//= SCRIPTS_VER ?>
Executive Chairman of the ANSA McAL Group of Companies, Mr. A Norman Sabga, LLD (Hon.) UWI
On Friday the 28th June 2019, the Executive Chairman of the ANSA McAL Group of Companies, Mr. A. Norman Sabga, LLD (Hon.) UWI, delivered the feature address on ‘Competitiveness and Regional Economic Growth’ at the AMCHAM T&T’s Annual General Meeting 2019 Forum which took place at the Hilton Trinidad and Conference Centre.
See below for the Executive Chairman’s feature address
It is an honour and my pleasure to address you today, and I wish to thank the Board of Directors of AMCHAM, for the invitation to speak at this important function.
I would like to utilize the occasion to talk specifically about ‘competitiveness’ and broadly, but in the same context, ‘regional economic growth’.
I would also like to position the theme of “Competitiveness” against the backdrop of a ‘global economic map’, that is experiencing massive shifts in ‘economic output’ and ‘political influence’, that are re-routing the eb and flow of global trade, which is unprecedented in modern history.
Many traditional trade alliances have dissolved in the wake of a new epidemic of ‘economic Nationalism’, that has now gone Global.
Tensions between the US and China and the Brexit fiasco, involve most of the World’s largest, most influential and most valuable economies, brings to mind a story about “elephants rumbling, and mice being trampled.” Not that we ‘captains of industry’ would ever want to be characterized as mice, but on a Global scale, neither are we the elephants.
Closer to home, our Venezuelan neighbours are fleeing their country in the hundreds of thousands, as their political and economic situation deteriorates.
It is potentially one of the worst humanitarian crises in our region and will certainly impact Trinidad and Tobago and other Caribbean nations.
All countries face a choice when it comes to immigrants, but they can make a strong contribution to economic growth. Research shows that immigrants searching for safe havens and opportunities, benefited their host nation’s economies within 5 years of arrival. Some of the world’s largest and most important companies were founded by immigrants. As a matter of fact, 216 companies on the Fortune 500 were founded by them or their children.
There is no doubt that all the above represents significant challenges and threats to our already stressed society, strained infrastructure and to our own struggling economy.
Within the region, Trinidad and Tobago is lagging behind regional averages. However, the latest Moody projection is upbeat.
The IMF estimated real GDP growth in the Caribbean region of 4.7% in 2018, and projects growth of 3.6% and 3.7% in 2019 and 2020 respectively.
Although both sides of the political divide, have proclaimed and endorsed economic diversity and social transformation as critical to sustainable economic growth and development, the stark reality is that decades later, we are still heavily reliant on the export of energy-based commodities and favourable oil and natural gas prices in order to compete in the Global market.
The energy and petrochemical sector still account for 36.7% of GDP and 86.7% of export earnings and contributed 19.9% to Government revenue. It is still the major earner of Foreign Exchange in our market. This vitally important sector has been challenged by a reduction in gas supply.
However, 2017 recorded a slight increase in supply. Investments must be encouraged to continue in the upstream, if this vital sector is to remain competitive and sustainable in the long haul.
Ladies and Gentlemen, Trinidad and Tobago face several social and structural constraints along the journey to becoming a competitive and a diversified economy. As citizens and business leaders, we experience these challenges every day.
There is almost an ideological resistance to linking productivity to reward, discipline to excellence, efficiency to competitiveness and delivering world class service to sustainability.
Is it perhaps the lack of an ideological alignment or even a shared National agenda between – the State, the Private Sector and Labour that sends conflicting signals to our citizens?
Does this unintentionally reinforce the negative attitudes that have not worked in the National interest?
We know the obstacles and have been talking about and analysing these challenges for decades. However, it appears outside the private sector, there is neither the appetite nor the urgency to reset the balance in the economy.
Ladies and gentlemen, we need a long-term National Vision for Trinidad & Tobago, one that is actionable now, not one that is bracketed by five-year election cycles or short-term political ambitions.
A Vision with specific goals to fix the big issues that stifle our potential and dilute our ambitions, and where entrepreneurship is encouraged to thrive at all levels of society.
A Vision championed by people courageous enough to embrace the consequences of the toughest decisions for the greater good.
A Vision focused not only on what is wrong, but also the things that are good that can become great and compete anywhere in the world!
A Vision where winning, success and achievement is celebrated and encouraged, and ‘wealth creation’ and ‘profit’ are seen as aspirational.
And a Vision that answers the questions – what kind of country do we want to be?
What are the key pillars that will support and sustain success for Trinidad and Tobago and its stakeholders?
