Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, accountability, the all new talk radio freedom 106.5.
[00:00:09] Speaker B: But this time we welcome back to our program a gentleman who's been with us before. We've been discussing a number of things related to business and the economy. Let's welcome back chairman of the Confederation of Regional Business Chambers, that's Vivek Charan. Good morning to you.
[00:00:23] Speaker A: Good morning, Satish.
[00:00:24] Speaker B: Nice to have you back on the show.
[00:00:25] Speaker A: Happy to be on your program this morning. Yes, good morning to all your viewers.
[00:00:29] Speaker B: Nice to have you with us here this morning. The discussion this morning has been on what's taking place in the United States and the impact that it's going to have on us here at Hohmann. And just before we get into our discussion about finances and forex and all of these other things, let me get your opinion because we've already been told that we are going to feel the pinch. There are things that are going to happen that we can't get away from. These sweeping measures as announced with funding cuts and others by the Donald Trump administration are going to have an impact on us. What is the business community saying about it? Does the business community have an opinion?
[00:01:10] Speaker A: Well, yes, the business community does have an opinion. I mean, you know, I think that the new administration or the new American administration, a lot of their new policies, particularly foreign policies, is going to have some effect on us here. And you only have to look at let's start with Marco Rubio. Marco Rubio is now the secretary of state. So he came in and some of his opening remarks, he spoke about, he gave us a picture, he gave the world a picture of the Caribbean, the Caribbean and the Latin American diaspora of countries very close to us. So he started with Cuba and Haiti. He started saying, you know, the, the Biden government removed sanctions from Haiti or sorry, removed not Haiti, removed Cuba from the state sponsored terrorism list. And they don't agree with that. Secondly, that Russia, I mean, Cuba is once again inviting Russian interests into the island.
And if you remember, you know, history, the Cuban missile Russian crisis when John F. Kennedy was there that almost, you know, started the Third World War. That was a critical point in, in world history when the Russians were getting ready to set up missile bases in Cuba and so on. Then we moved to Venezuela, who is also inviting foreign players and foreign interests, namely Russians again and also Chinese and also Iranians.
The Iranians, according to the secretary of the American Secretary of State, Margot Rubio, is setting up factories and building drones in Venezuela. Then we go to Nicaragua, Nicaragua, South American country, they are, you know, teetering on the brink of dictatorship if they're not already there. And there there's talk about them harboring a Russian naval base, according again to the Secretary of State, Marco Rubio. Then we go back again to Haiti. Haiti is currently under siege by the gangs, criminal gangs. The criminal gangs now have the government on the back foot, as it were, and they are actually in control of the country. If you remember not too long ago, they were firing shots at planes and they had shut down the airport and there were no flights going to Haiti. Now, the sovereignty and the stability of the Dominican Republic, or Santo Domingo, let's say, is at stake. And that is something that the American government is very worried about. And when you look at all these places, first of all, we see a divergence from a lot of these, a divergence from a democratic system of government and also, I have to say, a capitalist system. And it has not done the population any well. And because of that, because of the poverty, because of the sanctions, because of the foreign players that have come into the area, it has set the tone for what, you know, American, let's say, foreign policy in this particular localized area, which would be the Caribbean and those countries close to the Caribbean, I wouldn't say deep into South America, but more on that narrow, narrow part of land from Panama, you know, all the way there. When we also look recently at how heavy handed they were in dealing with Colombia, when Colombia had said, you know, we're not going to accept a military plane full of deportees, the immediate response was A, 50% tariffs and B, we canceled all the, the tariffs have since rolled back, but all the visa appointments in the American Embassy in Colombia have been canceled. So, you know, when you look at that and you see our government has felt that the only path to Dragon Gas was dealing with Maduro, dealing with Maduro and his dictatorship and so on, that no doubt would have put them on a very different trajectory from, let's say, American foreign policy and American foreign policy.
