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Regional Trinidad & Tobago CLF owed Clico $1.3 billion Former CL Financial (CLF) corporate secretary Gita Sakal said the chief executives and managing directors of CLF's 60 plus subsidiaries usually ran the companies in their interest and not in the interest of the parent company. T&T firms fail in corporate governance The emphasis on good corporate governance is important in T&T at this time as the CL Financial enquiry is sinking into a "soap opera," says Catherine Kumar, the chief executive of the T&T Chamber of Commerce. TT needs a new corporate code Trinidad and Tobago needs a national Corporate Governance Code if it is to effectively improve transparency and accountability in businesses. Trinidad dismisses tax-haven label The Trinidad and Tobago government has described as "premature and improper" the decision by French President Nicolas Sarkozy to name the country as a tax haven. Investors interested in Union Estate Describing local natural gas reserves as a "chicken and egg" scenario, a local energy expert has sought to assure potential investors that downstream energy projects, including melamine manufacturing, were based on the availability of natural gas which in turn spurs exploration and production initiatives by upstream gas producers. Duprey wanted to sell MHTL in February 2009 Shortly after signing a Memorandum of Understanding (MOU) with the Government of Trinidad and Tobago for his cash-strapped companies, former CL Financial chairman Lawrence Duprey was negotiating to sell one of the Group's most lucrative assets, Methanol Holdings (MHTL). $200M profit for CAL STATE-owned Caribbean Airlines (CAL) will close this year with a profit of $200 million. This was disclosed by CAL chairman George Nicholas III at the arrival ceremony for the first of nine ATR 72-600 turboprop aircraft at Piarco International Airport yesterday. US shale gas displaces TT LNG ENERGY Minister, Kevin Ramnarine, blamed rising US shale gas production for the sharp fall in TT's export of liquified natural gas (LNG) to the USA, according to a report in Bloomberg yesterday. Trinidad & Tobago cont'd Deepwater bid round delayed to March 2012 T&T's 2011 deepwater bid round will now take place early next year as the Ministry of Energy has taken a decision to delay it for a couple months while it rolls out additional data that it feels will conclusively show that there are huge reserves to be discovered the deep water off T&T. REPSOL MAKES ITS LARGEST EVER OIL FIND Energy company Repsol YPF has confirmed its biggest ever oil discovery following the first exploratory efforts in the Vaca Muerta formation in Argentina's Neuquén province, one of the world's largest non-conventional reservoirs. Making banking sexy again In a Trinidad and Tobago market, troubled by a number of underperforming stocks trading at stagnant or declining prices, Republic Bank shares have been one of the blue chip exceptions year after year. Ties with Central America The recent statement by Guatemala's Minister of Energy, Luis Antonio Velasquez Quiroa, that Guatemala would welcome investment and expertise from Trinidad and Tobago's oil and gas sector effectively positions this country to broaden its ties with Latin America. CEO Kama Maharaj: Sacha brand's a hit in Beverly Hills Sacha Cosmetics' entry into the elite Beverly Hills market—America's "beauty capital"—represents a big breakthrough for a local manufacturer and its premium brand. "After years of frustration trying to gain entry in countries in Latin America and fed up with non-tariff barriers and their mañana mentality, we took the decision to focus on positioning our brand in the US market. Banks thrive despite economic slowdown For the financial year ended September 30, 2011, RBL reported a diluted EPS of $6.98 versus an EPS of $6.19 for FY 2010, a 12.8 per cent increase in earnings year-on-year. The board has declared a final dividend of $2.75 (2010, $2.40) payable on December 2, 2011. This brings the total dividend for FY 2011 on each share to $4 (2010, $3.55). Jamaica GDP growth to continue — BOJ THE economy is estimated to have grown between zero and one per cent in the last quarter, down from the almost two per cent average in the first two quarters. Brian Wynter, the Governor of the Bank of Jamaica (BOJ), said growth in the economy, though slower in the quarter ending in September, is expected to continue. Jamaica cont'd 'Opportunities ripe' for tech investments in Jamaica MARC Canter, founder of the US multibillion-dollar computer software company that introduced flash technology, says opportunities are ripe for technology startups in Jamaica, which he feels possibly has a better investment climate than the US right now. Jamaica 'beefing' up production MINISTER OF Agriculture and Fisheries Robert Montague is confident that the country can achieve self-sufficiency in beef production. He stated that Government's plan to significantly boost production of beef to meet 60 to 65 per cent of local consumption needs by 2020 is achievable. Funding agencies challenged to spend on human resources DONOVAN STANBERRY, permanent secretary in the Ministry of Agriculture and Fisheries, has challenged international funding agencies to rethink their poverty alleviation strategies by matching the money spent on infrastructural investments with, at least, an equal financial emphasis on human resources. This is especially necessary where widespread behavioural change is crucial to success JMMB reports $1.3b half-year profit Jamaica Money Market Brokers (JMMB) has reported net profit of J$1.3 billion for the first six months of its financial year up to September 2011, more than triple the J$454.7 million recorded for the comparative period last year. Wehby delivers 122% profit growth in first quarter as CEO GraceKennedy Limited has reported improvement in both revenues and profits for the first nine months of its financial year, with net profit attributable to owners of the company moving up 122 per cent in the third quarter ended September 30, on the back of excellent results across its five reporting segments. Lascelles diversifies into frozen meats Lascelles Limited will start selling frozen meats in a bid to achieve performance target of 20 per cent returns, following its lease of a US$20-million (J$1.7 billion) food-production and storage facility formerly occupied by National Meats.The company will refurbish and modernise the facility in a bid to increase Lascelles' storage space twofold, the company said. UK air passenger duty could be revised, says Jamaican minister Jamaica's Tourism Minister Edmund Bartlett says that, coming out of recent discussions with representatives of the United Kingdom government, there is possibility that the Air Passenger Duty (APD) band system could be revised in favour of a more equitable scheme that would not put the Caribbean region at a disadvantage with the United States. Jamaica cont'd Azan, Epstein enter gaming market Gassan Azan and business partner Adam Epstein say they will invest J$2 billion in a new chain of gaming shops, the first of which is already open for business in downtown Kingston. The partners plan to open 25 shops elsewhere in the capital city and across Jamaica within a one-year period under the name Sizzling Slots. Barbados US$70m for alternative energy BARBADOS HAS SIGNED a US$70 million loan agreement with the Inter-American Development Bank (IDB) to boost the island's renewable energy initiatives. Fair, open process The Barbados National Bank (BNB) says it will not cloud the sale of any foreclosed house in secrecy. Derwin Howell, managing director and chief executive officer of BNB, said the sale of homes or commercial properties of people unable to pay their mortgage debt was a development taking place across the banking system. Bajans still keen to invest Despite the protracted economic downturn, Barbadians are still looking to invest their money. That is the word from managing director of Fortress Fund Managers Limited, Roger Cave. Barbados civil servants benefit from employee assistance programme Those public servants in Barbados who are underperforming in their respective organisations due to domestic or other personal problems, have found a sympathetic ear to their difficulties through the Employee Assistance Programme (EAP). Economic planners still baffled by recession, says Barbados minister There is no formula in economics text books that can be applied to economic planning to pluck the world's economy from the grips of the worst recession in a century, according to Barbados Minister of Finance and Economic Affairs, Christopher Sinckler, while addressing the Institute of Chartered Accountant's 18th annual conference. Bahamas 'HARD PRESSED' XMAS CONCERN ON ROADWORKS Many Bahamian businesses are expressing concern that New Providence's roadworks will leave them "hard pressed" to enjoy the Christmas sales performance they are used to, a former Chamber of Commerce president yesterday saying there was "real pressure" for the major roads to be opened by the first week in December. Bahamas cont'd DEBT SERVICING COSTS UP 4.5PTS IN THREE YEARS THE GOVERNMENT'S debt servicing costs increased by 4.5 percentage points of tax revenues during the three years to 2010, a Wall Street credit rating agency has revealed, with the BTC and BORCO deals preventing the fiscal deficit from hitting a record 5.9 per cent of GDP in the 2010-2011 Budget year. INSURER HITS AT PATH TO ADMINISTRATION THE head of a Bahamian insurance company currently under statutory administration by the Insurance Commission yesterday alleged the small underwriter's demise had resulted from the Government failing to uphold an agreement that would have allowed its parent, Atlantic Financial, to liquidate assets to help its ailing subsidiary. 'CONFLICT OF INTEREST' THREAT TO AVIATION The Bahamian aviation industry's "healthy development might be compromised" by its current regulatory structure, a confidential government paper has warned, undermining the sector's competitiveness due to "a serious conflict of interest" between the Civil Aviation Department's (CAD) various functions. Dominican Republic Big business says it's time to modernize the country The business leaders grouped in the CONEP yesterday inaugurated their 4th National Enterprise Convention, in which its former president Elena Viyella de Paliza, stated an urgent need to seek a modern country. Contrary to other countries which expedite that move, Dominican Republic must resort to foreign capital to balance its external accounts, Viyella said in her opening speech. Guyana APNU crowd violently breaks up PPP Victoria meeting SUPPORTERS of the opposition A Partnership for National Unity (APNU) last night violently disrupted a meeting being held by the governing People's Progressive Party Civic (PPP/C) in the Victoria, East Coast Demerara community. AFC will pursue removal of executive presidency ATTORNEY-AT-LAW, Nigel Hughes, of the Alliance for Change (AFC), said yesterday that should his party be successful at the general elections, it will pursue the removal of the executive presidency, among other constitutional and legislative changes. St. Kitts and Nevis St Kitts-Nevis remains committed to REDjet service Although there have been no direct negotiations with the low cost Caribbean air carrier REDjet recently, St Kitts and Nevis Prime Minister Dr Denzil Douglas said his government remains committed to bringing to its citizens and residents more direct, affordable and reliable air transportation between the twin-island federation and other countries. St. Vincent & the Grenadines Caribbean's St. Vincent looks to cash in on cocoa The small Caribbean country of St. Vincent and the Grenadines wants to cash in on the world's booming taste for chocolate. The lush, volcanic island chain struck a deal recently with major commodities trader Armajaro to start growing cocoa, betting it will provide a much-needed economic boost in one of the Caribbean's smallest nations. Other – Regional Confidence in SMEs growing among banks in the Caribbean A large majority of banks in Latin America and the Caribbean consider small and medium-sized enterprise (SMEs) as a strategic part of their business and plan to increase their credit portfolio for this sector in the next two years, according to a survey conducted by the IDB Group and the Latin American Banking Federation (FELABAN). IDB releases first regional survey of Caribbean banks' sustainability The Inter-American Development Bank (IDB) has released the first regional survey about environmental, social and corporate governance sustainability of banks in Latin America and the Caribbean. International United States Opinion: Why Wall Street's Layoffs Are More Serious Than You Think And so it begins. All that talk about cutbacks and layoffs on Wall Street are coming to a head. United Kingdom Virgin to Buy U.K.'s Northern Rock for 747 Million Pounds Billionaire Richard Branson's Virgin Money Holdings U.K. Ltd. is to buy Northern Rock Plc for 747 million pounds ($1.2 billion), marking the first sale of a British government bank holding since the 2008 financial crisis. China China plays down risks of rift over U.S. push China need not be ruffled by the Obama administration's latest diplomatic offensive across Asia, and Beijing and Washington remain committed to steady ties, a Chinese official and state newspaper said on Thursday, playing down risks of a rift. Europe Gloom Deepens In Europe's Financial Markets -- Spanish government bond sale damages sentiment further -- Fitch's warning on U.S. banks adds to gloom -- Deficit-cutting stalemate seen -- Rising U.S. crude oil prices also a concern India India's Debt at 70% of GDP Is 'Constraint' to Higher Rating, Moody's Says India's public debt at 70 percent of its gross domestic product is preventing Asia's third- biggest economy from securing an investment-grade rating, Moody's Investors Service said. Other – International Moody's blasts plan to curb ratings agencies: report A European Union plan to impose tougher rules on credit rating agencies is "dangerous" as it is bound to limit the "quality and independence" of the rating process, the president and chief operating officer of Moody's Investor Services told Le Figaro newspaper. Oil Falls From Five-Month High on Signs Europe Crisis Spreading Oil fell from a five-month high in New York as Spain's borrowing costs surged, heightening concern that Europe's debt crisis is spreading and will hurt demand. Other – International cont'd Central-Bank Gold Purchases Soar Total central-bank gold purchases in the third quarter were more than double the level reported just one quarter earlier, and came in almost seven times higher than the year- earlier period as countries continued to diversify their official reserves, according to World Gold Council data Thursday that surprised gold traders and analysts. * FULL ARTICLES * 'HARD PRESSED' XMAS CONCERN ON ROADWORKS Wednesday 16th November, 2011 - The Tribune Many Bahamian businesses are expressing concern that New Providence's roadworks will leave them "hard pressed" to enjoy the Christmas sales performance they are used to, a former Chamber of Commerce president yesterday saying there was "real pressure" for the major roads to be opened by the first week in December. Dionisio D'Aguilar, who told Tribune Business that four of his laundromat sites were being impacted by different portions of the New Providence Road Improvement Project, said businesses were being impacted by"niggly issues", such as forced adjustments to parking lot layouts and elevated sidewalks. Explaining that affected businesses could see the 'bigger picture', and the benefit improved roads could bring, Mr D'Aguilar said the manner in which the New Providence Road Improvement Project had been handled by the Government and Argentinean main contractor had left many feeling they had been "left out of governance". "A lot of people have expressed concern about how this is going to affect commerce for Christmas," Mr D'Aguilar said of the roadworks, which have left major portions of Robinson Road and Prince Charles Drive closed, and the East-West Highway and area around the Mall at Marathon snarled at peak traffic times. "There's a real concern that the public will be so put off from getting into their cars to go shopping that unless they get the major roadworks finished by the first week in December, a lot of businesses will be hard-pressed to enjoy what they did in the past. "When Christmas shopping begins in earnest, the consuming public are likely to be so concerned by the difficulty in getting around this island they may say: 'Forget it, I'm not interested in it'. People are not going to be excited to go out and make those Christmas purchases." The Ministry of Works has already indicated it is aware of such concerns, having pledged that parts of Marathon Road, Robinson Road, Blue Hill Road and the East-West Highway will all be open to traffic by December 20. However, Mr D'Aguilar, Superwash's president, said 'ease of access' to businesses not in areas impacted by the roadworks was likely to give those companies a competitive advantage over those who were being affected. Consumers were less likely to visit, and purchase from, businesses in the hardest hit locations. "There's a real pressure for the Government to get the main thoroughfares - Robinson Road, East-West Highway, East Street, Market Street - all open and flowing," he added. "A lot of major businesses are concerned. You've got about another three-week window to get this done, get the people flowing, or otherwise they're going to significantly disrupt Christmas shopping yet again." Apart from impeding consumer access to multiple Bahamian-owned businesses, Mr D'Aguilar said the roadworks were also forcing companies to make other adjustments. He pointed to the case of his Blue Hill Road/Carmichael Road laundromat, which has been forced to redesign its parking lot. "What many people do not realise is that, in addition to the disruption to your business these roadworks are causing, you also have to the cost of adjusting the entrance and exit to your business as a result," Mr D'Aguilar told Tribune Business. "At Superwash Blue Hill/Carmichael Road, they are widening the road, and absorbed a portion of the existing parking lot into the road. I don't know who is going to pay, but as a result we have to redesign the layout of the parking lot. All that is an additional cost and additional disruption to your business." Adding that he suspected he would have to pay for the parking lot changes, Mr D'Aguilar said that in common with his East Street/Soldier Road location, many businesses were having to contend with newly-installed elevated sidewalks. These "keep changing the dynamic of how consumers get in and out of a parking lot. In my instance they installed them incorrectly, admitted they did, said they'd come back to it, and left this half-completed sidewalk". As a result, Mr D'Aguilar said he personally had to buy fill to cover it over. "While we can see where it's going, and can see the end game, it's all these annoying issues," he added. The Superwash president told Tribune Business many fellow businesspeople had complained to him about why work crews were not on shift "round the clock", the project seemingly being treated as a 9am-5pm, Monday-Friday, concern. And the main contractor, Jose Cartellones Civiles, appeared not to have budgeted for the need to upgrade alternative routes that were "in such poor condition" while it worked on the main thoroughfares. Arguing that the experience and knowledge possessed by businesses, some of whom had been based in the affected areas for decades, was being ignored, Mr D'Aguilar said: "We feel we are not actively participating in our governance. "Our government is telling us what they're going to do, take it or leave it. We are left to deal with it, while some people in the Ministry of Works of the Cabinet Office are telling us what's best for us. That's not the way a government should work. Consult, analyse, conclude." << Back to news headlines >> DEBT SERVICING COSTS UP 4.5PTS IN THREE YEARS Wednesday 16th November, 2011 - The Tribune THE GOVERNMENT'S debt servicing costs increased by 4.5 percentage points of tax revenues during the three years to 2010, a Wall Street credit rating agency has revealed, with the BTC and BORCO deals preventing the fiscal deficit from hitting a record 5.9 per cent of GDP in the 2010-2011 Budget year. Moody's, in its 2011 analysis of the Bahamian economy, said the Government had "confirmed their intention" to implement a Value Added Tax (VAT) "in the near future" to boost tax revenues, noting that public spending had risen by an amount equivalent to 6.7 percentage points of GDP over the past eight years. Describing the Bahamas as having the highest national debt-to-revenues ratio among its sovereign credit rating peers, Moody's said of this nation's debt servicing (interest) costs: "Interest expense to revenues is also among the highest in the rating category and is on an upward trend - it increased from 9.3 per cent in 2007 to 13.8 per cent in 2010. "While it continues to rely heavily on one-off revenues in its 2012 fiscal year Budget, the Government has acknowledged that any long-term solution to its fiscal problems is likely to require a significant reform to the tax structure, and authorities confirmed their intention to introduce a VAT tax to improve government revenues in the near future." And the Wall Street credit rating agency added: "The Government acknowledges