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Services


        1. The services sector accounted for over 46% of GDP in 2010, a significant increase from about 40% of GDP in 2005. However, the sector was also responsible for employing nearly 70% of the total workforce in the economy, depicting low labour productivity. During the period under review services exports declined from US$ 644 million in 2005 to US$ 436 million in 2010.

        2. In the Uruguay Round, Trinidad and Tobago made sector-specific commitments with respect to 8 of the 12 sectors as per the WTO classification. Most commitments are specific to certain subsectors. Trinidad and Tobago listed exemptions to MFN treatment under maritime transport for cargo reservations under the UN Code of Conduct on Liner Conferences, and for all sectors for bilateral investment promotion and protection treaties, both for an unlimited period of time.28

        3. Trinidad and Tobago participated and undertook commitments in the WTO extended negotiations on telecommunications, but did not make commitments in the WTO negotiations on financial services and, as a result, the only financial services area in which it has made GATS commitments is reinsurance. In June 2005, Trinidad and Tobago submitted an initial services offer in the negotiations on services under the Doha Development Agenda.29

      1. Financial services


            1. The financial sector in Trinidad and Tobago comprises commercial banks, non-bank financial institutions, insurance companies, the Trinidad and Tobago Stock Exchange, the Unit Trust Corporation, home mortgage banks and the Deposit Insurance Corporation. In 2010 the total assets of the financial sector were approximately TT$ 162.5 billion, of which commercial banks accounted for over 45% (Table IV.8). The financial sector combined with the real estate sector was responsible for 11.5% of GDP and 8.3% of total employment in the economy. The sector also has the second highest level of labour productivity (after the petroleum and gas sector) in Trinidad and Tobago.30

Table IV.8

The Financial System in Trinidad and Tobago, 2010

 

Number of Institutions (Branches)

Total Assets (TT$Mn)

Number







Central Bank

1

66,086

Commercial Banks

8 (133)

103,694

Finance Companies and Merchant Banks

11 (26)

5,262

Trust and Mortgage Finance Companies

7 (7)

5,933

Thrift Institutions (Building Societies)

3

87

Development Banks

2

3,735

Unit Trust Corporation

1

20,998

Credit Unions

129

9,158

National Insurance Board

1

19,262

Insurance Companiesa

38

30,239

Deposit Insurance Corporation

1

1,641

Home Mortgage Bank

1

1,819

Venture Capital Companies

2




Trinidad and Tobago Stock Exchange

1

62

Eximbank

1

341

a Refers to all insurance companies (active & inactive) - life, non-life and composite.

Source: Central Bank of Trinidad and Tobago.

(a) Banking


Structure and performance

            1. As of March 2011, there were eight commercial banks operating in Trinidad and Tobago up from six at the time of the last Review. The two new entrants to the market were the First Caribbean International Bank (Trinidad and Tobago) Limited, which was converted from a non-bank financial institution, and the Bank of Baroda (Trinidad and Tobago) Limited, which started operations in 2007. As of March 2011, the two local banks had a market share in excess of 53%. Commercial banks have approximately TT$103.7 billion in assets, which is nearly 80% of GDP.

            2. During the period under review, commercial banks have remained profitable, albeit at a declining rate. Despite the interest rate spread largely remaining unchanged, bank profits, as measured by return on assets, fell from 3.4% in 2006 to 2.6% in March 2011.31 The decline in profitability can mainly be attributed to the economic slowdown in Trinidad and Tobago, which resulted in weak credit demand with private sector credit contracting for most of 2010.32 The economic slowdown also resulted in a stark rise in non-performing loans (NPLs) as businesses and individuals were unable to service their debts due to reduced cash flows. As a consequence, NPLs rose from 0.7% of gross loans to 5.5% of gross loans in March 2011, the highest level in a decade. Additionally, banks have become more conservative and risk averse. Commercial banks' foreign currency risk exposure as a proportion of gross assets declined from over 8% in 2007 to 5.2% in March 2011.

            3. Commercial banks are well capitalised, with a regulatory capital-to-risk weighted-assets ratio of over 24% against a prudential requirement of 8% , and a Tier 1 capital-to-risk weighted-assets ratio of over 21% compared to a prudential requirement of just 4%. Furthermore, commercial banks had conservative lending practices with little or no exposure to sub-prime debt and had the cushion of a high interest rate spread. The above factors resulted in commercial banks emerging relatively unscathed and stable in the post-2008 financial crisis environment and the subsequent economic downturn.

Regulation

            1. Commercial banks and non-bank financial institutions are regulated by the Central Bank, which administers the Financial Institutions Act of 2008.33 The new Act, which was enacted in December 2008, replaced the Financial Institutions Act of 1993. The new Act seeks to strengthen the regulation and supervision of institutions under its domain. In this regard, it provides the Central Bank with power to conduct consolidated supervision of all domestic banking groups as well as those with cross-border operations, and also requires the restructuring of "mixed groups" (i.e. a banking group that offers commercial banking and other financial services) through the creation of a financial holding company (FHC), which would ring-fence each type of financial service in the group and would also be regulated by the Central Bank. The Act also allows for information sharing between the Central Bank and other domestic and international regulatory bodies.

            2. Under the Act, licensees are required to submit information on both an individual and consolidated basis, and it also places increased responsibility on the Boards of Directors of licensees, who are required to make an annual attestation that they are satisfied by the risk management systems and internal controls of the institutions for which they are responsible. Licensees are also required to measure and apply a capital charge for all components of market risk. The enforcement powers of the Central Bank have also been enhanced. It can now, inter alia:

  • issue compliance directions to a licensee or FHC, controlling or significant shareholder of a licensee, director or any other employee for breaches of the Act or for conducting unsafe and unsound banking practices. Consequently, the Central Bank can instruct licensees to change procedures and policies which it deems inadequate;

  • ask licensees to reduce exposure that it sees as having excessive risk; and

  • instruct licensees to increase paid-up capital.

            1. Administrative fines have been introduced for specific breaches of the Act. The fines vary from TT$75,000 to TT$125,000 for each breach of the Act depending on the offence. These are in addition to criminal penalties, which were provided for in the 1993 Act. The criminal penalties are in the form of fines that vary from TT$300,000 to TT$500,000 depending on the offence, often with additional penalties for each day that the offence continues.

