Identifier
Created
Classification
Origin
08PORTOFSPAIN444
2008-09-30 13:30:00
UNCLASSIFIED
Embassy Port Of Spain
Cable title:  

TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR MID-AUGUST THROUGH

Tags:  ECON ETRD EFIN EINV EAIR SENV ENRG KIPR SOCI TD 
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FM AMEMBASSY PORT OF SPAIN
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RUEATRS/DEPT OF TREASURY WASHDC
RUEHDG/AMEMBASSY SANTO DOMINGO 2631
RUEHSJ/AMEMBASSY SAN JOSE 0494
RUCNCOM/EC CARICOM COLLECTIVE
RHMCSUU/DEPARTMENT OF ENERGY WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHDC
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RUBDPLA/TSA HQ WASHINGTON DC
UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000444 

SIPDIS

SANTO DOMINGO FOR REGIONAL COMMERCIAL OFFICE
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EINV EAIR SENV ENRG KIPR SOCI TD

SUBJECT: TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR MID-AUGUST THROUGH
MID-SEPTEMBER 2008

The following were notable economic issues in Trinidad & Tobago during
the second half of August and first half of September.

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000444

SIPDIS

SANTO DOMINGO FOR REGIONAL COMMERCIAL OFFICE
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EINV EAIR SENV ENRG KIPR SOCI TD

SUBJECT: TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR MID-AUGUST THROUGH
MID-SEPTEMBER 2008

The following were notable economic issues in Trinidad & Tobago during
the second half of August and first half of September.


1. US$2.3 billion plastics deal signed with Europeans

2. Hill International wins $285 million project

3. T&T faces labor shortages

4. GOTT increases infrastructure borrowing authority

5. NGC benefiting from high Methanol Prices

6. GOTT gives CAL tax exemption

7. Yachtie fuel crisis resolved

8. Flow signs agreement with TBS

9. GOTT to curb DVD piracy through regulation

10. Committee formed to protect T&T's plant varieties

11. T&T's Green Fund to begin issuing grants

12. Eight industrial parks planned for T&T

13. T&T appoints new Regulated Industries Commission


1. US$2.3 billion plastics deal signed
--------------
The GOTT signed a deal that will bring US$2.3 billion in Foreign Direct
Investment from German and Netherlands-based companies for the
construction of an integrated polypropylene complex. This investment
represents the largest inflow of FDI for a single project in T&T's
history. A joint venture between LyondellBassell (a Netherlands-based
company wholly owned by U.S. conglomerate Access Industries) and Lurgi
of Germany, this facility is slated to come on line by 2012 and will
provide inputs for manufacturing plastic goods. GOTT-owned National
Gas Corporation and National Energy Corporation are the other parties
to the deal. Coming just 8 months after the companies signed an MOU,
the polypropylene project has leapfrogged ahead of another plastics
proposal, from Westlake Chemical of the U.S. to build a polyethylene
complex. Westlake signed an MOU in mid-2006, anticipating investment
of $1.5 billion, but has not yet finalized a deal. Speaking at the
signing ceremony, PM Manning emphasized the potential benefits of a T&T

plastics industry for manufacturing in other Caribbean countries and
reiterated his support for regional integration and the EU-CARIFORUM
Economic Partnership Agreement.


2. Hill International wins $285 million project
-------------- --
New Jersey-based construction management firm Hill International
announced its selection by the GOTT-owned Housing Development
Corporation to design and construct a residential/commercial
development in South Quay, Port of Spain. The project, valued at US$285
million, is the first phase of a GOTT urban renewal effort in troubled
east Port of Spain. The award to Hill represents the first time in a
decade that a U.S. firm has won a GOTT-funded construction project of
this magnitude, even as firms from China, France, and Canada have won
contracts worth billions.


3. T&T signs labor MOU with El Salvador
, --------------
The GOTT signed an MOU with El Salvador to facilitate Salvadorans
working in T&T. With more than 40,000 open positions and less than
25,000 job seekers, employers in T&T are facing shortages. According
to businessmen, they must compete for labor with government training
and "make work" programs. Taking a more positive view, the government
argues labor shortages reflect a booming economy. Unemployment is
estimated at 4.3 percent.


4. GOTT increases infrastructure borrowing authority
-------------- --------------
The GOTT recently proposed an increase in its borrowing threshold under
the Development Loans Act from TT$13 billion (US$2.2 billion) to TT$20
billion (US$3.3 billion). The new funds will be channeled towards
infrastructure investments in water, electricity and mass transit.


