the Methanol Institute Web site.
Instead
of exporting all of our methanol, why aren’t
members of the Manufacturers Association beating
down the doors of the methanol companies at Point
Lisas with ideas for the establishment of companies
producing fuel cells for the world market.
It’s
great to be the leading exporter of ammonia in
the world, but T&T still imports large amounts
of finished fertiliser from companies that use
T&T ammonia in its production.
The
fact that T&T is not THE major exporter of
fertiliser in the world is a major deficiency
of the Point Lisas model. That deficiency may
be as a result of the fact that, with two exceptions,
the ammonia companies are foreign owned and export
the product at high prices in the world market
or to their vertically integrated fertiliser
plants.
But
even when the plant is majority state-owned (as
Tringen is) there has been NO ATTEMPT to develop
a branded fertiliser export industry using T&T’s
ammonia.
In
other words, there has been no attempt by the
local private sector to create an onshore, export
industry from the offshore, export industry.
Why
is that?
Why
do we have young men—who inherited their
father’s agricultural products business
and who import tonnes of processed fertiliser
from the US made from T&T ammonia— opting
to use the surplus of the family company to invest
in a franchised restaurant but not in a small,
hi-tech fertiliser plant using T&T ammonia.
Has
the local private sector done enough to create
new industries out of the methanol, ammonia and
steel produced at Point Lisas.
Why?
I
guess the answer is that we have not broken the
back of the traditional plantation economy.
It
is true that some companies on the estate resisted
selling product to the local market. These companies
know themselves.
Tune-up
#2
The
other major critique of Point Lisas is that the
State has not done nearly enough to facilitate
the ownership of that plantation by local capital.
Apart
from NEL, there is no vehicle for direct or indirect
ownership of the wealth-creating industries in
T&T by credit unions, pension plans, workers,
mutual funds, insurance companies, investment
clubs, individuals, companies and even sou-sou
hands.
Even
when there have been explicit, contractual provisions
for the sale of shares in Point Lisas companies
to the local public, they have been able to thumb
their noses.
Again,
a certain company on the estate is the poster-child
for this attitude as there was a specific provision
in its 1994 sales agreement that 40 per cent
of the equity in the plant should be placed on
the local capital market with the workers being
given first preference.
BG- Business
Guardian is
the weekly business suplement of the Trinidad
Guardian, one of Trinidad most read newspaper.
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Editor's
Note: This article was first publish in Trinidad
Guardian, Thursday 23rd August, 2007. Petroleumworld
reprint this article in the interest
of our readers.
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08/26/07
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