            2. The Act addresses prudential requirements as well. These pertain to investment limitations, large exposure limits and connected party exposure limits. Other prudential requirements such as paid-up capital are unchanged.

            3. Another significant change that has taken place concerns the market entry conditions for foreign banks. Foreign financial institutions are now allowed to conduct business in Trinidad and Tobago through licensed branches. Previously, banks had to be incorporated in Trinidad and Tobago. Foreign bank branches are subject to the same prudential regulations as local banks. To obtain a license, the foreign financial institution must be "subject to regulation and supervision in its home jurisdiction that is satisfactory to the Central Bank" of Trinidad and Tobago and the foreign financial institution needs to appoint a resident of Trinidad and Tobago as its principal representative (Article 18). Additionally, the foreign financial institution must maintain assigned capital with the Central Bank in the form of cash or securities, an amount equivalent to the minimum share capital that would be required of a licensed domestic financial institution, or a larger amount that the Central Bank may specify.

        1. Insurance


Structure and performance

            1. The insurance sector in Trinidad and Tobago is made up of 38 companies of which 31 are active. These comprise nine companies involved exclusively in the life insurance business, 17 of which deal exclusively in general insurance, while the remaining 5 are composite (life and general insurance). The period under review saw the collapse of the CL financial group (CLF) and its subsidiaries, the Colonial Life Insurance Company (CLICO) and the British American Insurance Company (Trinidad) Limited (BAT) (Box IV.1). These insurance companies accounted for approximately 40% of the total assets of the insurance sector in Trinidad and Tobago, while CLF's assets were equivalent to 30% of the Caribbean region's GDP, and thus their collapse had a contagion effect in the region.34

              Box IV.1: The collapse of CL Financial Group, CLICO and BAT

              In addition to traditional insurance and pension products, CLICO and BAT35 both took in funds through a product called the "Executive Flexible Premium Annuity", which was a deferred annuity permitted to be sold by life insurance companies so long as it contained a mortality clause, implying a guaranteed rate of return at the forecast retirement age of the contract holder. However, the products functioned as term deposits. These products were sold for a fixed term of 3-5 years with guaranteed returns in excess of 8% per annum, well above the ordinary savings deposit rate in Trinidad and Tobago of approximately 2% at the time. However, despite functioning as deposits, the funds solicited from this product were not subject to the stricter banking regulation and supervision applied to ordinary deposits. As a result, the CL Financial Group was able to channel these deposits to fund illiquid assets such as real estate in Florida and plant and equipment for petrochemical production. Consequently, between 2005-07 CL Financial's assets grew by 32%. The global economic crisis of 2008 triggered the collapse as many of CL Financial's subsidiaries faced liquidity and solvency pressures.

              According to the authorities, the key factors in the collapse were:


              • Excessive related party transactions which carried high contagion risks;

              • An aggressive high interest rate resource mobilization strategy to finance high risk and illiquid investments; and

              • Very high leveraging of CL Financial's assets.

              Despite being aware of the above issues the regulator (Central Bank) was unable to implement corrective measures due to the inadequacies of the then legislative framework.

              At the time of the collapse, CL Financial's total assets were equivalent to 30% of the Caribbean region's GDP, while CLICO's assets were equivalent to over 10% of Trinidad and Tobago's GDP. To avoid the systemic failure of the financial sector, the authorities intervened. CL Financial agreed to sell assets to meet the statutory requirements of CLICO and BAT, while the Government injected TT$5 billion. In return the Government received preferential shares and 49% equity in CLICO and also gained control of the firm by appointing four of the seven board members, including the chairman.



              In the 2010/11 budget, the Government announced a restructuring plan that would pay all investors in full up to a maximum of TT$75,000 and restructure the remaining outstanding amount over a 20-year period with no interest. Furthermore, the Government is also seeking a new agreement with CL Financial, which would provide more scope to the Government to sell the group's assets, thus enabling the authorities to cover some of the costs they have incurred due to the bailout of CLICO and BAT, estimated to be as high as 10% of GDP.

              Source: IMF Trinidad and Tobago Selected Issues January 2011, and IMF Staff Report for Article IV consultation December 2010 and information provided by the authorities.

            2. If CLICO and BAT are excluded, the insurance sector grew and remained profitable during the period under review albeit at a declining rate of growth since 2008. Life insurance, which accounts for approximately 80% of the industry's assets, saw growth in gross premium income decline to about 7% annually in 2010 from a high of over 16% in 2008, while the assets of life insurance firms rose to over TT$15 billion in 2010, reflecting an annual growth rate of 8%, which was lower than the 10% registered in the previous year.

            3. However, with operating expenses remaining static over the past few years and premium income increasing during the same period, life insurance company profits have been rising. Return on equity rose to nearly 15% in 2010, compared to 9% in 2006. Life insurance companies in Trinidad and Tobago are well capitalised. At present there are no capital adequacy rules for insurance companies in Trinidad and Tobago, thus the ratio of free capital and surplus to policy holder liabilities is used as a proxy. This ratio has been about 36% during the review period compared to a global industry standard of 5%.

            4. The non-life insurance sector has not performed as well as the life insurance sector. Total assets of non-life insurance firms have remained almost constant at about TT$4 billion since 2006, while growth in gross premium income has declined from 23% in 2006 to slightly over 4% in 2009.

            5. The larger non-life insurance companies are better capitalised and profitable. However, certain smaller companies, especially those providing third-party motor insurance, have tended to under-price risk and underestimate claims reserves. As a consequence, the Central Bank liquidated two such companies and has petitioned the courts to wind-up another.

Regulation

            1. Since 2004, the insurance sector has been regulated by the Central Bank, which administers the Insurance Act of 1980 (as amended in 2009). To be registered under the Act, life insurance companies must have a minimum capital requirement of TT$3 million, while non-life insurance companies must meet the minimum solvency margin requirements. Additionally, the insurance products of all firms need to be approved by the regulator. Furthermore, all insurance companies need to maintain a statutory fund with assets that are equivalent to their Trinidad and Tobago policyholders' liabilities. Investments in Trinidad and Tobago assets must be at least 80% of their Trinidad and Tobago dollar liabilities.36 Life and automobile insurers are required to have statutory funds to support policyholders' liability. All foreign firms providing life insurance and all non-life insurers must maintain statutory deposits. All insurers are required to have adequate reinsurance.