that the revenue increases attributable to improvements in tax administration or a rebound in the economy will not be sufficient on their own to enable it to reverse the fiscal deficits it has generated over the past several years, and begin to repay a portion of the recent increase in debt, which it holds forth as a key policy objective." Moody's, though, said the Government still enjoyed a favourable debt structure, with just over 10 per cent of its outstanding $4.075 billion due to mature in the short-term. The amount of long-term debt set to mature was set to rise from $70 million in 2011 to a $130 million peak by 2022, with Bahamian commercial banks acting as the Government's largest domestic debt holder. While the National Insurance Board (NIB) still held 25 per cent of the Government's paper debt securities, commercial banks had increased their holdings by "nearly two- thirds to more than $1.1 billion in the last two years alone". One the downside, Moody's said the Bahamas' external borrowing "constituted one-third of total borrowing over the past four years, nearly three times' historical levels". It expressed concern that domestic lender demand might not be able to keep up with the Government's financing needs, especially if commercial banks saw a recovery in lending opportunities, something that might force greater reliance on international capital markets. Moody's said no tax reform moves were expected prior to the 2012 general election, but added that reducing reliance on the import and Excise duty regime, which generated 50 per cent of tax revenues - and 45 per cent of all revenues - in fiscal 2010 would also be driven by the Bahamas' commitments to the World Trade Organisation (WTO) and Economic Partnership Agreement (EPA). While the Government's fiscal deficits peaked at 5.8 per cent of gross domestic product (GDP) in the 2009-2010 fiscal year, dropping to 1.7 per cent in 2010-2011, Moody's said the decline was due to the proceeds received from selling a 51 per cent BTC stake and Buckeye Partners' purchase of BORCO. "Excluding these items, the deficit would have equalled 5.9 per cent of GDP," Moody's warned. "Notwithstanding permanent revenue increases attributable to various improvements in tax administration undertaken last year, the fiscal deficit is expected to rise to 3.1 per cent for the 2011-2012 fiscal year (once again after taking one-time revenues equal to 1.5 per cent of GDP into account." What this all adds up to is that while the Ingraham administration's deficit spending to prop up the Bahamian economy cannot be totally faulted, especially as many other countries adopted the same policies, this nation - with its small, narrow base and open economy - cannot sustain the same magnitude of bleedsing as the US or a European nation. The Government's counter-cyclical economic policies, involving multi-million dollar infrastructure investments and increased social security spending, had driven a "steady increase" in public spending over the past five years, growing this from 15.8 per cent of GDP in 2003 to 22.5 per cent in 2011. The spending increase, also driven by those higher debt servicing costs, had not been matched by revenues, and Moody's added: "In our opinion it will be difficult to make meaningful reductions given the continued weakness of the economy and high levels of unemployment. "Furthermore, most of the increase in spending has been attributable to current expenditures, which are harder to reduce than capital expenditures. If anything, expenditures are likely to rise further, at least in the near term, due to significant pressure faced by the Government to increase infrastructure spending to accommodate new tourism developments." Infrastructure spending had to be replicated across numerous islands, Moody's warned, raising costs. << Back to news headlines >> INSURER HITS AT PATH TO ADMINISTRATION Wednesday 16th November, 2011 - The Tribune THE head of a Bahamian insurance company currently under statutory administration by the Insurance Commission yesterday alleged the small underwriter's demise had resulted from the Government failing to uphold an agreement that would have allowed its parent, Atlantic Financial, to liquidate assets to help its ailing subsidiary. In documents provided to Tribune Business, Nicholas Ward claimed Atlantic First had suffered profit losses worth $37.428 million over the 1999-2011 period, and its parent Atlantic Financial in excess of $10 million, due to regulatory actions taken against the firm and alleged government inaction over a real estate deal. The figures Mr Ward produced are likely to raise some eyebrows in the Bahamian insurance industry, but he told Tribune Business yesterday that while he intends to take legal action against the Government, his hands are currently tied. Having met with the Insurance Commission yesterday, he told Tribune Business: "They have been gathering information for two or more months, and they were to make a report. Court "I went in to see what that report looked like and if they would give me permission to sue. They are not prepared to give me permission to sue and they are proceeding to go to court. I am fine with that so long as the other issues of equity are covered." Mr Ward added: "We are trying to sue, but because they have taken the company over by statutory administration they have to give us permission to sue. They are saying I cannot sue because they are in charge of the company. "That is a law I'm having checked out now." The Insurance Commission's statutory administration of Atlantic First appears not to have been a happy experiensce, as far as Mr Ward is concerned. He was warned to "refrain from conducting any business in the name of Atlantic First" by Insurance Superintendent, Lennox McCartney, on September 15 this year, after ostensible contacting the Munroe & Associates law firm over his proposed legal action against the Government. The Insurance Commission alleged he was in breach of the Insurance Act. Mr Ward, in response, urged the Insurance Commission to pursue the legal action, but his attempts to call government attention to his plight were rebuffed by the Ministry of Finance. According to documents produced by Mr Ward, in 2001 Atlantic Financial Network invested $2 million to purchase 6.5 acres of land north of Prince Charles Drive. While seeking approval, the company discovered that the Government needed a portion of the property to create a new road connecting Prince Charles Drive to Springfield Road. Atlantic Financial Network then allegedly negotiated with the Catholic Church for the adjacent land, produced a 40x600 portion of the connecting road and gave the Government a portion of the road with the agreement that it would complete the entire road with infrastructure. Mr Ward explained: "In 1998, because we were unable to collect $1.1 million in premiums due to us, we fell into a position of not being as solvent as we should have been. Land "They [the then Registrar of Insurance], without going to court, put us in receivership, and that's when the problems began. We had land that we owned, and we were developing that land, and the Government made a commitment to put a road to make that development possible. "That was approved. We started construction of 10 condominiums, four of which were held by Atlantic First to liquidate for $1.2 million to replace the funds that we were not able to collect at that time. "The Government made a deal in 2001, and from then until now they have not completed it. I just kept getting the run around. "The proceeds from the sale of several of those condos was to go into Atlantic First and replace that missing $1.1 million. We had assets that were not liquid, and the Government prevented us from making it liquid and they are proceeding on the other hand to go against us." Earlier this year, the Insurance Commission extended the existing ban on Atlantic First Insurance Company writing new business to the renewal of its existing portfolio, suspending its license. Between 100-200 general insurance policies, involving gross premiums collectively worth $500,000 per year, were impacted. << Back to news headlines >> 'CONFLICT OF INTEREST' THREAT TO AVIATION Wednesday 16th November, 2011 - The Tribune The Bahamian aviation industry's "healthy development might be compromised" by its current regulatory structure, a confidential government paper has warned, undermining the sector's competitiveness due to "a serious conflict of interest" between the Civil Aviation Department's (CAD) various functions. A draft copy of the proposed 'White Paper' National Aviation Policy, which is understood to have been discussed at a recent meeting involving government and Inter-American Development Bank (IDB) representatives, said CAD's current structure effectively left one arm regulating the activities of another. The report, which has been obtained by Tribune Business, said a review of the aviation industry's institutional framework noted the "high degree of concentration of functions" within CAD, which had responsibility for policy making, technical regulation, operation of the Bahamas' air traffic control infrastructure and accident investigation. "The healthy development of the air transport sector might be compromised when all the regulatory activities are performed by the same entity, as a conflict of interest between the different functions could take place," the draft National Aviation Policy said. "For example, if the technical regulator is also the operator of the infrastructure, it could be difficult to ensure an effective oversight, since the regulator ends up regulating itself. "Also, if the accidents investigation functions are carried out by the technical regulator, it would not be possible to guarantee an unbiased investigation in those cases where technical regulation could have played a role in the accident." The draft National Aviation Policy recommends that the CAD's responsibilities be split up, with a separate Civil Aviation Agency - also separate from government - taking over technical regulation of the industry. It was also suggested that infrastructure, airport and air traffic control services be placed under a "reformed Airport Authority". Accident investigations were proposed to go to another independent body. Indicating that the economic competitiveness of the Bahamian aviation industry, a critical component of this nation's tourism industry, and the airlines and other players in it could be undermined by an inadequate regulatory regime, the draft White Paper said policy should be at "arm's length" from operations. "Any influence of the CAD in the operation of the airlines jeopardises an effective implementation of aviation policy aimed to promote the sector," the draft National Aviation policy said. "Even with protective environments, where safeguarding of an airline is part of national aviation policy, the impartiality of the policymaker should be guaranteed to allow for a truly level playing field. "National aviation policies define market access, capacities and air fares....... Any shared interest between the policymaking body and any of the airlines may risk the competitiveness of the entire sector." That is likely to be an oblique reference to government-owned Bahamasair, but the draft National Aviation Policy said market data indicated "the absence of protectionist policies that could restrict capacity or entry points". This, the paper said, was shown by the fact Bahamasair controlled just 20 per cent of the seating capacity flying out of Nassau's Lynden Pindling International Airport (LPIA), with US carriers taking a 62 per cent share. The latter figure may have grown slightly, with Jet Blue expanding its Bahamas capacity to a monthly 28,000 seats through the addition of yesterday's new route from New York's Westchester County. And Delta Airlines is also planning to launch a new non-stop service between New York's La Guardia airport and Nassau in March. Nassau was said to be connected to 22 non-stop markets in the US, Canada, Caribbean and the UK, with the US accounting for 54 per cent of markets out of Nassau and 81 per cent of international seat capacity. Still, the draft National Aviation Policy warned that the CAD's current structure created "a serious conflict of interest on different levels", and argued that it was "essential to redesign the current framework to ensure the development of the aviation sector in a safe, transparent and efficient manner". It added: "The institutional framework is the foundation of which the aviation industry is developed, and given the dependence of the Bahamian economy on this mode of transport, it is vital to implement changes to the current structure." << Back to news headlines >> US$70m for alternative energy Thursday 17th November, 2011- Nation News BARBADOS HAS SIGNED a US$70 million loan agreement with the Inter-American Development Bank (IDB) to boost the island's renewable energy initiatives. Minister of Finance Chris Sinckler and the IDB's Barbados representative Joel Branski yesterday signed the agreement, which is expected to help reduce the island's electricity consumption by 90 per cent over the next 18 years and significantly lessen its dependency on fossil fuels. Before the signing at Government Headquarters on Bay Street, Sinckler acknowledged the contribution of the IDB, saying the institution had continued to show confidence in Barbados' economy through its ongoing financial assistance. He noted this policy-based loan was the second of two "programmatic loans", the first of which had been signed and disbursed last year. (GC) Above, Inter-American Development Bank Barbados representative Joel Branski (left) shaking hands with Barbados' Minister of Finance Chris Sinckler after signing an agreement for an IDB US$70 million loan at Government Headquarters yesterday. << Back to news headlines >> Fair, open process Wednesday 16th November, 2011- Nation News The Barbados National Bank (BNB) says it will not cloud the sale of any foreclosed house in secrecy. Derwin Howell, managing director and chief executive officer of BNB, said the sale of homes or commercial properties of people unable to pay their mortgage debt was a development taking place across the banking system. BNB has a total of 48 houses in the foreclosure process which have been accumulated over a period of years noting that the legal process was an extremely lengthy one. Those 48 houses, he said represented less than one per cent of BNB loan portfolio of several thousand mortgages. Howell, who took over top management of BNB late last year, told BARBADOS BUSINESS AUTHORITY: "It is across the board – except that we do it in a different way and we do it at different times," as he referenced the bold, large ads BNB has published in the Press. "The reality is . . . we have an obligation to advertise these things prominently. I can't just put two ads in the Wednesday edition in back with the classifieds and that is it." According to head of the Trinidad-owned Republic Bank subsidiary, he did not want the institution to be accused of colluding with any individual or institution to cheaply dispose of clients' homes. "Before we sell a house, I get memo that says how many times [we] advertised it, where we advertised it . . . what was the highest bid and what was the lowest bid and what was the average bid, so that there is a level of transparency." "We certainly don't want anybody to come to us and say that 'you take my $500 000 house and sell it to one of your friends for $200 000'. The bids are opened under dual custody, and they are sealed bids – so we have a very transparent process of how we do things." Dismissing any suggestion that the bank was a "fair-weather friend", Howell said what was happening in the banking system was simply a reflection of what was happening in the economy. "It is not a question of just selling a house for selling a house's sake," he contended. The banker insisted that BNB had in all cases where it was forced to sell the property of delinquent clients tried "very hard to at least match the price to the valuation". Moreover, he said BNB had even gone as far as to suggest to clients that had reached the unfortunate stage, to try to find a buyer on their own because the market was so challenging that getting a prospective buyer to pay market price was difficult. "We have told some customers: 'If you think you can get $600 000 for your house, you can try to get it.' We have done some of that and we have continued to work with customers," Howell said. << Back to news headlines >> Bajans still keen to invest Tuesday 15th November, 2011- Nation News Despite the protracted economic downturn, Barbadians are still looking to invest their money. That is the word from managing director of Fortress Fund Managers Limited, Roger Cave. Cave said that although the recession had resulted in a major decline in spending, Barbadians were still keen to invest in several of the funds and plans which his company offers. He spoke to the DAILY NATION on Saturday after the second annual Fortress Investment Forum at the Frank Collymore Hall, which featured Emmy award-winning actress and former Business anchor for CNN, Valerie Coleman-Morris. "Barbadians have definitely been responding well to our products. We all know that times are difficult and it takes time, but we are constantly encouraging people to save," he said. "The needs of today are always greater than the needs of tomorrow and with the economy in a tough state people actually don't have the money to invest, so it really is a challenge." Cave acknowledged that the removal of tax incentives had made it more difficult to encourage people to save and invest. However, he said that with the company's continued efforts to create new plans which best suited consumers, some progress was being made. The Fortress executive also said he believes there is a need for financial investment matters to be taught in schools to give students an early start in learning how to use their money wisely. "By the time they are finished school, they understand Chemistry, Physics or Maths, but they don't really understand money and investments," he said. It was for this reason that Fortress had chosen Coleman-Morris, a financial literacy advocate, as the featured speaker at this year's lecture, he explained. Cave said he hoped she could help educate the Barbadian public about the importance of saving and investing money. << Back to news headlines >> Barbados civil servants benefit from employee assistance programme Tuesday 15th November, 2011- Caribbean News Now Those public servants in Barbados who are underperforming in their respective organisations due to domestic or other personal problems, have found a sympathetic ear to their difficulties through the Employee Assistance Programme (EAP). An initiative of the Office of Public Sector Reform (OPSR), the programme is a professional assessment and/or short term counselling service that is offered to employees who are struggling with difficult personal or work-related problems as a result of domestic issues, alcoholism, or legal or financial stressors. Last September, a number of senior public officers were exposed to the tenets of the programme, during a series of training workshops put on by Network Services Centre, under the auspices of the OPSR. Facilitator Anderson Kellman outlined the rationale behind the workshops. "These workshops are a culmination of 13 years of work in the public service. The sessions commenced two years ago and we were not able to complete them at the time. They [workshops] are feedback sessions where we would share with heads of departments some of the things that we would have picked up on over the years. "The sessions would also focus on leadership skills which we think are critical to strengthening the team spirit within the public service and also awareness building in terms of emotional intelligence. We believe that the success of public sector reform will lie with those who are in management and senior positions within the context of the workforce," Kellman said. The counsellor also outlined the benefits of the EAP to both the employer and the employee. "I think it will have a 'trickle down as well as a trickle up effect'. If an employee is happy and coping well with his/her life challenges, then there will be a much greater output in the workplace. Conversely, if a person is beset with personal challenges, his/her ability to focus, while maintaining productivity, is reduced. Therefore, the individual approach would assist workers in giving more to their employers," he pointed out. Kellman stressed that the workshops were not an exercise in information sharing, but were designed to "engage participants so that they would understand where they are and what are the limitations to their performance on the job; so that we can create the environment to allow them to grow professionally". So far, more than 6 000 public servants had been exposed to the EAP which also zeroed- in on areas such as personal counselling, and family and group counselling. Kellman alluded to a report which had been complied previously and revealed some of the trends that had emerged during the programme's 13 year history. What we saw emerging were issues of favouritism, under-training and unfavourable management/employee relationships, and sometimes these are the reasons for absenteeism when persons don't feel comfortable with their superiors or within the work environment. "Another major issue that has emerged is a lack of team spirit in some organisations...basically everybody