Recently, the projections of growth in the international environment for 2013 have been scaled down marginally by the International Monetary Fund (IMF) from four per cent to 3.9 per cent with the projection for 2012 remaining at 3.5 per cent growth.

This comes as a result of signs of further weakness in the Euro Zone, the United States (US), United Kingdom (UK) and somewhat in emerging markets.

The Euro Zone has been affected by renewed concerns about the conditions in Spain and Italy which have resulted in sovereign and financial market stress.

Further, the slower than expected growth in the US, contraction in the UK and the tempered growth in emerging countries such as China and India in the first quarter of 2012 have all culminated in setting the bleak stage for the global economy and investment climate for the rest of 2012.

The increased uncertainty in Europe and the US resulted in volatilities in major equity and foreign exchange markets which surged to highs in 2012 and most equity markets saw earlier 2012 gains erased.

This occurred alongside worsening financial performance of banks in the Euro area with several banks being downgraded by rating agencies particularly in Spain and Italy.

The local environment runs parallel to the international environment in many ways, particularly in terms of the sluggish growth. In Trinidad and Tobago, which occurred partially as a result of lower output by the energy sector due to on-going maintenance work in several energy facilities and the industrial action which negatively impacted the construction and manufacturing sectors.

For late 2011 and 2012 thus far the financial system has been characterised by sluggish credit demand and thus excess liquidity in the banking system.

Added to this there were fewer public sector bonds issued resulting in increasing bank deposits, all of which resulted in short-term domestic interest rates declining to unprecedented lows. The Central Bank reports that the banking sector remains stable and well capitalised despite the international and national environment.

Against this background, the need for T&T to attract Foreign Direct Investment (FDI) is an important element in improving economic activity as FDI represents investments in production facilities, increases in investible resources and capital formation and a means of transferring technology, both physical and innovation capacity, and access to international networks.

Thus far, the majority of FDI has been in the energy-based sectors. However, the US Department of State 2012 Investment Climate Statement on Trinidad and Tobago highlights that there is interest in areas such as information technology, steel, desalination plants, wood and wood products and the entertainment industry. While the US remains the single largest source of FDI, other significant investments come from the UK (petroleum and financial services), Canada (petroleum, petrochemicals and financial services), Germany (petrochemicals), Norway (petrochemicals), Australia (petroleum) and Spain (petroleum).

The strategy to attract FDI should form part of a broader plan for improving the business environment for both foreign and local investors and creating confidence. Although the Ease of Doing Business Index 2012 ranking of Trinidad and Tobago, improved from 97th in 2011 to 68th in 2012, out of a total of 183 countries, it still highlights areas for significant improvement such as the time taken to start a business, registering property, enforcing contracts and dealing with construction permits. Additionally, the Global Competitiveness Index has highlighted areas such as crime, inefficient government bureaucracy and poor work ethic of the work force as the most problematic factors for doing business. That said, the index showed slight improvement in the country's ranking from 81st out of 142 countries in the 2011-2012 report from 84th out of 139 countries in the 2010-2011. The efforts to develop these areas are vital to improving the investment climate and will undoubtedly reap benefits in attracting investors both local and foreign. One should also bear in mind that FDI is usually deterred by a bad track record of completion of mega-projects. The strategy must also show that capital projects targeted for FDI can be completed, are viable, and will give the return on investment to all investors. We note that local investment forms an important part of the sustainability of a national economy and should therefore not be discounted. The Chamber want to see proper systems and proper legislation in place to ensure that our local companies are equally targeted for investment in projects, once there is the local capacity to do so.

Further, in seeking to attract FDI there are some institutional arrangements that need to be addressed. In short, there needs to be more focus and organisation in targeting FDI. There is both an abundance of sectors identified between successive governments and institutions charged with some form of investment promotion in an environment void of an overarching strategy. The Chamber is aware that there are attempts to rationalise the sectors to be targeted for investment promotion which we support along with the rationalisation for and co-ordination among organisations charged with different aspects of investment promotion. Given the international and local environment that we will be operating in for the remainder of 2012 and into 2013 we cannot allow potential investors, foreign or local, to be disenchanted by uncoordinated systems. The Honourable Minister of Finance and the Economy, Senator Larry Howai indicated in an interview with a local newspaper that growth of the economy is a priority and shared his intention to continue infrastructure and capital projects. Additionally, he is looking at the extent to which the private sector can be involved in these projects as he sees this as providing a level of commercial justification. While we agree that the structure of Trinidad and Tobago necessitates short run expenditure in capital projects to avoid the country going into recession, the utilisation of these infrastructural projects should be aligned with the sectors that have been rationalised as part of the national plan to further add to its commercialisation and long-term viability.