            2. Cross-ownership of financial institutions is permitted, subject to Central Bank approval. However, a bank cannot acquire any part or share of an insurance company if it is greater than 100% of the bank's capital base or the shareholding is greater than 25% of the bank's paid up share capital and statutory reserve.

            3. Foreign firms are permitted to conduct insurance business in Trinidad and Tobago if they are locally incorporated or appoint a local resident as their principal representative.37 There is no minimum paid-up capital requirement for foreign firms but they are required to deposit TT$250,000 with the Central Bank in order to be able to carry out long-term insurance business in Trinidad and Tobago. Furthermore, there are no restrictions on local residents purchasing insurance products abroad or any restriction on foreign firms advertising and selling insurance products in Trinidad and Tobago.

            4. The 2009 amendment to the Insurance Act followed the collapse of CLICO and BAT, which was widely blamed on inadequate regulation and weak supervision.38 The amendment addressed shortcomings in the legal framework by requiring quarterly reporting and that statutory fund requirements be met on an on-going basis, not only at the end of the year. Previously, the requirement that the statutory fund cover an insurance company's liability only needed to be met at the end of the year and the annual statement only needed to be filed within six months of the company's fiscal year-end. The amendment also gave the Central Bank authority to implement timely corrective action as well as authorizing information sharing among regulators.

            5. The authorities have drafted a new Insurance Bill, which is expected to be enacted in 2011. According to the authorities, the Bill is based on international best practice regarding insurance regulation and supervision. The Bill provides for inter alia: the imposition of risk-based capital adequacy requirements and limits on credit exposures and connected party exposures; stronger corporate governance by requiring audit committees, annual reporting by directors and senior management, as well as prescribing additional responsibilities for directors, auditors and actuaries; and consolidated supervision by broadening the Central Bank's powers to inspect subsidiaries and offshore operations of insurers. The Bill also provides for more effective protection of policyholders with respect to funds handled by insurance intermediaries. On the other hand, the authorities recognise deficiencies in the Bill such as the continued requirement that insurance companies maintain a statutory fund, that life insurance companies keep sufficient assets in Trinidad and Tobago to cover all liabilities regardless of their origin and prior approval of insurance products.39 In addition, the draft Bill would need accompanying guidelines.40

        1. Securities


            1. The equity market in Trinidad and Tobago is small with only 32 listed companies in 2010, with eight being delisted since the last Review. During the period under review, market capitalization declined from TT$96.8 billion in 2006 to TT$77.8 billion in 2010.41 Furthermore, market value of traded shares declined from approximately TT$2.5 billion to TT$865 million over the same period. The decline was due to the global financial crisis in 2008.42

            2. There has been no change to the legislation. The Securities Industry Act, 1995 continues to govern securities trading in Trinidad and Tobago. The Act details the conditions for the issue and listing of securities on the stock exchange. The Act is administered by the Securities and Exchange Commission (SEC), which is an independent regulatory body. Issuers, underwriters, investment advisers, stockbrokers, and dealers, must register with the SEC. The SEC also has quasi‑judicial authority: it has been granted investigative and dispute settlement powers to enforce rules and regulations and to monitor the solvency of market players. It can recommend by-laws to the Minister and has the authority to formulate principles for the guidance of the securities industry, and to review, approve, and regulate take-overs, amalgamations, and all forms of business combinations. However, the authorities stated that the Draft Securities Bill 2010 is being revised according to international best practices and the SEC is in the process of hiring a consultant to undertake the revision process.

      1. Telecommunications

(a) Structure


            1. The revenues collected from the telecommunications and broadcasting sectors in Trinidad and Tobago contributed over 3% of GDP in 2010. The sector comprises mobile telephony, fixed-line telephony, internet and broadcasting. During the period under review the sector has been growing, with total penetration of telecom services increasing approximately 167% in 2010 compared with 73% in 2005.43

Mobile telephony

            1. Mobile telephony is by far the largest segment of the telecommunications sector accounting for nearly 44% of the sectors revenue in 2010. Furthermore, mobile telephony is also the driver of growth in the industry, with mobile telephone subscriptions increasing from 630,000 at the time of the last review to nearly 2 million in 2010 which is equal to a penetration rate of over 143%. The sector comprises two operators: Telecommunications Services of Trinidad and Tobago (TSTT) and Digicel Trinidad Limited, which have an equal market share. According to the authorities a new license for mobile operators would be auctioned in 2012. The price of a three-minute cellular call in Trinidad and Tobago is comparable with other Caribbean countries at approximately US$1.44

Fixed line telephony

            1. The fixed-voice market accounts for 17% of the sector's total revenue. However, in contrast to the mobile telephony market, fixed-line telephony has been losing ground, with the total number of subscribers declining from 330,000 at the time of the last Review to approximately 293,000 in 2010, which is equal to a penetration rate of approximately 22%.

            2. Currently there are two service providers in the domestic fixed-line market, TSTT (the incumbent) and Columbus Communications Trinidad Limited. TSTT has a near monopoly on the market and has been declared by Telecommunications Authority of Trinidad and Tobago (TATT) as a dominant player in this market segment.45 Furthermore, three other entities also have concessions to provide domestic fixed-line telecommunications service, two of these have initiated services and mainly serve corporate clients, while the third is expected to start operations in the near future. Fixed‑line telephone charges are approximately US$0.03 per minute.46 Additionally, there are eight active operators in the international switched telecommunications market. The authorities stated that the competitive nature of the international market had driven prices down to unsuitably low levels, resulting in TATT intervening at the request of the industry and implementing price floors for incoming international termination rates in February 2010.

Internet

            1. Internet services account for approximately 12% of the total sector's revenues. Currently there are over 171,000 fixed internet subscribers and 452,000 mobile internet subscribers, resulting in overall internet penetration of approximately 47%. At present there are seven active fixed-line internet service providers, with both mobile operators providing mobile internet access.47 The authorities stated that Trinidad and Tobago has the lowest fixed broadband internet monthly subscription in the Caribbean, at approximately US$12 per month.48

Broadcasting

            1. The Broadcasting sector, which is made up of Subscription Television and Free to Air radio and television was responsible for approximately 18% of the telecommunications sector revenues in 2010. With over 178,000 subscriptions spread over nine operators, the subscription TV market is the main driver in the broadcasting market segment. This translates into a household penetration rate of 52%. The Free-to-Air markets are competitive with 37 radio stations and 8 television stations.

