Finance minister looks to put Trinidad and Tobago on IFC map

The financial sector plays an important role in Trinidad and Tobago’s plans to diversify its economy, which is still heavily driven by oil and gas revenues. The country has ambitious goals not only to further strengthen financial businesses, but also to establish itself as an international financial centre. The ministry of finance, Larry Howai, explains why the newly created Trinidad and Tobago International Financial Centre (TTIFC) will create a long-term, sustainable source of wealth and employment for the country.

Q: What has been achieved by Trinidad and Tobago's financial sector so far?

A: The financial sector accounts for about 14.5% of gross domestic product [GDP], making it the second largest sector in the country after the energy sector, which contributes 40% to 45% of GDP. Trinidad and Tobago’s banks have by and large dominated the [Caribbean] region. We have a very strong, solid financial sector; our financial institutions are very well capitalised with a ratio of about 25% in risk-adjusted capital on total assets. So it’s a well-run, well-regulated and very strong and vibrant industry. It is our intention to see that industry continue to develop.

Over the past year, the TTIFC, the international financial centre in Trinidad and Tobago, has made some significant strides in helping us to begin the process of [deepening] the sector, which is built around our strong retail banking sector. It has also initiated some steps to assist the further development of the insurance sector. So we expect to see continuing growth and development in the [financial] sector in the years to come.

Q: Trinidad and Tobago’s banking sector is by far the strongest in the Caribbean and the country is strengthening its insurance sector too. However, do you think that to attract further interest from international investors, the overall legislative framework needs to be further strengthened?

A: We have started to strengthen our legislative framework. We have brought into place a new Securities Industry Act, which went into effect in early 2013. We are currently debating the Insurance Act, which will bring our insurance legislation fully up to date. We introduced a Financial Institutions Act in late 2012, and took steps to remove Trinidad and Tobago from the grey list of the Financial Action Task Force [an inter-governmental body established to combat money laundering and terrorist financing]; we are a fully compliant country now. We have also taken steps to make ourselves compliant with the Energy Industry Transparency Initiative, which also positions us well internationally as far as disclosures are concerned with respect to our energy sector. We’ve also started to put other pieces of legislation in place, for example, credit union legislation – I expect to be able to bring that to parliament within the next few months.

So overall, we expect to be able to have a fairly solid financial and regulatory framework on which we can grow our financial sector over the next few years. It’s going to take a lot of time to make sure that we get it all right, but we want to make sure that Trinidad and Tobago is seen as a well-regulated market, one in which anyone can reasonably operate well, without having any concerns about transparency, about compliance and about the state of the industry generally.

Q: Trinidad and Tobago has tried to develop a financial centre in the past, without much success. Do you think that this time things will be different, and that, should the government change in the next election in 2015, commitment to the initiative will remain?

A: Yes... The initiative that we are pursuing now had its genesis when the last administration was in office, prior to the last election. I see this as an area that the country will continue to focus upon and emphasis will be placed upon [from all] sides of the political spectrum. In fact, we’ve had some successes recently on which [other administrations] could build. We started looking at back-office processing [being based] locally, and we have created about 1000 jobs in that area over the past two years. Seeing results in terms of job creation was important.

We have a number of committees within the central bank looking at capital markets, we see potential for some development there in the next year or two. As a consequence, we expect that the job-creating initiatives that are being put in place just now will be something that will be continued by any administration.

Q: Trinidadians are proud of the country’s human capital. Is this a strong selling point for the international financial centre, and something that differentiates the country from the rest of the Caribbean?

A: Trinidad and Tobago makes quite a significant investment in education and human capital development on an annual basis. Approximately 18% to 20% of the annual budget is [typically] allocated towards education. Trinidad and Tobago is one of the few countries in the world where education is free from the pre-school level right up to the tertiary level, and in some cases post-graduate level.

So we have invested, and continue to invest, very heavily in education and in human capital development. I think it is an area in which we excel, and in which we far surpass any of the other islands in the region.