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contents 4

From the Editor


Caribbean to benefit from improved communications structure



Latin America: recalculating global volatility

June 2012

27 IEA report sees bright future for natural gas over the next 5 years 28 Growth in global oil market slows in 2011 32 The lighter side

ECLAC maintains its growth forecast for LAC in 2012

10 LAC received $153B from FDI in 2011 12 Larry Hoawi, Trinidad and Tobago’s new Minister of Finance and the Economy 14 Rethinking development and the crisis of market capitalism

Caribbean Hotelier of the Year


20 Do you look and feel the part? 22 Small business owners undertaking professional debt to save employees 23 The financial crisis continues to rumble on

Editor: Linda Hutchinson-Jafar Contributors: Ambassador P.I. Gomes Garfield King Kevin Craig Elina Smith

David Scowsill, Head, World Travel & Tourism Council on the business outlook of travel and tourism in the Caribbean


Design and layout: Karibgraphics Ltd. Business Journal is published by: Caribbean PR Agency #268 Harold Fraser Circular, Valsayn, Trinidad and Tobago, W.I. T/F: (868) 645-0368 Š 2012. No part of this publication may be reproduced without the written permission of the Publisher.

From the Editor’s Desk


alf way through 2012 and the Caribbean continues to limp along the economic road, saddled by high inflation, reduced foreign exchange, high unemployment and reduced activity in their major sectors. Creating macro-economic stability characterised by conditions including low inflation and a return of domestic and foreign investment continues to evade governments as negative or flat growth reflect the state of economies over the last four years. In energy-based Trinidad and Tobago, a new Minister of Finance and the Economy, Larry Howai, a veteran banker was appointed to inject some momentum in the economy which has been described as being in a slump or moving sluggishly. The country’s Central Bank in its latest Monetary Policy Report states that the economy, which has faced three years of consecutive decline, has been revised downwards from an end of year growth projection of 1.5 to 1 percent because of falling oil and gas production.

In 2011, real GDP declined at 1.5 percent, a slight revision from the negative 1.4 per cent originally estimated. In 2010, the country registered a 0.6 percent decline. Other Caribbean countries, mainly dependent on tourism are reporting similar trends or slow recovery at best. All this of course is taking place as European Union countries battle for solutions to the Eurozone debt crisis which poses a serious risk and threat to trading partners. In this issue, we’ve published several reports which track the economic trends in the Caribbean and Latin America. Lastly, thanks very much to those readers who have communicated directly to me, expressing their thoughts on the March edition of Business Journal. Do continue to drop me a line at hutchlin@ Regards,

Linda Hutchinson-Jafar


JUNE 2012 | Business Journal

Caribbean to Benefit from Improved Communications Infrastructure Broadband connectivity to be expanded


he World Bank Board of Directors approved a US$25 million financial package to support the first phase of the Caribbean Regional Communications Infrastructure Programme which will provide 27 million people with access to better and affordable broadband services. The Infrastructure Programme is the first phase of a 10-year Information and Communications Technology (ICT) programme. Françoise Clottes The first phase will focus on Grenada, Saint Lucia, Saint Vincent and the Grenadines, with The Caribbean region is serviced by an other Caribbean countries joining at a later extensive, complex, and robust submarine stage. network, but significant gaps remain and connectivity disruptions are hindering economic By improving the communications growth. There is little investment in broadband infrastructure, the programme aims at fostering networks venturing beyond the main urban regional economic development and growth. centers. Many rural areas remain largely The package includes a US$3 million grant to unserved. Furthermore, the lack of emergency the Caribbean Telecommunications Union (CTU) communications networks leaves the countries to coordinate the regional program; a US$10 exposed to major disruptions in communications million credit to Grenada; a US$6 million credit services in the face of emergencies. to Saint Lucia; and a US$6 million credit to Saint Vincent and the Grenadines. The first phase of this new initiative will include technical assistance and funding to: “A sound regional connectivity and ICT-led • Improve the regional connectivity innovation system is vital for the Caribbean infrastructure by expanding broadband region’s growth”, said Françoise Clottes, World connectivity. Bank Country Director for the Caribbean. “This • Promote ICT-led innovation and related programme is a unique opportunity to put in place activities that will leverage the regional critical infrastructure and skills to capitalize on broadband infrastructure to foster the transformative power of Information and employment, as well as growth of a robust Communication Technologies to promote growth regional Information Technology (IT) and and open new job opportunities to Caribbean IT-enabled services industry. citizens. It is my hope that other countries in the • Build capacity of the governments to region will take advantage of this opportunity to implement, coordinate and monitor the join the programme”, she added. programme at the national level. business journal | JUNE 2012 

Latin America: Recalculating Global Volatility Having made a strong recovery from the global financial crisis of 2009, economic activity in Latin America and the Caribbean

Global Economic Prospects

Volume 5 | June 2012

Managing growth in a volatile world

is once again facing external and domestic headwinds, says the World Bank’s Global Economic Prospects report. The World Bank

Overall growth in the region eased to 4.3 percent in 2011, from a remarkable 6.1 percent postcrisis rebound in 2010. Growth in Brazil, the region’s largest economy, slowed markedly to 2.7 percent in 2011, from 7.5 percent in 2010, as growth of domestic demand, investment growth and private consumption eased. In the Caribbean, growth was supported by a continued, albeit subdued, recovery in tourism, and a notable increase in activity in the mining and extractive sectors. Growth in the Central American region, which excludes Mexico, accelerated marginally, in part due to a marked acceleration in growth in Panama, due to the expansion of the Panama Canal, the construction of Metro system, and strong private consumption. Increased concerns about the worsening of the situation in the Euro area during May has caused market sentiment to deteriorate globally. Increased financial tensions have driven up the price of risk, caused most currencies to depreciate against the U.S. dollar, and caused commodity prices and stock market indexes to decline markedly. This is in contrast to developments in early 2012, when improved sentiment in high-income Europe and the associated improvements in market expectations had prompted a robust rebound in capital flows, equity markets and regional currencies. 

JUNE 2012 | Business Journal

Outlook The short-term outlook for Latin America and the Caribbean is clouded by a fragile and uncertain external environment, still high oil prices and capacity constraints in select economies. Due to resurgence in tensions in the high-income world the region is once again facing headwinds from marked declines in commodity prices and weaker capital flows. Consequently growth is expected to decelerate to 3.5 percent in 2012, before firming marginally to 4.1 percent and 4 percent in 2013 and 2014, respectively.

Growth in Brazil is projected at 2.9 percent in 2012, accelerating to 4.2 percent in 2013, and 3.9 percent in 2014, supported by more expansionary policies and increased investment ahead of the World Cup. Argentina is expected to record one of the sharpest slowdowns in the region, with GDP projected at 2.2 percent in 2012 (8.9 percent in 2011), and to grow below 4 percent in the 2013-2014 period. Growth in the Caribbean is expected to consolidate at 4 percent by 2014, due, in part, to improvements in labor markets in the United States. The expected gradual recovery in the United States bodes well for Mexico, Costa Rica, El Salvador, and Haiti; countries that have strong industrial links to the world’s largest economy. It will also support remittances and tourism to Central America and the Caribbean.

The short-term outlook for Latin America and the Caribbean is clouded by a fragile and uncertain external environment, still high oil prices and capacity constraints in select economies.

Euro Area A sharp deterioration of conditions in the Euro area is one of the main risks to the Latin American and Caribbean economies. In such a scenario global demand could drop significantly, and commodity prices, remittances, tourism, finance, and consumer and business sentiment would be negatively affected, potentially causing regional output to decline relative to baseline by close to 4 percent. Countries that have fewer macroeconomic buffers could be particularly vulnerable in the face of a significant weakening in global demand.

Risks and vulnerabilities Looking East Risks to growth in the region have shifted to the downside. Large fiscal deficits and public debts in high-income countries and very loose monetary policies suggest that capital flows will remain volatile in the next years, making the fine-tuning of macroeconomic policies challenging.