(b) Regulation


            1. The main legislation governing the telecommunications sector in Trinidad and Tobago is the Telecommunications Act of 2001 and the subsequent Telecommunications (Amendment) Act of 2004. The Telecommunications Authority of Trinidad and Tobago (TATT) administers the Act and is the regulatory authority for the sector.

            2. TATT is responsible for, inter alia: facilitating the environment for open and competitive telecommunications services; ensuring the development of the telecommunications and broadcasting sector; granting licences and making recommendations to the Minister on the granting of concessions; classification of telecommunications networks and services; determination of universal service obligations so that all residents of Trinidad and Tobago have access to telecommunications services; establishing industry standards; implementing and enforcing the Telecommunications Act and associated regulations; collection of all fees related to the Act; and resolving disputes between different parties that use telecommunications services.

            3. There have been no changes to the Telecommunications (Amendment) Act 2004 during the period under review. Operation of a public telecommunications network, or provision of a public telecommunications or broadcasting service, requires a concession from the TATT, while use of the spectrum requires a licence. No distinction is made between foreign and domestically owned service providers when granting concessions and licences. The authorities stated that a new amendment to the Act was expected to be promulgated in 2012. The new amendment would give greater regulatory power to TATT and also address competition issues.

            4. Frequency bands may be licensed by auction, tender, at a fixed price, or on stated criteria. Applications for concessions or licences are published in the Gazette and open to public comments or objections. Concessions and licences contain expiry dates and are subject to annual fees. The transfer of control of the concession requires prior written approval from the TATT. The TATT may determine that an operator or provider is dominant where, individually or jointly with others, it is in a position of economic strength affording it the power to behave independently of competitors.49

            5. Concessionaires must permit the resale of their telecommunications services and must provide and contribute to universal service. The public telecommunications services for which the requirement of universal service will apply are highlighted in the Universality Framework, which has been published by TATT. The authorities stated that corresponding regulations have also been developed but are awaiting cabinet approval. The draft regulations propose that domestic concessionaires, international concessionaires and all providers of closed-user group and private telecommunications services in the market contribute 0.5%, 1% and 2% respectively of gross revenues arising from relevant telecommunications services and/or network facilities towards the universal service fund. However, three regulations have been issued pertaining to the implementation of the Act. These are the Telecommunications (Access to Facilities) Regulations 2006, Telecommunications (Fees) Regulations 2006 and Telecommunications (Interconnection) Regulations 2006.

            6. Under the Telecommunications (Access to Facilities) Regulations 2006, the concessionaires are required to provide access to each other's networks if so requested in a non-discriminatory manner. Access agreements are required to detail the price for access to facilities as well as other technical, operational, billing and planning conditions for access. The price for access is to be agreed through commercial agreements. In the absence of mutual agreements between the access seeker and the access provider, the cost will be determined by the TATT, based on its costing methodology, which would reflect the cost incurred by the provider.50 If such costing methodologies are not available, then internationally accepted costing benchmarks may be used. Furthermore, under the regulation, a request for access cannot be denied except for reasons of insufficient capacity, safety, security, or technical difficulties. Access-related disputes are to be referred to TATT, which may put in place an interim arrangement. Any breach of the regulations is liable to a summary conviction and a fine of TT$50,000.51

            7. The Telecommunications (Fees) Regulations 2006 stipulate that all concessionaires need to submit their monthly revenue accounts to TATT, which takes the total annual revenue of the sector into account when it recalculates annual concession fees.52 The initial fee is determined based on the type of concession and is detailed in the First Schedule to the Regulation.53 The Regulation also includes a provision for competitive bidding for licences for frequency and spectrum bands. Telecommunications Tenders Rules 2004 detail the bidding procedure.

            8. Concessionaires are required to provide non-discriminatory access to their facilities for interconnection purposes, which would include transmission, switching, routing of voice, data and media over their networks, under the Telecommunications (Interconnection) Regulations 2006. The Regulation also allows for number portability between concessionaires.

            9. After an interconnection request has been made, the agreement needs to be concluded within six weeks where either party has published a reference interconnection order or ten weeks in other cases.54 All interconnection agreements are required to state prices for interconnection services and resources as well as technical, operational, billing and planning conditions for interconnection. If the concerned parties cannot agree on interconnection rates among themselves, TATT shall intervene and set interconnection rates based on a costing methodology provided by TATT. If such methodologies are not available then internationally established benchmarks are to be used. All interconnection agreements are to be posted on the TATT website.

            10. Any denial of an interconnection request needs to be notified to TATT with reasons provided for the denial. If TATT deems that the reasons are not justified, it can ask for network changes or adjustments so that interconnection is possible. All interconnection disputes need to be referred to TATT, which may ask for an interim agreement to be put in place during the resolution process. Breaches of the Regulation are liable to a summary conviction and a fine of TT$50,000.

            11. There have been no changes to the pricing methodology for telecommunications services in Trinidad and Tobago during the period under review. As long as TSTT is the dominant supplier in the fixed-voice market, its tariffs are subject to oversight by TATT. Additionally, TATT is mandated to set, review, and approve prices in cases where inter alia there is only one service provider or if a provider has a dominant market position or where the operator of a public telecommunications service cross-subsidizes another telecommunications service, or if TATT detects anti-competitive behaviour. In 2009 TATT published a Price Regulation Framework, which defines relevant telecommunications markets, the methodology for assessing whether there is dominance or exclusivity of supply within those markets, and the imposition of price regulation if so justified. Furthermore, the Framework also details the different forms of price regulation and the notification of price changes, the prevention of unfair cross-subsidies, anti-competitive pricing and the treatment of new service offerings.

      1. Tourism


            1. The tourism sector was responsible for 3.6% of GDP directly in 2008, while indirectly it contributed 7.4%. The travel and tourism sector is also responsible for nearly 5.4% of total employment in the economy directly, while the sector's indirect contribution to total employment was 9.5%. The period under review has seen a decline in visitors to Trinidad and Tobago. International air travellers declined from over 460,000 in 2005 to about 419,000 in 2009. The largest source market was the U.S., which accounted for 47% on the arrivals in 2009 followed by the Caribbean (13%), Canada (12%), Central and South America (11%) and the UK (10%).55

            2. During the period under review there has been no change to the legislative framework governing the tourism sector or the incentives that are in place. Three government entities are responsible for the tourism sector: the Ministry of Tourism, which is responsible for policy formulation; the Tobago House of Assembly; and the Tourism Development Company Limited, which is responsible for tourism investment, marketing and product development.

