Interview with former finance Minister Wendell Mottley

Create the wealth first, then the sky is the limit, was the basic impulse of the Finance Minister. This way, even non-marketable sectors could be taken care of. The following interview which Ira Mathur conducted during the Minister’s term in office gives a clear indication of the long-term financial plan put in place by the Minister of Finance Wendell Mottley.

Since then, the Prime Minister announced that General Elections would be held on November 6; and Wendell Mottley announced that he would not be a candidate in the election.

The government’s economic philosophy seems to be that of a market economy. But why the speed of the changes? And what about those who lack the skills to compete n a market economy?

MOTTLEY (WM): I want to make a point here, and it’s very important that Trinidad and Tobago understand this. As a result of the government policies, investments are coming in. The policies of the government have been market oriented. World wide (especially as developed in Far Eastern countries - Singapore, Malaysia and so forth) - the market mechanism has been found to be an effective tool for generating the fires of investment and wealth creation. In the absence of wealth creation, nothing else is possible.

However the old theories of “trickle down” are not working as well as before. This means that investment does not necessarily create jobs at the scale one would have expected. The 700 million US dollars (which will be invested in Trinidad and Tobago this year) does create jobs. There’s no question about that. But, worldwide, in the last 10 years, robotics and computer-aided devices in factories have removed a great deal of the human input in machine engineering etc. so that there has not been massive job creation with a fixed input of investment. I make this point not to say there aren’t jobs, but that we have to work even harder than before to make sure we generate those jobs.

Now one of the advantages we have is that Trinidad and Tobago is relatively small, just 1.2 million people, and if were highly successful in our macro economy (management), for example, investment facilitation and promotions, we can attract companies on the scale to deal with most of our job problems, whereas very large countries like India or China or even the United States may have problems simply because of the amount of investment that is required.

Does that mean we need to question our role in the world economy, and should we then go the whole hog of trade liberalisation and freeing up the market and all the rest of it? Is it really relevant to developing countries such as ours?

WM: I can’t speak for all developing countries, I can only speak for our own. Singapore succeeded, we have to make sure we in Trinidad and Tobago, we succeed. I am fully confident that we have that capacity to succeed. The real question you are asking is that can every country succeed - I doubt it. I just have to make sure that we succeed here in Trinidad and Tobago.

How do you do that? How do you get around the fact that the trickle down theory isn’t working?

WM: By speed. If everybody is in the race, not all are capable of finishing first or even second. We have to make sure that we finish first. That is why the government has moved with such urgency. If we finish with the pack, we are not going to get the benefits; that unfortunately is how the world is. Our job in the government is to make sure is that we position Trinidad and Tobago in such a way that we finish among the first few so that we derive those benefits. That’s why we are so anxious to speed up the pace of trade liberalisation, even when we hear protests that we are going too fast. That’s why we have to accelerate our market access treaties, why we are looking at Nafta etc.

Even from within my own constituency, I recognise that there are several people who will never fit into the market model of development - human beings with their own worth. In (Trinidad and Tobago’s) development, they have to be accommodated out(side) of the market model. Having got to the point where we are seeing the benefits of success in the market model, we have to address those of us who have not got the kinds of skills or education or background to fit into the market model. That market model is just the commercial part: life is far more than just that. The market model is rewarding to those who have the modern skills required of the modern economy. But if you don’t have those skills the market model is punishing. To keep the society together even as we succeed, and we have to succeed in the market economy because that’s where the wealth comes from, we have to take that wealth and decide how we are going to deal with other sectors of our economy.

Other than the petroleum sector where most of our foreign investment is heading this year, what does the government see as growth areas?

WM: We are expecting US$700 million dollars in new investments in 1995. It is heavily concentrated in the energy sector. (However) we’re seeing new investments in tourism in Tobago, in what I call the infrastructure of Trinidad and Tobago like electricity generation, investments in TSTT, this is a measurement of the success we’ve had with all policies over the last several years.

What are these policy steps needed to promote growth, which you have mentioned?

WM: (The first step is) the macro investment policy. These have set the right framework, then there are the investment facilitation policies and now we’re on to the third phase which is investment promotion policies. Each one is necessary. As we move on to this final step, I’m very pleased with what has happened so far.

What is the current unemployment figure in the country?