is rowing their own canoe in their own direction. This attitude usually leads to lower levels of productivity," he underlined. For public servants interested in counselling services, government will bear the cost of the first three visits for each officer per year. Thereafter, a 20 percent discount is granted for subsequent visits as required. Kellman stressed that all sessions are confidential and there had never been any breaches in its 13 years of operations. << Back to news headlines >> Economic planners still baffled by recession, says Barbados minister Monday 14th November, 2011- Caribbean News Now There is no formula in economics text books that can be applied to economic planning to pluck the world's economy from the grips of the worst recession in a century, according to Barbados Minister of Finance and Economic Affairs, Christopher Sinckler, while addressing the Institute of Chartered Accountant's 18th annual conference. Three years-plus into the global recession, the finance minister remarked that global economic planners and policy makers had been unable to "signal to the world that they have a believable plan to extricate either themselves, or by extension, their peripheral dependents, from this economic downturn". Sinckler said the current situation had exposed the region to the dangers of an over reliance on the global economy, uncovered the weaknesses of the economic structures and revealed the error of the long-standing view that our destiny was determined by "what happened in Bridgetown". "...Truth be told, there are some who still believe in that postulation... and others who refuse to face the fundamental reality that there is currently a seismic shift in the shape, drivers and controllers of the global economy. A shift, which I respectfully submit will, in five to ten years, renders our current economic model in Barbados and the Caribbean ineffective, in securing even moderate economic growth and sustainable social development for our citizens," Sinckler remarked. He further stated: "The era of the dominance of finance capital is fast concluding and the economy ... characterised by unregulated investment banking, borderless capital circulation fuelled by advanced technology, and a de-emphasising of real production for stratospheric transactions, has all but collapsed under its own weight." In fact, the finance minister observed that the economic decline did not start four years ago, as widely thought, but a decade earlier when global economic planners identified the production and circulation of money as more important than producing goods and services. Given this scenario, Sinckler suggested a re-organisation of the balance between capital and production to "open up new vistas of economic growth in industrialised and emerging economies". "We must once again earn our way in the world by virtue of what we create and produce and not just wait on other people's savings... what we need to construct in Barbados is not a new economy, but one that is more balanced, responsive and creative, he said. He argued that the Barbados economy was lacking in diversity in existing and traditional sectors, and pointed out that all the major economic analyses in the last 15 years had highlighted this fact. "...This country's economic structure was too limited, too dependent on a few markets and was in major need of reform. Our sugar industry was left languishing... investments in non-sugar agriculture were more about subsistence farming than exploring new avenues for strategic production expansion through the application of new production technologies in traditional farming and newer agro-processing ventures," Sinckler said. The finance minister also mentioned an over reliance on traditional markets for investment and tourism, in the face of a global shift in the market to emerging economies at the expense of building a sustainable economic base. "We did not pay sufficient attention to building a sustainable production base on which we could predicate the new base as a regional centre for banking, finance and other services. We, therefore, have to accept that we have lost ground in this regard and determine that we must make strategic changes as the global economy continues to transform," he underlined. << Back to news headlines >> St Kitts-Nevis remains committed to REDjet service Thursday 17th November, 2011- Caribbean News Now Although there have been no direct negotiations with the low cost Caribbean air carrier REDjet recently, St Kitts and Nevis Prime Minister Dr Denzil Douglas said his government remains committed to bringing to its citizens and residents more direct, affordable and reliable air transportation between the twin-island federation and other countries. Douglas, during the Caribbean Community (CARICOM) heads of government meeting in St Kitts last July, said the government had indicated to the owners of REDjet that the Federation stands ready for further discussions with REDjet with regard to flying in and out of St Kitts and the airline was presently holding talks with the authorities in Barbados on routes. "I am hoping that after these discussions with Barbados are finalised we would be in a position to start our own negotiations with REDjet," Douglas told a caller during his weekly live radio call in programme "Ask the Prime Minister" on Tuesday . "We had looked favourably at a route with REDjet operating Barbados-St Kitts and Nevis-St Maarten-Barbados-Guyana. I am still very hopeful that very shortly we would be able to provide a service to the people of St Kitts and Nevis," Douglas said. He pointed out that in his capacity as current chairman of CARICOM, he had the opportunity during the summit in St Kitts in July to "deal with this matter once and for all, bringing to the attention of our colleagues that REDjet needed to have a stake in the Caribbean region and so the difficulties that were being experienced between Jamaica and REDjet and Trinidad and Tobago and REDjet were resolved shortly after the meeting in St Kitts." Earlier this week, news reports from Bridgetown said REDjet was in discussion with the government of Barbados to address the delay in approval for new routes and chief executive officer Ian Burns has insisted that the company "is not moving out" of Barbados over the dispute. Burns made that position clear as REDjet awaits permission from the Barbados government to operate the St Maarten, Antigua, St Lucia, Grenada and St Kitts routes, even though the carrier has already received licences from those governments. Last month, REDjet called on government to deliver promised political support for its routes. Asked if the airline has been able to get that commitment, Burns told the Weekend Nation discussions were ongoing. Late Tuesday, St Lucia's Tourism Minister Allen Chastanet disclosed the Barbados government has withdrawn REDjet's permission to fly the Barbados-St Lucia route. "I am not certain of the full details, but I know that REDjet had called for a press conference and a day before the press conference they called to cancel the event. "My understanding is that they were hopeful to get their licence and I guess when they physically went to collect it they discovered that while it was promised it was not approved," he said. Officials of the Barbados-based airline had planned to host a joint news conference with the St Lucia Tourist Board (SLTB) to announce the introduction of the service from the Hewanorra International Airport into Barbados, with connections to Panama. But Chastanet told reporters that REDjet had been informed that permission had been denied and that he was not certain whether that had anything to do with the ongoing discussions between trade unions and the regional airline, LIAT. He said he hoped the REDjet issue would be resolved soon, "because REDjet is registered in Barbados and I keep pleading with the government of Barbados that if they are going to have an airline, allow it to fly." Chastanet said he was still patiently waiting for some progress to be made on the matter, adding, "I think for the government of Barbados at this particular juncture to be selecting where the plane can go and not go, is unfair to the remaining sister countries in CARICOM, as it flies in the face of the CARICOM agreements that we have signed in terms of having an open skies arrangement. "I am still hopeful that the government of Barbados and in particular the Minister and the Ministry will announce that REDjet can start flying," he said. Chastanet said that REDjet operating out of Hewanorra International Airport in the south, would not be competing with LIAT which does not operate a service there. REDjet was originally due to commence its operations to St Lucia last month. << Back to news headlines >> Caribbean's St. Vincent looks to cash in on cocoa Thursday, 17th November, 2011 - Reuters The small Caribbean country of St. Vincent and the Grenadines wants to cash in on the world's booming taste for chocolate. The lush, volcanic island chain struck a deal recently with major commodities trader Armajaro to start growing cocoa, betting it will provide a much-needed economic boost in one of the Caribbean's smallest nations. "Farmers are already lining up," St. Vincent and the Grenadines Prime Minister Ralph Gonsalves told Reuters. Armajaro, a leading cocoa trader, will provide training to local farmers under the agreement in exchange for being the sole buyer of their cocoa. "We are looking for fine flavor, high-value premium cocoa," Nicko Debenham, Armajaro's director of development and sustainability and the project leader, said in an interview. For the farmers, cocoa could be a good bet. Increased demand for chocolate in emerging markets, particularly Asia, has lifted world cocoa prices despite fears of a global economic slowdown. A former British territory, St. Vincent and the Grenadines is home to just over 100,000 people. Located in the southeastern Caribbean, its mountainous islands are popular with yachting and boating enthusiasts. Like many small, fragile Caribbean states, it was hard-hit by the global financial crisis and its tourism- and agriculture-dependent economy is still struggling to recover. The country has long been largely dependent on a single crop: bananas. Once helped by European Union trade preferences, banana production employs more than half of the national workforce, many of them small farmers, and is the top export. However, a phasing out of EU preferences and fluctuations in banana prices led government officials to begin a push to diversify the economy, now mired in a three-year recession. "We have suffered greatly," Gonsalves said. "There are lots of challenges. But this provides a chance for some of the land that was cultivating bananas to go into cocoa." ICE cocoa prices CCc2 hit a 32-year high of $3,775 a tonne in March at the height of a conflict in the world's top producer, Ivory Coast, after a disputed presidential election. While prices have fallen around 30 percent since the situation in Ivory Coast stabilized, they still exceed levels seen through the late 1980s and lasting until 2008. STARTING SMALL Drawn by the rise in prices, authorities in St. Vincent and the Grenadines began promoting the crop several years ago and approached Armajaro to help stimulate production. Armajaro's Debenham said the agreed project aims to start planting on 500 acres (200 hectares) by mid-2012. If initial plantings are successful, they could be expanded within five years to 5,000 acres (2,000 hectares) potentially producing between 2,500 tonnes and 3,000 tonnes, he said. "It's more about the challenge of starting something from nothing than the outright volume of it," Debenham said. Growing cocoa is not new to St. Vincent and the Grenadines, which also produces coconuts, sweet potatoes and spices. Today, cocoa is produced only in very small amounts. "It's not being farmed," Debenham said. "They're basically selling it in single bags at a time to locals who make cocoa sticks." Global cocoa demand is on course to outstrip supply in the coming years as aging trees and a lack of investment in some of the world's top producers limit production. In the Caribbean, the Dominican Republic ranks among the world's ten leading producers. Other Caribbean countries have also begun to show an interest in producing the crop, lured by the prospect of higher prices. Premier Gonsalves said he did not expect cocoa entirely to replace banana farming. But he predicted it would help bring a change in farmers' livelihoods and contribute toward turning around the country's sputtering economy. Raised in a rural area and an owner of some farmlands, Gonsalves said he too planned to try his hand at producing cocoa. "I intend to grow some myself," he said. << Back to news headlines >> APNU crowd violently breaks up PPP Victoria meeting Thursday, 17th November, 2011 - Guyana Chronicle SUPPORTERS of the opposition A Partnership for National Unity (APNU) last night violently disrupted a meeting being held by the governing People's Progressive Party Civic (PPP/C) in the Victoria, East Coast Demerara community. It is understood that a crowd of APNU supporters, some of whom are reported to have been bussed in to Victoria, proceeded to disrupt the meeting, including violently attacking PPP/C's afro-Guyanese activists at the meeting. This culminated in one of the PPP/C activists being doused in kerosene oil and was about to be set afire. The PPP last night condemned this violence in the strongest possible terms and appealed to its supporters to remain calm but vigilant. According to reports, there was a PPP/C public meeting scheduled to take place at Victoria gas station road, in front of the Victoria primary school at 18:00 hrs ( 6pm) yesterday. Former PNCR member Mr Joseph Hamilton, who recently joined the PPP/C on the 2011 campaign trail, was the first speaker and he began to speak at about 18:15 hrs. There were about 150 persons gathered at the place of the meeting. A majority of them were armed with APNU posters and placards bearing the name APNU and bearing derogatory and racist remarks regarding Mr Hamilton and the PPP/C. They were shouting very loudly and chanting the name "Granger" and "PNC". In short, their behaviour was disorderly and unruly. The noise level prevented Mr Hamilton from being heard over the microphone and obviously affected his ability to make a proper presentation. While Mr Hamilton was speaking, on several occasions they attempted to storm the podium and the Police had to intervene to prevent them from getting their hands on the podium and Hamilton. On many occasions, they threw their posters and plaque cards almost in the face of Hamilton. As a result, Mr Hamilton was forced to conclude his presentation. As Mr Hamilton left the meeting, 'missiles' were thrown at him and at his vehicle. The next speaker was Mr Anil Nandlall. Again, the crowd continued with its disorderly and ruckus conduct, on many occasions throwing their placards and posters at him while he was speaking. Also, a member of the crowd set on fire a PPP poster and waved it in front of Mr Nandlall as he was speaking. A glass coke bottle was also pelted and it hit the podium. On several occasions, while Mr Nandlall was speaking, the crowd attempted to grab the podium but the police had to physically intervene to create a human barricade between the crowd and Mr Nandlall. All this time, they were chanting, shouting and cursing, proclaiming their support for APNU, Granger and the PNC. As a result, Mr Nandlall could hardly have been heard over the microphone and, like Mr Hamilton, he was forced to conclude his presentation. When he was finished, the police and PPP supporters escorted him to the Public Road and he left for another speaking engagement at another public meeting. After Mr Nandlall left, the crowd then turned their attention to the PPP supporters and activists on the ground and physically beat and assaulted five persons. One PPP activist was reportedly doused with kerosene oil and the crowd was going to light him afire. At the same time, another PPP activist was pelted with a bottle that hit him in the face and a man armed with a baseball bat then charged another PPP activist who had a licensed firearm and the PPP activist discharged two rounds in the air. It was only then that the crowd receded and the police intervened and took the PPP supporters and activists to the Cove and John Police Station. It should be noted that the attack is a clear breach of the elections Code of Conduct, which the four main political parties contesting the upcoming November 28th elections signed onto last Friday. Analysts believe this is a clear sign of desperation by the opposition, especially APNU, since it is not the first time that 'thugs' were bussed in to disrupt the PPP's public meetings during this current elections campaign. "It is our hope that the law-enforcement agencies will take the necessary action," PPP/C Campaign Manager Robert Persaud said late last night. << Back to news headlines >> AFC will pursue removal of executive presidency Thursday, 17th November, 2011 - Guyana Chronicle ATTORNEY-AT-LAW, Nigel Hughes, of the Alliance for Change (AFC), said yesterday that should his party be successful at the general elections, it will pursue the removal of the executive presidency, among other constitutional and legislative changes. Speaking at the AFC's headquarters in Campbellville, Georgetown, Hughes said a bicameral legislature would be put in place where a president will enjoy no immunities, and the leader of the government would be the prime minister. Also at the press conference were Chairperson Cathy Hughes, Head of Youth for Change group Trevor Williams, and executive in charge of the New Jersey/New York AFC diaspora group, Rohan Somwar. According to Hughes,the AFC is proposing, in a bicameral legislature, to set up a senate which will be more reflective of the regional bodies. As an example, he said if each region were to send two members to the senate, then that would allow greater representation at the regional level. Further, Hughes said the AFC proposes legislation that would remove the possibility of a 'deadlock' in the appointment of the chancellor and the chief justice. The party also proposes the establishment of a permanent parliamentary court which will deal with malfeasance in the office by constitutional office holders. Hughes said that the court would be staffed with professional judges. It would have its own investigators and would command the police to conduct investigations on those constitutional office holders who are accused of behaving improperly. The court will have the authority to prosecute, convict, imprison and fine, as the case may be. Hughes said the AFC intends not only to expand the complement of judges, but would like to pull the judiciary into the present electronic age, which will allow attorneys to address judges electronically by way of video conferencing. << Back to news headlines >> Moody's blasts plan to curb ratings agencies: report Thursday 17th November 2011 – Reuters A European Union plan to impose tougher rules on credit rating agencies is "dangerous" as it is bound to limit the "quality and independence" of the rating process, the president and chief operating officer of Moody's Investor Services told Le Figaro newspaper. "I see it as reflecting an obsession to challenge the rating process itself, and to hold rating agencies responsible for the European debt crisis," Michel Madelain said in an interview. "These proposals cannot make investors confident again nor facilitate the access of companies and European states to credit markets," he added. The European Union on Tuesday unveiled plans to shake up credit rating agencies, although it shelved for now a divisive move for temporary "blackouts" on some sovereign ratings. EU financial services chief Michel Barnier said his draft law would inject competition into a sector dominated by three companies, Moody's Standard & Poor's and Fitch Ratings who warned the rules would leave investors with less choice. Many EU policymakers want tougher rules for the sector, saying a ratings downgrade of Greek sovereign debt last year made it more expensive to mount the country's first bailout. << Back to news headlines >> India's Debt at 70% of GDP Is 'Constraint' to Higher Rating, Moody's Says Thursday 17th November 2011 – Bloomberg India's public debt at 70 percent of its gross domestic product is preventing Asia's third- biggest economy from securing an investment-grade rating, Moody's Investors Service said. The nation's fiscal deficit and "the debt burden, which is high relative to similarly rated countries," are among the constraints, Atsi Sheth, a sovereign analyst at Moody's, said in a telephone interview from Mumbai yesterday. "For the ratings to be improved, we will have to be comfortable that India's government debt is at a level that can be sustained over the medium term." India's finance ministry pitched for a higher rating in a meeting with Moody's officials on Nov. 14, R. Gopalan, secretary, Department of Economic Affairs, said a day later. The government raised its planned borrowing for the six months through March 31 by 32 percent as revenue collections fall short of target. Finance Minister Pranab Mukherjee said Oct. 4 that it may be hard to meet his goal of cutting the budget deficit to a four-year low of 4.6 percent of GDP. Moody's rates India's rupee sovereign debt a Ba1, the highest junk grade, a level shared by Indonesia and Morocco. India's foreign-currency debt is rated at Baa3, the lowest investment grade. Sheth, who