            3. Incentives for investment in the tourism sector are covered under the Tourism Development Act of 2000 as amended in 2006.56 Under the Act, incentives for approved tourism projects include a seven-year tax exemption pertaining to the gains or profits from an approved tourism project; tax exemption in respect of the gains or profits derived from the initial sale of a villa or condominium or a site that is part of an integrated resort development which is an approved tourism project. Any dividends from an approved tourism project made to non-residents are exempt from tax. Additionally, approved tourism projects may also be granted accelerated depreciation on equipment and capital allowance on approved capital expenditure. An importer of a vehicle to be used in the tourism transportation industry, may also apply for a licence to import a vehicle at a preferential customs duty rate of 10% with 0% motor vehicle tax.

            4. Imports of building materials and articles of tourism equipment used in a tourism project are granted customs and excise duty exemptions; for purchases made locally, companies are permitted duty drawbacks for building materials and articles of "tourism equipment" that were not already duty free (the VAT is still payable). To be eligible for the incentives, any accommodation project must have a minimum of ten guestrooms; approval depends on the amount of capital invested, the financial risk assumed, the contribution made or likely to be made to the sustainable development of the tourism industry, and the achievement of national tourism objectives. Tourism projects seeking to access benefits under the Act must be registered with TDC if the project is in Trinidad, or with the Tobago House of Assembly if the project is in Tobago. Projects are inspected annually.

            5. Tourism incentives are open to Trinidad and Tobago and other CARICOM nationals, and to foreigners except in the case of accommodation facilities with fewer than 21 rooms, transport services, and ground tour operations or destination management companies and dive operations for which incentives are reserved solely for Trinidad and Tobago and CARICOM nationals.

            6. The Government has identified travel and tourism as an important avenue for diversifying the economy. In this regard, it announced a National Tourism Policy in 2010.57 The Policy aims "to use sustainable tourism as a tool for the economic, socio-cultural and environmental development of Trinidad and Tobago for the benefit of all citizens." To achieve this goal, the potential of the tourism sector would be used to create jobs, alleviate poverty, earn foreign exchange as well as stimulate the creation of inter-industry linkages, particularly with the agriculture, construction, manufacturing, sports and other services industries.

            7. Additionally, the Policy also encourages inter alia investment in the sector through public-private partnerships; improving industry standards, while also encouraging the adoption of national and international standards; improving transport infrastructure and links, and marketing Trinidad and Tobago as an all-encompassing tourist destination.

      1. Transport


Shipping

            1. The registration and licensing of ships is covered under the Shipping Act, 1987, which is administered by the Maritime Services Division in the Ministry of Works and Infrastructure (MOWI). Under the Shipping Act, to be registered, ships need to be owned by nationals of Trinidad and Tobago or other CARICOM member states, or by foreigners engaged in bareboat charters or in joint venture shipping arrangements with Trinidad and Tobago nationals. Domestic ship owners are not required to fly the national flag. As at 31 December 2004, there were 145 ships on the Trinidad and Tobago register with a gross tonnage of 60,767 gt.58

            2. Inter-island routes between Trinidad and Tobago are operated by the Port Authority of Trinidad and Tobago (PATT) on behalf of the Government. All other operators are required to obtain an operating permit in accordance with the Shipping (Passenger Ferry) Regulations 1994. Furthermore, vessels engaging in coastal trade between the islands of Trinidad and Tobago are required to have a Certificate of Droghers59 on fulfilment of safety, environmental, and financial responsibility guidelines.

            3. Trinidad and Tobago is a member of the International Maritime Organization (IMO) and has ratified a number of its conventions, dealing mainly with safety, security, and pollution issues. Trinidad and Tobago is also a signatory to the United Nations Code of Conduct on Liner Conferences Convention. Trinidad and Tobago does not have a national shipping line.

Ports

            1. There are three major sea ports in Trinidad and Tobago: Port of Spain and Point Lisas in Trinidad, and Scarborough in Tobago. Port of Spain, the country's largest port, handles all major dry cargoes, containers and general cargo, break bulk cargo, liquid bulk cargo and passenger traffic, and in recent years has increasingly become a major regional hub for trans-shipment. Point Lisas is a multi-purpose port. It has specialized installations for loading industrial cargo and infrastructure for the handling of containers and general cargo. Scarborough is used mainly for inter‑island passenger and cargo transport, and international cruise ships.

            2. During the period under review cargo handled at the ports increased from 467,000 TEU in 2005 to above 577,000 TEU in 2010, of which over 42% was transhipment cargo.60 Vessel turnaround times have increased from 21 hours in 2006 to nearly 26 hours in 2010.61 The authorities stated that this increase was due to a reduction in port container handling productivity due to increased cargo volumes, inadequate storage space, inadequate equipment and counter-productive industrial contracts. The review period also saw an increase in port tariffs, which encompass towage charges and container and cargo handling charges.

            3. There have been no changes to the legislation and regulations governing ports in Trinidad and Tobago since the last Review. Transportation policy formulation and implementation is the responsibility of the Ministry of Works and Infrastructure. Port administration is the responsibility of the Port Authority of Trinidad and Tobago (PATT), which administers the Port Authority Act of 1961. Under the provisions of the Act, authorization from the PATT is needed to discharge and load general cargo and to supply other port services at any port in Trinidad and Tobago except Point Lisas, where authorization from Point Lisas Port Development Company (PLIPDECO) is required. Trinidad and Tobago has no restrictions on foreign suppliers of auxiliary port services.

            4. At the time of the last Review, the Government intended to restructure the PATT and to commercialize operations so as to improve efficiency and accountability in the provision of services. This has been done by setting up Port of Port of Spain (cargo handling), Port of Spain Infrastructure Company (property management and cruise shipping) and Trinidad and Tobago Inter Island Transportation Company (ferry services).