WM: It’s under 18 percent (now 16.5%) and we know the trend is down.

Does this include the URP programme?

WM: Yes, it does.

Would the persons employed in the URP fall in the category of people who would fall through the cracks of a market economy?

WM: Some of them yes, but a lot of URP employment has a fairly high level of construction skills. As the construction economy picks up, we expect these people to migrate off in those jobs. The URP programme does have a social element, which does address some of the concerns that you have. Programmes like the URP have to address the number of women who have reasonable educational backgrounds, but no real marketable skills. But then we have to remember that the URP alone cannot do it since even now URP is heavily construction-biased. We have to find other areas in the social sector to absorb these people. At the end of the day there are going to be a number of people who are going to need very special attention. These are people who for whatever reason find they are tied to a lot of children. You see a number of women in that situation who find it almost impossible to give that kind of selfless devotion that a private employer in particular demands in a competitive economy. These people we believe will have to find employment within their communities. There are a whole range of things required to be done in the social sector, especially by women outside of the normal requirements of market place work, and compensation of some form tied to that effort (work is tied to marketplace). We have to pick up women in activity that is meaningful, that begins to knit together the community again. I believe that there is a joint role, involving NGO’s and government, which will be needed to deal with problems of poverty and social disintegration within communities. It will also build back a spirit of self worth.

Are you thinking of cottage industry?

WM: Yes - but that is still part of the market, the word industry implies market. There are other things outside of the market for example, health care: it might be taking care of children, it might be teaching after hours by people who have these skills, so it’s socially rather than commercial, or market oriented.

The unemployment level has dropped by about four percentage points in the last four years. Which industries have contributed the most to this drop?

WM: Two sectors which have been very much disparaged. The petroleum sector has done very well; the petroleum sector which people feel is so capital intensive. The fact is the petroleum sector employs a great number of sub-contractors and that has seen significant job creation. Agriculture has also seen significant job creation. Again that has been disparaged, people say it is low paid work. But there have been a number of people in rural areas who have done very very well in export agriculture. If you look at figures for exports from this country you will see tremendous increases, I mean phenomenal increases, several hundred-fold in the exports of fish, green vegetables, exotics etc - up to the ethnic markets in North America in particular. The exchange rate has helped enormously. The fact we had that devaluation and that costs have remained in control in Trinidad has made a number of these enterprises or individual entrepreneurial capabilities flourish.

What has trade liberalisation done for jobs?

WM: There is going to be a mixed performance in the manufacturing sector because we are going to see some of those companies who have less flexibility, less agility, lose share. We are going to see other companies who have done strong marketing especially in Latin America, Colombia and the United States, succeed. We saw a trend last year where companies were adding whole new work shifts (and therefore added employment) whereas other industries were fighting a rear guard battle. A lot of it is a mind set. Sometimes people feel defeated and they mouth defeat and they don’t see the significant opportunities about them. Others’ imaginations have caught fire and they have done what is required. They are moving from a small Caricom market to a market in Colombia, in Venezuela that just dwarfs Caricom; and they find a niche, and that niche is capable of thousand-fold expansion and they became very very confident. You meet manufacturers like that and it is contagious - you are starting to feel caught up in their enthusiasm.

After all these changes, will we have more or less jobs?

WM: I, frankly will predict more jobs - I am sometimes accused of over-optimism but I feel that the success I’m seeing is capable of more than outweighing the failures. What I’m clearly signalling is I see no collapse, and I want to make a point again to the people who say we don’t have this advantage or that advantage:

1. The ones who are successful will tell you that they have a competitive exchange rate.

2. They tell you they have a labour force in Trinidad and Tobago, this is confirmed by foreign investors who have come in, that are extremely productive, extremely adaptive.

3. They tell you that our wage costs are under control, that we are losing very very few days on time, either through power failure or foolish strikes or anything of that nature.

4. They tell you that we have possibly the most competitive utility pricing - electricity especially, natural gas and so forth - in the region.

Let’s talk foreign investment. Who wins and who loses? There’s the green field investment, where the foreign company starts from scratch. They need equipment and man power. Then there are the asset sales, which are not as clear.

