Economic Summary Trinidad and Tobago, long known for its annual carnival which rivals Rio de Janeiro's Carnaval and New Orleans' Mardi Gras, is increasingly becoming known as a sophisticated, free market economic leader among nations in the Caribbean Basin. Trinidad & Tobago's economy, the most highly industrialized in the Caribbean, grew by 3.9% in 1997. The country has been liberalizing its economy for several years and is widely considered to be the Caribbean country most qualified to join NAFTA. At the same time, Trinidad has also been positioning itself as a diplomatic and financial link between the Caribbean and South America. Trinidad has the second largest amount of U.S. direct investment on a per capita basis in the Western Hemisphere, behind Canada, excluding off shore finance centers. U.S. investment alone is expected to reach $4 billion for the years 1996-9, according to the U.S. Embassy in Port of Spain. Following the United States in foreign investment in Trinidad and Tobago are Canada, Germany, India, Norway, the United Kingdom and Spain. One area targeted for development is information processing services, with computer and telecommunications technologies opening new markets and investment frontiers. Trinidad and Tobago's per capita computer literacy is considered the highest in the Caribbean. Business opportunities being promoted include software development, data entry operations, telemarketing, electronic document data management systems, and offshore information processing and software development. Agriculture State-owned sugar company Caroni Ltd., Trinidad and Tobago's largest employer, increased daily production at its refinery from 170 to 190 tons, 7 days a week, during February 1998. Even so, it was still necessary to import sugar from the U.S. early in the year to meet the needs of domestic industry. Sugar and cocoa exports were seen as unlikely to increase and were possibly headed for decreases in 1998 compared to 1997, due partly to crop infestation. Exports of sugar and sugar preparations totaled approximately U.S.$35 million in 1997; rice and other cereals $28.5 million ; fruits and vegetables $13.8 million, and coffee, tea, cocoa and spices $10.4 million. The Government has ongoing plans to develop non-traditional agricultural crops for export. Energy Sector In the short term, oil prices were low and production continued its ten year decline in 1998, yet medium term prospects were good, given new finds and commitments from international investors in the area of hydrocarbon exploration and production. Oil production in 1998 was approximately 122,000 barrels per day, mostly from mature fields. Oil revenues accounted for 72% of Trinidad and Tobago's foreign exchange earnings in 1997 and 26% of GDP. The Trinidad and Tobago government has signed more than a dozen production sharing agreements for oil and natural gas with petroleum companies over the last three years. Strategic partners include Atlantic Richfield, British Gas, Conoco, Exxon, Elf Aquitaine and Talisman. In January 1998, Amoco Trinidad Oil announced its largest find of crude oil in 25 years, with estimated reserves of 40-70 million barrels. Amoco planned to spend approximately U.S.$806 million on exploration and development in Trinidad & Tobago during 1997/8. Natural gas is increasing in importance relative to oil; a $1 billion liquefied natural gas plant, a joint venture between U.S., European and Trinidadian companies, is scheduled to begin production in 1999. The Atlantic LNG plant represented the single largest investment in Trinidad and Tobago as of late 1998. Total proven reserves of natural gas in 1997 were 18 trillion cubic feet, sufficient for 25 years, with probable and possible reserves estimated at 3.73 and 1.94 trillion cubic feet, respectively. The liquefied natural gas plant is expected to produce 3 million metric tons of LNG per year, with projected revenues to the Government to exceed US$3.1 billion over 20 years. Trinidad has the largest single train ammonia plant in the world and is the world's second largest producer. Trinidad and Tobago's methanol production and export capability has more than doubled in recent years. Plans have been announced for the merging of three companies, TTMC, CMC and Methanol IV into a single company, with combined installed capacity of 2.06 million tons per year, 8% of world capacity and 20% of traded methanol. Manufacturing & Industry The abundance of inexpensive energy is seen as a major plus in the government's thrust to further develop the manufacturing sector. Several initiatives are under way, and the sector is considered to be potentially the country's second engine of growth in the short term. Currently, highest source of employment. The Government is developing a Manufacturing accounts for about 10% of GDP, and is the second highest source of employment. The Government is developing an industrial policy to the year 2000, and plans to establish Enterprise Zones throughout the country. Trinidad & Tobago's major non-oil export is iron and steel, worth U.S.