And how America deals with this situation will also inform how close or how far away we remain from Dragon Gas. The Secretary of State also stated, Marco Rubio, that they did not agree with the Biden policy, which was that deal that they cut with the Venezuela and Maduro, that, you know, if you have free and fair democratic elections, you know, we'll allow, we wouldn't place any sanctions on oil, we'll roll back some of those sanctions and so on. And then according to again, the American Secretary of State, Maduro, he faked the election, he stole the election.
And he took all the money as well too, which is millions and millions of dollars in oil money. So it seems that it could also happen that the Americans or the American, the present American administration would rescind all privileges and licenses for American companies to be selling or dealing with oil in Venezuela. And as a matter of fact, when you listen to what Trump had said with Canada and so on, when he said, we don't need your oil, we have enough, we have enough oil.
And you know, one of his, at the inauguration, one of his famous statements was drill, baby, drill, meaning that, you know, we're going to go into Alaska, we are going to become a self sufficient economy when it comes to oil. And in fact, you know, I was talking to Kevin Ramnere the other day and he was telling me, and I did verify it as well too. America is one of the largest producers of oil in the world, if not the largest producer of oil in the world. So they have, you know, but that is for their, you know, a lot of it goes towards their own use because, you know, the amount of energy that they consume and that sort of thing. So we are in a predicament because, you know, we desperately need our energy sector to rebound. And for that to happen, we need to find new wells, we need to increase production and, you know, the Dragon Gas fields provide us with a great opportunity that we can start to, you know, to reach to that point where, you know, we once again have new wells producing gas and maybe that can add to our, you know, our production. Now, some experts have said that even with Dragon Gas, you know, the addition to current production is not going to be, you know, very, very large. But in any case, it will, you know, it will be an increase and it can help the situation. Why is this important? As every, you know, as people know and people have noted, it's important because no matter what we say or no matter how much diversification comes into, we talk about diversification, the energy sector has always been the primary driver in the economy. And it is in fact the primary driver in many other economies, particularly those developed economies in which there is oil and gas.
And when you look at that, it is also the largest contributor to forex, that sector that contributes the largest amount of forex to Trinidad and Tobago. And when we see the, you know, and that comes from economic rents, that comes from private sales of forex from the companies, from foreign companies in the energy sector to the commercial banks and so on, and that's how we get as much forex as we used to get, that is no longer the case because when oil, when the price of oil is below a certain amount, then taxes are not collected and things like that happen. But then also we're looking at the fact that we are not producing as much as we used to produce. There are wells out there. Not a lot of people are exploring. There are wells, the commodity well, Calypso. There are different things that are supposed to come on stream and they're hoping that we would get there. But progress in the energy sector is not measured in days and weeks, satish, it's measured in years. And so even if we discover, if they discover a well and a gas, even if we discover, you know, even if things go well in Dragon Gas, it is not going to be immediate. We're still talking about years. And therefore when we're talking about, you know, an inflow of forex because of a growth in the energy sector or a rebound in the energy sector, we still have to consider the short term and the short term for small and medium businesses. And in fact, everybody that demands a certain amount of Forex, even people who are not in business in order to travel and so on and on, their credit cards and that sort of thing, online purchases that they make and other things that they might make, you know, all these people in the short term, what is going to be the situation for us going forward? Now I've recently come across, I heard you talking about foreign reserves and so on, and I've recently come across a graph that was done by an economist and it shows that current reserves, net external debt. And according to this graph, we are in the negative. We are in the negative, which means that our external foreign debt is greater than our forex reserves. And that's a scary place to be. Will it continue to grow?