            5. As an island nation, maritime transport and services are very important for Trinidad and Tobago. In this regard, the authorities have identified the merchant marine industry as a high growth sector. Thus, with a view to developing "a world class maritime cluster leveraging on local advantages and favourable geographic location, while at the same time building core maritime competencies for the future"62, in 2004 the Government created a strategic plan to guide the long-term development of the sector. In 2006, a Maritime Industry Development Committee was created. The strategic plan addresses legislative reforms, institutional reforms, cluster development and human resource development.

            6. The authorities stated that the MOWI is currently working on amendments to the Shipping Bill, Harbours Bill and Marine Pollution Bill which, according to the authorities, are at the draft policy stage and require legal direction. Furthermore, a draft Business and Implementation Plan for the establishment of a Maritime Services Authority has been completed and is currently being reviewed by MOWI.

Civil aviation

            1. At the time of the last review there were two domestic airlines operating in Trinidad and Tobago, BWIA International Airways and Tobago Express. However, due to financial difficulties, both airlines were merged into the newly formed Caribbean Airlines in 2006. The latter is the only airline registered in Trinidad and Tobago and is also the national carrier.

            2. Policy formulation and implementation for the airline sector is the responsibility of MOWI. The Trinidad and Tobago Civil Aviation Authority (TTCAA) is the regulator for the industry and administers the Civil Aviation Act of 2001, which is the main legislation governing the sector. Under the provisions of the Act, TTCAA is responsible for inter alia: regulating civil aviation operations in the Trinidad and Tobago territory, as well as the operation of maintenance organizations in respect of aircraft on the Trinidad and Tobago register; issuing, renewing, and amending civil aviation licences and collecting the respective fees; and providing a system of air traffic services. The Authority is also responsible for aviation safety and security, and for maintaining a national aircraft register.

            3. There have been no changes to the conditions under which foreign carriers operate in Trinidad and Tobago since 2005, and these are detailed in the Foreign Operators Regulations of 2004. Air operators who do not hold an Air Operator Certificate issued by TTCAA need to have a Foreign Air Operator Operations Specification for which the operator must provide a copy of a valid air operator certificate issued by a foreign authority, and must have presented an Air Operator Security Programme for approval. Aircraft registered abroad and holding operating certificates need clearance from TTCAA.

            4. Under the Civil Aviation (Tenders Committee) Rules of 2004, TTCAA contracts cannot be awarded to non-residents, foreign companies or partnerships without prior written approval from the Minister. The authorities indicate that this is for monitoring purposes.

            5. Non-CARICOM airlines are subject to cabotage restrictions for both cargo and passenger transportation.

            6. As per the provisions of the CARICOM Multilateral Air Services Agreement, CARICOM-designated air carriers are allowed to offer all types of air services within CARICOM. The agreement also establishes guidelines on competition, fares, and security. Trinidad and Tobago has bilateral air services agreements with 18 countries.63 Of these agreements, those with Canada and the US are open-skies agreement, both of which were concluded as such in 2010. Additionally, Trinidad and Tobago has memoranda of understanding with a number of countries.

Airports

            1. There are two international airports in Trinidad and Tobago, the Piarco International Airport in Trinidad and the ANR Robinson International Airport in Tobago. During the period under review total passenger traffic at both airports decreased. At Piarco, the number of passengers declined from 2.4 million in 2005 to 2.3 million in 2008, while at ANR Robinson passenger traffic fell from approximately 878,000 to 814,000 over the same period. In contrast, cargo volumes at both airports increased over the same period.64

            2. Both airports are owned and managed by the Government-controlled Airports Authority of Trinidad and Tobago, which administers the Airports Authority Act of 1979, the main legislation governing the sector. Airports may only be built and owned by the Government and operated by the Airports Authority.

            3. Under the Civil Aviation Aerodrome Licensing Regulations of 2004, all aerodromes, including airports, must obtain a licence to operate, and must be registered in the Aerodrome Register. Licences are granted for one year. To obtain a licence, applicants must meet the safety and financial conditions spelled out in the Regulations.

REFERENCES
Central Bank of Trinidad and Tobago (2010a), Annual Report 2010. Viewed at: http://www.central-bank.org.tt/sites/default/files/Central%20Bank%20Annual%20Report%202010_0.pdf.
Central Bank of Trinidad and Tobago (2010b), Financial Stability Report, November. Viewed at: http://www.central-bank.org.tt/sites/default/files/Financial%20Stability%20Report%202010.pdf.

Central Bank of Trinidad and Tobago (2011a), Annual Economic Survey 2010. Viewed at http://www.central-bank.org.tt/sites/default/files/2010%20Annual%20Economic%20Survey.pdf.


Central Bank of Trinidad and Tobago (2011b) Economic Bulletin, July. Viewed at: http://www.central-bank.org.tt/sites/default/files/Economic%20Bulletin%20July%202011_1.pdf.
Central Bank of Trinidad and Tobago (2011c), Financial Stability Report Mid-Year Review, June. Viewed at: http://www.central- bank.org.tt/sites/default/files/ Financial%20Stability%20Report%20 Mid%20Yr% 20Review%20June%202011.pdf.
Central Statistical Office (2005), 2004 Agricultural Census. Viewed at: http://www.cso.gov.tt/ statistics/Statistics/Agricultural%20Census%20Preliminary%20Report.pdf.
Congressional Research Service (2006), Ethanol Imports and the Caribbean Basin Initiative, Order Code RS21930, Updated 10 March. Viewed at: http://www.hsdl.org/?view&did=473029.
EIU (2010), Industry Report, Energy, Trinidad and Tobago, December. Viewed at: http://www.eiu.com/index.asp?layout=ib3Article&article_id=367542421&country_id=700000070&pubtypeid=1142462499&industry_id=&category_id=775133077.
FAO (2005), CARICOM/CARIFORM Preparation of National Medium-term Investment Programmes and Formulation of Bankable Investment Project Profiles, Progress Status &Preliminary Findings. Viewed at: ftp://ftp.fao.org/sids/caricom.pdf [August 2011].
Government of the Republic of Trinidad and Tobago (2011a), Medium-Term Policy Framework 2011-14, October. Viewed at: http://www.finance.gov.tt/content/Medium-Term-Policy-Framework-2011-14.pdf.
Government of the Republic of Trinidad and Tobago (2011b), Review of the Economy 2011. Viewed at: http://www.finance.gov.tt/content/Review-of-the-Economy-2011.pdf.
IMF (2011), Trinidad and Tobago: 2010 Article IV Consultation—Staff Report, Supplement, Staff