$216 million in 1997. Point Lisas, Trinidad & Tobago's largest industrial estate, is expanding in response to industrial growth. In addition to the energy-related industries, the estate houses steel and iron carbide plants, and dozens of smaller factories and warehouses. Construction was set to begin in 1998 on a U.S.$900 million aluminum smelter on Point Lisas, a project of the U.S.' ICF Southwire Consortium. Norsk Hydro of Norway announced its intention, pending government approval, of building another aluminum smelter near its existing ammonia plant on Point Lisas. Complementing the yachting industry, which has experienced dynamic growth in recent years, the Government is promoting pleasure craft manufacturing. Already, customized pleasure craft are designed and built by skilled artisans at a fraction of the international price. Yachts, sport fishing boats, fishing trawlers, power catamarans, kayaks and the indigenously designed pirogue are included in the types of vessels being exported. Innercob Industries, a U.S. company, was reported to be securing five industrial sites in 1998 for manufacturing plants for glass, paper, particle board, ethanol, and electricity generation. Privatization Initial divestment of some of the National Petroleum Company's gas station network is under consideration, and the Government also is considering a new telecommunications policy, which would open the local market to at least one additional full-service provider. Cable and Wireless holds a minority share in the majority state-owned telephone company which currently is a monopoly provider. Innercob Industries of New York reportedly planned to build a 150 MW electric plant to supply four of its own plants as well as to sell electricity to the Trinidad & Tobago Electricity Commission, in competition with Powergen, a consortium of Southern Electric, Amoco and the T&T government, which is currently the nation's exclusive supplier of electricity. Privatization of the Postal Service was being negotiated in 1998 as bids were accepted for a three year management contract to be awarded by the Utilities Ministry. Tourism Visitors to T&T during the February 6-24 Carnival period in 1998 reportedly increased by 28%, to 32,071, and spent close to U.S. $15 million. The medium-term goals of the Government's Hotel and Tourism Policy are to increase the current availability of accommodations by 8,000 first class hotel rooms, sell the island as a sophisticated cultural destination, and also attract more cruise ship passengers. Consideration is being given to a gaming law to help attract visitors to the island. The Government is focusing on the development of the north and northeast coasts of Trinidad, and the Chaguaramas Peninsula. Chaguaramas has thousands of acres of relatively flat lands, incorporating five beachfront areas. The Chaguaramas Development Authority has embarked on a program to create a major center for leisure, recreation, marine activities and eco-tourism. The yachting business is estimated to generate US$10 million a year in revenue, and employs 600-800 directly. Projects over the next 5 years include an upscale marina for multi-million dollar yachts, a 50-room ecological type hotel, a half-mile long boardwalk from Tembladora to Welcome Bay, and an eco-lodge development in Scotland Bay. The Government is pursuing proposals for the development of a port and auxiliary services at Toco Bay on Trinidad, intended to improve linkages with Tobago and develop the north coast. Included in proposals are passenger and cargo handling facilities to accommodate a ferry service to Tobago, and a marina. Investment in the tourism industry is being courted aggressively, with emphasis on diving, eco-tourism, marina and boat building, and yacht services. Plans are under way for development of the north coast region of Trinidad and for reef management systems in the coastal areas. Economic Outlook In the short to medium term, Trinidad's major economic worry will be international oil prices. The significant exploration and recovery activities under way in late 1998 point toward continued strong activity in the hydrocarbon sector over the next decade. The government's aggressively investor-friendly posture and modern legislation should encourage additional investment in hydrocarbons and petrochemicals, manufacturing, tourism and agriculture. Over $4 billion of U.S. capital alone is already committed over the next few years, and there are substantial ongoing and planned European and Far Eastern projects as well. Prospects are for continued and possibly accelerated growth in the 3.5-5% range in 1998/9, according to Trinidad's Central Bank and other sources.
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