As the region, notably South America, is becoming increasingly reliant on exports to East Asia, particularly China, a hard-landing there could have important implications for export growth in the region.

business journal | JUNE 2012 

ECLAC Maintains its 3.7% Growth Forecast for Latin America and the Caribbean in 2012 The Latin American and Caribbean region continued to grow in the first quarter of the year, despite a difficult external climate. According to a new report from ECLAC, in the first few months of 2012 there was less of a slowdown in economic activity in the region’s countries than the one observed during the second half of 2011, despite considerable uncertainty and volatility in the external climate. In the ‘Macroeconomic Report on Latin America and the Caribbean, June 2012’, ECLAC maintains its 3.7% growth forecast for the region, following a growth rate of 4.3% in 2011. This United Nations Commission predicts that the current European financial crisis, the slowdown in China and the positive but low-level growth in the United States will have differing impacts on this region’s countries, depending on the relative size of their export-destination markets and their export structure. The ECLAC report is the first in a new series of studies that will periodically review the region’s macroeconomic performance and predicts that the fastest growing economies will be Panama (8.0%) and Haiti (6.0%), followed by Peru (5,7%), Bolivia (5.2%) and Costa Rica (5.0%). Venezuela will also grow 5.0%, while Chile will expand 4.9%, Mexico 4.0%, Argentina 3.5% and Brazil 2.7%. In the first quarter of this year, there was a pause and a partial reversal in the slowdown observed in many countries during 2011. In comparison with the same period of last year, in 2012 the growth rate has risen significantly in Peru, Chile and Venezuela and climbed slightly in Mexico, while there was a break in the slowdown observed in Brazil’s economy during 2011. Growth was slower than in early 2011 for Argentina, Colombia and Guatemala, but only

JUNE 2012 | Business Journal

Paraguay posted negative growth during the first quarter of 2012. Available information for Caribbean countries suggests the slow recovery following the 2008-2009 crisis began to be reflected in modest growth rates in 2011, although they have shown an upward trend in the first quarter of 2012. In the first quarter of 2012, growth was associated with increased internal demand. Services, and particularly trade, remained one of the most buoyant sectors. Private consumption was responsible for the bulk of the rise in regional gross domestic product (GDP), thanks to a rise in employment and wages, the ongoing credit expansion and, in some countries, increased remittances mainly from the United States. During this period, inflation maintained its downward trend and in April 2012 stood at an annual rate of 5.5%, compared with 6.7% in March and 7% in December 2011. The price drop for the main export commodities triggered a fall in the region’s export values in the first quarter of 2012. The year-on-year rate of change for exports went from a maximum of 29.3% in the second quarter of 2011 to 10.4% in the first quarter of 2012. This was partly attributable to the weakening of sales to European countries since early 2011, in the wake of the debt crisis affecting that region and the consequent shrinking of economic activity there. ECLAC predicts that the relative slowdown in world economic growth expected for 2012 will result in the region’s international trade growing more slowly than in 2011. Exports will grow by 6.3% this year, while buoyant internal demand will fuel stronger growth (10.2%) for imports. As a result, the trade surplus will fall from 1.3% of GDP in 2011 to 0.7% in 2012.

The report states that the possibility of a worse external scenario in 2012-2013 should not be ruled out. Were this to happen, it could halt financial inflows to the region and suspend bank credit lines abroad, which would in turn bring about stock market falls and currency depreciation, as well as a reduction in exports and investment. According to the report, although in most countries this is less true than before the

2008-2009 crisis, the region generally has the fiscal room for manoeuvre to implement a countercyclical policy that would contain the immediate effects of the crisis on its economies, except in several Caribbean countries. The report concludes that, should the external climate worsen, many countries are in a position to take action without affecting the sustainability of public and external finances, thereby moderating the effects on growth.

Latin America and the Caribbean Total GDP (Millions of dollars in constant 2005 prices ) Rates of variation







Argentina Bolivia (Plurinational State of) Brazil Chile Colombia Costa Rica Cuba Dominican Republic Ecuador El Salvador Guatemala Haiti Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela (Bolivarian Republic of)

6.8 6.1 5.2 3.7 3.5 2.7 4.1 5.3 7.2 1.3 3.3 0.8 4.2 1.2 2.8 10.1 5.8 9.8 7.2 5.3

0.9 3.4 -0.3 -1.0 1.7 -1.0 1.4 3.5 0.4 -3.1 0.5 2.9 -2.1 -6.3 -1.5 3.9 -3.8 0.9 2.4 -3.2

9.2 4.1 7.5 6.1 4.0 4.7 2.4 7.8 3.6 1.4 2.9 -5.4 2.8 5.6 4.5 7.6 15.0 8.8 8.9 -1.5

8.9 5.1 2.7 6.0 5.9 4.2 2.7 4.5 7.8 1.5 3.9 5.6 3.6 3.9 4.7 10.6 3.8 6.9 5.7 4.2

3.5 5.2 2.7 4.9 4.5 5.0 3.0 4.5 4.5 2.0 3.5 6.0 3.2 4.0 5.0 8.0 -1.5 5.7 3.5 5.0

Sub-total Latin America






Antigua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Jamaica Saint Kitts and Nevis Saint Vincent and the Grenadines Saint Lucia Suriname Trinidad and Tobago

0.0 -2.3 0.1 3.8 7.7 1.0 2.0 -0.6 4.7 1.4 5.4 3.1 2.3

-11.9 -4.9 -3.7 0.0 -0.7 -6.6 3.3 -3.0 -6.9 -2.2 -1.1 7.7 -3.0

-7.9 0.2 0.2 2.9 0.9 0.0 4.4 -1.3 -2.4 -2.8 3.2 7.3 0.0

-5.0 1.6 0.0 2.5 -0.3 1.0 5.4 1.5 2.1 0.1 -2.3 4.5 -1.4

2.3 2.8 1.0 3.0 2.6 1.9 4.1 1.0 1.0 1.8 2.1 4.3 1.7

Sub-total Caribbean






Latin America and the Caribbean






Source: ECLAC, based on official figures.

Public Information and Web Services Section - E-mail: - Tel.: (56-2) 210-2040

business journal | JUNE 2012 

Latin America and the Caribbean received US$153 Billion from Foreign Direct Investment in 2011 The Latin American and Caribbean region Hcontinued to grow in the first quarter of the year, despite a difficult external climate.