declined to comment on the lobbying by the finance ministry, expects the budget gap to be as high as 5.5 percent in the year ending March 31. Mukherjee said yesterday the government isn't revising its deficit target yet. Rising Bond Yields The yield on the benchmark 10-year government bond has risen 96 basis points this year, the most in Asia, to 8.88 percent, as inflation remained untamed above 9 percent for a 11th consecutive month in October, while increased supply damped demand. The Reserve Bank of India has increased borrowing costs 13 times starting March, 2010, to slow the pace of price gains, and expects inflation will cool to 7 percent by the end of March. "It might be optimistic to expect a rating upgrade at this juncture when there are significant risks" on account of the deficit, said Suvodeep Rakshit, an economist at Kotak Securities Ltd. in Mumbai. "The government's finances are under severe pressure this year due to slowing growth and higher rates." Slowing economic growth may also exacerbate the deficit, Sheth said. The $1.7 trillion economy is likely to expand 7.6 percent in the fiscal year to March, 2012, slower than 8.5 percent in the previous year, according to the central bank. "The deficit is going to be higher due to growth slowdown," Sheth said. "Growth and profitability have been lower than the government had assumed and that will be reflected in revenue growth." Revenue Collection India's receipts grew 38.7 percent in the six months to September from a year earlier, slower than 58.4 percent gain in the same period a year ago, according to government estimates. Fourteen of the 30 companies that comprise the benchmark Sensitive Index reported profits that fell short of analyst estimates in the quarter ended Sept. 30. The government will also spend more on oil and food subsidies, she said. The state caps retail prices of fuels including diesel, cooking gas and kerosene to rein in inflation and shield about 828 million people the World Bank says live on less than $2 a day. Standard & Poor's and Fitch Ratings have a BBB- rating on India's local-currency debt, the lowest level in the investment category. "A high debt burden, we believe, limits the fiscal flexibility that the government has to respond to future shocks, as well as invest in India's social and physical infrastructure Needs," Sheth said. << Back to news headlines >> Oil Falls From Five-Month High on Signs Europe Crisis Spreading Thursday 17th November 2011 – BusinessWeek Oil fell from a five-month high in New York as Spain's borrowing costs surged, heightening concern that Europe's debt crisis is spreading and will hurt demand. Futures retreated as Spain sold 3.56 billion euros ($4.8 billion) of a new 10-year benchmark bond at an average yield of almost 7 percent, the most since the euro's creation. Oil surged yesterday after the Energy Department said U.S. crude stockpiles declined for a second week and Enbridge Inc. said it will reverse the direction of the Seaway pipeline, adding an outlet to transport from the central U.S. and Canada to the coast of the Gulf of Mexico. "We expect the euro zone to get into recession next year," said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, who expects the price of Brent to slip to $100 a barrel by the end of the year. "I don't think prices fully reflect the weakening outlook for Europe. There's still some geopolitical fears priced in with Brent at $112." Crude for December delivery was at $102.25 a barrel, 34 cents lower in electronic trading on the New York Mercantile Exchange at 10:15 a.m. London time. Earlier it reached $103.37, the highest intraday price since May 31. Prices have gained 13 percent this year, after increasing 15 percent in 2010. Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $111.46 a barrel, down $1.42. The European contract was $8.35 higher than West Texas Intermediate crude, the smallest premium since March 9. The spread is down 71 percent from a record $27.88 on Oct. 14. U.S. Supplies Enbridge and Enterprise Products Partners LP, the other owner of the 500-mile (800- kilometer) Seaway pipeline, will reverse the north-flowing line that extends from Houston-area refineries on the Gulf of Mexico to Cushing, Oklahoma. This may reduce stockpiles from the storage depot by opening access to refiners on the Texas coast. Goldman Sachs Group Inc. said Brent's premium to West Texas will shrink to $6.50 a barrel sooner than it had estimated, citing the pipeline reversal. The spread will narrow to that level in six months, half the period the bank forecast previously, David Greely, a New York-based managing director, said in an e-mailed report. Supplies at Cushing increased for the fifth time in six weeks, rising to 32 million barrels in the period to Nov. 11, according to yesterday's Energy Department report. Chart Resistance Total U.S. crude inventories dropped 1.1 million barrels to 337 million, the report showed. Gasoline supplies rose 992,000 barrels, near a median 1 million-barrel gain predicted by analysts in a Bloomberg News survey. Distillate-fuel stockpiles, including diesel and heating oil, fell 2.1 million barrels to 133.7 million. Oil has technical resistance at $103.39 a barrel, near where yesterday's rally was halted, according to data compiled by Bloomberg. On the weekly chart, that's the 61.8 percent Fibonacci retracement of the intraday decline to $32.40 in December 2008 from a record high of $147.27 in July that year. The 14-day relative strength index climbed above 70 for the first time since April 8, signaling further gains aren't sustainable. The reading was 73.5 today. "The market should oscillate around $100 for a while," said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who sees resistance to prices at $102. "Overhanging the market is the concern that this contagion in Europe will continue to flare up." The U.S. is the world's largest oil consumer, using 19.1 million barrels a day in 2010, or 21 percent of global demand, according to BP Plc's annual Statistical Review. The European Union consumed 16 percent. << Back to news headlines >> Central-Bank Gold Purchases Soar Thursday 17th November 2011 – Wall Street Journal Total central-bank gold purchases in the third quarter were more than double the level reported just one quarter earlier, and came in almost seven times higher than the year- earlier period as countries continued to diversify their official reserves, according to World Gold Council data Thursday that surprised gold traders and analysts. At 148.4 metric tons, gold buying among central banks came in at its highest quarterly level since the sector became a net buyer of the precious metal in the second quarter of 2009, data in the organization's quarterly Gold Demand Trends report show. The official sector—central banks and other official institutions—by comparison had bought 66.5 tons of gold in the second quarter, and 22.6 tons in the third quarter of 2010. "Central-bank buying was a highlight of the quarter. Statistics this year have been remarkable," Marcus Grubb, managing director of investment at the gold council, said in an interview. The data came as a shock to traders and analysts, as it included a significant number of purchases that haven't yet been reported publicly, and whose buyers couldn't be identified due to confidentiality restrictions, the council said. "This large number is a surprise," said UBS analyst Edel Tully, who said her own tally of net purchases reported through the WGC and International Monetary Fund totaled just 20.2 tons for the quarter. "This information is very bullish. And no doubt the market will be busy speculating on the identity of such buyers." The WGC—an industry association representing 22 gold miners, including Barrick Gold Corp., Newmont Mining Corp. and AngloGold Ashanti Ltd.—attributed the acceleration in central-bank demand to concerns over the creditworthiness of Western governments, as sovereign-debt troubles remained squarely in the global economic and political spotlight. "While one can account for some of the purchases—from Thailand, Bolivia, Russia etcetera—there is an unaccounted amount out there. A clue probably lies in the fact that a lot of buying has been from central banks that have been in surplus, [in regions] like Asia, Central Asian and Latin America," said Mr. Grubb, who expects the unknown buyers will likely be made public in the coming months. Central-bank purchases by developing countries have been growing in recent years as those nations diversify holdings, partly because of growing foreign-exchange reserves through export-led growth but also, more recently, as a reaction to the sovereign-debt crises affecting traditional reserve currencies like the U.S. dollar. Before 2009, however, central banks had been net sellers of gold bullion for around two decades. The central bank of Russia, a regular buyer from its domestic market, continued its long- term program of gold accumulation during the three-month period. Its third-quarter gold purchases amounted to 15 tons, taking its total holdings to around 852 tons, the WGC said. Still, the association said while a number of banks like Russia had continued their well- publicized programs of gold buying, "a slew of new entrants emerged wishing to bolster their gold holdings in order to diversify their reserves." In Bolivia, gold reserves rose by 14 tons, while Thailand also stepped up its buying, adding 25 tons to its holdings over the course of the quarter. Last month, metals consultancy GFMS forecast central banks could buy nearly 500 tons of gold this year. According to the WGC's figures, the sector purchased a total of 348.7 tons of the metal in the first three quarters of the year. "This is an incredible number when you compare to last year. If buying continues at this pace, I wouldn't rule out 400-500 tons [of gold being purchased by central banks] this year," Mr. Grubb said. The WGC said it expects growth in central bank gold demand to continue into 2012. << Back to news headlines >> Why Wall Street's Layoffs Are More Serious Than You Think Thursday 17th November 2011 – Forbes And so it begins. All that talk about cutbacks and layoffs on Wall Street are coming to a head. Bank of America has reportedly started the first phase of a massive layoff plan by notifying some of its employees that they no longer work for the company. The layoffs are part of a larger cutback plan that is intended to save the bank $5 billion over the next couple of years. One of the biggest areas where firms like BofA save money is compensation. That's why the bank has plans to cut about 30,000 jobs by the end of 2012. On the one hand it's hard to blame CEO Brian Moynihan for these kinds of cost cutting measures. His bank has been flooded with bad news related to everything from its bad bets on the mortgage business (remember Countrywide?), questions about its capital position and serious trouble with its stock price which is flirting with the $6 mark today– down 55% on the year. Moynihan has little choice than to revamp the bank so that shareholders have at least some evidence that the bank has a chance of turning around. Of course that means pink slips for many of its employees. According to the Charlotte Business Observer BofA laid off an undisclosed number of employees in its tech and operations division out of its headquarters in North Carolina. Of course job cuts aren't happening at BofA alone. Sandler O'Neill analysts say they expect total job losses on the Street to be between 2% and 3% .The analysts say the financial services reductions seems to be more focused on consumer banking which seems true enough in BofA's case. But there's a bigger, more concerning issue regarding these and other layoffs at financial firms. And that has to do with whether or not these jobs will ever come back. When BofA or JPMorgan Chase fires an operations guy at its headquarters, are they planning to hire a replacement when the economy picks back up? My hunch is no. (To be fair, JPM seems to be the only big bank not planning any major cuts.) If you have any doubts just read over some of Moynihan's comments from yesterday about his banking platform: It's going to be a smaller platform, it won't be quite the same as it was at Bank of America and around the industry. We have 42 million retail customers, many of those don't contribute or overcome their cost-to-serve. Moynihan pointed to the economic slowdown and plethora of new regulations as the reasons for the downsize which he referred to as the "new normal." The "new normal" doesn't just apply to BofA. There are plenty of other institutions cutting back on jobs and giving little indication that the positions being cut will be available in the future. Bloomberg puts the number of financial jobs lost at close to 200,000 this year alone. The most recent cuts were apparently being mulled at Citigroup which is reportedly considering eliminating at least 3,000 jobs as part of an overall expense cutback. Investment banking giant Goldman Sachs said last quarter that it will lay off 1,000 employees as part of a $1.2 billion cost-reduction plan. The cuts are not limited to the U.S. either. Across the pond financial services firms are sitting front row for the Euro Zone's debt crisis which is sitting right outside their door– or on their balance sheets in some cases. Italy's UniCredit said it plans to layoff roughly 6,100 employees by 2015. Earlier this year UK banking giant HSBC announced that it plans to cut a staggering 25,000 jobs. Credit Suisse said in July it will ax 2,000 jobs. And Barclays CEO Bob Diamond said this summer that he expects jobs to cut about 2,800 jobs this year alone. This new normal means banks and other financial institutions are seeing all around decrease in their revenue and bottom lines–a decline that doesn't appear to drastically recover back to peak levels. And in some cases, firms don't expect to get that money back. The spinoffs and shut downs of many investment banks proprietary trading desks is one example of permanent job eliminations. The result: hundreds of thousands of jobs gone. Further, any firm cutting something like 20,000 jobs will endure a long road in getting back to peak employment levels. As Constance Melrose, Managing Director of eFinancialCareers North America, puts its, "It would take a long time." On the bright side as Melrose points out: Just because some positions may be permanantly eliminated doesn't mean theses firms won't be creating new positions that we haven't even heard of yet. Whether or not those new positions will help generate profits and bring firms back to the "old normal" has yet to be determined. << Back to news headlines >> Virgin to Buy U.K.'s Northern Rock for 747 Million Pounds Thursday 17th November 2011 – BusinessWeek Billionaire Richard Branson's Virgin Money Holdings U.K. Ltd. is to buy Northern Rock Plc for 747 million pounds ($1.2 billion), marking the first sale of a British government bank holding since the 2008 financial crisis. The government will also receive 50 million pounds in cash within six months, 150 million pounds of Tier 1 capital notes and as much as a further 80 million pounds in cash in the next five years subject to a profitable initial public offering, U.K. Financial Investments, which manages the government's stake, said in a statement today. That would bring the total to as much as 1.03 billion pounds, nearly 400 million pounds less than the sum invested by the government. The sale leaves the taxpayer with stakes in three other banks, including Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc. Chancellor of the Exchequer George Osborne, seeking to plug a budget deficit equivalent to 9 percent of gross domestic product, said today the decision marked the beginning of the taxpayer's withdrawal from banking. "The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks," Osborne said in an e-mailed statement. "It represents value for money, will increase choice on the high street for customers and safeguards jobs." Virgin Money will move its headquarters to Newcastle, Northern Rock's base, and will not impose any compulsory redundancies in the three years following the purchase. It will maintain the same number of branches, which will be rebranded as Virgin Money when the deal completes at the end of the year. The Unite trade union said the bank has cut about 3,000 jobs since nationalization and sought assurances that no more jobs will go. New Competitor The Northern Rock deal does not suggest the government is any closer to selling its stakes in RBS or Lloyds as that's "seen as being quite a way down the line," said Simon Willis, a banking analyst at Daniel Stewart Securities Plc in London. The Northern Rock deal will give Virgin "a big leg-up," in the U.K. banking market. The government injected 65.8 billion pounds of capital into RBS and Lloyds during the financial crisis and took stakes in the two banks. The shares have since declined, giving the U.K. a paper loss of more than 39 billion pounds on the two holdings. After the takeover and rebranding of Northern Rock, Virgin Money will add about 1 million customers to its 3 million existing customers, the lender said. Virgin Money said the deal is part-funded by WL Ross & Co., a New York-based investment firm. In January 2010, Northern Rock Plc, the consumer bank, separated from Northern Rock Asset Management Plc, and received 1.4 billion pounds of capital from taxpayers. Profit Next Year The sale price is lower than the bank's book value of 1.1 billion pounds at the end of June. The 46-members of the Bloomberg 500 Banks and Financial Services trade at an average price-to-book ratio of 0.67 percent. U.S. private-equity firm JC Flowers & Co. and NBNK Investments Plc, run by Peter Levene, also submitted bids for the bank which the U.K. government took over in February 2008. "The deal returns Northern Rock to the private sector and maximizes value for taxpayers," said Keith Morgan, head of Wholly Owned Investments at UKFI. Northern Rock reported a loss of 68.5 million pounds for the six months to June 30 from 142.6 million pound-loss for the same period a year earlier. It said it expects to post a profit in the second half of 2012. << Back to news headlines >> Gloom Deepens In Europe's Financial Markets Thursday 17th November 2011 – Wall Street Journal -- Spanish government bond sale damages sentiment further -- Fitch's warning on U.S. banks adds to gloom -- Deficit-cutting stalemate seen -- Rising U.S. crude oil prices also a concern Europe's financial markets weakened further Thursday on a disappointing Spanish government bond auction, renewed concerns about the U.S. economy and banking system, and rising U.S. crude oil prices. These factors outweighed news of a surprise rise in U.K. retail sales and a satisfactory French government bond auction, leaving Europe's main stock markets lower, the euro weaker and new highs for Spanish government bond yields. "Despite U.S. economic numbers recently coming in at or above expectations, the markets have a crisis of confidence, which is being led by European bond yields," said Ben Taylor, a sales trader at CMC Markets. By 1045 GMT, the FTSE index in London was down 1.4% at 5433.69, the DAX in Frankfurt was down 0.8% at 5865.57, and the CAC-40 in Paris was down 1.3% at 3024.39. The banking sector was particularly hard hit, with the Stoxx Europe 600 banks index down 1.8%. In the foreign exchanges, the euro traded at $1.3480, up marginally from its late New York levels Wednesday but failing to hold on to early levels above $1.35. It also fell to a fresh one-month low against the Japanese yen. Meanwhile, the 10-year Spanish government bond yield hit a new modern-era high at 6.71%, despite post-auction buying by the European Central Bank, and the yield spread between French and German 10-year government bonds hit a new high just above two percentage points. The "poor Spanish bond auction turned the mood decidedly sour again," said Adam Cole, global head of foreign exchange strategy at RBC Europe. Spain had to pay an average yield of 6.975% to sell a total of EUR3.563 billion in 10-year bonds. While the Spanish and French bond auctions were the main focus of attention, there was also concern that one week before the U.S. Congress's deficit-cutting supercommittee hits its deadline, the signs of stalemate are increasing. There were worries too that Fitch Ratings, in a paper issued Wednesday, said U.S. lenders "could be greatly affected if contagion continues to spread beyond the stressed European markets" of Greece, Ireland, Italy, Portugal and Spain. Fitch added that "the risks of a negative shock are rising." A climbing oil price added to the gloom after the U.S. benchmark Nymex crude oil contract for January climbed to $103.37 a barrel before easing back. It was below $76 as recently as early October. The spread between the benchmark U.S. and the higher-priced bellwether European contract fell below $9 after trading as high as $24 in August. << Back to news headlines >> China plays down risks of rift over U.S. push Thursday 17th November 2011 – Reuters China need not be ruffled by the Obama administration's latest diplomatic offensive across Asia, and Beijing and Washington remain committed to steady ties, a Chinese official and state newspaper said on Thursday, playing down risks of a rift. The comments from the Chinese Foreign Ministry and in the overseas edition of the People's Daily echoed the generally restrained response by Beijing to President Barack Obama's push this week to shore up a dominant security presence in Asia and expand U.S. trade with the