Statement, Public Information Notice on the Executive Board Discussion, and Statement by the Executive Director for Trinidad and Tobago. Viewed at: http://www.imf.org/external/pubs/ft/scr/ 2011/cr1173.pdf.
IMF (2011), Trinidad and Tobago Selected Issues. IMF Country Report No. 11/74. Viewed at: http://www.imf.org/external/ pubs/ft/scr/2011/cr1174.pdf.
Lake Asphalt of Trinidad and Tobago (1978) Ltd, (2007) Annual Report. Viewed at: http://www.trinidadlakeasphalt.com/pdf/Lake%20Asphalt%202007%20Annual%20Report.pdf.
Lalloo, S. (2011), TITLING FAMILY LANDS: The easy way vs. the right way: Land Ownership in Trinidad and Tobago: Issues and Challenges, The University of the West Indies, Trinidad and Tobago, 28-29 April.
Ministry of Energy and Energy Industries (2004), Local Content & Local Participation Policy & Framework for the Republic of Trinidad and Tobago Energy Sector, Port of Spain, 7 October.
Ministry of Finance (2009), E-Auction as a Procurement Tool. Viewed at: http://www.finance. gov.tt/content/pubF9B485.pdf.
Ministry of Food Production, Land and Marine Affairs (2011), Incentive Programme 2011, June. Viewed at: http://agriculture.gov.tt/fplma/ [October 2011].
Ministry of Tourism (2009), Statistical Overview of Tourism Performance in Trinidad and Tobago. Viewed at: http://www.tourism.gov.tt/LinkClick.aspx?fileticket=4jmiXbr7A%2fE%3d&tabid=93.
Ministry of Tourism (2010), National Tourism Policy of Trinidad and Tobago 2010. Viewed at: http://www.tourism.gov.tt/LinkClick.aspx?fileticket=hepfUm%2b3UUA%3d&tabid=175&mid=416;
Ministryof Trade and Industry (undated), Trinidad and Tobago's Merchant Marine Industry. Viewed at: http://www.investtnt.com/1content/articlefiles/9-Merchant%20Marine%20Indus-%20TIC2008.pdf.
National Ozone Officer (2009), Status of the Montreal Protocol Implementation in Trinidad and Tobago. Viewed at: http://ozone.unep.org/Data_Reporting/Article_9_reporting/Trinidad-and-Tobago-2009.pdf.
NGC (2009), 2008 Annual Report. Viewed at: http://www.ngc.co.tt/Docs/annual-reports/ 2008_NGC_ANNUAL_REPORT.pdf
Petrotrin (2010), Consolidated Financial Statements of Petroleum Company of Trinidad and Tobago Limited, 30 September, Pointe-a-Pierre
World Bank (2011), Doing Business 2012, Doing Business in a More Transparent World, Washington. Viewed at: http://www.doingbusiness.org/data/ [December 2011].


1 Central Statistical Office (2005), 2004 Agricultural Census, Port of Spain.

2 FAO (2005), CARICOM/CARIFORM Preparation of National Medium-term Investment Programmes and Formulation of Bankable Investment Project Profiles, Progress Status &Preliminary Findings. Viewed at: ftp://ftp.fao.org/sids/caricom.pdf [August 2011].

3 FAOStat online database. Viewed at: http://faostat.fao.org/site/291/default.aspx [August 2011].

4 Congressional Research Service (2006), Ethanol Imports and the Caribbean Basin Initiative, Order Code RS21930, 10 March, Washington.

5 The National Agricultural Marketing and Development Corporation online information. Viewed at: http://www.namdevco.com/ [September 2011].

6 Agricultural Development Bank online information. Viewed at: http://www.adbtt.com/ [September 2011].

7 TTABA online information. Viewed at: http://www.ttaba.com/index.htm [November 2011].

8 Ministry of Food Production, Land and Marine Affairs (2011), Incentive Programme 2011, June. Viewed at: http://agriculture.gov.tt/fplma/ [October 2011].

9 Lalloo S (2011), Titling Family Lands: The easy way vs. the right way, presented at Land Conference 2011, Land Ownership in Trinidad and Tobago: Issues and Challenges, The University of the West Indies, Trinidad and Tobago, 28-29 April.

10 Minister for Food Production, Land and Marine Affairs (2011), Speech on the occasion of the 2nd Luncheon of the Consular Corps, 23 August. Viewed at: http://agriculture.gov.tt/fplma/index.php?q=content/2nd-luncheon-consular-corps-8911314097964 [September 2011].

11 European Commission delegation to Trinidad and Tobago, EU Co-operation with Trinidad and Tobago. Viewed at: http://eeas.europa.eu/delegations/trinidad/eu_trinidad/tech_financial_cooperation/index

_en.htm [October 2011].



12 WTO documents G/AG/N/TTO/6, 8, 10 and 12 of 25 October 2004, 5 July 2007, 21 September 2007 and 6 October 2009, respectively.

13 Central Bank of Trinidad and Tobago (2011), 2010 Annual Economic Survey, Port of Spain, p. 9.

14 Ministry of Energy and Energy Affairs online information. Viewed at: http://www.energy.gov.tt/national_energy_policy_consultations.php?mid=77 [October 2011].

15 Ministry of Energy and Energy Industries (2004), Local Content & Local Participation Policy & Framework for the Republic of Trinidad and Tobago Energy Sector, Port of Spain, 7 October.

16 Ministry of Energy and Energy Affairs (2011), online information. Viewed at: http://www.energy.gov.tt/business_and_investing.php?mid=54 [October 2011].

17 Ministry of Energy and Energy Affairs (2011), online information. Viewed at: http://www.energy.gov.tt/business_and_investing.php?mid=159 [October 2011].

18 EIU (2010), Industry Report, Energy, Trinidad and Tobago, December, London.

19 Petrotrin (2010), Consolidated Financial Statements of Petroleum Company of Trinidad and Tobago Limited, 30 September.

20 Ministry of Energy and Energy Affairs (2011), online information. Viewed at: http://www.energy.gov.tt/energy_industry.php?mid=32 [September 2011].

