Feature interview: Winston Dookeran

Feature interview: Winston Dookeran

All things being equal, it could easily be that one of the most popular words in 2009 has been “recession”.
Indeed, President of the United States of America (US) Barack Obama said “recession”6 times in his February 24th address to Congress. Whilst the rest of the world battles with varying degrees of reactive and preventative measures in an effort to deal with this phenomenon, the Governor of the Central Bank of Trinidad and Tobago has only now admitted Trinidad and Tobago (T&T) being in a recession. His admission is based on the conventional definition of recession (three consecutive declines in GDP growth). Despite his optimism that various factors may mitigate the effects of the recession, Economist, Former Central Bank Governor and Political Leader of the Congress of the People, Winston Dookeran cautions that we will find ourselves surrounded by “rough waters” during the next year.
CCD’s Nalinee Khemraj met with Mr. Dookeran and got his views on Trinidad and Tobago’s current economic position and the likely effects on the construction industry.

1.What are the some of the major challenges facing the T&T economy at this time and how will these impact on our economic position?

In order for us to hypothesize about our future position, we must reflect on our history as well as our current position. T&T is in a recession. There is no need to deny this fact. 2009 saw the contraction of the global economy for the first time since World War II and we are aware that no country would have been immune to the effects of this decline. Bearing in mind that a one percent fall in the global growth rate is equivalent to 1,000,000 barrels of oil loss in global demand for energy coupled with the unstable price of oil during the course of this year, our government continues to promote projects and programmes that are weakening rather than strengthening our economy.

I am inclined to believe that we have adopted an Americanized approach even in the way we manage our economy. One of the major factors which led to the demise of the American economy was the fact that Americans were living unsustainable lifestyles. Their lifestyle was not consistent with what they were producing. Therefore there was always a shortfall and this laid the foundation for the entire system to crash. The economy of T&T is very similar in that our production levels are quite low. We have been enjoying a level of comfort beyond what we are actually producing and this has nothing to do with production but rather proceeds from our declining energy sector.

Today, although the price of oil seems to have stabilized albeit at a lower level than previous years, we must expect a decrease in revenue from the energy sector. This decrease is based on the fact that one never knows how the geo politics of the Middle East will play out. Moreover, given the Obama administration’s Energy Policy (to make the USA more energy self sufficient) we must be prepared for some degree of volatility in the world’s energy economy. We must also guard against down trends in prices. So to answer your question, the major challenges to our economy at this time are:

a. A loss of competitiveness due to globalization and declining productivity.
b. The decline in Caribbean economies; which could continue for some time, given the architecture of these economies.
c. The imbalances between finance and production considering also the contraction of our financial sector.
d. The prospect of inflationary trends and
e. Our continued reliance on the oil and gas sector, although we are well aware of what happens when we place all our eggs in one basket. We are already experiencing the effects of these challenges. We are in a recession which I believe will be worse than we expect. Maybe you can recall the recession of the late 1980’s? If not, the media has made the effects of the global recession visible for those who wish to acknowledge reality. The Governor of the Central Bank believes that the recession may only last until the end of the second quarter of 2010, when he expects investor confidence to pick up. What do we do until then? We cannot sit and hope for the best, we must take immediate action. We cannot address these challenges by any short cut method. We need to redesign our development strategy from excessive dependence on energy to a greater reliance on domestic and regional output in order to provide any growth impetus. The first step is to simply start producing more. Even if we implement reactive measures, we must recognize that recovery will be slow in coming. The economic cycle will take it course and recovery will take a life of its own. When one considers this in the context of our burgeoning national debt, reduced revenues from energy prices, depressed investor confidence and general low productivity, we must be realistic about what our position will be.

2. What are the challenges facing the construction industry?

Generally, it has been the norm that activity within the construction industry is pegged to the well being of the national economy. In the present scenario, the construction sector has contracted and this is largely due to the following factors:

a. A lack of domestic demand for construction services and
b. The curtailment of access to financing.

3. What opportunities are available to the construction sector at this time?

With the government’s continued spending on grandiose projects, some may be fooled into believing that “good times” are just around the corner for firms within the construction industry. However, given the government’s lack of performance and the many other issues plaguing the construction industry one must be cautious that these projects could be slow in implementation… if they get off the ground at all.

When one considers our current economic position and the prevailing conditions at a global level, the government’s priorities certainly seems misguided. From an infrastructure perspective, the government is bent on creating “symbols of development” instead of focusing on the “substance of development.” Although prospects may be dim, there are opportunities which firms within the industry can avail themselves to. The best opportunities lie in looking south to Guyana, Brazil and Suriname. These are perhaps the most efficient within the region and have enormous opportunities for joint venture type arrangements where the experience and expertise of our local contractors and consultants could easily be absorbed. Our local workforce has an abundance of qualified, experienced and hard working tradesmen and professionals. Given the level of activity within the industry during the last 10 years, our  workforce would have amassed a considerable amount of knowledge and experience. Therefore they can provide knowledge and even technology transfer to other countries. There is always opportunity in chaos but we must be wise enough to recognize it and brave enough to embrace it.