Right here in this room sit many of the movers and shakers, who can continue the heightened engagement with Government and critical stakeholders, to influence how Trinidad and Tobago and the region can navigate the riptides that threaten to erode major aspects of our economy and society.
In the ANSA McAL Group, we have long recognised that we are not always on a ‘level playing field’ at home or in the region.
Though successive administrations have regularly proclaimed that “T&T is open for business”, the field remains tilted in favour of maintaining the status quo.
So, we, like many other successful enterprises have had to cut our own path to competitiveness and sustainability. Recognising the limitations of market size and accessibility, we focus on obtaining scale through export and a competitive cost per widget. This is as essential as is world class quality, to achieving competitiveness. We must be competitive locally and regionally, and critically for export outside the protection of our CARICOM preferential Treaty arrangements.
The familiar challenge for all manufacturers in small markets whether it’s beer, blocks, bleach or ammonia, is that without scale you’re not running at optimal efficiency. Sub optimal efficiency drives up your costs and erodes GP, your profit and ultimately the ability to compete. If you can’t compete then you can’t achieve profitability and sustainability or monetize your investment.
Simply, we compete, or we die!
This may sound a bit dramatic, but we are, where we are.
We must stop sugar coating bitter reality, stop making decisions on anecdotal evidence and political expediency, and start making fact- based non-emotional decisions, if we are serious about achieving competitiveness and sustainability.
We must accept the fact that no one is going to hand us market share, we have to win it, ‘sip by sip, brick by brick’!
We at ANSA McAL have taken advantage of the opportunity to also invest in manufacturing and distribution operations in Barbados, Grenada, Guyana, St. Kitts and Jamaica. We have leveraged the regional market as a spring board to become an extra-regional organization, with the acquisition of the Florida Beer company in Tampa, and the diversification into the renewable energy sector in Costa Rica, with the Tilawind Wind Park Project.
ABEL Building Solutions, despite reduced local demand for concrete and clay blocks, was able to bolster its revenues and production through increased exports to Guyana and the OECS. ANSA Coatings Ltd and Carib Glassworks Ltd as well as Carib Brewery, had significant growth within the region, especially in Cuba.
We recognise that it is our competitiveness at home and in the region, that will determine our success in the global marketplace.
So, it is possible to transform a company to become competitive, sustainable and world class but what about a country?
The good news is we don’t have to invent or create anything new. There are a few well known socio-economic transformation cases that we are all familiar with. Pre-transformation Singapore was drowning in debt, corruption, crime, poverty, no Foreign Direct Investment, failed and failing infrastructure and social services, education, health, sanitation and communications.
Lee Kuan Yew focused on three pillars – Meritocracy – put the best people for the job in the key positions. Pragmatism – the second pillar – don’t be bound to any ideology or system that hasn’t worked in the past, be prepared to adapt and apply the best solution to the problem.
The third pillar, perhaps the most important – Lee Kuan Yew’s fixation with honesty at every level of his administration, meant that there was no room for corruption, which is the demise of so many developing and developed countries. Our neighbour to the west is a tragic example.
Closer to home is a more recent example of a country making a decision to transform its economy, be competitive and be successful.
A decade ago, Jamaica was on the brink of economic collapse. The global financial meltdown at the time exposed the weak foundations of the economy. In 2013, national debt was 141% of GDP. Today it is 96% of GDP. In 2013, the unemployment rate was 16%, it is now 8%.
Youth unemployment was 35%, now it is 21.8%, Jamaica engaged a tough IMF programme requiring at the time, a rescheduling of local debt and a commitment to a primary surplus of 7.5%, as well as deep structural and institutional reforms. Jamaica is now a success story; its Stock Exchange was voted the best in the world by Bloomberg in 2018.
Success for Jamaica in overcoming this crisis meant that all stakeholders, the government, private sector and unions had to sacrifice and there had to be a consensus on the type of sacrifice.
The Government and the Opposition had to agree to faithfully implement a programme of fiscal discipline, regardless of political risks.
The private sector had to agree to voluntarily accept a reduction of interest and a rescheduling of debt. The unions had to agree to a wage freeze and a general reform of the public sector, which included the introduction of a contributory pension scheme.
That was very much a partnership.
So, when the question is asked, to what extent here in Trinidad and Tobago can multi-stakeholder partnerships help address the challenges of sustainable development, I say it’s not ‘to what extent’, but rather ‘there is no alternative’.
We have many strengths as a nation. A well-educated labour force, good fiscal metrics – relatively low debt to GDP as compared to Jamaica, lower unemployment than Jamaica, strong foreign exchange reserves – as well as a Heritage and Stabilisation Fund with over US$6 billion. So, while we recognise the strides made by Jamaica we also have our strengths, and if well managed, can be the launching pad for diversification and growth.