Fact Sheet Latin America and the Caribbean received In 2011, the main foreign direct investment  In the last decade, consolidated its position as the US$153.448 billion from foreign direct recipients in the Spain region were Brazil (US$66.660 main European investor in Latin America and the Caribbean. investment (FDI) in 2011, which represents 10% billion, 43.8% of the total of flows FOREIGN DIRECT INVESTMENT BY THE Betweenrepresenting 2000 and 2010, 86% of Spanish FDI in the region was directed to the services sector, whereas the EUROPEAN UNION IN LATIN AMERICA of the global total flows according to a report into the region), Mexico (US$19.440 billion), manufacturing sector – mainly in Brazil – and the primary AND THE CARIBBEAN by the Economic Commission for Latin America Chile sector (17.299 accounted forbillion), 12% and 2% Colombia respectively. (US$13.234  EU transnational corporations are strongly relevant to  The European Union (EU) is the main investor in Latin and the Caribbean (ECLAC) in Santiago, Chile. billion), Peru (US$7.659 billion), Argentina Greenfield investments in the manufacturing sector, the main America and the Caribbean. In the last decade, the EU mechanism new productive capacity. (US$5.302 This is about theof US$ largest amount FDI (US$7.243for developing billion), Venezuela earmarked an average 30 billion per year forof foreign  In the region, Brazil is the only country that has become a direct by investment (FDI) in so the far, region,as which accounts received the region stated in for the billion) (US$2.528 Of relevant and target Uruguay for R&D activities guided by billion). European nearly 40% of the total FDI received. transnational corporations, which are intensifying their report entitled ‘Foreign Direct Investment  In the second half of the decade of 2000, European FDI inin these countries, Brazil, Chile, Colombia, Peru innovation and technology transfer activities in sectors such the region increased significantly in absolute terms; however, as the automotivereached industry andhistoric electronics.records. Latin this America and the Caribbean 2011’. being and Uruguay soar showed differences among subregions,  Considering the current crisis in the EU, European directed America, where Brazil was the main In mainly 2010, theto South region received US$120.880 In Central America, FDI incomes increased transnational corporations’ activities in Latin America and the recipient, followed by Argentina, Colombia and Chile. On the Caribbean constitute a critical contribution to stabilize billion, whereas in 2009, due to the international by 36% compared to 2010, where the amounts other hand, European FDI in Mexico, Central America and balance sheets in parent companies and better tackle the the Caribbean remained relatively stable. economic crisis, investments decreased to received by in their Panama billion), adverse situation countries of (US$2.790 origin.  In spite of these facts, the Latin American and Caribbean  According to ECLAC, Latin America and the Caribbean and region has increasingly lost relevance as a location for US$81.589 billion. Until then, the highest record Costa Rica (US$2.104 billion) and Honduras the European Union should promote cooperation in order to European transnational companies when compared to Asia foster investments as a sustainable source of growth and had been registered and Eastern Europe. in 2008, when investments (US$1.014 billion) stand out. In the Caribbean, development. Moreover, the region must complement its FDI  The presence of European transnational amounted to US$137.001 billion.corporations in the flows soared bywith 20% compared the policy previous promotion policies enhanced efforts on to industrial region is highly relevant to strategic industries such as banking and the energy sector.

for promoting permanent and dynamic benefits resulting from





40 000

30 000

20 000

10 000



European Union


2003 United States









Latin America and the Caribbean

Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the official figures database of the central banks of Latin American and Caribbean countries.

Public Information and Web Services Unit - E-mail: - Tel.: (56-2) 210-2040 10

JUNE 2012 | Business Journal

The Executive Secretary of ECLAC Alicia Bárcena presented the report “Foreign Direct Investment in Latin America and the Caribbean 2011” at a press conference.

year, with the Dominican Republic at the head with US$2.371 billion. “In spite of the prevailing uncertainty in global financial markets, Latin American and Caribbean economies attracted important amounts of foreign direct investment during 2011. These amounts should remain high in 2012,”said the Executive Secretary of ECLAC, Alicia Bárcena. In 2011, 46% of the net income deriving from FDI was due to profit re-investments, whilst the remaining percentage was due to capital contributions and loans among companies. According to the Organization, this denotes the trust of transnational companies in the region and important business opportunities within it. As shown in the report, this tendency, which started in 2002, is a result of the amount of assets accumulated by transnational companies in the region and an increase in their profitability due to the good economic performance of the countries and to high international prices of exported raw materials. Nevertheless, ECLAC identifies a current phenomenon that is increasingly relevant since 2004: the growing repatriation of profits by transnational corporations investing in the region, a fact that reminds that FDI is not a unidirectional flow. “FDI revenue transferred back to the countries of origin has increased

from US$20 billion per year between 1998 and 2003 to US$84 billion between 2008 and 2010 per year,” noted Bárcena. Also, the document points out that FDI strengthens the specialization of production in Latin America and the Caribbean. In 2011, 57% of foreign direct investments received by South America (except Brazil) were directed to the natural resources sector, 36% to services and 7% to manufacturing. In exchange, 7.8% of FDI received by Mexico, Central America and the Caribbean were oriented to natural resources, 39.7% to manufacturing and 52.5% to services. Meanwhile, 46.4% of foreign direct investments received by Brazil were directed to manufacturing, 44.3% to services and 9.2% to natural resources. “In this context, it is urgent to promote policies to guide FDI and leverage its potential benefits, among which are the knowledge and technological exchange and the increase of local capacities by strengthening national innovation systems, creating production chains, building human capacity and fostering local entrepreneurial development,” emphasized the UN high-level official. Investments made by Latin American and Caribbean transnational corporations -also known as trans-Latins- decreased to US$ 22.605 billion in 2011 - having amounted to US$44.924

business journal | JUNE 2012 11

billion in 2010. In spite of this decrease, ECLAC underlined that these corporations are still in an expansion phase. According to the Organization, this downsizing can be mainly explained by Brazil’s behavior, where net borrowings granted by subsidiaries abroad to parent companies increased, whereas capital contributions were cut down, a fact that suggests that Brazilian companies are investing more in their own country. Chile was the country that invested the most abroad in 2011 (US$11.822 billion), followed by Mexico (US$9.640 billion) and Colombia (US$8.289 billion). The ECLAC report shows that the European Union (EU), as a bloc, is the largest investor in Latin America and the Caribbean. In the last decade, the EU invested an average of US$30 billion per year in the region, representing 40% of the total received. European investments,

which have been mainly directed to South America, are widely diverse and strongly relevant to strategic sectors such as electricity and banking. Among the main investors in 2011, the United States (18%), Spain (14%), the Latin American and Caribbean region itself (9%) and Japan (8%) - among others - stand out. ECLAC estimates that, in 2012, the FDI flows to Latin America and the Caribbean will maintain high levels. Nevertheless, the Organization warns that if the crisis in the eurozone worsens, the flow of investments -especially those coming from Europe- could be reversed. Due to this uncertainty and to the attractive position of Latin America and the Caribbean to transnational companies, the Organization anticipates that inflows to the region deriving from FDI in 2012 will vary between -2% and 8% compared to inflows in 2011.

Trinidad and Tobago’s new Minister of finance and the economy Mr. Larry Howai who has over 30 years experience in the financial services industry was appointed Trinidad and Tobago’s Minister of Finance and the Economy, replacing Mr. Winston Dookeran who has assumed the Foreign Affairs portfolio. Mr. Howai was the Chief Executive Officer of First Citizens Bank since 1997. The immediate challenge facing Mr. Howai is injecting momentum in the energy-based economy which has faced three years of consecutive decline. The Central Bank in its May 2012 Monetary Report revised the end of year growth projection from 1.5 to 1 percent because of falling oil and gas production. A small decline in real GDP was recorded in the first quarter of 2012, a year in which economic recovery was anticipated.


JUNE 2012 | Business Journal

The revised growth projection assumes that ongoing maintenance activity in the energy sector is completed on schedule and that production of oil and gas returns to trend levels in the second half of the year. In 2011, real GDP declined at 1.5 percent, a slight revision from the negative 1.4 per cent originally estimated. In 2010, the country registered a 0.6 percent decline. In the first quarter of 2012, crude oil output continued its declining trend, falling to 82, 467 bpd, down from 96,865 bpd in the same period of 2011. Natural gas production also continued to remain depressed, dropping to 4,232 million cubic feet per day (MMscf/d) in the first quarter of this year compared to 4,260 MMscf/d a year earlier.

CHTA ELECTS NEW SLATE OF OFFICERS The Caribbean Hotel & Tourism Association (CHTA) voted in a new slate of officers at its Annual General Meeting (AGM), held on June 14, 2012 at the Half Moon Hotel, A Rock Resort, in Montego Bay, Jamaica. The officers will be led by Richard J. Doumeng, managing director of Bolongo Bay Beach Resort in St. Thomas, U.S. Virgin Islands, who was sworn in as president of CHTA during the AGM. Doumeng and the officers will serve the membership of CHTA for the 2012-14 biennium. The five Vice Presidents and Treasurer to serve under Doumeng are as follows: • • • • • •

1st Vice President - Emil Lee, president, St. Maarten Hotel & Trade Association and general manager of Princess Heights Hotel, St. Maarten 2nd Vice President - Alberto Abreu, director of hospitality, Punta Cana Resort & Club, Dominican Republic 3rd Vice President - Karolin Troubetzkoy, St. Lucia, president, St. Lucia Hotel and Tourism Association and owner and executive director of Anse Chastanet and Jade Mountain Resort, St. Lucia 4th Vice President - Evelyn Smith, president of the Jamaica Hotel & Tourism Association and general manager, Tensing Pen, Jamaica 5th Vice President - Willem Jonckheer, CEO of Jonckheer Advertising and Marketing, Curacao Treasurer - James Hepple, president and CEO, Aruba Hotel and Tourism Association.