As we look for opportunities locally, we should note that the mechanism for the expansion of the construction industry in Guyana and Suriname was the creation of public sector infrastructure projects. Comparatively, the government’s allocation to infrastructure in T&T continues to be minimal and therein lies one of our major problems. It never ceases to amaze that the country has enough money to host international summits and other frivolous projects but very little to spend on a reliable road and drainage program me; especially since a well developed and properly functioning infrastructure plan is one way of maintaining a level of sustainability within the sector.

4. How do small contractors survive in times like these?

Over the years there has been a sharp increase in the number of small and medium sized firms within the industry. Currently, it must be difficult for them to survive. This is exacerbated by the fact that public policy seems displaced. However, in the absence of government support, in order to survive and be successful, firms need to adapt by:

- Increasing productivity by trying to become more involved in trying to become competitive in recessionary times.
- Using technology as means of becoming more productive, being more efficient and improving construction methods.
- Seeking more opportunities from within the private sector.
- Aligning themselves with international counterparts with a view to accessing outside technology (technology transfer).

5. What measures would you implement to develop the industry?

The construction industry does not operate within a vacuum. It is part of the entire economy. Thus, whilst some solutions may emerge directly from within the industry there are others which will necessitate the redefining of our national development plan. However, from an industry specific perspective, the following are some measures which can assist in the development of the industry:

a. A higher emphasis on safety: Both firms and the authorities must commit to a more stringent enforcement of the rules and regulations on the jobsite. This will ultimately affect cost, production and profit positively.
b. The establishment of pension plans as well as increased health benefits for construction workers:
These must be designed to adequately provide for workers despite the project oriented nature of work within the industry. These measures would increase motivation and provide a level of comfort and security to workers.
c. Tax incentives for both onshore and offshore investments:
One issue which has never been addressed within the context of the construction industry is that of taxation. A properly implemented taxation regime could be used to create a stimulus within the sector. Since the government has been not been proactive in developing this regime, the onus is on stakeholders within the industry to engage the government in a tax regime which promotes its growth.
A number of incentives are offered to firms within the energy industry, especially multinational corporations. Thus it seems only fair that local small and medium enterprises (even large firms) be given similar type incentives, especially since the construction industry is often used as the catalyst to stimulate the economy. Furthermore becoming an exporter of construction services can add to our external revenue base.
d. The establishment of an Institute of Transport Economics and Infrastructure: Many years ago when I was a lecturer at the University of the West Indies, I pioneered a Transport Economics course. I also recommended the development of a major transportation plan which should anticipate the demand for transport services and infrastructure within the next 20 years. Regrettably the course was not pursued and today, transportation remains one of our biggest challenges with the government’s solutions being more reactive than anything else. Maybe if the course was applied we would have a fully developed and integrated transportation system today. Of course, we would expect some challenges with implementation. Today, I think that the establishment of an Institute of Transport Economics and Infrastructure will be able to drive transport and other infrastructure related initiatives. Partnering with the private sector would also lend to the success of this venture.
e. On the job training for new technology being used within the  industry: T&T has been slow in adapting new technology within the building process. At all levels, we need to embrace technology and use it as a tool to make us more productive and efficient.
f. More forums for knowledge creation and development: CCD in itself is a giant step in making this possible.
g. Better priorities than what has emerged instead of tall buildings:
The government must lay the foundation for “the substance of development” rather than continuing to focus on “symbols of development”. As I have said in the past “development cannot be imported, rather it resides in the capability of the people to improve their lives. If we cannot have public policies that will aid in the development of our people, then there will be no development.”

The implementation and success of these measures requires action on the part of the government. It has been my observation that the various ministries are more often reactive as opposed to proactive and enabling. The viability of the construction industry will determine its stability. Note however, that viability and stability are also dependent on onshore development and growth in the south (Guyana, Suriname and Brazil). It is a huge challenge to turn around our economy and by extension the construction industry back to a path of growth but we have the power to make it happen.

6. What are your personal plans for the future?

I continue to build my professional practice outside of T&T.
This is not because I do not wish to serve our country but because all opportunities within T&T have been denied because of my political affiliation. From a political perspective, my plans are to continue to engage deeply in a political party – to be freed from a history of past acceptance and accommodation to corruption and racial bias to one that is more responsive to good governance for all of our people. There is much to be done if we wish to reclaim and rebuild our country. I believe that we are standing at a political crossroad, armed with the knowledge that the way forward must be different from past ideas and solutions. I thus find it most satisfying to be engaged in shaping the future through political engineering which has created a democratic option for the people of T&T.