But the interests of public/private sector are not always aligned and there is suspicion between the two. There is a prevailing sentiment that the private sector is willing to reap the rewards without taking any risks or returning value to the national community.
Ironically, the private sector’s view of the public sector is in the worst case, corrupt, too bureaucratic, too slow or not reactive enough.
However, public-private partnerships and other forms of co-operation are frequently used around the world to develop and expand telecommunications and transportation systems, construct and operate water, sewer and waste treatment facilities and provide health, education and other services.
There is also a view that the biggest barrier to public sector reform are the unions, and that they are the enemies of progress and competitiveness. Unions are sometimes viewed as militant, only focused on preserving membership and the right to withhold labour as a central component of the negotiating process. However, in the last decades, economic and technological changes have rendered many aspects of these institutions obsolete.
So maybe, we should all be asking what kind of unionism makes social and economic sense given the new realities of global competition?
To remain relevant our trade unions must reinvent themselves much as some companies are being forced to do in order to compete and remain sustainable. The industrial relations climate in this country cannot be re-invigorated unless unions carve out a new role for themselves, and truly get on board the national vision of competitiveness and sustainability.
The Labour Movement must be prepared to adapt and be part of the process that develops the National Vision. As Charles Darwin wrote about his theory of evolution, referring to survival of a species, “it’s not the strongest that survived, but the ones that were the fastest to adapt”.
As stakeholders in the economy, the private sector should naturally expect a level of predictability and acceptable risk and return, in order to support capital investment. The key factors for a favourable business climate include regional security and cooperation, macroeconomic stability based on prudent economic policies, good governance, well developed financial and physical infrastructure and respect for the rule of law.
This brings me to another point.
The CSME came into effect in January 2006 and there is still a view that this important regional integration process is still to deliver on its promises.
However, there are signs that regional leaders are invested and are prepared to hammer out an implementation plan and timeline to achieve CSME goals, culminating in 2021 with the free movement of people within the region.
Earlier this year, Barbados Prime Minister, Mia Mottley, Chair of the CSME Sub-Committee, including CARICOM Chairman, Prime Minister Andrew Holness of Jamaica, our Prime Minister Keith Rowley, together, with other CARICOM Heads of Government, announced a partnership with the private sector and labour, making us associate members of CARICOM and allowing us to sit at the table during meetings.
Ladies and gentlemen, there is one special set of policies which have the potential to increase investment and growth and address directly, issues of poverty and inequality. Investment in human capital through improved primary, secondary and tertiary education, helps develop a skilled labour force.
At ANSA McAL we continue to set ambitious growth targets that often contradict economic outlook and are constantly resourcing and training to deliver the results that all our stakeholders expect. We invest in our talent pool at every level in the Group.
As Sir Winston Churchill noted many years ago, “government cannot give to anybody anything that it has not first taken from you”. The role of a government in the economic development and trade of a modern market economy should not be one of patrimony, but an enabler, providing a supportive framework for private sector activity. It is an important role, but it should not be a dominant one.
It is up to us to take the lead in determining the actual role of economic development and trade.
ANSA McAL will always will be an ‘agent of change’, and our aim is to have a positive impact on important issues facing society. We want to grow our businesses and maintain employment levels; for everyone to be paid for their best performance and to incentivise appropriately.
Let me end with this commitment. The ANSA McAL Group gives its assurance to continue to invest in the economy of Trinidad and Tobago, our communities and the region, through vigorous and positive collaborations.
We will continue to align the way we govern our businesses with local and international best practice and standards.
Ladies and gentlemen, the world is not waiting on any of us. We must fix ourselves and our institutions here in Trinidad and Tobago and the region. We must be part of the progressive dialogue when it comes to improving regulatory environments, developing human capital, increasing productivity, and fiscal and monetary policies, not just to survive but to thrive locally, regionally and globally.
Government must engage meaningfully and through real collaboration with all stakeholders, especially the business fraternity.
They should make Trinidad and Tobago attractive, reduce red tape and bureaucratic procedures, and improve the ease of doing business across the country and the region.
Here is an invitation for everyone to act and correct what is happening in our country if we are to compete against the best in the world and also be the best.
I am confident about Trinidad and Tobago’s resilience, the Caribbean and the capacity of our people to work together to elevate our country and the region.
I thank you and wish you all well.
Corporate Communications Department
ANSA McAL Group of Companies
Tuesday 02nd July, 2019