5. NGC benefiting from high Methanol Prices
, --------------
The National Gas Company (NGC) announced it is benefiting from high
methanol prices. In the past 24 months, methanol prices have increased
from US$300 to US$700 per ton. The rising price is driven largely by a
surge in demand from emerging markets like China. T&T is the world's
largest exporter of methanol.


6. GOTT gives CAL tax exemption
--------------
As part of the Income Tax Amendment of 2008, passed in early September,
the GOTT granted Caribbean Airlines (CAL) exemption from withholding

PORT OF SP 00000444 002 OF 003


taxes on its lease payments for a period of two years, beginning
(retroactively) on January 1, 2007, saving the company TT$25 million
(US$4.2 million) tax exemption. This measure is likely to increase the
debate over Caribbean Airlines' financial viability. Critics allege
the GOTT is "secretly" subsidizing CAL's purchases of jet fuel.


7. Yachtie fuel crisis resolved
--------------
Two weeks after T&T Customs and Immigration cracked down on the sale of
subsidized fuel to foreign flagged vessels, authorities gave permission
for a boat yard in Chaguaramas to sell fuel at the international price
to foreign flagged vessels. The controversy erupted when T&T customs
officials received reports that vessels were buying subsidized fuel in
T&T and selling it at a profit in the British Virgin Islands.
Authorities prohibited the sale of subsidized fuel to foreign vessels
but failed to give permission to sell fuel at the international price.
As a result, boat yards were forced to refuse fuel to the foreign
vessels, leaving them stranded in T&T. While the new arrangement,
worked out with a push from the Embassy, solved the immediate issue of
fuel availability, it has sparked debate about the impact of the price
increase on the yachting sector, a target growth industry for GOTT.
With fuel now four times higher for foreign flagged vessels, there is
concern that T&T will be a less attractive destination, thus stifling
the development of this promising sector.


8. Flow signs agreement with TBS
--------------
Columbus Communications, parent company of T&T's cable television
company Flow, recently signed an agreement with Turner Broadcasting
System Latin America to offer two new channels, Space and ISAT. This
agreement follows a deal with HBO Latin America last year that
legitimized a wide variety of previously pirated channels. While some
pirated channels remain in Flow's lineup, the company is in
negotiations with CBS.


9. GOTT to curb DVD piracy through regulation
--------------
The Ministry of Legal Affairs announced the formation of a
Cabinet-appointed committee to make recommendations on regulating the
DVD industry in an effort to decrease piracy. Chaired by lawyer and
former Opposition Senator Gillian Lucky, the Committee will make
recommendations on how to ensure adherence to copyright laws by DVD
vendors. In May, the GOTT passed the Copyright Amendment Act which
strengthens IPR enforcement and prosecutorial capabilities. The
formation of this Committee represents the first visible effort by the
GOTT to push ahead with implementation of this law.


10. Committee formed to protect T&T's plant varieties
-------------- --------------
The Ministry of Legal Affairs recently announced the formation of a
Cabinet-appointed committee to make recommendations on species to be
listed under the "Protection of Plant Varieties Act 1997." T&T is home
to a wide variety of plant species, including high quality cocoas and
year-round yield pigeon peas. By protecting these species, T&T hopes
to protect the genetic diversity and capitalize on the market potential
of these plants.


11. T&T's Green Fund to begin issuing grants
, --------------
Established in 2000 to support community efforts to preserve the
environment, the Green Fund is scheduled to finally begin issuing
grants this year. The GOTT levies a 0.1 percent tax on the gross sales
of all businesses operating in T&T to support the Fund, which currently
holds TT$1.4 billion (US$230 million). Up until recently, the GOTT was
working to put the organizational structure and financial mechanism in
place to operationalize the Green Fund.


12. Eight industrial parks planned for T&T
--------------
Evolving TecKnologies and Enterprise Development Company Ltd (E-Teck)
announced plans to create eight new industrial parks on 1,066 acres of
land. These parks are designed to encourage light industry and help
diversify T&T's economic base. E-Teck is a special purpose public
company charged with managing non-energy industrial parks and
attracting investment into non-traditional sectors. T&T currently has
17 industrial parks with 500 tenants.


13. T&T appoints new Regulated Industries Commission
-------------- --------------

PORT OF SP 00000444 003 OF 003


Minister of Public Utilities Mustapha Abdullah Hamid recently announced
the members of the new Regulated Industries Commission. The six-member
board is chaired by Ian Welch, managing director of PCS Nitrogen. The
Board is responsible for promoting high quality utility services at
fair rates.

AUSTIN