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Flow of Investment Capital Flow of Investment Capital from Intra- Regional from Intra- Regional

Sources Sources

Enid E Bissember Enid E Bissember Economic Intelligence and Policy Unit Economic Intelligence and Policy Unit

CARICOM Secretariat CARICOM Secretariat eipu@caricom.orgeipu@caricom.org

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OutlineOutline IntroductionIntroduction

• Nature of Intra-Regional Nature of Intra-Regional InvestmentInvestment

• Sectoral Trends in Intra-Regional Sectoral Trends in Intra-Regional Investment Flows Investment Flows

Implications Implications Policy RecommendationsPolicy Recommendations

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Nature of Intra-Regional Investment Nature of Intra-Regional Investment

Erratic Erratic Discriminating Discriminating Scarce Scarce Mobile Mobile Highly sought after Highly sought after Multi-directionalMulti-directional Responds to market opportunity Responds to market opportunity

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Erratic FlowsErratic Flows

0

50,000

100,000

150,000

200,000

250,000

1997 1998 1999 2000 2001 2002 2003

total CARICOM Investment in OECS

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Intra-Regional Investment in the Intra-Regional Investment in the OECS OECS

020,00040,00060,00080,000

100,000120,000140,000160,000180,000

1997 1998 1999 2000 2001 2002 2003

CARICOM investment in OECS 1997-2003

Antigua andBarbudaDominica

Grenada

St Kitts

St Lucia

SVG

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Types of Intra-Regional Types of Intra-Regional InvestmentInvestment

Portfolio investment Portfolio investment Direct investmentDirect investment

–Joint venture Joint venture

–Greenfield Greenfield –Mergers and acquisitionsMergers and acquisitions

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ScarceScarce Largely from few Member StatesLargely from few Member States

–Trinidad and TobagoTrinidad and Tobago

–Barbados Barbados

–Jamaica Jamaica

–St Vincent and the Grenadines St Vincent and the Grenadines Behaviour similar to global TNCs Behaviour similar to global TNCs

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Intra-Regional Investment Arena Intra-Regional Investment Arena

Major recipients are Jamaica and Major recipients are Jamaica and Barbados Barbados

Guyana, Suriname , the LDCs and Guyana, Suriname , the LDCs and the Bahamas not as attractivethe Bahamas not as attractive

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0

20

40

60

80

100

120

140

160

180

Discriminating flows

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Trinidad and Tobago intra regional Trinidad and Tobago intra regional investment 99-03 US$mninvestment 99-03 US$mn

BarbadosBarbados 171.42171.42

GrenadaGrenada 0.450.45

GuyanaGuyana 5.05.0

Jamaica Jamaica 94.794.7

Saint Lucia Saint Lucia 8.48.4

Suriname Suriname 9.659.65

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Attracting Intra regional Attracting Intra regional InvestmentsInvestments

Large variations across countries Large variations across countries Variations across Sectors Variations across Sectors

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Sectoral Trends Sectoral Trends

Banking and financial services Banking and financial services sectorsector

Distribution and trading Distribution and trading Food services Food services Tourism Tourism

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Sectoral Distribution of Intra Sectoral Distribution of Intra Regional Investment Regional Investment

Sunset industries -Primary sector lost in Sunset industries -Primary sector lost in importance importance

New emerging areas of services dominant New emerging areas of services dominant Countries with low growth seems to be left Countries with low growth seems to be left

behindbehind

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Intra regional investors Intra regional investors

Intra regional investment undertaken by a Intra regional investment undertaken by a few firms few firms

Banking led by RBTT and Republic Bank Banking led by RBTT and Republic Bank Limited Limited

Conglomerates led by ANSA McAL, Neal & Conglomerates led by ANSA McAL, Neal & Massy, Goddards , C L Financial Massy, Goddards , C L Financial

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Sample Areas of Operation of one TCCSample Areas of Operation of one TCC

AutomotiveAutomotive Brewing Brewing Chemicals Chemicals Insurance and financial services (including Insurance and financial services (including

Merchant bankingMerchant banking Marketing and distribution Marketing and distribution Manufacturing Manufacturing Media Packaging Media Packaging Real Estate Development Real Estate Development Shipping Shipping TradingTrading

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Concentration Concentration

Tourism Tourism 4 firms 4 firms Banking and finance Banking and finance 4 firms 4 firms Food and beverages Food and beverages 44 Conglomerates Conglomerates 66 Manufacturing Manufacturing 11 Transportation Transportation 11

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Recipient countries of Intra regional Recipient countries of Intra regional investment in banking and financeinvestment in banking and finance

Antigua and BarbudaAntigua and Barbuda Barbados Barbados Belize Belize Grenada Grenada Guyana Guyana JamaicaJamaica St Kitts and NevisSt Kitts and Nevis Saint LuciaSaint Lucia St Vincent and the GrenadinesSt Vincent and the Grenadines SurinameSuriname The Bahamas The Bahamas Trinidad and Tobago Trinidad and Tobago

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Multi-Directional Flows Multi-Directional Flows

MDCMDC MDC -- JMMB into MDC -- JMMB into Trinidad and Tobago and Trinidad and Tobago and Barbados Barbados

MDCMDC LDC -- RBTT in Grenada LDC -- RBTT in Grenada

LDCLDC LDC --Antigua Barbuda Investment Bank into LDC --Antigua Barbuda Investment Bank into BelizeBelize

LDCLDC MDC -- OECS commercial banks into MDC -- OECS commercial banks into BarbadosBarbados

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The Reality The Reality

Not all countries have the same Not all countries have the same locational attractiveness locational attractiveness

Benefits unevenBenefits uneven Operations are not integrated Operations are not integrated

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The TCCs The TCCs

Moving into branding e.g. RBTTMoving into branding e.g. RBTT Ansa McAlAnsa McAl Republic Bank Limited Republic Bank Limited

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Sample Direct Investment Sample Direct Investment

T.C.L. investments in Arawak Cement T.C.L. investments in Arawak Cement Barbados and Carib Cement Jamaica Barbados and Carib Cement Jamaica

Sandals investments in hotel properties in Sandals investments in hotel properties in Saint Lucia Saint Lucia

ANSA McAL acquisition of Bryden’s in ANSA McAL acquisition of Bryden’s in Barbados Barbados

A.I.C. venture capital operation in BarbadosA.I.C. venture capital operation in Barbados

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Portfolio investment Portfolio investment

Trinidad and Tobago Unit Trust Corp. Trinidad and Tobago Unit Trust Corp. investment in equities of regional companies investment in equities of regional companies including National Commercial Bank of including National Commercial Bank of Jamaica and Grace Kennedy of Jamaica, Jamaica and Grace Kennedy of Jamaica, B.S.&T and Sagicor of Barbados B.S.&T and Sagicor of Barbados

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Joint ventureJoint venture

RBTT and Guardian Holdings of Trinidad RBTT and Guardian Holdings of Trinidad and Tobago together with Sagicor of and Tobago together with Sagicor of Barbados investment in RGM Barbados investment in RGM

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Policy Recommendations Policy Recommendations Integrate the production process cross Integrate the production process cross

border border Increase competitivenessIncrease competitiveness Use trading arrangements more fullyUse trading arrangements more fully Consolidate into larger units Consolidate into larger units Take advantage of the larger market Take advantage of the larger market

created by the CSMEcreated by the CSME

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Thank YouThank You