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Column Rethinking Development and the Crisis of Market Capitalism By Ambassador P.I Gomes

Developing countries facing the impact of the massive financial meltdown that was set off in 2008 by the speculative banking sector of the so-called “advanced” developed economies of the USA and Western Europe are increasingly engaged in rethinking the meaning of “development”. In this task, the debates include critics from the Global South as well as in the North. Basically, it entails deconstructing the basic tenets of “free-market capitalism” and the impact of its policies on the impoverished and alienated millions in both the Global South and North. To propose options that might be pursued by developing countries, to achieve “development” - understood as the improved all round wellbeing of their populations in terms of material, social, cultural and spiritual satisfaction through decent work and enjoyment of fundamental human rights - it seems essential to depict major forces that are shaping the world economy as a whole. The inter-related crises of contemporary capitalism The continuing financial, economic and social upheaval accompanied by volatile trade in stocks, currencies or commodities has engendered considerable debate, demonstrations and street protests. In the USA, measures to bail out companies “too big to fail” and the enormous stimulus package have at best provided a “slow recovery” with “jobless growth.”  See various publications from the South Centre, Geneva; works by Ha-Joon Chang, The Bad Samaritans, 2007; and Walden Bello, 2009. 14

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Across the Atlantic, the protracted debt crisis of countries using the Euro as their official currency, particularly Greece, followed by Spain, Italy and Portugal has shown little sign of easing and the conditions imposed for bail-outs through the European Stability Mechanism and Fiscal Treaty demand “austerity” that entails reduced public services, loss of jobs, homes, savings and weak consumer demand. A response to this by large sections of the population has been frequent demonstrations across all social strata middles class professionals, unemployed and particularly the disillusioned youth, having been “schooled” (a la Ivan Ilich) and attained university education but with bear little hope of decent work. Explanations of the crisis found expression in wide-ranging debates, as that initiated by the BBC in the UK. With the theme: “where now for capitalism?” no attempt was made to avoid asking- “what does this mean for the future of capitalism?” Similarly, a Forum in Harper’s Magazine invited viewpoints on “How to save capitalism”- to solicit fundamental fixes for a collapsing system! According to Harper’s FORUM (November 2008): “Our system became so dominated by finance, insurance and real estate, and by the complex derivative securities these industries engendered, that the most eminent financiers (and their unsleeping computers) were unable to protect us from economic shocks”. Four years later there is little evidence that a rescue has been accomplished as the condition is far deeper than “shocks”.

For instance, since 2008, the poor performance of the Group of 7 (G7), the world’s most developed economies has persisted. With the exception of Canada at a growth rate of 3.7% in the first quarter of 2012, only the U.S at 1.2% and Germany at 1.0% can be regarded as being part of a “slow recovery”. Capitalism’s crisis is structural and systemic This “failure” of “free-market capitalism”, as Ha-Joon Chang of Cambridge University, and many other critics have proposed, demands “nothing short of a total re-envisioning of the way we organize our economy and society..” (Chang, 2010:252). From that standpoint, I will offer some attention to Chang’s “re-envisioning” of today’s capitalist system in his provocative and welldocumented study of “23 Things” that question both theoretical and empirical assumptions of “free-market economists”. At the risk of simplifying the arguments, this is merely an introduction to his thinking and his principles for reconstruction of the world economy. To readers I strongly recommend the book and his other writings.

 Here the following remarks draw heavily on Ha-Joon Chang, 23 Things they don’t tell you about Capitalism, London: Allen Lane,2010.

At the outset, Chang clearly states that his criticism of capitalism is of the dominant “freemarket” version not all kinds of capitalism. In the last three decades, the dominant paradigm by which the global economy has been organized has brought about the worst economic crisis since the Great Depression of the 1930s. Chang however, makes no condemnation of the “profit motive”, which he sees as the most powerful and effective fuel to power our economy but restraint is necessary. Likewise, the “market” to be effective as a “coordinating mechanism for complex economic activities” must be carefully regulated and steered. As a second principle for economic revisioning, Chang argues that human rationality is severely limited and recent advances in financial innovations require an ability to regulate that is now far below our ability to innovate. As a result, the assessment of risks and rewards of financial transactions need to be strong enough to ensure that society as a whole, rather than individual profit-seekers, benefits in the long run. Thirdly, building a system to bring out the best rather than the worst in people recognizes that material self-interest, although a powerful motive in the pursuit of economic well-being is by no means the exclusive factor that motivates achievement. A system that brings out the “best”, rather than the “worst” in people allows

business journal | JUNE 2012 15

the pursuit of material self-interest to respond in rational ways to incentives, rewards and just wages but also prevents the glorification of material enrichment as the primary end for which work is undertaken. The making of a just society is possible when self-interest is balanced by trust and solidarity. Fourthly, we should stop believing that people are always paid what they ‘deserve’. The productive and entrepreneurial capacity of poor people, granted legitimate opportunities can and have achieved remarkable economic and social success. On the other hand, distorted remuneration for executives is so wide spread it is unbelievable that the productivity of an average CEO today, could have risen 300-400 times compared to an average worker. But this is exactly how “US managers have increased their relative pay between the 1950s and today”. In such a situation, the rules of the stock market and corporate governance system need to be changed “in order to restrain excessive executive pay in limited liability companies”. Fifthly, “making things” needs to be taken more seriously. This implies understanding the so-called “knowledge economy’ in its proper context. As argued by Chang, “it has always been a command over superior knowledge, rather than the physical nature of activities that has ultimately decided which country is rich or poor” (2010:258).


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an overly large service sector makes the balance of payments situation more “precarious and economic growth more difficult to sustain.”

At a policy level, this requires investment in “machinery, infrastructure and worker training” through changes in tax rules, subsidies or public investment which can be done by accelerated depreciation for machinery and infrastructural development that promotes “key manufacturing sectors with high scope for productivity growth”. The case for manufacturing also recognises the sometimes overlooked factors that most high-value “services” are dependent on the manufacturing sector and “services are not very tradable.” Consequently, an overly large service sector makes the balance of payments situation more “precarious and economic growth more difficult to sustain.” Sixthly, Chang advocates a “better balance between finance and ‘real’ activities”. This acknowledges the role of a healthy financial sector for a productive modern economy and in particular, helps to reallocate resources quickly. But, rapid financial liberalization over the last 30 years has enticed corporations and governments to use policies that produce “quick profits, regardless of their long-term implications.” Increasingly, financial investors use their greater mobility to extract a bigger share of national income and with this comes greater financial instability and job insecurity. Therefore to reduce the “speed gap” between finance and the real economy is necessary especially so that long-term investment and real growth can occur. Citing the examples of Japan for success of its automobile industry and

