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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 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 • Policy Recommendations
Nature of Intra-Regional Investment • Erratic • Discriminating • Scarce • Mobile • Highly sought after • Multi-directional • Responds to market opportunity
Types of Intra-Regional Investment • Portfolio investment • Direct investment • Joint venture • Greenfield • Mergers and acquisitions
Scarce • Largely from few Member States • Trinidad and Tobago • Barbados • Jamaica • St Vincent and the Grenadines • Behaviour similar to global TNCs
Intra-Regional Investment Arena • Major recipients are Jamaica and Barbados • Guyana, Suriname , the LDCs and the Bahamas not as attractive
Attracting Intra regional Investments • Large variations across countries • Variations across Sectors
Sectoral Trends • Banking and financial services sector • Distribution and trading • Food services • Tourism
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
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
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
Concentration • Tourism 4 firms • Banking and finance 4 firms • Food and beverages 4 • Conglomerates 6 • Manufacturing 1 • Transportation 1
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
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
The Reality • Not all countries have the same locational attractiveness • Benefits uneven • Operations are not integrated
The TCCs • Moving into branding e.g. RBTT • Ansa McAl • Republic Bank Limited
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
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
Joint venture • RBTT and Guardian Holdings of Trinidad and Tobago together with Sagicor of Barbados investment in RGM
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