Amcham: Trinidad and Tobago’s economic development hinges on digital acceleration

WITH the International Monetary Fund (IMF) projecting moderate growth of 2.4 per cent for TT, the American Chamber of Commerce of TT (AmchamTT) has called on the government to enact strategic reforms and investments to maintain this momentum.

Amcham, in a lengthy document, offered dozens of suggestions to the Ministry of Finance, ahead of the September 30 budget presentation for the 2024/2025 fiscal year.

The chamber, and several local regional chambers, extensively addressed key challenges like crime, foreign exchange shortages and food security.

Amcham in particular stressed the importance of collaboration between the private sector and the government to drive innovation, diversification, and resilience.

"We believe that by focusing on enhancing the business environment, encouraging investment and fostering social development, we can significantly impact the nation's economic trajectory," Amcham said in the introduction to its recommendations.

The chamber focused on suggestions to improve public sector efficiency and infrastructure, and adopting digital and green strategies to enhance competitiveness.

"We emphasise the importance of enhancing public sector efficiency, improving infrastructure and adopting digital transformation strategies to remain competitive on the global stage.

"Furthermore, promoting green initiatives and sustainability will ensure that our economic progress does not come at the expense of our environment. By fostering a collaborative spirit and a shared vision for the future, we believe TT can achieve a more prosperous, resilient, and equitable society."

Amcham proposed several strategies to stimulate short to medium-term economic growth, starting with establishing an independent board to mobilise private capital, offering future tax credits for stimulating economic activity.

It suggested expanding the tax net and for the enforcement of existing tax laws for non-compliant businesses, utilising technology and collaboration with the Financial Intelligence Unit, without imposing past penalties.

Amcham also suggested incentivising venture capital with an amendment of regulations to allow institutional investors to allocate a portion of their capital to venture capital and private equity.

The chamber lobbied for up to five per cent of the Heritage Fund to private equity projects, focusing on diversification and revenue generation.

It called for expedited approvals for state land sales, leases and permits for projects that generate local or foreign direct investment in key sectors, and it has lobbied for the government to settle business debts, believing it will boost liquidity and tax contributions.

It wanted the government to announce a comprehensive plan to monetise hydrocarbon resources while transitioning to renewables.

Amcham also addressed nearshoring, calling on the government to accelerate efforts to develop the sector.

"We are aware that efforts are already underway to develop a nearshoring strategy," Amcham said. "It is well known that TT cannot continue to depend so heavily on oil and gas (revenue) and that diversification remains at the forefront of the government’s agenda.

"It is important that we plan and mobilise quickly to ensure that we capitalise on the unique economic circumstances created by the geopolitical instability in other countries that may be competitors for these investments."

Amcham also lobbied for a national task force to be implemented, along with a specialised team, budget and a five-year national strategy to develop the industry.

"There must be a solid vision with government support for sector development," it said.

The chamber shared numerous recommendations related to digital transformation, focusing on developing the digital economy, governance and cybersecurity infrastructure.

National digital economy strategy

Amcham encouraged the government to develop a strategy to identify digital opportunities and attract international investments, especially in export-oriented sectors such as IT, software development, and renewable energy.

Incentives like tax breaks could encourage private sector growth, following models like Curacao’s special economic zones.

– Whole-of-government approach: It recommended a systematic digital transformation approach across government ministries and regulatory bodies to enhance digital public services. The suggestions included cross-sectoral collaboration, digital skills capacity building and leveraging government-wide data analytics for better decision-making.

– National cybersecurity framework: Amcham said reforming the national cybersecurity strategy is crucial to address evolving threats. Cybersecurity audits, focusing on the public sector’s technical capacity, would help guide strategic development and strengthen partnerships for incident recovery planning.

– e-government interoperability: The government should adopt the "once-only" principle to reduce administrative burdens by ensuring interoperability and data sharing across departments. This would streamline processes and improve user experiences.

– Cloud computing and data governance: As the government integrates cloud services, Amcham suggested regulations should facilitate data sharing while avoiding data protectionism. A comprehensive data audit and governance strategy, it said, would enhance cross-border data flows and data-driven decision-making.

– Open data and innovation: Reforming the open data strategy can improve transparency and governance, Amcham said. Building on existing platforms like data.tt, the government could leverage partnerships with universities to advance digital inclusion and innovation in key sectors like agriculture, cybersecurity and software development.

– Digital skills and workforce development: A national ICT training framework is necessary to embed digital literacy from primary education through workforce training, equipping citizens with skills in emerging technologies like AI, robotics, and blockchain. Expanding digital literacy programs like WeLearnTT will further support workforce readiness.

– Regulatory reforms and sandboxes: Reforming regulations, including those around data protection, e-payments and SME participation in e-commerce, will foster a supportive digital economy.

Regulatory sandboxes can help test new digital products, ensuring innovation while protecting consumers.

Ease of doing business

The chamber has found ease of doing business in TT was an "area of discontentment" for many business people.