rapidly growing region. In Canberra, as part of a tour of the region, Obama said the U.S. military would expand its Asia-Pacific role and would remain a power helping shape the region. The Chinese Foreign Ministry stuck to a positive message. "As for relations among China, the United States and Australia, I think that further deepening and strengthening Chinese cooperation with the U.S. and with Australia suits the interests of all these countries as well as the other countries in the region and the international community," the Chinese Foreign Ministry spokesman Liu Weimin told a daily news briefing in answer to a question about Obama's moves. "China and the United States share an understanding to continue unwaveringly developing bilateral relations, because the significance of their bilateral relations far surpasses the two countries themselves," Liu also said. After a rough ride with neighbors last year and with an impending succession preoccupying the ruling Communist Party, Beijing policy-makers have been at pains to avoid diplomatic fireworks, even as the country's military modernization and export dominance stir anxiety in Asia. Comments in the overseas edition of the People's Daily, the official paper of China's ruling Communist Party, also reflected Beijing's reluctance to risk a row with Washington ahead of the East Asia Summit in Bali, Indonesia this week. "The United States both wants China to develop, but also wants it to develop according to the rules of the game stipulated and dominated by the U.S," said a commentary in the paper.. Yet China should not panic, it said. "No country hopes to see the United States and China fight with real swords and guns." "At the same time, all countries also hope that China can maintain its development momentum; otherwise, they cannot benefit from it. Thanks to these two points, we should have more confidence in the future peaceful development of Asia." In response to Obama's announcement on troop deployments, the Chinese Foreign Ministry on Wednesday obliquely voiced misgivings, but did not go so far as to accuse Washington of "strategic encirclement" -- a worry among some in Beijing. Media commentators and harder-line analysts have warned that China remains beset by potential strategic traps set by Washington and its allies. Those anxieties could well up around the East Asia Summit in Bali, Indonesia later this week, which the Obama administration has said should discuss South China Sea territorial disputes, which set China against several neighbors. China says it does not want the disputes discussed, putting it at loggerheads with the United States once again after they exchanged barbs over trade and currency at last week's meeting of Asia Pacific Economic Co-operation forum in Hawaii. The Global Times, a popular Chinese newspaper that focuses on nationalist concerns, laid down the harder-line view of U.S. intentions on Thursday. Separate commentaries in the paper scorned the Philippines for courting U.S. support in the sea dispute, and warned that Washington was stirring regional trouble. "That is the main reason for China's recent loss of stability in its near abroad," said a commentary in the Global Times by Zhang Weiyou, a Chinese researcher based in Geneva. << Back to news headlines >> GDP growth to continue — BOJ Thursday 17th November, 2011: Jamaica Observer THE economy is estimated to have grown between zero and one per cent in the last quarter, down from the almost two per cent average in the first two quarters. Brian Wynter, the Governor of the Bank of Jamaica (BOJ), said growth in the economy, though slower in the quarter ending in September, is expected to continue. This marks the economy's third consecutive quarter of growth. Previously, the country had 13 quarters, more than three years, of negative growth largely due to the global recession and areas of un-competitiveness in the economy. That said, inflation for the last quarter was just over two per cent, falling within the BOJ's forecast of 1.5 to 2.5 per cent. "The outturn also compared favourably with the five-year average of 3.8 per cent for the September quarter," Wynter said. "At the end of September, all the Bank's annual measures of core inflation were markedly below the rates at the corresponding period a year ago. "Inflation in the review quarter largely reflected seasonal increases in the prices of domestic agriculture commodities as well as higher costs for educational items and tuition," he said. "However, the impact of these factors was moderated by continued weak but improving domestic demand, a reversal in the prices of international commodities and the extended period of relative stability in the exchange rate." The Bank is moving forward to amend the BOJ Act to give it overall responsibility for financial stability. "This initiative has already been approved by the Cabinet and the proposals have also received comments from a number of stakeholders. "This is against the backdrop of the recent global financial crisis which clearly indicated the need for a single authority to be in charge of macro-prudential regulation. The addition of overall financial stability oversight to the Bank's function is a logical choice given its essential function as a store of liquidity in the economy as well as its supervisory role over banking institutions, which is the largest segment of the financial sector." The Bank's outlook for the economy remains positive as it anticipates reduced inflation and increased growth for the December quarter. "Inflation is projected to be in the range of one and two per cent, lower than the outturn for the previous quarter. The forecast is predicated on low imported inflation, a continued decline in inflation expectations and stable domestic capacity conditions. Given this forecast, the Bank expects that for the fiscal year ending March 31, 2012, inflation will be within the target range of six to eight per cent," he said. "Growth is expected to accelerate in the December quarter relative to the previous quarter. In this regard, the economy is expected to grow in the range of one to two per cent in the quarter. The projected expansion will be driven by growth in mining and quarrying, hotels and restaurants, construction and agriculture, forestry and fishing." However, Wynter recognised that there are challenges that may affect the projections for inflation and economic growth. "Adverse weather conditions could derail both forecasts, while an unfavourable international environment could depress economic growth but lead to a better-than- expected inflation outturn. "In addition, the persistence of weak domestic demand could also lead to lower output but a more satisfactory inflation rate. Conversely, improvements in the global economy could lead to sharper increases in commodity prices, hence higher-than-expected inflation, but would spur increased demand for Jamaican goods and services." The speculation surrounding the date of the next general election, which some predict will be announced soon, could "add to uncertainties", said Wynter, referring to unease about the delay in the reviews of the medium-term economic programme by the International Monetary Fund. "The Government is committed to pursuing policies that support stability and as such, the BOJ continues to monitor domestic and international economic developments in guaranteeing price and financial stability," said Wynter. << Back to news headlines >> 'Opportunities ripe' for tech investments in Jamaica Thursday 17th November, 2011: Jamaica Observer MARC Canter, founder of the US multibillion-dollar computer software company that introduced flash technology, says opportunities are ripe for technology startups in Jamaica, which he feels possibly has a better investment climate than the US right now. In an exclusive interview with the Business Observer on Monday, the renowned entrepreneur said tourism and culture are sectors which strike him as having great potential for investments in technology locally. "I'm delighted to see websites that are already up and running and we have 15 startups entering into a competition — related to the upcoming Caribbean BETA conference. So I'd say that, in general, I'm very pleased and that the opportunities are ripe," he said. Canter, in 1992, founded Macromedia, which was in 2005 acquired by Adobe Systems in an all-stock transaction valued at approximately US$3.4 billion ($290 billion). Macromedia created flash technology, a multimedia platform used to facilitate animation, video, and interactivity to websites. Canter is coming to the island to give a keynote address at the Caribbean BETA Tech Entrepreneurship Conference on November 25 at the Jamaica Pegasus Hotel in Kingston. What's more is that he is also helping to develop a startup ecosystem in Jamaica with Ingrid Riley, CEO of local digital communications company ConnectiMass, and has been customising his business model for the country. "We're just now getting into the finer details of what we want to do, which will lead to our budget and proposal," Canter revealed. "I have a new company which does this as our business model — We call it the 'Digital City' project," he continued. "Most of the time when we enter into a new city or region, we have to start our own local subsidiary. But in Jamaica, Ingrid has ConnectiMass, so we'll use that company as the entity." Canter encourages aspiring local entrepreneurs, faced with the daunting challenge of accessing start-up capital, to create a product prototype to test the market. There is a good chance investment will follow if the invention is good, he said. "Put up or shut up. As soon as potential investors see the opportunity and the benefits of what the startup has to offer, then that makes the issue of an investment more palatable," said Canter. "I really love the idea of getting a prototype up and running and then soliciting feedback from users. These early adopters can then, not only provide the startup a reality check on what their potential customers will want, but early adopters also often lead to early investors." Against this background, Canter said he preaches the mantra of "bootstrapping" — when an entrepreneur starts and attempts to build out a company from personal finances. "That's exactly what Ingrid (Riley) has been doing. If we get our programme funded we'll still execute on that attitude. This just happens to be part of the Jamaica aesthetic - 'hussler' by day, 'hussle' even more at night". Canter and Riley are currently in talks with potential investors for the start-up ecosystem. "We're about to take a few potential investors up on their offers and, if you see our project funded, well then you know things are better in Jamaica than in the US, where investment has practically dried up," he said, noting that one of the benefits of the local investment climate is its strong expatriate community. "We have a couple of these super power-hitter ex-pats on our board, so maybe that'll help us get funding," he said. Riley told the Business Observer yesterday that it is pivotal that an entrepreneur with Canter's level of success and influence has chosen to invest in Jamaica. "It signifies that he sees the country as valuable for him to get involved with," she said. "It's a testament to the quality of the talent and ideas that are here, that only requires some support, expert help and a little bit of cash to reach the tipping point." << Back to news headlines >> Jamaica 'beefing' up production Thursday 17th November, 2011: The Gleaner MINISTER OF Agriculture and Fisheries Robert Montague is confident that the country can achieve self-sufficiency in beef production. He stated that Government's plan to significantly boost production of beef to meet 60 to 65 per cent of local consumption needs by 2020 is achievable. Minister Montague was addressing a national consultation on Jamaica's livestock sector held this week at the Mona Visitors' Lodge on the campus of the University of the West Indies. Turning to the dairy subsector, the agriculture minister said the time has come to look at the industry with "new eyes" with a focus on productivity, herd management, genetics and other research and support systems. The minister noted that with farmers producing only 12.5 million litres of milk, while consumption was at some 140 million litres, the industry offers tremendous potential for growth. He observed that organic milk production presents an area of opportunity, while efforts are being made to utilise more locally produced milk and milk solids in the school-feeding programme. Turning to small-stock production, Minister Montague stated that the sheep and goat subsector is also teeming with opportunity. He observed that while the country produces some 500,000 of these animals, there is a current demand for some three million. "I have mandated the 4-H clubs to focus on small stock such as goats and chicken, rather than on rabbits and guinea pigs," he informed. Addressing praedial larceny The minister also outlined measures to address praedial larceny, including the increased apprehension of unlicensed butchers, greater emphasis on record keeping and certification of abattoirs and processing plants, as well as the establishment of at least four state-of-the-art public abattoirs. He also pointed to the need for increased vigilance on the part of community members to arrest the problem. Minister Montague praised the work of the late Dr. T. P. Lecky in the establishment of viable breeds in the livestock industry, and urged farmers to preserve that legacy through the maintenance and management of their stock. The one-day consultation, sponsored by the Food and Agriculture Organisation, included technical presentations from specialists in beef and dairy, swine, small ruminants, and egg and chicken meat production. << Back to news headlines >> Funding agencies challenged to spend on human resources Thursday 17th November, 2011: The Gleaner DONOVAN STANBERRY, permanent secretary in the Ministry of Agriculture and Fisheries, has challenged international funding agencies to rethink their poverty alleviation strategies by matching the money spent on infrastructural investments with, at least, an equal financial emphasis on human resources. This is especially necessary where widespread behavioural change is crucial to success. He warned that with the best of intentions, unless there was a reversal of the traditional approach the desired long-term gains and sustainability would not be achieved." When we are talking about fisheries management it's not only about the wonderful scientific things, about fisheries management plan and all of those things, how you manage the sea," the permanent secretary declared. "A critical part of it has to be about managing the people who are exploiting those resources, and nothing less than a transformation, a complete reorientation of thinking, is going to achieve that purpose," he told Tuesday's opening session of the African Caribbean and Pacific (ACP) Fish II programme monitoring and training workshop. New strategies needed Delivering the keynote address at the Wyndham hotel where the four-day event is taking place, Stanberry said that in light of the reality that most fisherfolk are poor, there must be a new way of getting them to appreciate the importance of better managing our finite marine resources. "It is difficult to preach to people and tell them to adopt better practices or sustainable practices, when in fact the levels of poverty are so great in those areas," he argued. "For too long the people who feed us, the people who supply our major source of protein, they labour under conditions which really are less than what is desirable for human beings." Continuing, he noted that while the provision of basic amenities such as sanitary conveniences, vending areas and other such infrastructural changes had in recent times translated into improved working conditions at local fishing beaches, we were missing the mark in some very important areas. He charged that despite the fiscal challenges, finding the resources to set up these facilities was the easy part, but he noted that getting them to do simple things often taken for granted was significantly challenging. The greater challenge is to orient our fishermen to take responsibility for these facilities and manage them properly. To this end, the permanent secretary advised that government is on track with the promulgation of a new fisheries policy that will provide the framework to support conservation and sustainable management of the marine environment. << Back to news headlines >> JMMB reports $1.3b half-year profit Thursday 17th November, 2011: The Gleaner Jamaica Money Market Brokers (JMMB) has reported net profit of J$1.3 billion for the first six months of its financial year up to September 2011, more than triple the J$454.7 million recorded for the comparative period last year. "Management is indeed pleased with the continued growth in profitability, as the six- month results have exceeded prior period results by J$910.5 million, or 200.2 per cent," the company said at the release of its half-year financial report. Net interest income reflected year-on-year improvement to J$1.63 billion from J$1.06 billion, an increase of 53.8 per cent. The company's profit performance traces back to improved interest margins and a doubling of securities trading income, which rocketed from J$536 million to J$1.18 billion. JMMB said efforts continued to diversify revenue streams and build fee income. "The management team of the group remains committed to building core revenues, as can be seen in increases in gains from securities trading and other income from diversified business lines - pensions and JMMB Insurance Brokers - which reflected increases of 120.5 per cent and 27.2 per cent, respectively," the company said. << Back to news headlines >> Wehby delivers 122% profit growth in first quarter as CEO Wednesday 16th November, 2011: The Gleaner GraceKennedy Limited has reported improvement in both revenues and profits for the first nine months of its financial year, with net profit attributable to owners of the company moving up 122 per cent in the third quarter ended September 30, on the back of excellent results across its five reporting segments. This compares with an increase in revenue of 3.2 per cent and a marginal decline in profit of 2.1 per cent in the first six months of its current financial year when banking, insurance and investments showed a decline year over year. The company said shareholders will receive an interim dividend totalling about J$165 million, or 50 cents per stock unit, an 11 per cent increase over the $148 million, or 45 cents per stock unit, paid out during the corresponding period last year. The dividend payment will be made on December 16. In a report accompanying the unaudited results for the third quarter and presented to investors at an online briefing in Kingston on Monday, chief executive officer Don Wehby and executive chairman Douglas Orane said for the third quarter, the group achieved revenues of J$14.8 billion, an increase of J$1.39 billion, or 10.4 per cent over the corresponding period last year. The period marks Wehby's first quarter as CEO. Increased net profit Net profit attributable to owners of the company increased by J$387 million compared to the corresponding period of 2010, moving from J$317 million to J$704 million, an increase of 122.1 per cent. Over the nine-month period, the group achieved revenues of J$43.8 billion, an increase of J$2.29 billion, or 5.5 per cent. Net profit attributable to owners during the same period increased by J$372 million, or 24 per cent to J$1.92 billion from J$1.55 billion. "The GK Foods Division had good results for the third quarter, despite our operations being affected by higher-than-expected increases in raw material and energy costs," said Wehby. "In order to counteract these increased costs, we continue to seek new and improved sources of raw materials as well as more efficient operating systems and equipment," he said. The food division was the main contributor to the company's results, with revenues up by J$3 billion and profits increasing by 73.4 per cent due to increased sales in both the local and overseas markets. Wehby also noted the company's continued expansion in North America through the strengthening of existing channels, and the development of new ones in the United States and Canada. He also referred to GraceKennedy's operations in the United Kingdom which, he said, was "focused on further growth in the existing market and building its capability to execute on export opportunities in Europe and Africa". The CEO said the money-services segment continued to do well, recording increased profits for the quarter, due in large part to increased volume at GraceKennedy Remittance Services Limited which took over bill collections within Jamaica Public Service locations in January, as well as GraceKennedy Payment Services Limited.a << Back to news headlines >> Lascelles diversifies into frozen meats Wednesday 16th November, 2011: The Gleaner Lascelles Limited will start selling frozen meats in a bid to achieve performance target of 20 per cent returns, following its lease of a US$20-million (J$1.7 billion) food-production and storage facility formerly occupied by National Meats. The company will refurbish and modernise the facility in a bid to increase Lascelles' storage space twofold, the company said. "It is a huge facility and probably the nicest frozen-foods facility in the Caribbean," Bruce Terrier, managing director of Lascelles Limited, told