Nokia’s realization of a profit in its electronics business, Chang claims in the former “forty years” of protection and government subsidies were required. For Nokia, it was seventeen years before realizing a profit. On this topic of finance capital’s strangulation of the real economy, Chang supports the call for “financial transaction taxes” including: “ ….restrictions on cross-border movement of capital (especially movements in and out of developing countries), greater restrictions on mergers and acquisitions. Praiseworthy as these measures are, resistance to their implementation has been fierce and can be expected to be for a long time. On the financial transaction tax, the European Commission has been a strong advocate but objection by the U.K. government persists. Seventh is the principle for government to be “bigger and more active.” The case is argued for the role of government to be thoroughly reassessed as a condition for making “ a prosperous, equitable and stable society.” By no means an original claim, it has been strongly vilified by conservative political ideologues for whom the “free-market” was in no way to be hindered by government. In democratic governance Chang sees the best vehicle for reconciling conflicting demands in society and improving our collective well-being. Citing the well-known argument, that big government collecting high taxes from the rich and redistributing to the poor, discourages wealth creation, Chang asks if small government is supposedly good for economic growth, it

does not obtain in many developing countries. Moreover, Scandinavian societies with large welfare states have a track record of good growth. More pertinent is the evidence that “all of today’s rich countries used government intervention to get rich”. This is evident in areas of R&D and worker training (that markets are bad at supplying), sharing risks for projects with high social returns but low private returns, and especially for infant industry protection to enhance productive capabilities. This latter issue so vital for developing countries has remained a source of acute contention between countries of the African, Caribbean and Pacific (ACP) Group in the negotiations of Economic Partnership Agreement (EPAs) with the European Union. In advocating a strong role for government, Chang offers the linkages that call for “a better welfare state, a better regulatory system (especially for finance) and better industrial policy” (ibid,:261). But clearly warns that such a role requires government intervention to be “designed and implemented appropriately”. The eighth principle advocates the world economic system to “unfairly favour developing countries” that have been the main subjects of “free-market policy experiments”. Put simply, accessing capital from the IMF and World Bank required developing countries “to adopt freemarket policies”. Additionally, weak democracies also meant that “free-market policies could be implemented more ruthlessly in developing countries, even when they hurt a lot of people” (ibid:262). business journal | JUNE 2012 17

Over the years, the WTO, the Bank for International Settlements (BIS), bilateral and regional “free-trade” and investment agreements are combined forces that executed “a much more thorough implementation of free-market policies on developing countries”. This has resulted in a much worse performance for those countries in terms of growth, stability and inequality than in developed countries. Consequently, Chang proposes greater “policy space” for developing countries and a more permissive regime regarding the use of protectionism, regulation of foreign investment and intellectual property rights. But this cannot be accomplished without reform of the WTO, abolition and/or reform of existing bilateral trade and investment agreements between rich and poor countries. In Chang’s view to “re-envision development” demands fundamental change in power structures between developed and developing countries. Intertwined as they are by globalization, but acutely divided by economic and political hegemony through policies of “free-market economics”, the advancement of the “developed few” has taken place at the expense of the “developing many”. Towards Caribbean “reenvisioning”? Serious questioning of the fundamentals of “free-market ideologies” has long been present in the work of Caribbean scholarsGirvan at the University of the West Indies and Thomas at University of Guyana- readily come to mind. Recently, an initiative was announced by the Caribbean Development Bank (CDB) for a Caribbean Growth Forum to be formed in collaboration with the


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World Bank, the Inter-American Development Bank (IDB) and the U.K’s Department for International Development (DFID). The aim, I have learned, is to identify policies and initiatives to induce growth and boost employment in the region. Similarly, the UN’s Economic Commission for Latin America and the Caribbean (ECLAC)/ Caribbean Development Cooperation Committee (CDCC) in May convened its second Caribbean Development Roundtable (CDR) and examined challenges for a successful “war on poverty”, giving much emphasis to “social protection”. Will these efforts lead to “much of the same”? I fear they might, unless engaging in a critical re-thinking of theoretical and empirical assumptions of the “free-market system.” This has, after three decades, brought the “G20s” of the world into a wrangling of sharing blame on where the global recession started, while witnessing the loss of jobs, closure of factories, enormous degradation of the environment and strangling economies by “austerity” – all these as outcomes of “markets.” This is neither natural, autonomous nor inevitable, but the outcome of human choices, decisions and the power of social action in systemic patterns and established structures. Deconstructing myths about “development” to craft different policies may be worth a try.

Dr. P. I. Gomes is the Ambassador of the Republic of Guyana to the ACP Group of States in Brussels

Do you look and feel the part? By Garfield King

In this troubled economic climate in which competition can be described as “cut throat”, small business operators can sometime get a sinking feeling. To keep your head above water it’s important to ensure that due respect is given to you and your business or trade. This can be achieved by creating and maintaining an image that reflects credibility. Regardless of how wonderful your products or services may be, it is vital in this age of hi-tech; hard sell; targeted marketing to stand out from the crowd. You are in business because you feel you have something to offer and surely you are proud of your product or service. Why not give it the respect it deserves? Give thought, energy, time and money to increasing your visibility in the market space. Small business people need to be concerned about image so as to be taken seriously by customers, clients and even suppliers. A few ideas presented to me several years ago remain relevant today. If you don’t have a calling card… get one. I’ve heard people say you don’t need one with all the social media available. But almost every prospective client I meet in the Caribbean asks for my card. I have a website, a Twitter account and a Facebook page. Somehow that does not yet carry much weight in the region. Many people want something they can hold in their hands and take back to the office. The card should be a reflection of 20

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your business. A poorly designed and badly printed card says, “I don’t care too much about my image.” That is not the message you want to deliver. Every chance you get to contact people presents an opportunity to project an air of credibility. Get some letterheads printed. These days it’s very affordable. An ordinary sheet of paper, from your inkjet printer, with your name and address centred at the top is asking to be ignored. A well thought out letterhead will present a more professional image. Another important consideration is the way you look. People will want to do business with you if you look successful. Like it or not… success breeds success. If you look as if you are struggling to find customers you will send the message of desperation. It will be perceived that your business is on the slide. Who wants to do business with a failing company?

There’s no need to run to the mall and spend thousands of dollars on a new wardrobe with matching accessories. What is important is that you take note of how the most successful people in your field present themselves. What sort of equipment do they use? What sort of stationary do they have? What sort of proposals do they make? What is their web presence like? You do not need to be a clone of anyone, simply adapt what you observe to suit your personality and of course your budget. If you look the part, the easier it will be for you to play the part and be taken seriously. Every line of work has its own vocabulary. It would be wise to learn the jargon. Even though you may be skilled and have the practical side of things under control, you will be regarded as “out of timing” if you are unable to respond to the jargon-coated enquiries of your customers and clients. Become familiar with the way things are said and done in your profession or trade. In this way you engender confidence in the minds of others. They know that you know what you are talking about.

While making a plan to have other people take you seriously, remember to take yourself seriously. There is no point in spending time building a wonderful image if there is nothing inside. You will need to prove that you can get the job done well. It is the results that will get you repeat work and enhance your reputation. Go beyond the image and work on updating, developing and refining your skills. As the quality of your work improves, the more effective will be your results and the more seriously you will be taken.

As a small business person, maintain the conviction that your product or service is the best. If you don’t have that faith, a prospective customer will pick up on your uncertainty. They in turn with become uncertain about your ability to deliver. Believe in yourself, believe in what you are doing and be prepared to go all out to provide quality and service.

Garfield King is an independent radio producer, presenter and writer with over 30 years broadcast experience. As a trainer, he conducts workshops on public speaking, presentation skills and communication dynamics.