The express parcel industry, for example, a key factor in global business competitiveness, faces significant delays due to customs inefficiencies.

The chamber advocated for reforming customs operations, recommending that the new TTRA lead this effort.

It shared recommendations, including improving border security through enhanced risk management and modernising customs technology for more efficient revenue collection.

Automation and streamlining of procedures, Amcham said, should align with international standards, such as the harmonised system.

The Automated System for Customs Data (ASYCUDA) system, despite significant investment, remains underutilised, and the backlog in processing shipments is negatively affecting businesses.

ASYCUDA is a digital customs management system, covering most foreign trade procedures.

It handles manifests and customs declarations, along with accounting, transit and suspense procedures.

Amcham also suggested removing VAT and duties on security-related equipment to improve border security and fully automating customs procedures by integrating with TTBizLink.

It also proposed revising customs hours and locations to increase efficiency, and to re-implement procedures for faster clearance of low-value commercial shipments, such as replacing the online purchase tax with a flat $40 fee.

A de minimis value of US$400 was also proposed to enhance system efficiency and revenue collection, reducing burdens on businesses and consumers.

The chamber recommended establishing a professional standards bureau within the Customs and Excise Division to ensure high operational standards.

It suggested the introduction of a global entry and pre-clearance department at Piarco International Airport to expedite customs clearance for travellers to the US and improve airport efficiency.

Economic policy

Regarding economic policy, the chamber proposed government develop a comprehensive migration policy to tackle the challenges of an aging population and declining birth rates by encouraging inward migration.

The policy would aim to integrate economic migrants, refugees and asylum seekers while ensuring the social services system remains stable.

Tax reforms were also recommended, including the creation of an advanced tax ruling system to enhance compliance and transparency and an alternative dispute resolution system for tax disputes.

It also proposed the revision of the VAT refunds system as the settlement refunds currently impair cash flow for businesses.

Measures like the automatic application of refunds, it said, must be made more transparent and accountable to avoid unnecessary financial strain on companies.

National security

Addressing crime must be a priority, said Amcham, and modernising the police force can help.

It suggested enhancing the police service with better performance targets, advanced forensic capabilities and community policing initiatives to foster trust and combat gang recruitment.

Digital transformation of the homicide bureau, it said, essential to streamline investigations and improve crime-solving efficiency.

It recommended strengthening the judiciary and implementing prison reforms, such as mandatory upskilling of convicts, are recommended to reduce crime rates and foster rehabilitation.

Energy – Sensible transition to renewables

Amcham has advocated for a national energy policy to maximise oil and gas production while transitioning to renewable energy.

Encouraging emissions reductions, carbon capture and the development of a hydrogen industry were proposed to align with global climate goals.

Amcham said expanding the electric vehicle (EV) charging network and creating incentives for energy efficiency would support this transition.

The chamber wants the government to encourage investments in energy efficiency, such as reducing or removing taxes on LED bulbs.

It also called for a carbon pricing/trading scheme and an energy transition authority.

"(TT ought to) participate in or establish a regionally recognised carbon pricing/trading scheme to incentivise investments in low-carbon opportunities," Amcham said.

The state should establish and staff an energy transition authority or an arm of the Ministry of Energy to coordinate various government agencies to support renewable energy investments.

"While TT is making progress in these areas, the full implementation of all recommendations will require ongoing efforts and collaboration between the government, private sector, and international partners."

Environment, Social, Governance (ESG)

"One inescapable reality is that decarbonising the economy is a monumental task, with far-reaching economic trade-offs that will challenge industries, companies and individuals," said Amcham.

"ESG is a growing movement that would force companies, industries and government to seek more sustainable ways to create economic value by taking into account not only profit, but also people and planet. (Amcham) believes that the following should be implemented for the promotion of ESG best practice."

Amcham said integrating ESG principles into national policy is essential for sustainable economic development.

The chamber suggested promoting ESG best practices through tax incentives like the green investment tax credit to encourage businesses to invest in renewable energy, sustainable infrastructure and low-carbon technologies.

It also recommended a social impact tax deduction to support businesses that address social issues, and green building tax incentives to promote eco-friendly construction.

Amcham proposed a research and development (R&D) tax credit for sustainability to foster innovation and incentivise companies to develop sustainable technologies.

Additional funding for natural resource conservation was recommended, focusing on forests, biodiversity, and water bodies.

ESG principles should be integrated into the national budget, Amcham said, using a framework that evaluates sustainability, social inclusivity, and governance of budget proposals.

It said this would encourage responsible public spending and align TT’s development with global ESG goals.

The proposal outlined a multi-step plan, including capacity building for government officials, public-private partnerships, and transparent reporting to enhance public trust and investor confidence.

In concluding, Amcham reaffirmed its commitment to working alongside the government to drive economic and social progress.

"We believe that through strategic collaboration, innovation, and a focus on sustainability, we can enhance the business environment and improve the quality of life for all citizens.

"We are optimistic about the future and eager to contribute to the nation's journey toward a more prosperous and resilient TT."