Wednesday Business. "It will allow us not only to distribute but also to cut up meat. So you can have some amount of value added," he said. Lascelles Limited is the trading arm of Lascelles de Mercado and Company (LdM), a J$39-billion conglomerate by assets. The St Ann-based facility includes 100,000 square feet of ambient or air-conditioned rooms and frozen facilities covering 75,000 square feet, plus a processing facility. "We are leasing with an option to purchase," said Terrier. The facility is said to be worth about US$20 million to US$49 million. Said Terrier: "US$50 million seems a bit high but to replace it would be nothing less than US$20 million. We will spend millions to upgrade it." Over the past 10 years, Lascelles Limited has acquired major brands in canned seafood, home care and infant, child and family care categories, and wine and spirits. The lease arrangement aims to continue "driving the 20 per cent annual growth" achieved over a decade, said a press release on the new initiative. National Meats managing director and main principal, David Phillips, told The Gleaner last December that his company had ceased trading since last June but was not sold. Billion-dollar debt It distributed frozen meats, poultry and seafood to the hotel industry. National Meats disclosed on its 2009 annual returns that it was more than J$1.32 billion in debt. The facility employed about 200 persons during its heyday, said Terrier. "We are trying to get to that level," he said in relation to the jobs to be created by Lascelles. The lease will allow Lascelles to not only increase its distribution of existing brands but sell and distribute meat products, including beef and mutton, he said. "We see tremendous opportunities in the market and we are investing for the future," Terrier said in a release on the lease. "It positions us near the north coast, improving our distribution capability and service level to our hotel industry and wholesale trade customers, more efficiently and effectively." Lascelles Limited distributes local and international wines, spirits, pharmaceuticals, foods, personal and home care and agricultural products. Lascelles also manufactures pharmaceuticals and agricultural chemicals that are exported throughout the Caribbean. It does not, however, distribute the popular Appleton rum, which is produced by LdM subsidiary Wray & Nephew. "This major move for Lascelles is an indication that the LdM group is committed to and is supporting its trading arm for future growth and development," said LdM managing director Fraser Thornton in the release. << Back to news headlines >> UK air passenger duty could be revised, says Jamaican minister Thursday 17th November, 2011: Caribbean News Now Jamaica's Tourism Minister Edmund Bartlett says that, coming out of recent discussions with representatives of the United Kingdom government, there is possibility that the Air Passenger Duty (APD) band system could be revised in favour of a more equitable scheme that would not put the Caribbean region at a disadvantage with the United States. Jamaica's Minister of Tourism, Edmund Bartlett, said there is possibility of a revision of the Air Passenger Duty (APD) band system, when he addressed the Jamaica Chamber of Commerce's Board of Directors Luncheon Forum on Tuesday in Kingston Bartlett was speaking to members of the business community and other stakeholders at the Jamaica Chamber of Commerce's Board of Directors Luncheon Forum held on Tuesday in New Kingston. In the region's continued lobby against the inequity in the APD application, Bartlett and Caribbean Tourism Organization (CTO) representatives last week met with the UK's Minister of the Treasury, Leonard Smith; and Minister of State at the Foreign and Commonwealth Office, Jeremy Browne, on the issue. "We continue to agitate and campaign a position, which would see a more equitable application of the APD for the Caribbean in relation to America and the rest of the world, and also to fight hard to see if there is any room for reduction (in the duty)… we have called for a design change of the band system, which will allow for two bands only," he explained. The tourism minister lamented that under the current system, the Caribbean is in a separate band from the US, despite the fact that the distance between London and Hawaii is almost twice as much as the distance between Kingston and London. "But Hawaii is in the US band, and therefore it is cheaper for the British tourist to fly from London or anywhere in the UK to the US, than to fly to Kingston or Montego Bay. We find that that is very iniquitous, and I think they have gotten the point. So that should help," he stated. The APD was increased a year ago from £50 to £75 per person for economy class seats and from £100 to £150 for premium economy, business and first class tickets. The duty is an environmental levy by the British government, which places countries in charging bands, based on the distance of their capital cities from London. This means that flying from London to Los Angeles or Hawaii in the US is calculated as being the same as to Washington D.C. (band B), while destinations in the Caribbean, which are in band C, are charged at a higher rate of tax. Jamaica and other Caribbean territories have said that this is an unfair tax, which puts the region at an economic disadvantage, and want the region to be placed in the same band as the US. << Back to news headlines >> Azan, Epstein enter gaming market Wednesday 16th November, 2011: Caribbean News Now Gassan Azan and business partner Adam Epstein say they will invest J$2 billion in a new chain of gaming shops, the first of which is already open for business in downtown Kingston. The partners plan to open 25 shops elsewhere in the capital city and across Jamaica within a one-year period under the name Sizzling Slots. Betting, Gaming and Lotteries Commission (BGLC) confirmed that the Princess Street shop was approved for business and said it was processing applications for two more. BGLC said it has granted a non-gaming lounge licence to Azan and Epstein, which allows Sizzling Slots to operate up to 19 slot machines at each location. The new gaming operation enters a market that includes established players Supreme Ventures Limited, operators of Acropolis and Coral Cliff, and the smaller Vegas in Lane Plaza and Monte Carlo at the Terra Nova Hotel. However, players like SVL operate gaming lounges, which are technically no different from gaming shops, except that they are allowed more than 19 machines per location. Still, assuming the 25 shops are approved and established, Sizzling Slots will have the most extensive network of any player in the market. The size of the gaming market is unknown, but listed company Supreme Ventures makes more than J$210 million in revenue per quarter - J$636m for nine months ending September 30 - on the gaming/hospitality services segment of the business. The segment is a loss-maker for SVL. Epstein, the chief operating officer of Sizzling Slots, told Wednesday Business that the shops, each 1,500 square feet in size, would be rolled out mostly in the Corporate Area but will also be dotted along the south coast of Jamaica. "We want to uplift the areas we go into, give them a better and nicer feel and uplift the entertainment," added Epstein. The businessman said Sizzling Slots is expected to open at Half-Way Tree in Kingston and Old Harbour in St Catherine this week. "We are trying to rejuvenate, change the image of the local rum bar," he told Wednesday Business. The company spent J$10 million to set up the Princess Street shop in commercial space leased from retail chain Bashco, a company owned by Azan. Epstein said all 25 stores will operate from leased space and that the company expects to spend J$10 million on average to set up each locale. The JS$2b investment, said Epstein, is split J$1.3 billion-J$1.4 billion on slot machines, while the rest is for costs linked to signage, bar, and other set-up costs. Together, the 25 shops are expected to employ about 200 persons. The partners say they expect to recover their investment within two to three years of operation. << Back to news headlines >> Big business says it's time to modernize the country Wednesday 16th November, 2011: Dominican Today The business leaders grouped in the CONEP yesterday inaugurated their 4th National Enterprise Convention, in which its former president Elena Viyella de Paliza, stated an urgent need to seek a modern country. Contrary to other countries which expedite that move, Dominican Republic must resort to foreign capital to balance its external accounts, Viyella said in her opening speech. With he speech motto "Let's break the inertia" the ex CONEP president said the country still straggles along. She said past experience shows that although mitigating the effects of the crisis is important, is fundamental to create conditions to correct the causes and promote development and investment in productive jobs by supporting the economy's sectors which create value and provide more sustainability to economic growth. The business leader said fuel and food prices continue increasing, leding to uncertainty and higher transport, energy and construction costs, among others, affecting household staples. She said the 2008 fall in capital markets didn't adversely affect the country, as it did other nations, whose real estate and financial sector were "infected" with financial instruments that were a large part of the cause of the global collapse. Viyella proposed the Convention's results and resolutions serve to bolster and improve the National Development Strategy, being debated in Congress, and for the political leadership as well. "Hopefully it will also become a source of consultation and support for the platforms of the candidates who'll compete in next May's presidential election." << Back to news headlines >> CLF owed Clico $1.3 billion Thursday 17th November, 2011 - T&T Guardian Former CL Financial (CLF) corporate secretary Gita Sakal said the chief executives and managing directors of CLF's 60 plus subsidiaries usually ran the companies in their interest and not in the interest of the parent company. Sakal, who gave evidence at the on- going Clico Commission at Winsure Building in Port-of-Spain yesterday, observed that the chief executives and managing directors were given too much autonomy. The result, she said, was that no profitability was coming back to CLF. In her witness statement, Sakal said that the MD's and CEO's would often report to CLF chairman, Lawrence Duprey. "In any event there was no requirement for the CLF board to get involved in the subsidiaries or their deliberations or the running of their business except to the extent that some of the individual members of the CLF board were also members of the subsidiary board and their function was one of reporting to the CLF board," she stated. She told the Commission that Duprey often lamented the failure of the subsidiaries (except MHTL, Clico Energy and RBL) to produce timely financial information and to generate profits that would allow them to pay dividends to the shareholder, CLF, and to realise a return on investment. As a holding company, she explained, CLF was dependent on dividend income from its "mature" subsidiary companies. Duprey sought to change that culture when he hired consultants to shape up the subsidiaries with consequences for non-performance, she said. Questioned by Commissioner Sir Anthony Colman on why the Ibis consultants were not successful in implementing changes in the organisation, Sakal explained that it was a "very generic" model which Clico had difficulty in understanding. "This just never happened. CLF had no choice but to depend on Clico for survival," she said. Even so, there was always a reliance on Clico, through its mortgage debenture instrument, to provide liquidity to the Group. Sakal said, at one time, that debenture stood at an alarming $1.3 billion, exclusive of interest. She explained that the first variation of the debenture was $62 million in 1992 which increased $500 million in 2000, to $800 million in 2007 and an additional $800 million in 2008. This, she said, was the instrument CLF used to borrow money from Clico. To ease this debt, following the Memorandum of Understanding with the Government of Trinidad and Tobago, CLF transferred to Clico its 6.5 per cent shareholding of MHTL valued at $1.1 billion. "In my capacity as a member of the committee to the board of CLF, I wrote to the Minister of Finance offering the MHTL and MHIL shares in satisfaction of the indebtedness," she said. CLF's role before the MOU, as she understood it, was to acquire shareholdings previously owned by Clico that did not qualify for the Statutory Fund and leverage these to grow the company. But the conglomerate was unregulated. CLF, she explained, was financed from an intercompany or current Clico account. "All payments made by Clico on behalf of CLF were credited to the intercompany account. I never knew the details of those payments but based on the increasing amounts reflected in subsequent variations to the Mortgage Debenture, it was significant," she said. "The fact is that CLF always had a liquidity problem. Hence the reason it relied on the intercompany and current account with Clico. Apart from borrowings from Clico from the intercompany account, CLF also borrowed from CIB, CMMB, RBL and other unrelated financial institutions local and international," she said. << Back to news headlines >> T&T firms fail in corporate governance Thursday 17th November, 2011 - T&T Guardian The emphasis on good corporate governance is important in T&T at this time as the CL Financial enquiry is sinking into a "soap opera," says Catherine Kumar, the chief executive of the T&T Chamber of Commerce. She was speaking at a press conference yesterday where the results were released of a study carried out by Syntegra Architects Ltd in collaboration with the United Nations Conference on Trade and Development (UNCTAD) at the T&T Stock Exchange Commission, Nicholas Towers, Port-of-Spain. The study was conducted between July and October 2011 and surveyed 31 companies listed on the T&T stock exchange to examine their disclosure practices. "The results of the study is timely and appropriate given the different things we are seeing in T&T right now. Certainly what is coming out of what is becoming a soap opera in the CL Financial enquiry and the lack of corporate governance we are seeing and disclosure with respect to that organisation," she said. She added that a lack of corporate governance contributes to T&T's low ranking on international competitiveness standards. "Corporate Governance is not just for the 31 companies listed on the stock exchange but we want to see that happening in every company. One of the areas that is holding us back is our competitiveness. The last survey 2011 to 2012 showed we ranked 87 out of 142. We rank very badly in auditing standards and those kinds of things," Kumar added. Peter Ganteaume, Deputy Chairman, Guardian Holdings Ltd said that it was embarrassing that there is not enough discussion on good corporate governance in T&T. "I say this with some embarrassment having been representative of a fairly significant company that the conversations of the embracing of corporate governance is not where it ought to be. It's more than timely that an exercise of its nature has been embarked upon," he said. Dr Axel Kravatzky, Chairman and Corporate Governance Consultant, Syntegra Change Architects said T&T ranks low compared to most other countries with respect to disclosure. "We found T&T has the lowest disclosure requirement in 45 countries reviewed by the United Nations. Of the benchmark of 61 disclosure items, T&T has five disclosure items. This means what the directors of companies need to share with owners," he said. He added that legislation in T&T does not go far enough in giving specific guidelines to company directors as to what they should be doing with regard to disclosure. "Another surprising finding is none of the current corporate governance guidelines either from the Central Bank, the Insurance Act or the proposed (Insurance) bill or the Securities and Exchange Commission (SEC) or the Securities Industry Act (SIA), none of these are actually proposing the disclosures that directors must make to their owners. It's extremely low and there is a great weakness in that." << Back to news headlines >> TT needs a new corporate code Thursday 17th November, 2011 - T&T Newsday Trinidad and Tobago needs a national Corporate Governance Code if it is to effectively improve transparency and accountability in businesses. The recommendation was made jointly by members of the business and investment community during a press conference yesterday at the TT Stock Exchange, Nicholas Towers, Port-of-Spain. CEO of the TT Chamber of Industry and Commerce Catherine Kumar, was among those who called for a national code in response to the research findings. "I think it is very much timely and appropriate, given the different things that we are seeing in Trinidad and Tobago right now and certainly from what is coming out of, what is becoming a soap opera in the Clico enquiry and the lack of corporate governance and disclosure with respect to that organisation," Kumar said. The research study was conducted between July and October this year by local consultancy firm, Syntegra Change Architects Limited (Syntegra) in association with the United Nations Conference on Trade and Development (UNCTAD). All 31 companies currently listed on the TT Stock Exchange were surveyed. TT ranks lowest of 45 countries reviewed by UNCTAD, with boards of directors here having the lowest requirements to publicly disclose, even to shareholders, details of how they govern their companies. There are 51 disclosure items, which Syntegra grouped into five broad categories — Financial and operating results; Ownership Structure and Exercise of Control Rights; Board and Management Structure and Process, Auditing and Corporate Responsibility and Compliance. Currently, TT directors are mandated to disclose only five of these items, none of which fall under Auditing or Corporate Responsibility and Compliance. However, chairman and corporate governance consultant at Syntegra Dr Axel Kravatzky said 94 percent of listed companies disclose more than the current five-item minimum. << Back to news headlines >> Trinidad dismisses tax-haven label Thursday 17th November, 2011 - T&T Newsday The Trinidad and Tobago government has described as "premature and improper" the decision by French President Nicolas Sarkozy to name the country as a tax haven. Finance Minister Winston Dookeran told the Trinidad Guardian newspaper that he had been in contact with the French embassy "to get clarity as to what was the meaning behind the statement" by Sarkozy. "I thought that statement was premature and perhaps improper," he said. Last week, Sarkozy, at the end of the G20 summit in France, named 11 countries, including Trinidad and Tobago, Antigua and Barbuda, and Barbados, as tax havens for failing to meet transparency standards. But Dookeran told the newspaper that citizens should not be bothered by Sarkozy's comments. He said that the global forum that promotes transparency in taxation matters was a body in the Organisation for Economic Co-operation and Development (OECD) and that it was engaged in a peer review "in order to come to conclusions regarding the adherence to the international standards". He said the Trinidad and Tobago government had taken a decision "to become a member of that group recently and we are currently involved in that peer review process". "In the meantime, we continue to meet the intentional standards as required in the peer review," said Dookeran, noting that Trinidad and Tobago was among the countries present at the peer review meeting last year. "We are dealing with the global forum in the OECD and he (Sarkozy) is speaking from a platform of the G20. So all I can say is it is premature and perhaps improper, given that we are involved in the peer review to meet intentional standards," Dookeran said. He told the newspaper that the five-party coalition People's Partnership government "has been trying to rectify the situation" and had "no doubt that matter will be resolved". << Back to news headlines >> Investors interested in Union Estate Thursday 17th November, 2011 - T&T Newsday Describing local natural gas reserves as a "chicken and egg" scenario, a local energy expert has sought to assure potential investors that downstream energy projects, including melamine manufacturing, were based on the availability of natural gas which in turn spurs exploration and production initiatives by upstream gas producers. National Energy Corporation's (NEC) manager of Energy Industry Development Dr Vernon Paltoo made the statement at an Energy Chamber business luncheon titled "Melamine Manufacturing Opportunities and Updates on Downstream Energy Projects" at Cara Suites Hotel and Conference Centre, Claxton Bay, yesterday. Responding to a query during the interactive session about natural gas reserves which had recently been placed at nine years by a recent Ryder/ Scott audit, Paltoo said the nation had essentially had that amount of years reserves for the last 20 to 30 years. "It has always been somewhere between ten to 15 years reserves so what essentially happens is that as projects come on stream, there is a demand for exploration and production to ensure there are reserves to supply these new projects," Paltoo said. Asked whether the Union Industrial Estate at