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Small Business Owners Undertaking Personal Debt in Order to Save Employees By Kevin Craig

According to recent studies in the United States, small business proprietors are going to unusual lengths in order to defend their workforces under these tough financial times. In an amazing show of generosity, one in twenty have actually re-mortgaged their own homes to earn money for paying wages and retaining employees. Dying to keep their businesses running, company holders are taking huge hits for workers. What is more, 35 percent admit that they have taken major pay cuts in the recent five years in order to avoid termination of employees. Of those who have lowered their income so as to avoid unemployment, 60 percent state that it’s something that continued for more than a year and nearly one in five say it might go on forever. Out of those who have abridged their own salaries, 70 per cent have slashed them by nearly half; whereas one in 20 confesses they aren’t ‘aspiring for number one’ as they’ve done away with their salaries completely. However, the sacrifices don’t stop here. In addition to doing away with advertising and marketing budgets, they’re moving to smaller buildings and devolving inventory or stock at significantly reduced costs too. The subject of holding on to employees when times are tough is most common in the West Midlands; a bizarre fact since the field has been categorized as the worst place for small business dealings in the UK right now. The exact proportion of business proprietors in the West Midlands was of the view that the trading location ‘wasn’t good’ and 43 per cent stated that new business fronts had 22

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everything but dried up. Regardless of concessions to corporation tax declared in Chancellor George Osborne’s newest budget, small business owners will definitely feel that major alterations are needed to get the economy off the ground. Recent studies confirm they’re more than eager to perform their part, while 28 percent confess to having seriously considered changing place in order to produce more business leads. According to information from the newest edition of the Business Inflation Guide (BIG), the research will make a negative reading for those who run small and medium sized businesses, but there could be light at the end of tunnel. An exclusive evaluation of small business inflation the BIG index measures changeability in value for 20 of the most significant spending costs for small businesses. This shows how for the second successive quarter expenses for Q4 2011 track an equally low amplification of 0.05 per cent in Q3. This is a guest post by Kevin Craig who is a financial writer associated with Oak View Law Group in the United States. He has been providing prudent advice on measures to rid debt since 2007 to lead people to a debt free life. Also, he has written many informative articles on bankruptcy, credit counseling, credit repair, debt management, personal injury and so on. You can get in touch with Kevin Craig at kevin. can find his contact information here:

The Financial Crisis Continues to Rumble on By Elina Smith The Crisis of 2006/7 hit all sections of society, governments, financial institutions, business and commerce, the ordinary man and woman, everyone has felt the “chill� in one form or another, and the majority are still feeling it. This is a world of interdependency. Few can flourish if the majority is failing because demand weakens leaving even the most efficient and innovative with nowhere to trade. The roots of the crisis are in the excessive credit which supported real estate at a value that was unsustainable and the resulting crisis led to unemployment, repossessions, demand for finance from all sectors; in the case of the family who had begun to default on payments, loans with no credit check began to be a more common application than ever before. While the crisis has peaked, the consequences are still being felt in every corner of the world. Real estate values will take years to regain their pre crisis levels and the result is that many families have seen their assets dwindle in value terms. Those who lost homes and now rent are still in need of loans though their credit scores may now mean there are loans with no credit check and as a consequence at a higher rate than when their credit scores were still intact. The IMF does see the shoots of recovery in global terms but that recovery for individual families is dependent upon employment in order even to borrow with no credit check.

The main thing a lender needs to establish is whether an applicant can pay the monthly installments of any borrowings for the whole term of those borrowings. The USA economy remains sluggish at best so there is still a good deal of caution among banks that have by their very nature reverted to their conservative principles and other lenders. However other lenders are still keen to satisfy the demand for finance from many sections of society whether a family in need of a new car or urgent repairs to the home, from people needing funding for education or medical bills, or people looking to consolidate their debt into a single monthly payment, often in the process clearing credit card balances which incur such a high rate of interest. Increasingly this demand is for money with no credit check because of recent defaults. Lenders know that there is a higher risk involved because of the nature of the business. If an applicant still has decent equity in a property which can be used as security, there is an excellent chance of approval as long as the applicant can show current regular income. Where no security is available, the risk is higher and the interest rate offered likewise. Proof of income is then the first priority and at least some reasonable security of tenure at the current address and a current checking account. After that it’s all about convincing the lender. Elina Smith is a financial advisor and a content developer of some good quality finance websites. She brings an exclusive view on personal finance, frugality and nature of consumer financial goods and services like debt loan, insurance, mortgage etc.

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Following is an abbreviated version of a speech delivered by head of the World Travel & Tourism Council (WTTC), David Scowsill, at the opening of the Caribbean Tourism Summit and Outlook Seminar in Montego Bay, Jamaica held in mid-June.

In this room we are all united by our belief in Travel & Tourism (T&T). We believe in the economic benefits our industry brings to people and places around the world because we see them every day. We are here to seize these opportunities in these times of rapid change. From the outset, our members understood that hard economic facts were the crucial foundation upon which to base these messages. We analyse the industry on its total impact – direct impact, indirect and induced. In 2011 we accounted for 9% of GDP, a total of 6 trillion dollars. We supported 255 million jobs. That means one in 12 jobs on the planet. Importantly for this meeting UNWTO forecasts reports that by the end of 2012 we will reach 1 billion international arriving tourists. One seventh of the world’s population will have crossed international borders as tourists in a single year. By 2022, T&T will account for 10% of global GDP, 10 trillion dollars and 1 in 10 jobs. We were recently hosted for our Regional Summit in Mexico by a leader who fully appreciates the strength of our industry and has made Travel & Tourism a strategic priority: Let’s think for a moment about our competitive position with other industries. We in the private sector recognise that in many government’s eyes Travel & Tourism is just one activity that sits alongside many other sectors. In most cases, these other sectors are better understood than our industry - they ARE understood and they ARE supported. Which sectors received all the government support during the last recession – automotive and banking? 24

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David Scowsill

By 2022, Travel and Tourism will account for 10% of global GDP, 10 trillion dollars and 1 in 10 jobs. Travel & Tourism is the 3rd largest industry in the world. At 9% of global GDP, it is larger than: - Automotive manufacturing (8%) - Mining (8%) - Chemicals manufacturing (7%) I often refer to banking at 11%, and this is a sub-set of Financial Services which accounts for 18%.We have to get better at putting across the importance of this industry. In the Americas, Travel & Tourism directly generates 2 trillion US dollars of GDP –also more than mining, the chemicals industry and auto manufacturing. And here in Jamaica, Travel & Tourism is larger than the financial sector and three times the size of the communications services.

Caribbean tourism means big business. At 14% of GDP, it is the world region with the highest dependence of national economies on Travel & Tourism.

It is worth noting that with 98 million people worldwide directly employed in 2011, this industry directly employs: • 6 times more people than automotive manufacturing • 5 times more than chemicals manufacturing • 4 times more than mining But what does this mean for the region? Tourism directly and indirectly employs 1 in 8 people in the Caribbean and here in Jamaica it is 1 in 4. That is a quarter of the population working in tourism and it is therefore not surprising that tourism employment exceeds that of so many other sectors. The economic message is there and is finally being heard: Like many of you around this table, the members of WTTC have understood this need to work together. WTTC and UNWTO are close partners now. The industry’s leading organisations have committed to work in a coalition for the common good, through coordinated communication, open sharing of information and coalescing around those key global issues where effecting change is a priority. Together with UNWTO, our coalition includes IATA, ACI, CLIA, PATA, USTA, ASTA and WEF. ‘We can no longer go it alone’. We will coordinate our research, our messages and our lobbying.

Today at this conference, we all have the opportunity to solidly demonstrate the partnership we have in Travel & Tourism to convey to our leaders the economic strength of the industry and the path forward for ensuring the growth. Caribbean tourism means big business. At 14% of GDP, it is the world region with the highest dependence of national economies on Travel & Tourism. This contribution is set to grow at 3.1% per annum over the next ten years. For some Caribbean states Travel & Tourism is the single most important generator of livelihoods. In Antigua and Barbuda, Travel & Tourism accounts for a staggering 75% of its national GDP. Here in Jamaica it contributes to a quarter of the national economy. Last year, the Caribbean received nearly 21 million visitors, which is an increase of 5% on the previous year. And these 21 million visitors generated 24.5 billion US dollars in tourist receipts making tourism one of the single biggest export industries for the region. But there are challenges ahead and the Caribbean nations need to speak with one voice to fully tap into the potential that Travel & Tourism offers. Cruise tourism has been in decline, especially here in Jamaica, for four consecutive years. Quite worryingly, capital investment in tourism has fallen by 0.3% in 2011 in the Caribbean and thus, drops much behind that of Latin America business journal | JUNE 2012 25

