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Trinidad and Tobago Promotes Foreign Investment

April 1, 2014

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Trinidad and Tobago, with World Bank support, assessed its capacity to attract foreign investment and improved the capacity of investment promotion institutions (IPI) to implement a modern economic zone strategy. Key stakeholders included Government ministers, senior management of key Government agencies, and approximately three dozen other Government and business leaders in the country’s investment promotion institutions (IPIs).

Synopsis

Trinidad and Tobago, with World Bank support, assessed its capacity to attract foreign investment and improved the capacity of investment promotion institutions (IPI) to implement a modern economic zone strategy. Key stakeholders included Government ministers, senior management of key Government agencies, and approximately three dozen other Government and business leaders in the country’s investment promotion institutions (IPIs).

The Bank team consulted with the stakeholders to assess the Government’s mandates, performance, and capacities and conducted comprehensive training on investment promotion and economic zones development, best practices and strategies for development. More than 35 operational and management staff of the lead investment promotion agency (IPA) and key public and private sector agencies participated in the training.

With support from this program, the Government has streamlined the institutional framework, which included more than 15 IPIs, and appointed and strengthened one lead IPA. The Government also commissioned evaluations focused on market demand and requirements for industrial space.

Challenge

For decades, the Government of Trinidad and Tobago prioritized diversification of the economy, which is highly vulnerable, given the country’s reliance on the oil and gas sector. However, achieving this diversification has been elusive. Despite attempts to strengthen the enabling environment for private sector development, the oil and gas sector’s contribution to Trinidad and Tobago’s GDP increased from 31.3 percent in 2000 to 43.6 percent in 2012. This motivated the Government to focus on economic diversification in the non-energy sector, particularly by attracting foreign direct investment (FDI) to stimulate sustainable economic growth and development. The country’s record of attracting non-petroleum FDI has been weak, with an annual average of US$66 million from 2001 to 2007.

Solution

A Bank assessment identified major areas for improvement in the policy, strategic and institutional frameworks related to investment promotion and special economic zones development. Based on this assessment, the Government designated InvesTT as the lead IPA and appointed eTeck as the lead agency responsible for asset management. Previously, InvesTT had been a subsidiary of eTecK. The agencies have now been formally separated, each with its own board of directors and separate offices. This will allow each agency to focus on its new mandate.

This decision also streamlines the diffuse institutional framework, creates a “first point of contact” for all investors, and eliminates potential conflicts of interest.

The Bank provided training in investment promotion and special economic zones best practices to operational and management staff in InvesTT and other sector-specific IPIs, as well as key Government ministry and agency staff. The training emphasized the need to clarify roles within the streamlined institutional framework and increase coordination between the agencies.                   

Results

Government policies and strategies informed.  The assessment’s recommendations include:

  • The consolidation of investment promotion agencies into one lead agency (Feb 2013).
  • The separation of asset management functions from promotion (Oct 2013).
  • Assessments of existing industrial estates, including analysis of market demand and requirements for further industrial development (ongoing).
  • Advances in the commercialization of an existing special economic zone, including plans to analyze and revise the development plan, engage in phased development, and identify potential commercial opportunities to aid in the zone’s development (ongoing).

The recommendations and detailed action plan were also incorporated into a draft government policy note for a potential broader government-supported program.

Implementation capacity increased for client agencies. The Bank provided training of more than 35 operational and management staff of the lead IPA and key public and private sector agencies on investment promotion and economic zones development and best practices and strategies for development.


Bank Group Contribution

The Technical Assistance was one component of a larger Reimbursable Advisory Service Project. The budget for this work was approximately US$240,000.

Partners

The project was a joint effort of the World Bank and the International Finance Corporation (IFC) effort. Technical inputs were provided by Bank and IFC staff members; in-country support was provided by IFC staff. The key partners in this project included the Ministry of Finance and the Ministry of Trade, InvesTT, and eTecK. These partners provided input and feedback and adjusted their institutional structures based on the program’s recommendations. 

Moving Forward

As part of this engagement, the Bank delivered an action plan to the Government of Trinidad and Tobago on further activities to strengthen the effectiveness of investment promotion and special economic zones development. The Government has expressed interest in expanded Bank technical assistance to support the implementation of the plan, which includes legal, policy, regulatory, institutional, and strategic components. The details of the scope of the continued technical assistance are currently being finalized.

Additionally, a Global Investment Promotion Best Practice (GIPB) assessment was recently undertaken to evaluate specific aspects of InvesTT’s performance. Continued annual GIPB assessments have been requested through 2015, which is in line with the objectives of the outlined plan, as the assessments will aim to improve the effectiveness of InvesTT. 

Beneficiaries

The program’s beneficiaries include the Ministry of Finance, the Ministry of Trade, and the organizations and InvesTT and eTecK. Capacity building activities directly benefitted staff at these organizations. Implementation of the report’s recommendations will likely lead to broader economic benefits for the private sector and the citizens of Trinidad and Tobago.