National recovery fund among American Chamber's advice for budget 2021

A national recovery fund, consolidation of debt, enforcement of tax laws, divestment and investment by state companies, regulations for venture capital and private equity investment and investment using a fraction of the Heritage Stabilisation Fund are among the suggestions for recovery post covid19, made by the American Chamber of Commerce Trinidad and Tobago (Amcham) to the Government for the 2021 national budget, expected to be read next month.

Amcham made the suggestions in a 15-page submission given to the Ministry of Finance on Wednesday.

Amcham said it recognised the need for Government to increase revenue while supporting citizens and businesses through the covid19 pandemic.

“It is important that our country’s economic recovery plan has clear objectives related to the improvement of quality of life and social harmony as prerequisites to a more attractive business environment.”

Amcham said a national recovery fund with an independent board, similar to the art and culture tax, could mobilise private capital through future tax credits for a suggested period of three to five years for expenditure in the fund.

It suggested that decreasing the US-dollar denominated debt should be a priority, thus refinancing was advisable rather than risking debt restructuring in the future.

“(Government should) consider divestment and strategic investments/acquisitions of and by state companies that have been operating as commercial entities,” Amcham added. It suggested that this would work for commercial entities who have not required subsidies from government for about five years.

“The use of transparent public private partnerships should be explored to achieve these objectives and feasibility studies/data analytics studies should be conducted on all of them as part of the annual agenda, so the process can commence with the appropriate data available.”

It also suggested that Government collaborate with the Financial Intelligence Unit and utilise technology like GIS maps, artificial intelligence, fraud detection tools, professional accreditation bodies and associations to identify businesses that are not BIR compliant to bring more people into the tax net.

Amcham also said Government should incentivise venture capital and private equity investments by allowing institutional and private investors to invest a portion of their capital in those types of funds. It also suggested that Government invest less than five per cent of the heritage fund in a similar fund, as well as revenue generating projects and diversification investments.

Aside from post covid19 growth, Amcham made general suggestions for development which included digital transformation, data for decision making and ease of doing business.

It advised that government create and implement ICT skills development and education policies which would enable competitiveness in some sub-sectors.

“Universities like UWI, UTT, SAM, SBCS etc can then be engaged to develop programmes to quickly develop the critical mass of designers, coders and analysts required. The curriculum should be reviewed by the Ministry of Education at every educational level and updated to reflect this policy. The design thinking methodology should also be included in both teacher and student learning. We also recommend that digital/ICT training be added to the curriculum at all levels, starting with coding with at the primary school level.”

It also suggested that Government expedite the process for the enablement of Central Bank’s TT regulatory sandbox which will allow for local fintech institutions to roll out to beta users and create economic opportunities for the technology sector.

“While this has been announced, it has not been effectively implemented thus far.”

It also suggested that government enable the use and acceptance of digital signatures, establish a data interoperability framework, design a change management plan for engaging groups that may be affected by the implementation of e-services and implement a national identifier and a legal digital identity for TT.

It recommended that Government prioritise the National Statistical Institute and give it what it needs to have up-to-date and accurate data.

“Deficiencies in data collection and reporting were highlighted as one of the primary factors affecting the country’s credit rating. The National Statistical Institute is therefore a critical component of the effective planning for the future.”

Being ranked as 105 out of 190 in the ease of doing business, with low scores in paying taxes and enforcing contracts, Amcham once again said more has to be done to improve the business environment in TT.

“(It would) not only allow our local companies to expand but it also allows investors to see the country as attractive for their investments.”

Recommendations for the ease of doing business included a full automation of the process at Customs and Excise Division and a full integration with TTBizLink. It also suggested that hours at customs be revamped and locations redesigned to increase the efficiency at Piarco airport and the sea ports.

Amcham also suggested Government develop a migration policy to meet the needs of increased development. It said the policy should address economic migration, refugees and asylum-seekers.

“Integration of migrants into local life is required,” it said. “Given the range of considerations necessary, development of such a policy would require inter-ministerial collaboration and must be underpinned by research; both of best practice and of the current situation of the country.”

It also recommended that Government re-implement the 2011 procedure of clearing commercial shipments $20,000 and below without an entry and encouraging the establishment of export tax free zones for investment in trade and cargo logistics and a replacement of online purchase tax with a $10 airway bill fee.

A comprehensive energy policy was also deemed necessary by Amcham, saying it should include measures to accelerate exploration and development of oil resources.

“A 10-year national strategy for the energy sector is important,” Amcham said. "This positions TT to be well-placed in energy transition.”