And then now we understand why whatever forex that's going to come in, the government or the administration would also have to ensure that they are able to utilize that to pay their foreign debt as much as we, many of our businesses, myself included, are in, you know, in a certain amount of foreign debt, a very uncomfortable amount of foreign debt because not, because, you know, we always making, we're not making the TT dollars, we're not making as much TT dollars, but we're making it. The fact of the matter is that there's not enough Forex for us to purchase from the commercial banks. And, you know, so when you see the, you know, so when you analyze some of the moves from the government, when you analyze this thing about, you know, vat repayments were VAT refunds were allowed to build up over a huge, a long period of time to amount a huge amount owed to the energy sector paid out in lump sum. Nobody foresaw that. When it was paid out in lump sum, then it meant that companies in the energy sector would then have all this TT dollars at their disposal and they would no longer need to make sales of Forex to the commercial banks. And then when you frame this, when you read the Republic bank economic report for December, I think December 18th, it came out, so anybody can read it, you will see that in 2022. They were talking about in 2022 how forex demand had increased significantly. That was because the economy opened back up and stuff like that. But at that point in time, you know, 78 or 79% of private sales came from the energy sector, 79% of, let's say, the monies that the forex month that they were able to purchase came from the energy sector. This would be the commercial banks or Republic in particular, and not from a central bank injection. So when you look at the central bank injecting money into the system and the central bank obviously would get their money from economic rents and other revenues, tax revenues and so on that they have coming in, in Forex into the reserves, they would make the injections and then the rest of the money would come from the people selling Forex to the commercial banks, majority of which would be the energy companies, energy companies not selling their Forex to the commercial bank, which is what has been happening. Less and less monies are being sold and then, you know, normal citizens, people who are earning forex, which there's a large amount of people, people are also getting remittances, money from people abroad and so on, aren't going to the commercial banks to sell their US dollars. And the reason for that is quite simply that it's too low.
The commercial bank rate for buying us from you is not 6.79, which is the official rate that you see in the exchange. Right. It's actually much less than that. It's less than that. And then the black market says you can sell very quickly small amounts of us for 7.5 and $8. So obviously people are going to convert their money on the, on the black market, you know, to cater to their bills, to cater to, you know, many other expenses that they may have.
[00:15:21] Speaker B: Welcome back. We are speaking with the chair of the Confederation of Regional Business Chambers, that's Vivek Charan. Let's see if we have a couple calls hello, good morning, Good morning, and.
[00:15:37] Speaker C: Good morning to your guest.
I have a couple questions and comments.
These cuts that the Trump administration is making, I think it will teach the leaders in our country to be more prudent with taxpayers money, any money that this country earns.
Mr. Ramnerijn said on his very program, this government has essentially abandoned oil production.
And I wanted to ask you, do you think the closure of Petrochin was the biggest mistake of this administration and they should have restructured it instead? When I look at Argentina, Argentina was in a worse state than ours with 26% inflation. And Mr. Milei was able to bring it within one year down to 8%. Now, that is not an acceptable level of inflation, but it is remarkable to do it in one year.
He has reduced his surplus deficit budget from 442 million, a surplus of $888 million in one year. Now, I don't think we have anybody in government or opposition that is willing to take the bull by the horn, so to speak, and make government the way. How he was able to do that was to close down redundant ministries in his country, Ministry of Gender affairs, and all these ministries that, you know, it's not feasible to have these ministries open. What say you said we should, should we adopt some of those policies down here? I'll listen up there.
[00:17:32] Speaker B: Thank you very call your response, Mr. Chairman.
[00:17:37] Speaker A: Well, well, you know, I agree with what you said about Millennial, so let's start there. However, we have some of the economic measures that he made were draconian, right? They were very, very, very tough and very difficult on the people. And it really has been there, you know, he's been really doing that for more than a year. But he has come to a place which is much better from where they left. And there is that. Right.