La Brea was the only available site for potential melamine projects, he said there were available "ready-to-occupy" lands at the site. "There are other areas but La Brea is what the NEC has at its disposal right now in terms of ready-to-occupy but again many areas, there are private areas that are available, if you have your own land that is acceptable to us," he said. Paltoo also pointed out these manufacturing type industries were "clean industries" as the manufacturing industry traditionally attempted to use as much of the material as possible. Meanwhile, during his Power-Point presentation, he identified six primary industries which could be developed including melamine moulding compounds, dinnerware, adhesives, coatings, laminates and plasticizers. He said the ideal industry would be that of a "cluster format" where the industries would be developed at a central location such as the Union Industrial Estate. And speaking to reporters afterwards, he said there were at least three local businesses which had expressed interest in the downstream industry though he did not identify the potential investors. And as to the way forward, he said the NEC was currently developing business plans for local entrepreneurs though noted that the company was contemplating developing some of the projects on its own to show Government that it could be done and then encourage local business participation in the projects. He said some of the other downstream industries included petrochemicals, plastics, metals, alternative energy, inorganic chemicals and bio-chemical and agro-based products. << Back to news headlines >> Duprey wanted to sell MHTL in February 2009 Thursday 17th November, 2011 - T&T Guardian Shortly after signing a Memorandum of Understanding (MOU) with the Government of Trinidad and Tobago for his cash-strapped companies, former CL Financial chairman Lawrence Duprey was negotiating to sell one of the Group's most lucrative assets, Methanol Holdings (MHTL). In his cross-examination of MHTL chief executive Rampersad Motilal, attorney for Proman Holdings, Christopher Hamel-Smith produced an email string from February 3, 2009 which showed the chairman of Clico Energy Limited (CEL), Duprey's German partners in MHTL, accepting CL Financial's offer subject to terms and conditions. Word of the proposal by Duprey to sell CL Financial's 56 per cent stake in MHTL to the methanol company's 44 per cent foreign shareholders was disclosed yesterday as attorneys continued to cross-examine Motilal on the sale of Clico Energy Ltd. Hamel-Smith also produced an email which showed that corporate secretary Gita Sakal forwarded a 2007 valuation of MHTL for CEL to pursue. Motilal told the on-going Clico Commission of Enquiry yesterday that while he was copied on that letter, he simply drew that letter to the attention of the CLF board for their consideration. Hamel-Smith questioned whether CEL's offer was being considered given the risks posed by the world environment for MHTL. Motilal maintained that it was an option but said it would be incorrect to say there was need for him personally to consider anything. "I would deny having any interest or being involved in any activity for consideration of the sale," Motilal told the COE. And despite Motilal's consistent defense that he remained unaware of the sale of Clico Energy Limited, he admitted that he did not interrogate the sale at the board level as he should have. In answer to an earlier question by attorney Fyard Hosein SC, Motilal said while he was not "alarmed" by the sale, he did not raise the issue with the CLF board. He told the Commission he was waiting for a more competent person to raise the issue as he did not have all the facts at his disposal. When it was pointed out that he was a member of the sub-committee of the board with a mandate to be responsible for the disposal of assets, Motilal said he interpreted his role differently. In his resignation letter, which he produced for the COE, Motilal wrote: "The sub- committee was mindful at all times to work within the framework established by the MOU. This task became more challenging after an injunction was filed against CL Financial restraining the company, its officers, etc from dealing, negotiating, selling etc assets of Clico as it appears that the injunction was granted on the basis of another transaction by CL Financial ie.the sale of its shareholding and the shareholding of Clico in Clico Energy Ltd without the prior notification or sanction of the Minister of Finance of the Central Bank and which to date has not also been brought to the attention of the CLF Board for discussion approval pr ratification as may be applicable." Of Duprey, Motilal later told the COE that: "I am sure he spent many sleepless nights trying to cajole subordinates and subsidiaries to report." Motilal will continue his cross examination today. Former corporate secretary Gita Sakal is also expected to take the witness stand today. Meanwhile, Commission Colman has ruled that the means of remuneration for CL Financial officials should be disclosed to the Commission but not the actual quantification of them. << Back to news headlines >> $200M profit for CAL Thursday 17th November, 2011 - T&T Newsday STATE-owned Caribbean Airlines (CAL) will close this year with a profit of $200 million. This was disclosed by CAL chairman George Nicholas III at the arrival ceremony for the first of nine ATR 72-600 turboprop aircraft at Piarco International Airport yesterday. Against this background, Nicholas said CAL is moving full speed ahead to acquire new aircraft (turboprop and jet) for its fleet; expand its routes (including resuming flights to London next June) and holding merger talks with other regional air carriers. CAL currently has a merger agreement with Air Jamaica. Addressing an audience which included Transport Minister Devant Maharaj, Nicholas declared: "We have made the first ever consecutive profit in Air Jamaica's 50-year history of several million US dollars. As to CAL, we will close around a profit of $200 million profit this year, even with reduced fares and increased flights." He added, "Accordingly, we are able to put millions into the treasuries." The relevant documents are expected to be laid in Parliament soon. Referring to Prime Minister Kamla Persad-Bissessar's announcement last week that CAL donated US$5 million into the Children's Life Fund, Nicholas said, "We are pleased to be giving US$5 for every passenger to the Prime Minister of Trinidad and Tobago's Children's Life Fund, a life-saving programme we call 'Under our Wings.' " He explained that soon CAL will add ways for passengers to participate by making in- flight donations if they choose to do so. With respect to the first ATR plane and the other eight to arrive later this year and next year, Nicholas said these planes were fully paid for "from our internal cash flow." The total cost of these planes is US$200 million. The plane which arrived yesterday will begin flights to Tobago in two weeks time. The other ATR 72-600's will be used to fly from Trinidad to Guyana, Grenada and St Lucia; an internal domestic service between Kingston and Montego Bay in Jamaica; Santo Domingo and Cuba. Announcing that CAL will resume direct flights from Trinidad to London through Gatwick International Airport in June 2012, Nicholas said two Boeing 767-300 aircraft which CAL will acquire from LAN of Chile are being considered to fly that route. Those planes are expected in the country in April or May 2012. Nicholas said CAL is preparing to start direct flights to Mumbai, India this year. Also under consideration are direct flights to Johannesburg, South Africa, Nigeria, Brazil and two new US gateways, Chicago and Atlanta. Speaking afterwards with reporters, Nicholas said CAL was in merger talks with another regional airline but that airline is not Liat. << Back to news headlines >> US shale gas displaces TT LNG Thursday 17th November, 2011 - T&T Newsday ENERGY Minister, Kevin Ramnarine, blamed rising US shale gas production for the sharp fall in TT's export of liquified natural gas (LNG) to the USA, according to a report in Bloomberg yesterday. Ramnarine was interviewed by the US business house in Doha, Qatar. The share of Trinidad and Tobago's LNG exports accounted for by the US has plunged to 25 percent, from 75 percent three years ago, said Ramnarine. However, the US is the largest single destination for TT's LNG exports, he said. TT exports 15 million metric tonnes of the fuel a year and this will continue even if the US reduces imports, he said. The country is shifting some of the supplies previously sent to the US to markets in South America, mainly Brazil, Argentina, and Chile, and also to Asia, Ramnarine said. "There is strong demand from Asia, especially Japan, and we are getting better prices there too," he said. Japan increased its imports of LNG after an earthquake in March knocked out nuclear power stations in the country. "The LNG market is very robust at the moment," Ramnarine said. "The nation exports 22 percent of its output to Asia." << Back to news headlines >> IDB releases first regional survey of Caribbean banks' sustainability Thursday 17th November, 2011 - Caribbean News Now The Inter-American Development Bank (IDB) has released the first regional survey about environmental, social and corporate governance sustainability of banks in Latin America and the Caribbean. The survey, launched during the Federation of Latin American Banks (FELABAN)'s annual meeting, showed that financial institutions in Latin America and the Caribbean have strong standards for corporate governance but more improvements are needed in terms of environmental and social sustainability. Ninety-eight percent of the 55 financial institutions surveyed in the region have policies in place to combat money laundering and 93 percent have a policy to fight bribery and corruption. Yet, in terms of environmental sustainability, only 62 percent of those surveyed in the region incorporate environmental and social standards for their credit and loan business and only 36 percent have initiatives to reduce direct greenhouse emissions. "This survey is a valuable benchmark and management tool for banks to measure their progress in terms of sustainability," said Daniela Carrera-Marquis, Chief of the IDB Financial Markets Division at the Structured and Corporate Finance Department. "The IDB is committed in developing financial markets in the region in a sustainable manner and this survey will allow us to better tailor our products and services to meet the needs of our clients and their end users, maximizing our development impact." The survey, carried out among banks from 19 countries, also showed that 42 percent of the institutions surveyed have initiatives to increase workforce diversity and 55 percent have initiatives to promote access to financial services to minorities. Twenty-two institutions from Mexico, Central America and the Caribbean, 15 from Andean Countries and 18 from the Southern Cone participated in the survey, which contained 46 questions divided in three topics: corporate governance, environmental and social sustainability. Top-ranked banks The survey is complemented by a study produced by Sustainalytics, a world leader in research and analysis of environmental, social and corporate governance issues, which has created a 'sustainability rating' that allows each bank to see their position over its competitors in any of these three aspects. Following this methodology, the five banks in the region that are better positioned when it comes to environmental and social responsibility and corporate governance are: Grupo Financiero BBVA Bancomer, Bancolombia S.A., Banco Santander (Brazil), Banco de Galicia y Buenos Aires S.A. and HSBC Latin America Holding Limited. "This project provides a unique opportunity to examine the financial sector in Latin America and the Caribbean as a whole, visualize trends and identify areas for improvement,'' added Gema Sacristán, IDB beyondBanking program coordinator. "It also offers an opportunity for other banks to learn from the successes and adapt such best practices moving forward. We hope this study sends a clear message to the region about the new role for sustainability in financial intermediaries." The study is part of the IDB's beyondBanking program aimed at promoting sustainability and stressing the competitive advantages that result when sustainable practices are mainstreamed in traditional bank management. << Back to news headlines >> Confidence in SMEs growing among banks in the Caribbean Thursday 17th November, 2011 - Caribbean News Now A large majority of banks in Latin America and the Caribbean consider small and medium-sized enterprise (SMEs) as a strategic part of their business and plan to increase their credit portfolio for this sector in the next two years, according to a survey conducted by the IDB Group and the Latin American Banking Federation (FELABAN). Out of 190 banks surveyed in the region, 73 percent expect an increase in their SME portfolio, and 83 percent expect the economic situation of these businesses to improve in the next two years. The main motivation behind extending credit to SMEs are higher profits and risk diversification in a segment that is experiencing an economic upturn. Other important factors are an interest in the development of the country and a tendency toward greater bank specialization in the sector. The survey also shows that the IDB Group remains the most important multilateral financing institution for banks in the region seeking to expand their SME portfolio. The main objectives of the survey were to learn about the perspectives for bank lending to SMEs in the region, and compare the results to previous surveys. Fifty-eight banks from South America, 46 banks from Central America and the Caribbean, and five Mexican banks were surveyed this time. The survey reveals an increase in confidence in SMEs as a strategic business sector for banks in the region: 89 percent of participants have an active lending policy toward this sector, 13 percent higher than in a survey conducted in 2008 and 20 percent higher compared with a 2004 survey. The new survey shows that banks primarily provide loans to SMEs to finance their working capital. In relative terms, it is interesting to note that larger banks have a larger offering of leasing products than smaller banks, while factoring accounts for a larger percentage of credit to SMEs at smaller banks when compared with larger financial institutions. The survey also reveals that most banks, when approving or denying credit, take into account a business's financial statements and the business owner's management and capital, but not the industry to which their client belongs. Generally, banks use an average of two different mechanisms to promote credit for SMEs, with direct contact with the client still being the most important action for this purpose. Banks in South America depend on their own capital whereas banks in Central America and the Caribbean are the biggest beneficiaries of international credit lines and financing from international institutions. The survey was conducted by Argentine consulting firm D'Alessio, with contributions from the following IDB Group's private sector windows: the Multilateral Investment Fund, the Inter-American Investment Corporation (IIC) and the beyondBanking program of the IDB's Structured and Corporate Finance Department. << Back to news headlines >> Ties with Central America Thursday 17th November, 2011 - T&T Newsday The recent statement by Guatemala's Minister of Energy, Luis Antonio Velasquez Quiroa, that Guatemala would welcome investment and expertise from Trinidad and Tobago's oil and gas sector effectively positions this country to broaden its ties with Latin America. Particularly, as Guatemala was one of the principals in the economic integration of the Central American Republics - El Salvador, Honduras, Nicaragua, Costa Rica and Guatemala. Already, Trinidad and Tobago has developed closer economic ties with Costa Rica. Meanwhile, of added importance was the revelation by Velasquez of Guatemala's general welcome for investment in his country's roads, upgrading of infrastructure and equipment at its airports. The welcome is extended to Trinidad and Tobago's being involved in the construction of additional airports. This would mean, in addition to financial investment, the use of Trinidad and Tobago technology as well as a greater volume of asphalt products being exported. Other Central American republics should also be targeted by TT. Trinidad Lake Asphalt has had a long history of exporting, for example, asphalt cement, to Guatemala, beginning from 1943. In turn, Trinidad and Tobago investment in the upgrade of infrastructure of existing Guatemalan airports and the construction of new airports will provide for increased use of Lake Asphalt products which have been employed in the paving of runways, tarmacs and aprons at major international airports, for example, John F. Kennedy. Any provision of investment in expertise in the further development of Guatemala, whether in the area of crude oil, natural gas or asphalt will lead to increased earnings for TT. We had noted earlier that Trinidad and Tobago would be positioned to broaden ties with Latin America. Already this country is the headquarters of the Association of Caribbean States. In addition, it is a member of the Caribbean Community of Nations [Caricom] which, in July 2000, signed an historic Trade and Economic Cooperation Agreement with Cuba. In turn, the Protocol to put into effect the Agreement setting up a Free Trade Area between the Dominican Republic and Caricom was signed on April of that year. The far reaching Protocol deals with such subject matters as "market access with respect to trade in goods, treatment of goods and services produced in the Free Trade Zones/Export Processing Zones, reciprocal promotion and protection of investment and Government procurement". A crucial provision in this Protocol, which is of considerable benefit to both Caricom and the Dominican Republic, is that approximately 85 per cent of the trade between the two areas is duty free. It should be understood that although Trinidad and Tobago is relatively small in size, nonetheless its energy based and non-energy based products are far ranging and include such items as ammonia, butane, gas oil, iron carbide, liquefied natural gas, methanol, nitrogen, propane, steel, urea, cement, asphalt cement and dried asphalt. In the meantime, the Guatemalan Minister of Economy, who was addressing the Regional Forum on Cluster Development on November 9, hosted by the Arthur Lok Jack Graduate School of Business, advanced the possibility of setting up a palm oil refinery in Trinidad and Tobago. Turning to Agriculture, Velasquez would note that Guatemala supplies 40 per cent of El Salvador's and 45 per cent of Honduras'food. Two points made by the Guatemalan Cabinet Minister in addition to those addressed earlier, which were of immense interest, were that Guatemala had the lowest ratio of foreign debt (to GDP) in Latin America and that its exports had virtually tripled in the last decade. What is inferred by this is that Guatemala is a good place in which to invest as well as to do business with. In turn, given the current relatively high prices and demand for crude oil, natural gas and liquefied natural gas (LNG) both Trinidad and Tobago and Guatemala stand to benefit from any TT investment in capital and expertise in the Central American Republic. This argument would apply as well to investment in the upgrade of Guatemala's roads and airport infrastructure. << Back to news headlines >> CEO Kama Maharaj: Sacha brand's a hit in Beverly Hills Thursday 17th November, 2011 - T&T Guardian Sacha Cosmetics' entry into the elite Beverly Hills market—America's "beauty capital"—represents a big breakthrough for a local manufacturer and its premium brand. "After years of frustration trying to gain entry in countries in Latin America and fed up with non-tariff barriers and their mañana mentality, we took the decision to focus on positioning our brand in the US market. We decided to do so in California, the beauty capital of America," said Kama Maharaj, chief executive officer of the Freeport-based Sacha Cosmetics Ltd. Maharaj was speaking on November 3 at the Caribbean Industrial Research Institute (Cariri) two-day forum on Creating Globally Competitive Businesses for Developing Economies at Crowne Plaza Hotel, Port-of-Spain. Sacha Cosmetics, which was created 33 years ago, is distributed in 23 countries, among them Puerto Rico, Cuba, Senegal, New Zealand, Australia, South Africa and the Dominican Republic. In North America, it is sold online and distributed through a distribution facilities in Florida. The brand has been the official line of cosmetics used by Miss Universe, Miss USA and Miss Jamaica pageants. In 1998, T&T's Wendy Fitzwilliam, wore Sacha Cosmetics, and brought home the Miss Universe title. Beverly Hills Maharaj commissioned a study in Southern California in February 2010 asking beauty professionals to compare Sacha Cosmetics to MAC, the leading make-up brand in the US. "At the end of the study, testers overwhelmingly reported that they found Sacha to be superior in various categories in terms of quality, colour and application," Maharaj said. However, there were recommendations that were made. "While the quality of the products could not be faulted, testers recommended that we upgrade our packaging which we have done over the last year. Having done this, we