TRINIDAD ECONOMIC HIGHLIGHTS JULY, PART 1

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000884

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TAGS: EAGR EAIR EIND KCOR TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS JULY, PART 1


The following were notable economic issues in T&T
during the first half of July:

(1) Caribbean Star/Sun expanding operations
(2) Energy minister lauds chemical facilities
(3) Agriculture minister calls for change
(4) NGO ranks T&T on economic freedom

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1. Caribbean Star/Sun expanding operations in T&T
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To better support an expansion in service from
Trinidad, Caribbean Star Airlines has established a
new crew base and maintenance facility at Piarco
Airport in Port of Spain. The new crew base will
enable the airline to position twoto-three aircraft
t
full time at Piarco Airport (POS). In April,
Caribbean Sun, Caribbean Stars sister carrier,
launched daily flights between Trinidad and Antigua.
The route proved so successful that Caribbean Star
added new flights as well. Further enhancing its Port
of Spain operation, Caribbean Star will resume daily
service between Trinidad and Guyana, a route
previously flown from 2002 to 2004. Both Caribbean
Star and Caribbean Sun offer daily service between
Trinidad and islands throughout the region. Caribbean
Star inaugurated service to Trinidad in 2000, while
its flights to Tobago started in 2002. Caribbean Sun
flights to Trinidad began in February 2006. COMMENT:
the expansion of Caribbean Sun to T&T has effectively
opened up USAir service via San Juan to Trinidad.
USAir has alliances with the GoCaribbean Network,
which includes Caribbean Sun and Caribbean Star. End
comment.

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2. Energy minister lauds chemical facilities
s
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In statements made in Parliament earlier this month,
Energy Minister Lenny Saith said that T&T would only
get wealthier in the future with the investment of
US$1.564 billion for the establishment of an ethylene
complex and a maleic anhydride processing facility.
According to Saith, both projects will create over
5,600 jobs during construction and a total of 540
permanent positions. He added that close to 6,000
sustainable jobs would be generated through the
stimulation of new businesses in a wide range of new
downstream manufacturing activities. The ethylene
complex will be constructed on 250 acres of land yet
to be identified, and would be done in three phases
with construction scheduled to start in the last
quarter of 2007. The US$1.5 billion facility would be
funded by equity (30 percent) and debt (70 percent).
Meanwhile, ISEGEN (PTY) Ltd, a company incorporated in
South Africa, will operate the maleic anhydride
facility. Maleic anhydride is an intermediate
chemical widely used in the industries for food and
beverage products, pharmaceuticals, resins, oil
additives, detergents, and agricultural products. In
2005, ISEGEN and Phoenix Park Gas Processors of T&T
(minority-owned by ConocoPhillips) signed a memorandum
of understanding (MOU) for the US$64 million facility,
with construction expected to begin in the third or
fourth quarter of 2008.

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3. Agriculture minister calls for change
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Agriculture Minister Jarette Narine has called for
more efficient use of the resources allocated to the
agricultural sector. Speaking at the opening of the
2006 Farmers Forum on July 14th, Narine said that the
Government had earmarked some 15,000 acres of land for
further distribution to former Caroni (1975)
employees, with a view to "reducing the price of
food." (NOTE: Caroni is the former government-owned
sugar cane company, which closed down roughly five
years ago.) In addition, Narine announced that the
GOTT plans to go into business with the private sector
in large agricultural projects, targeted for specific
industrial commodities, on some of the remaining
Caroni lands. The Minister elaborated on other
endeavors being pursued to enhance efficiency in
agriculture, such as the development of a database for
crop forecasting and relief payments to food crop
farmers as a means of improving documentation, which
he went on to qualify as being crucial to the proper

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functioning of any business, including agriculture.

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4. Canadian institute ranks T&T on economic freedom
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Local media has publicized a report by the Fraser
Institute of Canada on Economic Freedom of the World,
which was issued in September 2005. The Institute
defines economic freedom as the freedom to engage in
economic transactions without government interference
but with government support of the institutions
necessary for that freedom, including rule of law,
sound money and open markets. On a ten-point scale,
Trinidad received a 6.8 rating in the 2005 report,
ranking it 44th in the world. The report is based on
2003 data. This is an improvement from the 1980
figure of 5.1, when the first analysis was conducted.
The 6.8 rating, however, marks a decrease from the T&T
2001 rating of 7.1. Posts review of the reports
analysis on the contributing elements confirms that
the main factor behind the decline was a loss of
confidence in the legal system and a decline in the
score for judicial independence. Another trend
identified by the report is the increase in the size
of government. Within the region, Jamaica was the
only Caricom country to rank ahead of T&T. COMMENT:
Given the sharp increase in GOTT-owned companies and
expenditures since 2004, coupled with the ongoing GOTT
T
attempt to remove the chief justice from office, we
expect to see a worsening of the T&T ranking in the
next edition of the Fraser Institute report.

SWEENEY