21 Central Bank of Trinidad and Tobago (2011), 2010 Annual Economic Survey, Port of Spain, Table A.8.

22 Lake Asphalt of Trinidad and Tobago (1978) Ltd, 2007 Annual Report.

23 NP online information. Viewed at: http://www.np.co.tt/ [October 2011].

24 NGC (2009), 2008 Annual Report.

25 Atlantic LNG (2011), Atlantic, What you should know.

26 PLIPDECO online information. Viewed at: http://www.plipdeco.com/main/index.php?page= corporate-overview [October 2011].

27 Regulated Industries Commission online information. Viewed at: http://www.ric.org.tt/cms/mos/ Frontpage/ [October 2011].

28 WTO document GATS/SC/86, 15 April 1994.

29 WTO document TN/S/O/TTO, 21 June 2005.

30 Central Bank of Trinidad and Tobago Annual Report 2010. Viewed at: http://www.central-bank.org.tt/sites/default/files/Central%20Bank%20Annual%20Report%202010.pdf.

31 Central Bank of Trinidad and Tobago Financial Stability Report Mid-Year Review June 2011. Viewed at: http://www.central- bank.org.tt/sites/default/files/ Financial%20Stability%20Report%20Mid% 20Yr% 20Review%20June%202011.pdf.

32 Central Bank of Trinidad and Tobago Financial Stability Report Mid-Year Review June 2011. Viewed at: http://www.central- bank.org.tt/sites/default/files/ Financial%20Stability%20Report%20Mid%20 Yr% 20Review%20June%202011.pdf.

33 The Financial Institutions Act of 2008 is available online from the Ministry of Finance. Viewed at: http://www.finance.gov.tt/content/164.pdf [October 2011].

34 IMF Staff Report for Article IV consultation December 2010.

35 Both companies were part of a larger conglomerate CL Financial Group, which had interests in banking, insurance, real estate, beverages, and energy and petrochemical sectors.

36 For investment purposes CARICOM countries are given national treatment. Thus investments in CARICOM assets must be at least 80% of their Trinidad and Tobago dollar liabilities.

37 This requirement does not apply to companies from other CARICOM countries.

38 IMF Trinidad and Tobago Selected Issues January 2011. Viewed at: http://www.imf.org/external/ pubs/ft/scr/2011/cr1174.pdf.


39 Central Bank of Trinidad and Tobago Financial Stability Report November 2010. Viewed at: http://www.central-bank.org.tt/sites/default/files/Financial%20Stability%20Report%202010.pdf.

40 IMF Trinidad and Tobago Financial System Stability Assessment January 2011.

41 Central Bank of Trinidad and Tobago Financial Stability Report Mid-Year Review June 2011. Viewed at: http://www.central- bank.org.tt/sites/default/files/Financial%20Stability%20Report%20Mid%20Yr % 20Review%20June%202011.pdf.

42 Central Bank of Trinidad and Tobago Financial Stability Report Mid-Year Review June 2011. Viewed at: http://www.central- bank.org.tt/sites/default/files/Financial%20Stability%20Report%20Mid%20Yr

% 20Review%20June%202011.pdf.



43 Telecommunications Authority of Trinidad and Tobago online information. Viewed at: http://tatt.org.tt/ and information provided by the authorities.

44 Information provided by the authorities based on the ITU database.

45 The authorities stated that TSTT controls 90% of the fixed line market.

46 Information provided by the authorities based on the ITU database.

47 Telecommunications Authority of Trinidad and Tobago online information. Viewed at: http://tatt.org.tt/.

48 Information provided by the authorities based on the ITU database.

49 TATT is authorized to regulate competition and prices if a provider has a 70% or greater market share.

50 The authorities stated that through a consultative approach with concessionaires, TATT had developed a Long Run Average Incremental Cost Model which would be implemented shortly.

51 Telecommunications (Access to Facilities) Regulations 2006. Viewed at: http://tatt.org.tt/Link Click.aspx?fileticket=ggBHIX7iBZo%3d&tabid=125.

52 Fees for a national territorial concession shall not be less than TT$ 10,000.

53 Telecommunications (Fees) Regulations 2006. Viewed at: http://tatt.org.tt/Link Click.aspx?fileticket=eW9rzEGwtrA%3d&tabid=125.

54 Telecommunications (Interconnection) Regulations 2006. Viewed at: http://tatt.org.tt/Link Click.aspx? fileticket=UtRgpqGYcCg%3d&tabid=125.

55 National Tourism Policy of Trinidad and Tobago 2010. Viewed at: http://www.tourism.gov.tt/ LinkClick.aspx?fileticket=hepfUm%2b3UUA%3d&tabid=175&mid=416; and Statistical Overview of Tourism Performance in Trinidad and Tobago 2009. Viewed at: http://www.tourism.gov.tt/Link Click.aspx?fileticket=4jmiXbr7A%2fE%3d&tabid=93.

56 Tourism Development Act 2006. Viewed at: http://www.tourism.gov.tt/Link Click.aspx?fileticket=e6oo6z2%2b32k%3d&tabid=173.

57 National Tourism Policy of Trinidad and Tobago 2010. Viewed at: http://www.tourism.gov.tt/Link Click.aspx?fileticket=hepfUm%2b3UUA%3d&tabid=175&mid=416.

58 WTO document WT/TPR/S/151/Rev.1 12, October 2005.

59 A drogher is a freight barge of the West Indies, rigged as a cutter or schooner.

60 Trinidad and Tobago Export Directory. Viewed at: http://www.bdc.co.tt/exportdirectory/ profiles.php?cid=3&docID=20 and information provided by the authorities.

61 Information provided by the authorities.

62 Trinidad and Tobago's Merchant Marine Industry. Viewed at: http://www.investtnt.com/1content/ articlefiles/9-Merchant%20Marine%20Indus-%20TIC2008.pdf.

63 Trinidad and Tobago has bilateral aviation agreements with: Aruba, Antigua and Barbuda, Barbados, Belgium, Canada, Cuba, Denmark, France, Jamaica, the Netherlands, Nigeria, Poland, St. Lucia, St. Kitts and Nevis, Sweden, Switzerland, the United Kingdom, and the United States.

64 Airports Authority of Trinidad and Tobago online information. Viewed at: http://tntairports.com/ newdesign.html.

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