which has seen a growth of 6.3% during the same year. Despite its significant contribution to GDP, Travel & Tourism was also outperformed by other sectors due to crime and safety issues along with lower yields attributable to increasing price pressures. This last point becomes particularly relevant for the aviation sector, where rising fuel prices have cut profitability of the industry. Air transport lies at the heart of modern, globalised economies. Some 3 billion passengers and more than 50 million tonnes of freight are flown around the world every year. And about one third of the value of global trade in manufactured goods is transported by air. Aviation is in itself one of the world’s most important economic sectors. Oxford Economics has estimated that over 5.5 million workers are employed directly in the industry worldwide and that, if aviation were a country, it would rank 21st in the world in terms of GDP – with its US$425 billion contribution considerably larger than that of some members of the G20. A healthy airline industry matters because it is the artery of the global Travel & Tourism industry – it drives all aspects of our business. The future of the aviation sector is subject to significant uncertainty, and commercial profits are showing extreme fluctuation in response to energy and environmental factors. But forecasts predict relentless growth in passenger numbers, from 2.5 billion in 2007 to some 6 billion by 2026 …… as well as in the sector’s direct economic contribution, which could reach US$1 trillion within a decade. However, latest news from IATA is not good. Overall profitability for the sector was 1.2% in 2011 and will be as low as 0.6% in 2012. IATA has forecast a marginal profit for South 26

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America and the Caribbean of only 100 million US dollars. But it also warns that this could also turn into a 400 million dollar loss if oil prices spike towards the end of the year. Air transport supports 4.6 million jobs and 107 billion US dollars in GDP in Latin America and the Caribbean. However, the full potential of the sector is still untapped. Missed opportunities such as a rigorous follow-up of the San Juan Accord on a single Caribbean aviation policy in 2008 hamper the success of this crucial sector. The apparent lack of liberalisation and some elements of government protectionism block ways to fully reaping the benefits of a dynamic air transport industry. As much as their Latin American neighbours, Caribbean states would be well advised to address safety and security issues. A safety record of 3.5 times worse than the global rate leaves room for improvement and a homogenized security data processing system can only help Caribbean aviation in the future. There has been much discussion around the UK’s Air Passenger Duty tax, which was increased again in April this year. Arguments and pleas by the industry have continued to fall on deaf ears. The Caribbean industry has been at the forefront of this argument – the structure of APD leaves the region at a considerable competitive disadvantage compared to other destinations. However, the UK Treasury does not listen. This is where the GLOBAL industry really needs to speak with one voice and one message. Did you know that APD is actually harming the UK economy as well? In fact, more is lost in terms of GDP contribution than the Treasury gathers in APD tax revenue? Our recent research shows that removal of APD would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months. Surely this is a message that will make George Osborne, UK Chancellor, sit up and listen? It is therefore that we, with a united voice, call for stability in the region and for countries to seize the opportunities that Travel & Tourism has to offer.

IEA Report Sees Bright Future for Natural Gas over Next 5 Years Medium-Term Gas Market Report 2012 predicts doubling of Chinese demand and further U.S. growth Natural gas is well on its way to a bright future, according to a new report from the International Energy Agency (IEA) that projects China will more than double consumption over the next five years while lower prices from the unconventional gas revolution will continue to benefit the United States. The report, ‘Medium-Term Gas Market Report 2012’, released at the World Gas Conference 2012, says China will become the third-largest gas importer behind Europe and Asia Oceania, driving a 2.7% average annual growth in global gas demand through 2017 (up from the 2.4% annual growth rate predicted in last year’s report). During the period, North America will become a net LNG exporter, while Japanese imports will increase, although by how much will hinge on the country’s nuclear policies. Medium-Term Gas Market Report 2012, part of a series of IEA medium-term market reports also featuring coal, oil and renewable energy, presents detailed forecasts for the next five years of sectoral demand by region plus supply and trade. An in-depth analysis addresses infrastructure investments in LNG and pipelines. The release of Medium-Term Gas Market Report 2012 comes a week after the IEA issued a special report, Golden Rules for a Golden Age of Gas, which looks at the environmental impacts of unconventional gas production and how those impacts are being – and might be – addressed over the next 25 years. “The Golden Age of Gas has dawned in North America, but its continued expansion worldwide depends on producing gas and bringing it to the market in a way that is friendly to investors and society as a whole,” IEA Executive Director Maria van der Hoeven said during the launch of Medium-Term Gas Market Report 2012. “As gas competes against other energy sources in all market segments, notably in the power sector, pricing conditions are a key element to keep it competitive everywhere.

This medium-term report aims to facilitate investor decisions by providing a timely, indepth analysis of the current trends and what we expect to take place over the coming five years.” While Medium-Term Gas Market Report 2012 sees growth for natural gas in most regions, low economic growth, relatively high gas prices and strong growth of renewable energies will limit demand in Europe. Successful and timely developments of new resources should lift gas demand in the Middle East, Africa and Asia. The report identifies other future sources of supply, with most incremental gas production coming from the Former Soviet Union (FSU) and North America. Further growth in unconventional gas will come mostly from shale gas in North America plus tight gas and coalbed methane (CBM) production elsewhere. Shale gas developments in other regions are likely to be concentrated in China and Poland. Other key findings of the report include: • A quarter of new gas demand will come from China, another quarter from the Middle East and other Asian countries together, and a fifth from North America. • Low gas prices will result in gas generating almost as much electricity as coal in the United States by 2017. • Global gas trade will expand by 35%, driven by LNG and pipeline gas exports from the FSU region; most of this expansion occurs from 2015 onwards, following a period of further tightening of global gas markets. • Natural gas is the most important commodity with no global market price yet. Divergence among regional gas prices will decline but remain a feature of global gas markets. The emergence of a spot price in Asia would aid regional producers and buyers.

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Growth in Global Oil Market Slows in 2011

Global oil consumption increased by 0.7 percent in 2011 to reach an all-time high of 88.03 million barrels per day, according to new research conducted by the Worldwatch Institute ( for its Vital Signs Online service. This rate of increase was considerably slower than in 2010, when oil consumption rose by 3.3 percent following a decline of 1.3 percent in 2009 due to the global financial crisis.

China’s oil consumption increased by 5.5 percent in 2011 and accounted for about 85 percent of global net growth in oil use. An increase in oil consumption of 5.7 percent in the former Soviet Union contributed another 37 percent of net growth. But these increases were offset by declines in the United States and European Union, where oil consumption fell by 1.8 and 2.8 percent respectively, writes Worldwatch Climate and Energy Research Associate Shakuntala Makhijani. The gap in oil consumption between countries in the Organisation for Economic Co-operation and Development and all other countries narrowed further in 2011, with the two groups respectively accounting for 51.5 and 48.5 percent of total oil consumption. Oil remained the largest source of primary energy worldwide in 2011, but its share fell for the twelfth consecutive year to 33 percent. To meet continued growth in demand, global oil production rose for the second year in a row, by 1.3 percent in 2011, to reach 83.58 million barrels per day. Most of this increase was driven by higher production in countries that belong to the Organization of Petroleum Exporting Countries (OPEC), which overall grew by 3 percent in 2011. Meanwhile oil production in non-OPEC countries fell slightly by 0.1 percent. Oil production growth was slow compared with natural gas and coal production, which grew by 3.1 and 6.1 percent, respectively, in 2011.


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Oil production rose for the second year in a row, by 1.3 percent in 2011, to reach 83.58 million barrels per day.

Political unrest in the Middle East and North Africa had a significant effect on oil production in certain countries in the region. Output in Libya fell by 71 percent in 2011----from 1.7 million barrels per day (2 percent of global production in 2010) to just 479,000 barrels (0.6 percent of global output) due to the disruptions related to the civil war. At the same time, tense political situations and violence in Iran, Syria, and Yemen resulted in production declines of 0.6, 13.7, and 24 percent, respectively, in 2011.

