Tobago: desperate for change

Critically dependent on Trinidad, and badly hurt by the prolonged turmoil on the seabridge, Tobago is in urgent need of transformative action

WORDS By: Hillary Young
Published in CONTACT Magazine

For economic transformation to take place in Tobago, the island must identify and develop its own industries, says Tobago-born UWI economics lecturer Anthony Birchwood. And “once the industries are identified, the youths must be part of any development going forward.”

Tourism and manufacturing will benefit from investment flows, both international and local. But development must be driven by the private sector, or by the government/Tobago House of Assembly (THA) – or both.

The THA’s plans

The Tobago House of Assembly documented its proposals for Tobago’s economic development in its Comprehensive Economic Development Plan (CEDP) 2.0.

Covering the island’s development from 2013 to 2017, the policy framework showed how the THA wants to “transform and diversify the Tobago economy … to adjust to rapid changes in the national and international economies”.

The plan concentrated on eight strategic areas:

  • good governance and institutional reform
  • business development and entrepreneurship
  • human capital development
  • social development and resilience
  • improved infrastructure and utilities
  • enhanced safety and security
  • environmental sustainability
  • branding Tobago “Clean, Green, Safe and Serene”.

To what extent these policy objectives were achieved is debatable. For sure, the project was starved of funding as budgetary transfers from Trinidad, the major source of Tobago’s finances, fell from $2.609 billion in fiscal 2015 to $2.19 billion for fiscal 2017, a far cry from the $5 billion requested by the THA annually to run the island’s affairs.

Tourism

Some rebranding of the island to sustain the tourism product did occur, but its effectiveness remains in doubt, as the industry has declined rapidly, helped on by successive failures of the ferry service from Port of Spain.

According to the Tourism Development Company of Trinidad and Tobago (since wound up), international tourist arrivals in 2005 were close to 90,000, and occupancy levels were high. But by 2015 the numbers had fallen for the fourth consecutive year to 22,435, and industry insiders have reported that last year fewer than 20,000 international tourists visited the island.

For a while, the industry was kept afloat by an increase in domestic tourism. The World Travel and Tourism Council (WTTC) reported that domestic travel spending generated 53.7 per cent of the travel and tourism contribution to GDP in 2016, and noted that the market was expected to grow by 1.9 per cent in 2017.

Though the WTTC figures did not disaggregate travel from Trinidad to Tobago, the government in Port of Spain, in launching the Tobago leg of its “staycation” programme, said 59 per cent of domestic trips originated from Trinidad.

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The 2017 growth predicted by the WTTC never materialised. Domestic travel was seriously damaged by challenges on the air and sea bridges.

But tourism arrival statistics and budgetary allocations from Trinidad tell only part of the island’s economic story.

Its hotels and guest houses were starved for international and local direct investment flows; properties could not be upgraded. The Foreign Investment Act of 1990, requiring foreigners to acquire a licence before purchasing land, and financial institutions’ reluctance to give government-guaranteed loans to local investors, have blocked investment flows needed to build new properties and upgrade existing ones.

Parlatuvier Bay, Tobago. Photo by PHB.cz (Richard Semik)/shutterstock.com

Private sector participation

The private sector is playing an active role in the island’s plan for economic transformation, but again the focus is on tourism. According to Demi John Cruickshank, immediate past chairman of the Tobago Division of the Trinidad and Tobago Chamber of Industry and Commerce, “the business association will drive the economy with the government as its partner.”

In January, Tobago business owners met with a ministerial team led by prime minister Dr Keith Rowley (himself a Tobagonian), and several decisions were taken involving private-public partnership (PPP).

Revamping the economy in 2018

The government-guaranteed loans programme will return, and the period of repayment will increase from seven to fifteen years. This facility can now be accessed by all tourism and tourism-related industry stakeholders.

Two marinas are planned for the western end of the island, and the proposed Sandals Resort will proceed as planned. The government will build the hotel, sourcing funds from the private sector, and Sandals will provide management services.

To accommodate the Sandals project, extensive infrastructural work is planned. Work will begin on desalination and sewage treatment plants, and Tobago’s electricity capacity will increase with a $132 million expansion of the Cove Power Station. Twenty megawatts will be added to the plant’s present 64-megawatt output.

Three vessels will operate the domestic sea bridge, and a new terminal for Tobago’s airport will be built through a build-own-lease-and-transfer financial arrangement.

These PPP projects are primarily geared towards reviving the tourism sector, but in the process they are intended to kick-start the transformation of Tobago’s economy are intended to kick-start the transformation of Tobago’s economy.

 

As published in the first issue of the rebranded CONTACT Magazine, produced by MEP for the Trinidad & Tobago Chamber of Industry & Commerce. Read the full issue here, which was unveiled at the Chamber’s April 2018 AGM

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