Serendipitously, the 2009 CLICO bailout or investment brought substantial capital revenue to the Republic of Trinidad & Tobago, in 2013, 4 years after. And in 2014, as oil and gas prices decline, CLICO along with the listing of First Citizens’ shares on the local stock exchange grew these extraordinary revenue items by over 200% from the previous year. The listing of NGL and the sale of key property assets formed part of the revised estimates in Apr 2015, budgeted at over 300% from 2014 actual figures. This trend was continued in the 2015-2016 budget projecting $7,300,000,000 in revenue a further 50% increase from the 2015 revised estimates.
It is such capital investments and divestments, with high potential for growth, which as agree by the actions of past and present executive cabinets will deliver revenue gains to augment declining oil and gas revenues. Such investments cannot be left to luck and chance, but must be professionally analyzed and prudently planned to achieve the stated results and budgeted figures. Analyzing and reviewing the increase in capital revenue points to, in the CLICO case, poor management structures being strengthened and over extended calls on the cash flow leading to the liquidation of various assets and refocusing the core business, and in the FCB case, by a strong, well managed, performing institution able to offer growth and payout dividends.
Now it is essential the executive cabinet actively and purposely seek investment opportunities with clear, measurable and attainable objectives, driven by a vision to improve lifestyles through efficiencies. Taking the tough and unpopular decisions to sell and dispose of unprofitable components or restructure parts of the whole, such as with a national airline or a national broadcaster. Preserving and strengthening the air bridge between the two islands is necessary with international landing rights being sold cheaper and granted by the airport authority to land in Tobago first, boosting tourism. Using broadcasting licenses to safeguard local content is essential, while designating education, information and entertainment programming.
Divesting profitable, non-essential, state enterprises, which have matured beyond the need for state resources, by listing on the local stock exchange, selling a percentage of its shares to the wider public (employees, unions, pension plans, etc.), raising capital, reducing debt and monitoring performance, without giving up control, similar to the FCB and NGL cases. NEL and NFM which are already listed can offer new or rights issues to sell more of its shares. UTC and a new entity created to hold real estate assets such as the Hyatt and Water Front Towers A,B, and C, will also be an attractive share offering and result in substantial Capital Revenue into the national budget.
Developing or expanding sectors and industries should be undertaken towards divestment in the not to distance future. Many have spoken and seen the need to diversify the economy. This clearly must be done led by state resources, understanding the difference between infrastructure development and capital investment. Both are indispensable elements of nation building, but a capital investment, such as a ship building and maintenance industry, can quickly generate returns to fund an infrastructure project, such as a mass transit system, not the other way around.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
