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THE EASE OF DOING BUSINESS IN TRINIDAD AND TOBAGO - IT AIN'T THAT EASY                                       The story of an entrepreneur is an evolving one....

The story of an entrepreneur is an evolving one. A costly problem that a start up faces may, over the years, become just another business activity that can easily be handed off to an employee at little expense. Today I went to one of the many of the
government offices that engage with businesses. Even though I did my online research, I still visited the wrong, though one of many scattered all over Port of Spain, office. I then proceeded to the right office, collected the forms, and after two hours of going back and forth between offices and standing in a meandering line, it occurred to me- Am I costing this experience into my business?

The Ease of Doing Business in Trinidad and Tobago has been questioned by the corporate community repeatedly. Most recently, at the Trinidad and Tobago Chamber of Industry and Commerce annual general meeting and business luncheon on the 21st of March, the main presenter Mario Siman of the UNICOMER Group noted that

     "One is the tremendous inherited red tape that a business has to overcome to get business done. The second area of concern is the       unavailability of foreign exchange. We are constrained by the shortage of US dollars to meet our needs. The third constraint that impacts some of us more than others is the limited availability of properties to expand our business at a reasonable pace and cost."
(“Courts chairman on ease of doing business: T&T must address three major issue” Guardian Online, March 22, 2017)

The red tape is defined in simple terms as the systems that prevent businesses from getting the documents, approvals and any other materials needed to get things done ( a very simple definition I know), is known to all business owners and managers. Long queues, continuous sharing of wrong information and just simply being directed to the wrong line, only to be sent to the right one after 10 minutes, has a price.
Before we get into the price, however, let us look at where Trinidad and Tobago stands in the world. The Ease of Doing Business Index was developed by the World Bank under the Doing Business Project. The index was developed to measure the ease at which small and medium businesses maneuver the regulations required by local law. There are 10 topics areas, but for the purpose and brevity of this article, we will only focus on three topics, with only some of the indicators being discussed. One should note, it is not the author’s intent to express Trinidad and Tobago in a poor light. In fact, for most indicators, Trinidad and Tobago outperformed other Latin American and Caribbean Countries. In aiming for first world status, however, it is only justified that comparisons be made with first world countries. Even without comparisons being made, the costs and time of regulatory processes are notable.

Starting a Business
In 2017 Trinidad and Tobago ranked 69 out of 190 countries in this topic area. Within this activity local businesses are at an international disadvantage; it takes 7 procedures to become registered and start a business. Other countries, such as those found in the Organisation for Economic Co-operation and Development (OECD) averaged on 4.8 procedures. The ideal country, New Zealand, only has 1, yes only 1, process. The trend continues in other aspects of starting a business. The cost of starting a business in Trinidad and Tobago in the 2017 index was 2 times that of the OECD high earning countries and infinity times that of Slovenia which charges nothing to start a business. Not only is starting a business costly, it is time-consuming. The total number of days needed to register a firm is 10.5 days (s lot of days in the corporate world)

Paying Taxes
In this topic, Trinidad and Tobago managed to perform better than OECD high-income countries in terms of cost. The total tax rate in our country for the 2017 report is 32.2% versus the 40.9% of the OECD countries. Even though the tax rate is cheaper, the opportunity cost (we will discuss this later) is incurred by the 155-hour difference in time it takes to file any forms of tax when compared to the ideal country Luxembourg. Even the number of tax payments made per year may be concerning to local businesses as Trinidad and Tobago has more payments than the average of Latin America and the Caribbean (39 payments versus 28.9 payments).

Trading across Borders
A concerning topic area for locals, it is clear that local regulation is worsening as Trinidad and Tobago fell 9 places for 2016 to 2017 in Trading across Borders. In 18 countries looked at in the study, 18 countries had their local entrepreneurs investing zero hours in the time and cost for border compliance including time and cost for obtaining, preparing and submitting documents during port or border handling, customs clearance and inspection procedures. Trinidad and Tobago measured at 60 hours. The cost to export is also relatively high. Local businesses pay $499 U.S, while 18 other economies pay nothing.

So, we have gotten a sense of where Trinidad and Tobago is at. And even though there are costs that may be easily recorded by businesses, for example, the price of getting an Income Tax Compliance Letter at $100 TT, there are other costs, opportunity costs, which are incurred, especially for small businesses. In a 2005, report by the Business Linkage Challenge Fund et al on South Africa listed the types of regulatory costs. Specifically, they mentioned efficiency costs such as unemployment, compliance costs incurred from red tape and costs of non – compliance such as administrative and psychological costs. I would like to argue that not all aspects of these costs are measurable. Looking at the opportunity costs, if I am a small business in which I am the accountant, market analyst and receptionists, there are many other things I may wish to be doing to earn income instead of running about from office to office to get registered or to attain necessary documents. There are also the psychological costs. Though the South African authors list this as a cost of non-compliance, in our local reality, it is also a cost of compliance.
The scenarios presented, however, is especially applicable to small businesses. Compliance costs are mostly regressive – the larger your business the lower the cost per employee. Larger businesses have the capability to comply with regulations because of their specialized staff and other factors that allow for easier cost absorption. Small businesses do not benefit from these economies of scale (the spreading of cost that comes with a larger size). In addition, new business owners do not have the knowledge and capacity to easily approach the government offices. Some small companies also fail to factor in how costly red tape has been to their bottom line.

So what solution is there for a small business? To track full costs without missing any hidden losses, a possible solution is to outsource services. There are many businesses that register your businesses for you and specifically deal with the red-tape. Whatever they charge, is whatever you put on your books and hidden costs become less of a problem. If you cannot afford an external service, make sure to track the costs incurred in dealing with regulatory systems. Record everything – your lost hours, your gas bill, printing costs in making copies, anything to get to the true costs so that you can get an accurate expense calculation.

And finally, for all businesses, the other option despite all efforts is to hope that the Government of Trinidad and Tobago (GOTT) keeps its promise. According to the National Development Strategy 2016 to 2030, the GOTT noted
    "The modernisation of the institutions of government into responsive, inclusive and participatory decision-making structures is crucial to ensuring that the principles of good governance are upheld and strengthened as required. In addition, we envision that efficient and effective government services will be provided to meet the needs of citizens as well as facilitate the ease of doing business." (Draft National Development Strategy 2016 to 2030 2016, 23)

Business Linkage Challenge Fund, Com Mark Trust and Friedrich Nauman Foundation. 2005.“Counting the cost of red tape for business in South Africa”. Accessed July 8th, 2017. http://www.saregulators....
“Courts chairman on ease of doing business: T&T must address three major issue”, Guardian Online, March 22, 2017. Accessed July 7th, 2017 . 23/courts-chairman-ease-doing-business-tt-must-address-three-major-issues
GOTT. 2016. “Draft National Development Strategy 2016 to 2030”. Accessed July 9th, 2017.
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