recently launched the brand in Beverly Hills, California, with both product and packaging receiving rave reviews." Maharaj described this as "tremendous breakthrough" for his company. "It is a testimony to our enormous potential to market Sacha as an ultra premium brand in one of the most sophisticated and quality conscious markets." He spoke of elite salons in upscale Beverly Hills that now use the Sacha line. "A number of high-end salons, including the celebrity Louis Salon on the famous Rodeo Drive, Beverly Hills, have made Sacha their exclusive make-up brand. For the first time, they now carry one line, confident it will look equally beautiful on all their clients, regardless of skin colour." Maharaj's audience at the Cariri event included officials of the Ministry of Finance, the Employers Consultative Association and the Inter-American Development Bank. Spurred on to grow Not one to rest on his laurels, Maharaj has plans for expansion. In the new year, we will be expanding our distribution in Southern California, flying the country's flag high. As luck would have it, in California, exotic skin is now more the norm than the expectation. A growing number of Caucasian women want to look more exotic and are fascinated by what they have dubbed our 'sun-skinned' foundations." Maharaj said a small country like T&T should not want to manufacture cheap products to sell cheaply. "We are committed to building a quality brand rather than making and selling low-priced products. In our view, manufacturers locally and regionally, could never win the price war with China and we ought to accept that. We can build powerful niche brands that can successfully be marketed world wide." Beyond Caricom Maharaj hailed the Internet as one of the main tools that has promoted his business internationally. "We launched our company's Web site 13 years ago and, today, it is one of the most respected and highly ranked cosmetics online, attracting hundreds of thousands of visitors a year. To drive more visitors to our main site, we built additional Web sites such as, www.applymakeup.com, that ranks number one in every search engine for the important term, 'how to apply make-up'." Maharaj said that world wide, Sacha Cosmetics sells at prices four to five times what is retailed locally. "Our operating margins are excellent since we sell from manufacturer to US retail at premium prices. If you want to enjoy high margins, then having a niche product that satisfies an unfulfilled market need is the way to go. Competition drives down prices but, in niches, there is so little competition, so you can command higher prices." Maharaj said having an innovative product is not a guarantee of success. "Brands like Black Opal and Black Radiance target a specifics sector of the market and have very limited appeal. To ensure our products are embraced by all, we market Sacha to women with 'exotic skin' which is a tremendous crossover concept." For a small island state, Maharaj believes local manufacturers must look beyond Caricom. "We have to accept the reality that that T&T is a small market, as is Caricom, and if you want to expand your market, you have to export extras regionally." He believes the positive conditions outweigh the negative. "While there are challenges being a local manufacturer and, yes, we do get frustrated at times. We have instead focused on leveraging the advantages we do enjoy." Maharaj listed a number of advantages which makes T&T an ideal location for manufacturing. "We speak English—the universal language of the Internet—we are in close proximity to the US, the largest consumer market, we are in the same time zone with them, we have beautiful weather, we have political stability, the cost of fuel and utilities is low, and we have an educated and skilled population," he said. << Back to news headlines >> Deepwater bid round delayed to March 2012 Thursday 17th November, 2011 - T&T Guardian T&T's 2011 deepwater bid round will now take place early next year as the Ministry of Energy has taken a decision to delay it for a couple months while it rolls out additional data that it feels will conclusively show that there are huge reserves to be discovered the deep water off T&T. Confirmation of the change of date came from Juliana Johan Boodram, permanent secretary in the Ministry of Energy and Energy Affairs, who told the Business Guardian the decision was in T&T's best interest. She said: "We decided that we will seek to hold the bid round in March next year because we are reprocessing some important data that we feel will be helpful in showing the companies the extent of the possibilities in the deepwater." The Business Guardian has been told that the data will be ready in late January after it is reprocessed by Houston- based GX Technologies. According to well-placed sources in the Ministry of Energy, the data in question is a 1996 2d seismic survey that was done by the then Amoco, now bpTT, in which there were long lines and the seismic records were very deep. That seismic is being made compatible with another seismic that was done subsequently in the 2000s, and the quality is considered to be very good. Only last week, geological consultant Dr Krishna Persad predicted that T&T will discover upwards of three billion barrels of recoverable reserves of crude oil, two billion of which will come from the deepwater. The findings are contained in Persad's new book, Petroleum Geology and Geochemistry of T&T, which took him three years to write. He said his conclusions came after 40 years of research. Persad said he looked at information from offshore Ghana, the Guyana Suriname basin, and the deep water in the Niger/Equatorial Guinea basin because they were all similar in geological history. In comparing the regions, Persad said he had found a striking similarity with T&T deep water and the Niger/Equatorial Guinea basin. He said: "We can see toe thrust faults penetrating into the deep cretaceous section, indicating access to the source. As a result, we expect to find oil off the east coast in the ultra deep areas and we may also find fractionated gas and condensate." The permanent secretary said the decision to delay the bid round was also taken after discussion with the energy sector companies, which indicated that during December, many of their key personnel will be out of the country and, in the circumstances, they would prefer that the round be pushed back. In a telephone interview, Johan Boodram said, "We have held discussions with the various companies and they have indicated their challenge of doing that kind of work over the Christmas holiday. With that in mind, we thought that even though we at the ministry are prepared to work through the Christmas season, it will be prudent to push it back to March. "On a number of occasions, this country has had to give extensions on bid rounds and we are not minded to do that, hence the decision to move forward in March." Business Guardian understands there has been considerable interest shown by several large oil and gas companies in participating in this bid round and that this time, it's likely fewer block will be on offer. << Back to news headlines >> Banks thrive despite economic slowdown Thursday 17th November, 2011 - T&T Express For the financial year ended September 30, 2011, RBL reported a diluted EPS of $6.98 versus an EPS of $6.19 for FY 2010, a 12.8 per cent increase in earnings year-on-year. The board has declared a final dividend of $2.75 (2010, $2.40) payable on December 2, 2011. This brings the total dividend for FY 2011 on each share to $4 (2010, $3.55). At the top, the Group's Interest Income declined 5.7 per cent for FY 2011 to $2.5B, while its Interest Expense fell to $402.1M, down 35 per cent from FY 2010.The decline in this expense is a reflection of the lower interest rates that currently exist on current, savings and deposit accounts. RBL's Net Interest Income was up 3.3 per cent year-on-year to $2.1B. The Group's Net Interest Income margin improved from 76.8 per cent in FY 2010 to 84.1 per cent. The $1.2B in Other Income recorded by RBL was 24.1 per cent higher than the reported figure in the last financial year. The increase in Other Income came about particularly in the last quarter (Exhibit 1) where $451.1M was reported, while the average in the first three quarters of FY 2011 stood at $241.9M. In all, total Income increased by 9.9 per cent moving from $3.0B to $3.3B. Operating Expenses moved to $1.5B, up 3.9 per cent from FY 2010. This combined with the increase in Income resulted in an increase in RBL's Operating Profit to $1.8B, representing a 15.1 per cent growth over last year. RBL's Operating Profit margin improved from 51.1 per cent last year to 53.5 per cent. Loan Impairment Expense, net of recoveries increased from $147.2M in FY 2010 to $288.6M in FY 2011. Investors should note that the Loan Impairment in Q4 2011 accounted for approximately 72.7 per cent of the total Loan Impairment Expense. As the Group moves ahead, Interest Income growth may continue to be a challenge given that the low interest rate environment is expected to persist. RBL managed to maintain the size of its loan portfolio in light of moderate loan demand in the market. On a positive note, the Central Bank of Trinidad and Tobago pointed out that credit conditions continue to improve steadily in the market. Between August 2010 and August 2011 a 1 per cent increase was reported in Private Sector Credit. Consumer credit was up 4.2 per cent for the same period, while Business lending remained flat. This is positive news for RBL and if credit conditions continue to pick up there is potential for the Group's top line to increase. It is vital that the spread between Interest Income and Interest expense be maintained or improved. RBL has been successful in doing so in the last few years as seen in Exhibit 2. The Other Income stream has befitted the Group in FY 2011. Improved focus in this area will certainly have positive results for RBL and further diversify its income streams. If the Group is to repeat this year's results in FY 2012, a reduction in Loan Impairment expense to the levels of FY 2010 will be critical. The Group has managed to weather the storm of a weak economic climate and grow its earnings. This combined with its fair valuations, dividend yield coupled with the potential of price appreciation makes RBL a stock that investors should add to their portfolio. BOURSE recommends a BUY. National Commercial Bank of Jamaica Limited NCBJ recorded an EPS of J$5.30 for the financial year ended September 30, 2011. This represents a 17.8 per cent increase from the EPS of J$4.50 reported in the comparative period last year. The board of directors has declared an interim dividend of J$0.34 per ordinary stock unit, payable on December 1, 2011. NCBJ's Interest Income declined by 9.3 per cent year on year moving from J$33.3B in FY 2010 to J$30.1B. This fall in Interest Income was accompanied by a 28.6 per cent decrease in Interest Expense to J$9.0B resulted in Net Interest Income of J$21.2B versus J$20.6B in 2010. The Group's Net Interest Income margin improved, from 62.0 per cent to 70.1 per cent for the year ended September 30, 2011. For the period 2005-2011 this margin has shown steady improvement as reflected in Exhibit 3. The Non-Interest Income of NCBJ increased 56.1 per cent year-on-year to J$13.5B.Contributing to this, was the increase in fees from growth in loans and transactions in the Retail and SME segment which resulted in Net fees and commission income of 9.9 per cent over FY 2010 to J$6.4B. NCBJ's Operating expenses moved up 1.7 per cent year-on-year to J$19.2B, particularly because of the Impairment losses on securities of J$262.0M recorded for the year. The Group's Staff costs, the largest component of expenses, declined marginally for FY 2011 registering a value of J$9.2B. Provision for credit losses fell 18.9 per cent to J$768.9M, while Depreciation and Amortization expenses moved upwards 9.8 per cent to J$580.1M for the year. Key to the Group's performance for FY 2011 was the J$1.1B recorded as the Gain on acquisition of associates. As investors may recall, during the year, the Group acquired 29.30 per cent of the shares of Jamaica Money Market Brokers Limited (JMMB). This acquisition, as well as the Group's 25.17 per cent share of Kingston Properties Limited have been accounted for as associated companies and gains of $1 billion was included in NCBJ's Net Profit. The total assets of NCBJ for the period was up 7.1 per cent to J$358.8B. As a percentage of total sssets, the Group's loan portfolio remained constant at 25.6 per cent for the financial year ended September 30, 2011. While on the liabilities side, total liabilities increased 4.3 per cent to J$297.6B. Operating expenses grew at a faster pace this year than Operating Income mainly as a result of the increased cost associated with the new annuity contracts. Greater focus will need to be placed on managing operating expenses. From a valuation perspective, at the current price of TT$2.20, the stock is trading at a trailing P/E of 5.6 times. With the possibility of price appreciation of this stock coupled with the commendable performance of NCBJ in a challenging environment as well as the attractive dividend yield of around 4.21 per cent, BOURSE recommends a BUY this stock. << Back to news headlines >> Making banking sexy again Thursday 17th November, 2011 - T&T Express In a Trinidad and Tobago market, troubled by a number of underperforming stocks trading at stagnant or declining prices, Republic Bank shares have been one of the blue chip exceptions year after year. An investor who bought Republic shares on the local stock market in 2000 would have paid $30 per stock unit. Today those shares are worth around $95, providing a total return on investment of more than 305 per cent since 2000, data from the bank shows. But the strength of Republic Bank isn't only reflected in its stock price and dividend yields to shareholders over the years. The proof is also in the profit, and that is a number that continued to climb. A strong balance sheet for its year ended 2011 shows the Republic Bank Group posting profit attributable to shareholders of $1.1 billion. This was a 12.8 per cent increase over the previous year's performance. The bank's assets also grew three per cent over last year, standing now at $47.3 billion. Consider that this performance was achieved against, what the banks agrees were, serious debt crises faced by Europe and the United States that have continued to have a negative ripple effect on tourism-reliant economies in the Caribbean. Here at home, the banking group has also grappled with declining growth and up until recently, contractions in borrowing. Credit levels in the manufacturing and business sectors remain subdued across the country and only recently has retail borrowing for goods like cars and furniture as well as mortgages, started to trend upward. Republic Bank also had to be concerned when its largest single shareholder CL Financial collapsed under the weight of its inter-company transactions and fallout from declining economies around the world. So against these odds, how did the bank still produce a profit in excess of $1 billion? Republic Bank managing director David Dulal-Whiteway shared some of the secrets to success with the Business Express during an interview last Thursday at the bank's head office at Park Street, Port of Spain. He had hours before, stepped off an aircraft at Piarco on a return flight from Suriname. He recalls businesspeople in the South American country asking about the ongoing State of Emergency in the country. Like the remainder of the business community, Dulal-Whiteway says the bank welcomed the removal of the 11 p.m. to 4 a.m. curfew in the country. Dulal-Whiteway and the board of directors led by chairman Ronald Harford have focused on the banking group's balance sheet and what he calls "preserving profitability". The bank's capital ratios stand at around 30 per cent, several times ahead of the required average of eight per cent. Its liquidity in cash and Treasury bills also hovers around the 30 per cent mark, ensuring the bank has enough unencumbered cash to withstand financial challenges. Dulal-Whiteway and his executive management team have also kept costs down while ensuring that their customers remain the bank's top priority. Even loan delinquencies now are below two per cent, "better than the boom days", in 2007 when customers were borrowing at around 13 per cent, he says. "This year a big part of the bank's business has been recoveries," he explains, citing as an example the sale of the bank's JMMB shares earlier this year which brought in $160 million. Next year, the bank commemorates 175 years in the country, and Dulal-Whiteway maintains that the secret to success lies in the bank's philosophy of sticking to 'Banking 101' principles. He insists that the bank does not doing anything unique and remains conservative in financial practices. Which is not to say the banking group takes no risks. Its made provisions this year of $280 million to protect against those risks but Dulal- Whiteway maintains that Republic will continue to be conservative while simultaneously creating of atmosphere that provides the best customer service to clients and customers. "The borrowing boom that happened in the United States where buyers got over 100 per cent financing for homes, well we have had complaints from people who remind us of that and that they are only getting 80 per cent at the bank," Dulal-Whiteway says. "But these are the corner blocks of banking and we ensure we stick to the basics. Actually, banking 101 has become sexy again, bearing in mind the collapse of banks in the US." In announcing the bank's year end results last week, Republic chairman Ronald Harford noted that, the outlook for 2012, is one of flat performances across the region, except for resource-endowed countries like Guyana and Trinidad and Tobago, where better growth rates are expected. Harford said, "We remain hopeful that Government's recent 2011/2012 budget presentation, which focused on job creation, spurring investment and national security, will contribute to an improved economic environment." Dulal-Whiteway admits that the decline of Caribbean economies have taken a toll on Republic's bottom line. The bank has offices spread across the region. "We haven't incurred any losses but Barbados which recorded a profit of $50 million in 2009, decreased (profits) by 56 per cent last year and Grenada had a 73 per cent decline," he told the Business Express. Trinidad and Tobago's market has improved, with more people accessing mortgages and with liquidity still high, he says. But Dulal-Whiteway would also trade increase and a stimulus to get the economy growing again, not just in Trinidad and Tobago, but around the region. "We don't want people (and the country) only buying cars or putting up buildings that are empty," he says. << Back to news headlines >> REPSOL MAKES ITS LARGEST EVER OIL FIND Thursday 17th November, 2011 - T&T Express Energy company Repsol YPF has confirmed its biggest ever oil discovery following the first exploratory efforts in the Vaca Muerta formation in Argentina's Neuquén province, one of the world's largest non-conventional reservoirs. The company has confirmed recoverable resources of 927 million barrels of oil equivalent of non-conventional hydrocarbons, of which 741 million are high quality oil, in an area of 428 square kilometres of the Loma La Lata Norte formation in the Neuquén province, the company said in a statement from its Port of Spain office to the Business Express last week. A total of 15 vertical wells were drilled, and they produced an initial 5,000 boepd of high quality shale oil. Repsol YPF has also begun exploratory and production activities in another discovery, in a 502 km2 producing area in the same Vaca Muerta formation. The well is producing 400 boepd of high quality shale oil. This new area has significant potential for large volumes to be developed in the future once the appropriate studies and preliminary work to determine resources is completed. Until now, the company has concentrated its exploratory efforts for non-conventional resources on an area of Loma La Lata Norte. This 428 km2 area is part of the 12,000 km2 to which YPF owns rights in the Vaca Muerta area, site of one of the world's largest (30.000 km2) and highest quality non-conventional resources. Wood Mackenzie identified the Vaca Muerta shale as one of the best in the world in its "Unconventional Gas Service," describing the formation as "excellent" after evaluating areas in Australia, China and various European countries. The evaluation included the development of the hydrocarbons market, infrastructure, regulation, availability of water, fiscal terms, quality, comparative volume, potential for enhanced recovery and organisation of the supply chain. Wood Mackenzie said in its report that YPF is the world's second largest company in non-conventional acreage, with three million acres (12,000 km2) in the Vaca Muerta formation. Repsol in December 2009 launched its "Exploratory Programme 2010-2014" which begun in the middle of 2010. One of its objectives was the creation of a non-conventional resources exploration plan. Additionally to the reported 428 km2, studies are being carried out to quantify the additional resources in a new 502 km2 area, where results obtained so far allow the company to estimate similar potential to the aforementioned area. << Back to news headlines >>
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