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ICT for diversification?

Published: 
Thursday, September 27, 2012

The idea of diversifying the local economy away from a century-old dependence on petroleum and petroleum-based products ­­­­­­ one that has permeated the national agenda for more than 40 years. The evolution of information and communication technologies (ICT) in the past few decades into a resilient, multi-billion-dollar global industry has caused mixed reactions, and varying levels of priority on T&T’s diversification agenda by different administrations during that time. These initiatives over the years to empower the local ICT sector has yielded little results with local ICT companies and initiatives lagging severely behind our global peers.

 

Doctoral researcher and ICT subject matter expert Damain Ramsajan believes this lack of traction in the ICT sector may be caused, in part, by our inability to properly classify the dual effects of technology as both enabler and facilitator. Ramsajan says that while ICT is an enabler of economic growth within its own industry, the discipline also acts to facilitate productivity, growth and profitability in organisations across all industries. This dual role of ICT has confused many political appointees over the years in developing a holistic ICT plan and agenda to meet T&T’s technology facilitation and diversification enablement needs in the context of an increasingly shrinking global competitive environment.

 
 
ICT as facilitator
Over the years, many research findings have shown that ICT plays a vital role in advancing economic growth and reducing poverty. A survey of firms carried out in 56 developing countries finds that firms that use ICT grow faster, invest more, and are more productive and profitable than those that do not. T&T’s ICT strategy has always reflected this understanding with many projects over the years geared towards these ends, some more successful than others. Some examples of TNT’s past ICT facilitation projects include:
• Government’s “backbone project” phase one and two sought to facilitate communications infrastructure and connectivity for all government agencies
 
 
• TTConnect portal was meant to integrate the provision of many government services online.
 
 
The many iterations of our strategy have always reflected the use of ICT to facilitate connectivity and improve productivity through implementation of already-existing foreign manufactured software, hardware or services. While this focus has brought about the creation of many local ICT companies over the past 50-plus years, these companies have mostly been system integrators (implement hardware and software solutions manufactured by foreign entities) and in a few small cases, multi-national technology companies like Microsoft and IBM, which sell and implement their externally-developed solutions locally. 
This activity in the ICT arena in T&T focuses on ICT as a facilitator and has not generated the type of results in the sector capable of making any kind of a dent in the national diversification agenda.
Is this copycat culture of implementer versus innovator inherited as a legacy of an amalgamation of short-sighted political strategies and decisions?
 
 
Did it start with the Government’s vision in the early 1960s of economic development through the industrialisation-by-invitation model of Arthur Lewis? This model subsequently failed, and by the mid-1960’s, led to the Government’s introduction of the import substituting industrialization (ISI) model. The ISI model encouraged the development of assembly-type production, like automobiles, televisions, processed foods and beverages, radios, mattresses and the like.
While our manufacturing sector has come a long way since then, has this assemble versus manufacture culture evolved into an implementation of foreign vendor solutions approach in lieu of local software development and the manufacture of locally innovated technology products for use on the global stage?
 
 
 ICT as enabler
In 2002, Government established a Vision 2020 planning committee and targeted seven sectors, including ICT, for growth as part its diversification agenda. Ten years later, the current administration also indicated its intention of placing a strong focus on the ICT sector for diversification. In all this time, how many local companies have sprung up to create uniquely local technology products for sale on the international market? Where is the global availability of an e-pan? How many have access to play our beloved “all fours” on line, or participate in a Trini Carnival-type social platform. Are we not the kings and queens of social? Where is the proliferation of local animation on the global stage infused with our own creative touch? Why are local companies not a part of the International charge? Creating ICT industry enabling products like Facebook, Google and YouTube. While the opportunities are mammoth, questions of knowledge, competency and infeasibility due to a lack of scale do arise.
 
