TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 2

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000701

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EINV ECPS EFIN KIPR KFLU SENV TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 2


PORT OF SP 00000701 001.2 OF 003


The following were notable economic issues in T&T
during the latter half of May:

(1) T&T going with the "Flow"
(2) Repo rate hiked again
(3) Fertilizer complex deal with U.S. firms
(4) Alcoa leads tour of Brazilian smelter
(5) Govt explores new U.S. trade options
(6) T&T ranking in environment study
(7) T&T preparing for bird flu
(8) New investment policy coming

--------------

1. T&T going with the "Flow"
--------------

Local cable company Columbus Communications has re-
branded its services with the launch of Flow, a new
digital system incorporating the "triple play" service
of cable, high-speed Internet and telephone service.
Columbus expects to give incumbent local telecom
provider TSTT stiff competition for its Internet and
telephone services. TSTT plans to launch its own cable
service before the end of the year. Columbus expects
75 percent of its customers to be digital in 36 months,
with phase one of the digital conversion starting in
June. Cable customers will have access to more than
200 digital quality video and audio channels, DVD
picture and sound quality, pay-per-view programming,
video on demand capability and superior parental
control features. According to company officials, it
will invest in excess of TT1 billion (US$160 million)
in T&T as testimony to its commitment. Columbus has
not yet resolved its ongoing piracy of certain U.S.
broadcast signals, though it claims to be in discussion
with HBO.

--------------

2. Repo rate raised again
--------------

On May 23, the Central Bank increased the `Repo' rate
from 6.75 percent to 7.0 percent in light of continuing
inflation, evidence of continuing strong demand in the
economy and the relatively narrow spread between
domestic and US interest rates. Latest data from the
Central Statistical Office (CSO) shows that inflation
continues to be a major economic challenge. Year-on-
year headline inflation was up to 6.9 percent as of
April 2006.

--------------

3. Fertilizer complex deal with U.S. firms
--------------

Two American companies, Terra Industries and CF
Industries Holdings, and local corporate giant Ansa
McAl recently signed an agreement with the GOTT for the
construction and operation of a fertilizer complex at
Union Industrial Estate in southwestern Trinidad. The
complex, First UAN Trinidad Ltd., comprises five
chemical plants - urea, ammonia, nitrate acid, and two
Urea Ammonium Nitrate (UAN) plants, and is to be built
at a cost of US$835 million. Construction is expected
to start in the third quarter of this year, and
production is expected by the first quarter of 2009.
The project will employ 2,000 construction workers.
Once production begins, some 125 people will be
permanently employed at the complex. CF Industries is
a newcomer to this country, but Terra Industries
already has a foothold in T&T. The company owns 50 pct
of Point Lisas Nitrogen after Terra acquired
Mississippi Chemical in 2004.

--------------

4. Alcoa leads tour of Brazilian smelter
--------------

In an effort to gain support for its Trinidad smelter
project and allay health and environmental fears among
residents of the communities involved, Alcoa arranged
in May for a group of local non-governmental
organization (NGO) representatives to visit the Alcoa-
owned industrial complex, Alumar, in Sao Luis, Brazil.
Consisting of a representative from the Beekeepers
Association, a Pentecostal minister, the chairman of
the Council of Presidents of the Environment (COPE),
and a schoolteacher, the group toured the Alumar
environmental park, port and refinery. The visitors

PORT OF SP 00000701 002.2 OF 003


also toured the Rural Family House, the Technological
Capability Center, and the Bom Menino Park, all of
which are financially assisted by Alumar.

--------------

5. GOTT explores new U.S. trade options
--------------

Foreign Affairs Minister Knowlson Gift recently
welcomed a Miami-Dade County trade delegation and
advised the members of the significant levels of trade
currently taking place between T&T and the USA. Gift
said that TT-US trade spanned several business sectors,
with the greatest emphasis on the energy sector. The
Minister told mission members that the T&T investment
climate was "hospitable," and the time was ripe for
South Florida businesses to seek out opportunities in
T&T. Gift said trade opportunities with South Florida
were being explored. Some T&T manufacturers have also
expressed an interest in exporting their goods to South
Florida.

--------------

6. T&T ranking in environment study
--------------

The Environment Management Authority (EMA) recently
highlighted findings of a joint Columbia/Yale study,
comparing countries on environmental indicators. The
Environmental Performance Index (EPI),a study of the
environmental health of 133 countries, was released in
January at the World Economic Forum in Davos. It ranks
T&T 35th (the USA is 28th). According to EMA chairman
John Agard, water resources in T&T received an almost
perfect score of 99.9, an environmental health score of
94.1, air quality 74.4 and natural resources 88.9.
However, its two major failings were in biodiversity
and protected habitat where it scored 32, and
sustainable energy, which got 3.4. Agard explained
that the sustainable energy score was a result of this
country's exportation and overdependence on its fossil
fuel deposits, and its failure to invest in alternative
sources of energy. He said that an improvement in this
area could easily place T&T into the top ten countries
on the list.

--------------

7. T&T preparing for bird flu
--------------

The Ministries of Agriculture and Health have signed up
for UN Food and Agriculture Organization (FAO)
emergency assistance for early detection and prevention
of avian influenza in the Caribbean. The FAO project
runs from April 2006 to September 2007. T&T, together
with 14 other countries, will have access to US$500,000
to use in sharing information and developing emergency
preparedness plans. The project includes support for
laboratory services. The funds are to be used for
communications strategies and early detection by
looking at wildfowl, domestic birds and free-range
species. According to Agriculture Minister Jarette
Narine, the T&T Cabinet has given his ministry one
month to develop plans and proposals to deal with bird
flu (AI),and this also includes funding. According to
Narine, Bird Flu (AI) is expected to reach T&T within
18 months or sooner. He urged people to cage their
yard-fowl in an effort to prevent them from catching AI
from infected migratory wild birds, especially wild
birds trafficked from Venezuela.
- Meanwhile, the Ministry of Agriculture has
announced that tests and autopsies performed in recent
deaths of several seabirds on Tobago determined that AI
was not present. It is believed that the deaths were a
result of ingesting poison used in a pest control
exercise at a nearby landfill.

--------------

8. New Investment Policy Coming
--------------

At the May 17 opening ceremony for the Trade and
Investment Conference (TIC),Trade and Industry
Minister Kenneth Valley revealed that government was in
the process of developing a new investment policy to
promote more foreign and domestic investment.
According to Valley, the policy will be available for
public comment shortly. During his address Valley said
T&T would lay the foundation for sustainable economic

PORT OF SP 00000701 003.2 OF 003


growth by integrating its economy into the Latin
American economy, and a key to this would be expanding
the non-energy sector in T&T.

AUSTIN