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Flow of Investment Capital from Intra- Regional Sources

Flow of Investment Capital from Intra- Regional Sources . Enid E Bissember Economic Intelligence and Policy Unit CARICOM Secretariat eipu@caricom.org. Outline. Introduction Nature of Intra-Regional Investment Sectoral Trends in Intra-Regional Investment Flows Implications

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Flow of Investment Capital from Intra- Regional Sources

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  1. Flow of Investment Capital from Intra- Regional Sources Enid E Bissember Economic Intelligence and Policy Unit CARICOM Secretariat eipu@caricom.org

  2. Outline • Introduction • Nature of Intra-Regional Investment • Sectoral Trends in Intra-Regional Investment Flows • Implications • Policy Recommendations

  3. Nature of Intra-Regional Investment • Erratic • Discriminating • Scarce • Mobile • Highly sought after • Multi-directional • Responds to market opportunity

  4. Erratic Flows

  5. Intra-Regional Investment in the OECS

  6. Types of Intra-Regional Investment • Portfolio investment • Direct investment • Joint venture • Greenfield • Mergers and acquisitions

  7. Scarce • Largely from few Member States • Trinidad and Tobago • Barbados • Jamaica • St Vincent and the Grenadines • Behaviour similar to global TNCs

  8. Intra-Regional Investment Arena • Major recipients are Jamaica and Barbados • Guyana, Suriname , the LDCs and the Bahamas not as attractive

  9. Discriminating flows

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

  11. Attracting Intra regional Investments • Large variations across countries • Variations across Sectors

  12. Sectoral Trends • Banking and financial services sector • Distribution and trading • Food services • Tourism

  13. Sectoral Distribution of Intra Regional Investment • Sunset industries -Primary sector lost in importance • New emerging areas of services dominant • Countries with low growth seems to be left behind

  14. Intra regional investors • Intra regional investment undertaken by a few firms • Banking led by RBTT and Republic Bank Limited • Conglomerates led by ANSA McAL, Neal & Massy, Goddards , C L Financial

  15. Sample Areas of Operation of one TCC • Automotive • Brewing • Chemicals • Insurance and financial services (including Merchant banking • Marketing and distribution • Manufacturing • Media Packaging • Real Estate Development • Shipping • Trading

  16. Concentration • Tourism 4 firms • Banking and finance 4 firms • Food and beverages 4 • Conglomerates 6 • Manufacturing 1 • Transportation 1

  17. Recipient countries of Intra regional investment in banking and finance • Antigua and Barbuda • Barbados • Belize • Grenada • Guyana • Jamaica • St Kitts and Nevis • Saint Lucia • St Vincent and the Grenadines • Suriname • The Bahamas • Trinidad and Tobago

  18. Multi-Directional Flows MDC MDC -- JMMB into Trinidad and Tobago and Barbados MDC LDC -- RBTT in Grenada LDC LDC --Antigua Barbuda Investment Bank into Belize LDC MDC -- OECS commercial banks into Barbados

  19. The Reality • Not all countries have the same locational attractiveness • Benefits uneven • Operations are not integrated

  20. The TCCs • Moving into branding e.g. RBTT • Ansa McAl • Republic Bank Limited

  21. Sample Direct Investment • T.C.L. investments in Arawak Cement Barbados and Carib Cement Jamaica • Sandals investments in hotel properties in Saint Lucia • ANSA McAL acquisition of Bryden’s in Barbados • A.I.C. venture capital operation in Barbados

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

  23. Joint venture • RBTT and Guardian Holdings of Trinidad and Tobago together with Sagicor of Barbados investment in RGM

  24. Policy Recommendations • Integrate the production process cross border • Increase competitiveness • Use trading arrangements more fully • Consolidate into larger units • Take advantage of the larger market created by the CSME

  25. Thank You

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