 
 
Where are we?
The People’s Partnership Government, according to its manifesto, has also prioritised ICT. In fact, it has ranked ICT as fourth place in its development plan. Have the laudable initiatives of the past decade yielded any significant progress? Last month it was revealed that T&T dropped to number 84 on the Global Competitiveness Index. Would a fully-developed ICT sector ensure a better showing? Ramsajan says yes. “It is a proven fact that ICT impacts every element of not only business activity but the day to day operations. With specific reference to the Competiveness index , empirical data has shown that countries with a fully developed sector rank far better. This area of development is one of the pillars of the GCI metrics, and thus will directly contribute to overall national rankings.
 
 
“A fully developed ICT sector will aid Government’s initiatives to attract foreign investors, since a developed sector will augment conditions which yield productivity, efficiency and transparency. Only last week, Kwangsoo Chang, Korea’s assistant Minister in the Ministry of Public Administration and Security, labelled T&T’s ICT readiness at the basic stage. “As far as I am aware, the ICT process in T&T is at the first or second stage. This rating has been established by the United Nations and they identify four stages, of which, T&T would be in the first two.” After over a decade of focus, why are we less than 50 per cent compliant?
 
 
Challenges
As a people, we have been conditioned to value the tangible, our accounting practices still grapple with the phenomenon of the “intangible asset and a proper valuation,” while our political and managerial decisions hinge around physical deliverables rather than on services and behavioural change. It seems that our infatuation with the physical may be impeding our ability to embrace a sector which is intricately linked to a number of intangibles. The T&T Chamber of Industry and Commerce called for the amortisation of intangible fixed assets in the 2011 budget. The chamber requested  that Government amend the act to include all assets, (tangible and intangible) for capital allowance purposes. This would be in line with what pertains for other tax jurisdictions in the Caribbean (for instance, Barbados) and elsewhere. 
All current schedules AB&C of the Income Tax Act refer to fixed assets (plant and machinery) only, and capital allowances for tax purposes are applicable only to those. In the chamber’s view, intangible assets are and will continue to be a significant part of the capital cost of setting up such companies and, as such, the current act puts T&T-based companies at a strategic disadvantage when competing globally. Currently, the private sector is allowed to import computer systems duty free. While this is a commendableinitiative, it falls short because the importation of spare parts for those same devices has remained subject to heavy duties. As an example, many cables that connect these devices can run up to 35 per cent duty.
 
 
Recommendations
Ramsajan believes the solution to enabling the local ICT sector towards achieving the diversification requirements lie in an increased focus on a few key areas: “We need policy, incentives and education initiatives around building local ICT implementation competency. Currently, hundreds of millions of US dollars are spent on foreign IT services, particularly among multi-nationals. Simply, we must give these companies compelling reasons to further invest in training and other human resource development costs that would enable local talent to execute these services.” The IT subject matter expert added: “Secondly, we need to increase availability of specialised training in technology development, software and hardware that would facilitate the development of new, globally viable ICT products.” He believes that animation, video game programming, social platform programming and digital filmmaking are a few areas that would help propel us on a path towards empowering the local ICT sector.
 
 
 
Workforce alignment 
The Ministry of Tertiary Education and Skills Training has launched a number of initiatives aimed ensuring the workforce of tomorrow properly aligns with Government’s plans. Minister Fazal Karim said a number of programmes has been introduced, together with a realignment of faculties and a rationalisation of ICT programmes at the tertiary level institutions, with specific focus on ICT. As such the University of the West Indies has now created a Faculty of Science and Technology. The University of T&T and the College of Science, Technology and Applied Arts of T&t (Costaatt), have similarly restructured and realigned its ICT programme content to ensure its relevance in today’s market place.
 
 
Other projects include the T&T research and education network (TTREN) as well as the continuation and extension of Star.tt project to bridge the digital gap. The ministry also has planned an expansion of YTEPP mobile computing bus and a one card system for tracking and securing On the Job training programme hoppers.  As we eagerly anticipate the 2012/2013 budget, a number of challenges face the sector, but as the global space is shrinking, can we soar to greater heights? Simple answer, yes, but that solution lies not just with technology, but also on a focus on culture, people and their ability to effectively utilise a fully developed and comprehensive ICT sector as a means to unlocking T&T’s global potential.

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