WM: I think it’s clear. It’s win/win on the green field. Let’s look at some of the divestments. I think people just look at past positions. Let’s look at the Fertrin divestment which is now owned by Arcadian. At the time they promised not to lay off anybody for two years. Those two years have past. They haven’t laid off anybody. In fact they are going to expand their employment because they have de-bugged their plant - taken out certain bottlenecks and have increased their production. They have put their employees on all kinds of profit sharing plans. The employees have even benefited from shareholdings, not only in the local company but in the international company. They are putting down a new ammonia plant and considering further investments. That’s the dynamic picture. But when we signed the divestment agreement, everyone focused on the static picture. The population needs to know that in that bid process Arcadian won the bid for Fertrin over Farmland Ltd. Farmland and Arcadian had their attentions brought to Trinidad by that divestment process. Not only have we got Arcadian here increasing their investment but the loser in the bid, Farmland, seeing the opportunities, came forward to put down this greenfield $300 million investment in La Brea. That’s a dynamic situation.

What about the asset sales which would mean a loss of jobs eg at Petrotrin?

WM: Yes - but the only aspect of Petrotrin that is up for divestment is the Point Fortin Refinery, where the divestment is trying to save the jobs. Because Petrotrin has taken the decision that it can’t continue to subsidise the Point Fortin refinery. To the extent that they do, it is pulling them down into serious financial problems. Therefore that divestment is attempting to save the refinery at Point Fortin. We are looking for someone to keep the refinery going. There have not been many interested parties. Petrotrin is down to talking to two at the moment, but we are not certain whether there will be any takers at this stage. Therefore the loss of jobs is not related to the divestment, but it is of concern and we want to try to save that refinery at Point Fortin. It is the key to the livelihood of virtually all of Point Fortin. What we are attempting to do in the meantime is to look for other opportunities for Point Fortin to get new investments and we’ve succeeded in La Brea - we have to make sure that Point Fortin gets caught up in the same new greenfield investment thrust irrespective of what happens with the refinery there.

Who in your opinion are among the most unemployable?

WM: Those women who are about 35-40 who have very young kids and very large families and who since leaving school have not been attached to market work. The young men can still find unskilled labour on a construction site - but the young women are the most vulnerable and the statistics reflect that. All of us, parliamentarians regularly meet people who need our intervention somewhere because that is the area that presses upon you. They come for help: tried consistently to find jobs out there, and failed. The government used to be the employer of last resort and would take people in to do a little cleaning job and so on, but because of the tight fiscal constraints the government can no longer find these extra jobs. It has problems keeping those on its payrolls as it is. So these people are having to buck up against the private sector - the private sector wants to know what can this person do that would affect me profitably at the bottom line. They are not coming forward with these skills and you sit across the table and you are aware of it. It deeply concerns us and that is why we are beginning to address the other area which I call the social sector.

Tourism seems to be taking off slowly - In London you see advertisements “Come to Barbados and Jamaica.” I think, why not Trinidad?

WM: Because you’re a loyal Trinidadian and you want to see us immediately on top.

Trinidad doesn’t seem to take off, I don’t think Trinidadians are service-oriented. It doesn’t seem to be happening.

WM: You’re right. It’s not a country that is familiar with the (tourism) industry and our culture is not promotional in that respect and that is true of all contacts with the potential  tourist. You may be focusing on whether the waiter or taxi driver has a positive impact on the tourist, but it goes broader that that. We’ve been trying in the Ministry of Finance to change attitudes of Customs Officers. What is the attitude of a policeman in Tobago dealing with somebody who’s making a complaint about harassment? What is the attitude of the media towards the industry? This is why we’ve commissioned this tourism masterstudy so that, as we forge ahead we are aware of all of the difficulties and opportunities. We have to take it a step at a time. We’ve taken the immediate step of putting a fair amount of money in promotional investments - promoting the destination of Trinidad and Tobago. We started with Tobago at first because that is where we have judged we can make an immediate impact - but we will not ultimately neglect Trinidad - we’re spending that money now. There was a programme launched in Berlin immediately after Carnival with all the promotional materials - video and advertising. This is to make sure that the existing plant in Tobago is successful. No new investment will come if a potential investor sees existing investors failing.

WENDELL MOTTLEY announced his intention not to run for a seat in this year’s General Election on Monday 9th October. He is still campaigning for the PNM.