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US State Department says TT Foreign Exchange Shortage Delays Payments to Firms

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By Sue-Ann Wayow

THE International Monetary Fund (IMF) is predicting that Trinidad and Tobago’s  gross domestic product  (GDP) is expected to fall  for 2020 by 4.5 per cent due to the early collapse in global energy prices and the economic impact of the Covid-19 pandemic.

On Wednesday, the US Department of State released its annual Investment Climate Statements of which Trinidad and Tobago is included.

In its report, the US Department of State stated, “TT’s investment climate is generally open and most investment barriers have been eliminated, but stifling bureaucracy and opaque procedures remain.”

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The banking sector remains healthy with the estimated total assets of the largest banks being reported at $21.9 billion in 2019 and the educational level is in the top ten in the Americas.

While doing business with Trinidad and Tobago was less complicated than several other countries, lack of law enforcement, slow processing and crime continued to a deterrent to foreign investors.

Some positive aspects of Trinidad and Tobago’s economy were: stable, democratic political system, educated, English-speaking workforce, well-capitalised and profitable commercial banking system and insurance industry, established rule of law, independent judicial system that is substantively fair, in certain sectors, lack of domestic competition and no foreign ownership limits.

Investment incentives include exemption from import duties and customs duties; tax credits and deferrals; cash refunds; carry-over of losses; and access to loans, the US Department of State stated.

The negative aspects listed were:  foreign exchange shortages that delay payments to foreign firms, widespread perception of corruption among public officials, lack of transparency in public procurement, inefficient and complicated government bureaucracy, time-consuming resolution of legal conflicts, such as enforcement of contracts and violent crime.

Foreign exchange continues to be a problem and Trinidad and Tobago continues to rank low globally in several areas according to information provided by the World Bank’s Doing Business 2020 report.

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Trinidad and Tobago ranks 158th of 190 countries for registering property, 174th for enforcing contracts, and 166th for payment of taxes representing a deterioration of indicators that reflect a difficulty of doing business the US Department of State stated.

The Global Enterprise Registration Network (GER) gave the TT business registration website a low grade for  the inability to make online payments, submit certificates online, and engage in simultaneous requests are the three main reasons for the low score.   According to GER, two areas for improvement are: development of an online payment portal, provision of online certificates.

The US Department of State stated that Trinidad and Tobago’s judicial system was independent of the executive and the judicial process was competent, procedurally and substantively fair, and reliable, although very slow.  According to the World Bank’s report, Trinidad and Tobago ranks 174 of 190 in ease of enforcing contracts, and its court system requires 1,340 days to resolve a contract claim, nearly double the Latin American and Caribbean regional average.

The World Bank ranked Trinidad and Tobago 83rd of 190 countries in resolving insolvency. This reflects TT’s recovery rate (cents on the dollar), which is worse than the regional average, and cost as a percentage of estate, the US Department of State stated.

Trinidad and Tobago also ranked 158th out of 190 countries in ease of registering property.  Reasons for the poor score include the number of procedures required (more than the regional average), the length of time required (more than the regional average) and the cost of registering property as a percentage of the property value.

Theft remains common with respect to intellectual property rights (IPR) although the  legal structure was strong, the US Department of State stated. Trinidad and Tobago does not track seizures of counterfeit goods.  At its May 2019 WTO Trade Policy Review, it reported one seizure in 2018.  The country has prosecuted IPR violations in the past, but such prosecutions are uncommon. Trinidad and Tobago returned to the United States Trade Representative Special 301 Report’s Watch List in 2020.  Challenges concern widespread copyright infringement and the country’s lack of institutional commitment to enforce IPR.

And referring to labour policies and practices, the US Department of State stated, “In 2019, the International Labor Organization estimated unemployment at 2.8 per cent. That figure, however, is artificially low due to government make-work programs that absorb excess labor.  The labour market includes many skilled and experienced workers, and the educational level of the population is among the top ten in North America, according to the Human Development Index, though there is a gap between official literacy statistics and functional literacy.”

“In 2019, youth unemployment rate (15-24 years of age) was estimated at 6.41 percent. Trinidad and Tobago is a net importer of expatriate labor, including doctors, nurses, construction workers, and extractive industry specialists.  There are surpluses of accountants and attorneys and shortages of unskilled workers for the hospitality, retail, and agriculture sectors.”

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