I hear a lot of people calling for tough, tough economic decisions in Trinidad and Tobago. And you have to frame what is a tough economic decision and understand that a tough economic decision might be necessary. But then we must also do the due diligence, or let's say we must also understand that if the discomfort or the hardships that it imposes is greater than the benefit, then should we do it, or should we only do it when the benefit is greater than the hardship? And if that is the case, then maybe we should devalue 10 to 1 immediately. If we look in the past and we say, well, okay, the government at one point had decided that they're going to remove gas subsidies. It did not go down well in the public, in the public domain increasing gas prices because of the removal of the subsidies. But the removal of the subsidies was set by many of the economists to be good, good for the country. It was an inefficient use of government resources at a time when those resources should have been used elsewhere. We have another issue coming up, which is that of raising utility rates or raising the TN Tech prices. I attended many of the meetings with the RIC with different chambers and so on. And as you can see, many people are very upset about, you know, going to be very upset about increasing TN Tech rates because the proposal is that it's going to be significant and then we're paying every month and it is going to impact business and it is going to impact people's pockets in addition to many of the other things that they have to continue to pay. And when people's disposable income get targeted once again by increasing their fixed expenses every month, it's going to affect the kind of money that they have to spend on other things, particularly in small and medium businesses in the area or other, you know, other things that they have. But let me stick to the tntec. So when we looked at TNTEC and you understand from the RIC perspective, the RIC are the people who are, you know, you know, the ones who are coming out and speaking on behalf of TM Tech and saying that, you know, future generation of electricity in Trinidad and Tobago, the security of that is at stake because they can no longer afford to pay for the nut. They have huge natural gas bills. It's very inefficient. When you tell them, well, have you. What cuts have you made? They're showing you all the cuts that they have made to salaries and all these other things or whatever. So it seems that a crisis has been growing once again, same way as the forex crisis has been growing from year to year to year. This situation within Tiantec has been growing from year to year to year until it's reached a critical point. And now all of a sudden they're coming out and saying, listen, you know, we will maybe unable to supply electricity because we may be unable to, you know, we have all these bills outstanding, we have all these expenses. We're running at a loss.
And if we can't pay for natural gas, how are we going to be able to continue to provide electricity to Trinidad and Tobago on a consistent manner? Now, those are the kind of decisions that a government has to do, or someone like Millennial may do to say, listen, the most important thing is I must ensure that we have the security of electricity 24,7.
I need to raise those rates in order for us to be able to pay off those gas debts and ensure that we have a current supply of natural gas for energy production. But as you can see, sometimes hard economic policies are difficult to swallow. But one of the issues that, you know, I need to raise and it upsets me sometimes a lot of the times is why always in our country, inefficiencies with state organizations and inefficiencies with, you know, things like public utilities and so on, allow to build up to a critical point after 10 years, after so many years, and then finally when it has to be dealt with because we have no choice, it's a very difficult choice to swallow. You understand? It's a very difficult choice that needs to be made. And mostly time is not a choice. It has to be done. It has to be done or else the consequence is going to be much greater than what it is they're proposing to do. And it seems that we are at that point with, you know, tntec. But that goes to show what hard economic decisions sometimes look like. So the hard economic decision going forward for us would be how do we deal with this US situation, this forex situation.
Should we really devalue and how deeply should we devalue? Now devaluation is not going to cure the situation. You know, the valuation, the situation is a supply situation. The situation is there is not enough forex coming in to the country or generated and there's not enough forex that is going into the commercial banks. And the government can't put enough into the commercial banks because as I said, they have their own issues.
If we devalue a 10 to 1, what that is going to do is it's going to make buying US dollars very expensive, is going to mean you have to put out 10 TT dollars to 1 US dollar. So if before $100 you spend on Amazon and your credit card was $700 around that now you'd be spending 10,000. You'll be spending a thousand TT dollars when you buy a hundred US dollars or something on Amazon. So you had to pay a thousand TT dollars to your credit card. And so many people might say listen, that's way too much money, I can't afford that. So I going to reduce what I could buy online. Other people might say if you're traveling and you're going abroad and so on, the $200 you used to buy from the bank, the 200 U.S. which the bank will give you to travel with your whole family if you're going to Disney World or New York or Miami or wherever you're going may have cost you about $1,450, nor them US$200 will cost you 2,000 TT dollars, you understand?
