TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR MID-AUGUST THROUGH

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