Budget 2021 – a major step into the future

In the national budget 2021, the Minister of Finance announced a couple far-reaching decisions for Trinidad and Tobago, signalling the intention to transition more towards a market economy. Firstly, the decision to privatise the operations of the Port of Port of Spain represents a philosophical shift from a mindset that has been present for decades. Secondly the liberalisation of the retail fuel market represents divergence from government’s 46-year-old economic policy regarding the liquid petroleum market.

The TT Chamber has always maintained that the role of government must be facilitative, not in competition with the private sector. This means that the state should act in the realm of policy formulation and implementation as it pertains to the efficient and effective provision of services to enable smooth business operations. The privatisation of ports and liberalisation of fuel markets are features of modern competitive economies with a high standard of living.

To properly facilitate business TT needs a well functioning port, transparent and predictable customs and excise regime, fair tax administration and the provision e-government services. Of course we recognise that not all services mentioned can be readily privatised and some must remain state controlled in the interest of the public.

At our post budget analysis meeting held on October 6, learned economists and business leaders underscored that TT cannot move forward unless we have meaningful conversations about productivity, particularly in the public sector, which presents a serious impediment to business. TT’s private sector is willing to lead the charge for economic growth but it will not amount to much if there is a lethargic response from the public sector.

The privatisation of government businesses must be pursued with sensitivity, but determination if TT is to be given a real chance at economic recovery. There will have to be appropriate change management programs. Regionally, Jamaica’s government in 2015 concluded a deal to divest itself of interests in Kingston Container Terminal and hand over to a private company, Terminal Link/CMA CGM Consortium, in keeping with its goal of making it a major transshipment hub in the Caribbean. The concept of private ownerships in ports is not entirely new to TT, as 49 per cent of Plipdeco is privately owned. Analysing these experiences can provide a starting point for this new transition.

The sale of all gas stations owned by NP has the potential to unlock some of the liquidity in economy by allowing for greater private sector participation in the economy. Government has limited financial resources and means for revenue generation; therefore where the private sector is willing to invest and collaborate with government – public-private partnerships are a win-win.

We have to underscore that it is not simply about privatising state controlled enterprises or assets but about selecting competent service providers to achieve improved performance and offer services at rates that are globally competitive.

Divestment and privatisation cannot be treated as an end in itself but as part of a broader program of reforms designed to promote better allocation of resources, foster competition, a supportive environment for entrepreneurial development and even capital market development. It is not going to be a quick fix to all our institutional challenges.

TT has been caught in a loop of holding on to practices which the world has long been abandoned. If nothing else, the pandemic has highlighted the need for reduced bureaucracy, elimination of archaic processes as well as the repeal or revision of outdated legislation and combative negotiating processes. For example, it is unconscionable that TT is still operating under a Customs and Excise Act that was crafted in 1938.

If these can be implemented and regulated appropriately alongside the increased thrust towards digitisation of government services, they can redound to an increased ease of doing business and competitiveness.