Energy market in Trinidad and Tobago spurs growth that ripples to South Florida
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How long can its economy thrive on oil alone?

By Doreen Hemlock
South Florida Sun-Sentinel

February 26, 2006

PORT-OF-SPAIN, Trinidad -- When Caribbean scholar Anthony Bryan travels from his
South Florida home to his native Trinidad these days, he can hardly believe the
changes: new shopping malls, condo communities and a waterfront makeover soon to
feature office towers, a Hyatt hotel and conference center.

This oil- and gas-exporting country is reaping a windfall from surging energy
prices, its economy now outpacing all others in the Caribbean. Last year, the
twin-island nation of 1.2 million people saw growth of 7 percent and is on track
to top 10 percent this year.

But like many energy-exporting countries, Trinidad and Tobago grapples with
deep-rooted problems behind the rosy numbers, what some call "the curse of oil."
Too many residents think wealth comes easily from the ground, economists say,
leaving too few to toil as entrepreneurs or to save. Costly energy projects also
generate relatively few jobs, tempting government to pad payrolls and stoke
construction to boost political support.

Bryan and others here hope this middle-income nation off Venezuela's coast can
learn from its oil boom-and-bust cycle in the 1980s and, this time, seize the
upswing to invest wisely and diversify away from oil and gas for the long run.

They worry, though, that the country's divisive politics, stultifying
bureaucracy and laid-back island style might impede progress. And they point to
rising crime, especially a doubling of kidnappings for ransom last year, as a
sign of social unrest even during the boom.

"Trinidad and Tobago is at a point of inflection," said finance executive Ram
Ramesh of Trinidad's Caribbean Money Market Brokers. "If they `get' it, they can
take off."

The future of Trinidad & Tobago carries special weight for South Florida, home
to almost half a million West Indians. The nation's boom is helping South
Florida's economy, boosting business for companies like Riviera Beach-based
Tropical Shipping and Fort Lauderdale-based cargo airline Amerijet
International.

A repeat of the country's 1980s bust -- oil prices crashed, and its economy sank
for years -- could hurt.

Signs of the boom

Drive past the crane-filled waterfront of the capital, down the
shopping-center-studded highway, and there's no doubt that an economic boom is
under way in this land long known for steel drums and Carnival.

At Point Lisas industrial park on Trinidad's east coast, almost 3,000 acres are
filled with state-of-the-art factories that rely on the country's plentiful oil,
gas and energy. Where sugar cane once grew now stand industrial complexes that
churn out ammonia and urea for fertilizers, methanol for fuel additives and
steel.

Business is so strong that the park's seaport, a "sister port" to the Port of
Palm Beach, plans to add two more piers by 2008 and as many as four later, which
would make it the biggest seaport in the southern Caribbean. And yet, the
government needs to improve signs and access roads to speed the flow of trucks
to and from the port, said Rawle Baddaloo, acting president of the Point Lisas
Industrial Port Development Corp.

With so many foreign investors keen on Trinidad's oil and gas, the government is
developing new industrial parks farther south, already home to almost $4 billion
in plants that convert natural gas to liquid. In the works are aluminum,
petrochemical and other plants worth $7.4 million, with investors including
Alcoa of Pittsburgh and companies in China.

Gains elude the poor

But 12 straight years of economic growth haven't brought great gains to many of
the country's poor or civil servants, some of whom earn the minimum wage of
about $1.50 an hour. Prices are up, with food costs alone rising 22 percent last
year. Complaints abound that new houses are out of reach.

"The people who really benefiting are the upper class, the businessmen who deal
with things like exports and the government ministers whose salaries are going
up, but the poor not feeling it," said street vendor Alric Murray, 47, with an
island lilt.

With the national budget at a record high of almost $6 billion this year,
critics say the windfall could be spent more wisely.

"Rather than tall buildings and more freeways," said Bryan, who moved to South
Florida in 1992, "we should be attending to health care, housing, gaps in the
education system and the creation of permanent employment and security for the
citizens."

Nor is public accounting adequate, said Ron Ramkissoon, chief economist at
Trinidad's Republic Bank.

"The government says, `We built roads and schools.' But how many kilometers did
they build per $1,000, and how does that compare with Singapore or Barbados? ...
When you don't measure adequately and report frequently to the people, it gives
room to speculate [about corruption]." Indexes from Berlin-based Transparency
International show a growing perception of corruption in the country, Ramkissoon
said.

Even nonprofit groups that help the needy, such as Catholic-affiliated Living
Waters Community, bemoan inefficiency in government.

"In some cases, the social services are there, but it's very hard to access them
because of archaic systems," said Living Waters' manager, David Bibby, who
obtains supplies from Deerfield Beach-based Food for the Poor. "There's not the
same dedication to social problems as government shows to the corporate world."

Much investment, few jobs

To be fair, there are limits to how much growth can quickly trickle through
Trinidad and Tobago from the kind of investment it attracts.

Huge cash inflows into its energy-related industry don't produce many jobs.
Trinidad's four liquefied natural gas plants, billed as the largest single
investment in the Caribbean, employ fewer than 700 people full time. Yet each
plant produces such massive exports that when a new one fires up, it boosts the
economy by 2 to 3 percentage points that year -- as it will in 2006, analysts
say.

Ideally, planners aim to harness the energy dividend to make Trinidad and Tobago
a developed country, tripling the economy by 2020 with growth averaging 7
percent a year. Attention focuses on developing the non-oil sector to pick up
the slack, as the nonrenewable oil and gas sector wanes.

Some progress is being made, especially in tourism in Tobago and in financial
services in Trinidad.

Already, Trinidad-based financial groups are leaders in the English-speaking
Caribbean and growing beyond. Caribbean Money Market Brokers, for one, is an
alliance with a Jamaican firm, has offices in St. Lucia and Barbados and plans
to open in the Middle East, said executive Ramesh.

The Central Bank is helping. It launched an electronic system to settle accounts
between banks and helped start a regional credit-rating agency.

Still, Bryan said Trinidad and Tobago may not fully seize "its golden
opportunity."

"We need serious political will," he said, "and a lot of implementation is yet
to come."

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.



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