So that is sort of, you know, that is sort of, you know, the kind of things that we're looking at if we say, if we start talking about the tough economic decisions that need to be made. And then again, the problem is, you know, structurally, how have we dealt with, you know, when you see the data, and the data kept showing energy sector, you know, energy sector revenues falling, you know, external debt rising, you know, forex, forex reserves falling over the years. How has that been dealt with? How has it been dealt with? You understand what I'm saying? Many of these things, if it was dealt with in a, I mean, hindsight as this is, you know, the easy thing, but the reality is that we have had one administrator, I don't have to say this, and it's not political for me to say this. We have had one administration in power for 10 years and 10 years is a long time. And to be in government for 10 years is actually a blessing. You know why it's a blessing? Because most governments who are in for five years and then leave at the end of five years could say, listen, I, I wasn't able to do everything I wanted to do and I wasn't able to do much because as I got started, I had to leave. That didn't happen with this administration. This administration had a clean and clear run for 10 years. And where are we at the end of those 10 years? Look at the kind of things that we are facing in the economy at the end of those 10 years. So can we really look back at those 10 years and I'll probably get a lot of flack for saying this, but can we look back and those, those 10 years and say, you know what, guys did a great job. Manage the economy. We are in a better place. Our citizens in a better place.
Yes, we had to deal with COVID and we had to deal with some unexpected and tough things. But you know what? Definitely I can say that I am in a better place than I was in 2015. And I can't say that though. I looking at small and medium businesses and I looking at them struggling, I looking at them starting to contract, I looking at myself going to the bank and saying, I have foreign debt. Can I get US Dollars to pay the foreign debtors? We don't have it soon, I'm going to the bank myself and saying I have two containers I need to bring in for Christmas otherwise I'm not going to have that many things to sell from Christmas. Can I get the US Dollars? We don't have it still.
Right. And that's the kind of things that I am dealing with. And I have all these foreign suppliers as well as everybody else ringing and calling all the time. And it's an embarrassing thing. Nobody like to owe people money and I don't like to owe people money, you understand. But it's out of my hands. What am I to do?
So, you know, when you're looking at where we are today, we're in a difficult place today.
[00:27:28] Speaker B: Yeah.
[00:27:29] Speaker A: And so, you know, and then to that caller you had, you said about last thing is the, the Petroch and everybody's saying, you know, it was a mistake to close Petrochain. Two things, right.
Karen, was it a mistake to close County? Many people would say yes. But we have to understand that when we have big, you know, and it's an important point to me while a government, you can blame a government or you can say the government did the wrong thing by closing down a huge industry like Petrochair. No Kara Neo, anything like that, how much responsibility are we willing to take as individuals, as people to say that union action also created some of the problems inside of it. Right. And then unions are made up of people like us, people made up of the workers and so on. But how much did union action contribute to those things and made those, those entities unprofitable and inefficient? But the proof in the pudding will come if people Petrochin is sold and it'll be very interesting to see if it is sold to a foreign buyer because no foreign entity, no foreign private entity is going to buy a refinery unless they think it is profitable for them to do so.
[00:28:39] Speaker B: Yeah. Mr. Chairman, unfortunately that's where you're going to have to leave us here this morning because we are out of time. We covered a number of topics and I'm sure that we'll have another conversation in not too long from now. But I want to thank you for being with us here this morning.
[00:28:53] Speaker A: Thanks a lot, Satish. It was interesting as usual.
[00:28:55] Speaker B: Yeah. That's where we drop the curtains, ladies and gentlemen, on our conversation with head of the Confederation of Regional Business Chambers.
[00:29:02] Speaker A: The best insight, Instant Feedback Accountability. The all new Talk Radio Freedom 106.5.