Further highlights from the report: • Oil remained the largest source of primary energy worldwide in 2011, but its share fell for the twelfth consecutive year to 33 percent. • Average annual prices for West Texas Intermediate crude reached $94.83 per barrel in 2011, close to the average 2008 price of $99.67 per barrel. • OPEC countries control 72.4 percent of global oil reserves, and the Middle East has the largest share of reserves of any region, at 48.1 percent of the total.

The global impacts of the April 2010 Deepwater Horizon offshore drilling rig blowout and oil spill have been limited thus far, with reviews in most countries finding that existing safety requirements suffice to prevent similar accidents. Despite expanding offshore drilling efforts, the share of offshore oil is expected to remain steady at 30 percent of global oil production due to declining output from North Sea and Mexican offshore oil wells. Deepwater oil production is expected to constitute a growing portion of this production and is projected to go from 6 percent of total global oil supply today to 9 percent by 2016. “Against the backdrop of fluctuating oil prices and concerns about supply risk, many countries are paying more attention to their dependence on imports and the stability of the countries they purchase oil from,” said Makhijani. “In 2011, the United States imported 60 percent of the oil it needed, Europe imported 90 percent, and imports accounted for 68 percent of China’s oil consumption.” The Middle East remains the world’s largest oil exporter, accounting for 36.2 percent of exports in 2011 and a growing share of the global market. The Soviet Union and the Asia Pacific region were the second and third largest exporters, with shares of 15.9 and 11.4 percent, respectively. Oil exports from North Africa fell by 32.8 percent in 2011 due largely to the disruptions in oil production caused by political instability in the region. Exports from the United States grew by 19.4 percent in 2011, faster than in any other region, but they accounted for only 4.7 percent of the global market. business journal | JUNE 2012 29

Panel on Defining the Future of Trade Have Your Say The Panel on Defining the Future of Trade was established in April 2012 to examine and analyse challenges to global trade opening in the 21st century. It was created in response to Director-General Pascal Lamy’s suggestion at the WTO’s 8th Ministerial Conference in December 2011 that the profound transformations in the world economy require the WTO and the multilateral trading system to look at the drivers of today and tomorrow’s trade, to look at trade patterns and at what it means to open global trade in the 21st century, bearing in mind the role of trade in contributing to sustainable development, growth, jobs and poverty alleviation. The 12 panellists met for the first time in May 2012 in Geneva and are due to meet on other occasions in 2012. In the autumn, the panel will have the opportunity to hear the views of WTO members over the challenges facing trade. The panel’s analysis will be produced in early 2013, and can make an important contribution to debate between WTO members on the best way to tackle these challenges, according to Mr. Lamy.

The panellists are: Mr. Talal ABU-GHAZALEH, Chairman and Founder, Talal Abu-Ghazaleh Overseas Corporation, Jordan Ms. Sharan BURROW, Secretary-General, International Trade Union Confederation, Brussels Ms. Helen CLARK, UNDP Administrator, New York Mr. Thomas J. DONOHUE, President and CEO, US Chamber of Commerce, Washington Mr. Frederico Fleury CURADO, President and CEO, Embraer S.A, Brazil Mr. Victor K. FUNG, Chairman of Fung Global Institute and Honorary Chairman of the International Chamber of Commerce, Hong Kong, China Mr. Pradeep Singh MEHTA, Secretary-General, CUTS International, India Mr. Festus Gontebanye MOGAE, Former President of Botswana Ms. Josette SHEERAN, Vice Chairman, World Economic Forum, Geneva Mr. Jürgen R. THUMANN, President, BUSINESSEUROPE, Brussels Mr. George YEO, Former Foreign Minister, Singapore and Vice Chairman of Kerry Group Limited Mr. Fujimori YOSHIAKI, President and CEO, JS Group Corporation, Tokyo


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St. Lucia luminary and hospitality veteran Karolin Troubetzkoy, owner, Anse Chastanet and Jade Mountain Resort, has been recognized as the 2011 Caribbean Hotelier of the Year. Troubetzkoy accepted the honor before an international audience of hospitality and tourism industry leaders assembled for the Golden Jubilee Gala celebrating CHTA’s 50th anniversary, hosted at the Montego Bay Convention Center in Jamaica. Troubetzkoy is the 33rd recipient of this coveted award, widely considered the most prestigious in the region. Co-sponsored by the Caribbean Hotel and Tourism Association (CHTA) and MMGY Global, the annual Caribbean Hotelier of the Year Award is the highest professional honor bestowed in hotel and resort operations in the Caribbean. The award recognizes excellence in all areas of operations, as well as a commitment to the training and development of staff, contributions to the community, and a demonstrated commitment to sound environmental practices. The award also acknowledges each recipient’s active role in both national and regional issues affecting Caribbean tourism.

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The Lighter Side...

OK. I’m fed up. What is it with the ignorance pervading business people here in Trinidad and Tobago? When I say ignorance I’m not referring to lack of knowledge, but rather lack of etiquette; lack of manners; lack of professionalism; just plain selfishness. I could add more because as I already told you … I’m fed up. As a self-employed professional – I use that word to also indicate a state of mind – I have to write proposal after proposal to get work. No problem with that, in fact I am able to expand my knowledge as I research topics and assess the needs of prospective clients. But then the client will present me with an almost impossible deadline because: “We have to get this in the current budget and we’re having the budget meeting next week.” The next day she calls and wants to now if the proposal is ready. “Please” she says, “Do what you can to get it to me ASAP. We really need this.” So I put other projects on hold and stay up a few nights to finish this document. I present it to the client before the deadline and wait for a response. And then I wait for a response. No, that wasn’t a typo, just me waiting and waiting. After two weeks I call. “Yes Mr. Mann, we’ll have 32

JUNE 2012 | Business Journal

word for you next week.” So I give them two weeks instead of one and call again. “Oh yes Mr. Mann, didn’t my assistant call you? We’ve decided to put this project on hold until next year. We’ll get back to you.” I ask a few questions about the document submitted and from the responses it’s clear no one in the place has read my proposal. Grrrrrrrrrrrrrr!!!!! Listen, I’m not saying they shouldn’t reschedule their programmes, but a dash of common decency; a pinch of respect would spur someone to pick up the phone; or kick off an email; or shoot off a text; or post a letter; or send up smoke signals… anything to let me know. Email is another area in which uncouthness and unbridled disrespect thrive. You send an email and people don’t acknowledge receipt. When confronted they say “I was meant to get back to you, but I got distracted.” Distracted… really? Did the office catch fire? Did an earthquake rock the building? Did you have to rush to the toilet? How hard is it when you receive an email to type “received” and hit reply? I’m not asking for a response; just let me know that you got the darn email. And don’t get me started about text messages.

A promise in business seems to mean about as much as a promise in politics. I wanted some brochures for a new product we were launching. I paid my deposit promptly, “Delivery will be less than two weeks Mr. Mann” the printer promised. After two weeks… nothing. No telephone call to explain the delay; no email; not even an attempt at an excuse. When I called the printer he said, “We had no electricity one day last week so it threw us off.” I could have hit the roof. “Ok, so what about me – your client – did you consider you might be putting me in serious problems?” I could hear the indifference in his voice, “No need to get so worked up. I’ll have them for you tomorrow.” The next day there was no communication from the goodly gentleman. So I called him and advised that he shove the job up a part of

his anatomy he does not usually see. I cut my losses and got the brochures printed at another company within 3 days, the day before the launch. I am now advising all my colleagues and associates to avoid that first printer. So many businesses have stocks of nonchalance and mediocrity and peddle empty promises. What to do? When I make good on my promise and deliver on time, some clients leave the material lying around for weeks or even months. Result… no income for me. And when I want quality work done, people line up to make promises and don’t deliver. In fact, they don’t even tell me they are not delivering until I track them down and put them give them the third degree. Where else have I seen this practice of lining up to make promises and failing to deliver?

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June 2012 Business Journal  

Business, analysis, commentary