TTMA submits local content policy framework to the Government

TRINIDAD AND TOBAGO LOCAL CONTENT & PARTICIPATION POLICY FRAMEWORK
EXECUTIVE SUMMARY

CONTEXT
A Local Content and Participation Policy should be placed in the context of the current legal and regulatory framework facilitated by the Central Tenders Board Ordinance, 1961. This framework applies mainly to Government ministries and departments and some statutory authorities. It is known that there are other agencies which use public funds, including State-owned enterprises and statutory authorities whose procurement practices fall outside the ambit of the Ordinance.

The current scope of public procurement through the Central Tenders Board is largely limited to the tendering stage, in which offers of supply are invited and contracts awarded. It has been expressed in the Reform of the Public Sector Procurement Regime - White Paper, 2005 that The Principle Model is preferred model for Public Sector Procurement.

In this model, a central regulatory agency formulates operating policies and guidelines that amplify best practice principles of Value for Money, Transparency and Accountability, showing in general terms how the principles are to be applied in all transactions involving public funds.

This central agency will develop, for the purchasing agencies, procedure manuals for specific types of transactions.

Having the executing agency (i.e. Government Ministry or State Enterprise), involved in the entire design/financing/construction process of the projects shows that there is no segregation of duties in the implementation.

Hence, there must be transparency in order for this model to work, in the interest of the local industry. 

LOCAL CONTENT AND PARTICIPATION
The Government, as part of its goal to achieve a quality of governance as envisioned by Vision 2020, has an obligation to ensure that domestic procurement practices are in compliance with international best practices. Such a policy will guarantee a significant market share to the local industry; providing opportunities for sustainable development of the peoples of Trinidad and Tobago.

 “Local Content and Participation” – collectively referred to as “local value-added” – will be defined in terms of ownership, control and financing by citizens of Trinidad and Tobago. TTMA is of the view that a Partnership approach between the local business sector and Government (Central and Local) will provide maximum local content at all levels of the supply-value chain.

The TTMA has examined international public procurement policy frameworks, including the Chilean, Australian and Mexican models.  The Association puts forward a local content and participation policy model based on the Queensland, Australia Local Industry Policy:

LOCAL CONTENT AND PARTICIPATION POLICY MODEL
The key initiatives of the Local Industry Policy are:

1. Commitment to local industry being given a full, fair and reasonable opportunity to tender for major project work.
2. Establishment of a Local Industry Taskforce to include key industry groups and which is chaired by the Minister of Trade and Industry.
3. Establishment of a Local Industry Committee to include senior representatives from key state agencies and which is chaired by the Minister of Finance.
4. Requirement for Local Industry Participation Plans for:
1. Government funded projects in excess of TT$5 million.
2. Major projects where the Government has provided a significant contribution.
5. All State Owned Agencies or Special Purpose State Enterprises are required to report annually to an independent Auditor on levels of local industry participation in projects undertaken and prepare Local Industry Participation Plans for projects in excess of TT$5 million.
6. Enhanced support for the role of the Trinidad and Tobago Manufacturers’ Association (TTMA) in working with Government, project proponents and local industry.
7. Support for local industry through the promotion of innovation, flexibility and best practice to increase industry’s capacity to meet the needs of project proponents.
8. Support for the use of Trinidad and Tobago Bureau of Standards in project specifications.

Full, Fair and Reasonable Opportunity
Full, fair and reasonable opportunity is defined as the provision of equitable opportunity for competitive local suppliers to participate in the procurement activity with due consideration in the tender evaluation being given not only to price, quality, delivery, but also to the benefits of whole of life costing and local sourcing.

Local Content
Local content in public sector major projects includes all value-added activities undertaken in Trinidad and Tobago. Local content also applies to activities undertaken by all suppliers in the supply chain who are required to give consideration to the intent of the policy. The Revised Treaty of Chaguaramas should be used to define local content. That is:-
Local good - a good for which a Certificate of Origin that identifies that a product has been produced in Trinidad and Tobago, in accordance with the Rules of Origin of the Caricom Treaty (Article 84), can be obtained.
Services - includes consultancy services,and will fulfill the requirement of Chapter III of the revised Treaty of Chaguaramas demonstrating ownership (greater than 50% equity) and control (ability to appoint the Board of Directors) of the service company.

Local Industry Participation Plans
The Local Industry Participation Plan is defined as a clear statement of the Project proponent’s commitment to the Local Industry Policy and an indication of how local industry participation will be maximized.

Significant Financial Contribution
For the purposes of the Local Industry Policy the government financial contribution includes direct financial outgoings and revenues forgone as incentives to facilitate the project proposal. If the total financial contribution exceeds TT$5 million it is deemed to be significant and the project is subject to the provisions of the Local Industry Policy.

Value-added
In general terms, value added is the wholesale price of goods and services less the amount spent on imported products and services (including, without limitation, all components, embedded design, manufacturing, assembly and supply services) used for, or in, the supply of the product or services.

ROLE OF THE TRINIDAD & TOBAGO MANUFACTURERS’ ASSOCIATION
The Queensland, Australia Local Industry Policy ensures support for the Industrial Supplies Office (ISO) which is an organization that assists with the identification of competitive local suppliers for the purpose of increasing opportunities for import replacement activities. The ISO is available to support project proponents as follows:

1. At the earliest stages of project planning and development, the ISO can provide advice to project proponents or their agents, on the indicative capabilities and competitiveness of Queensland industry for the supply of goods, equipment and services.
2. The ISO can provide advice, assistance or seconded staff to project proponents on the development of Local Industry Participation Plans for all projects, and provide services to pre-qualify local industry capabilities against specific project requirements.
3. The ISO can identify to project proponents the potential for Queensland and Australian industry to uptake overseas technology; and will work in cooperation with the Queensland Manufacturing Institute (QMI) and government agencies to facilitate opportunities for technology transfer.

Other activities in support of the Local Industry Policy undertaken by the ISO include:

1. The provision of advice to the Local Industry Committee on local industry capabilities and the participation of local industry in specific projects. The ISO will contribute to the evaluation of Local Industry Participation Plans and ultimately, the assessment of benefits to Queensland from the Local Industry Policy.
2. The provision of advice to the Local Industry Taskforce on the effective implementation of the Local Industry Policy in specific projects, and can recommend strategies for improving the effectiveness of the policy.
3. The provision of staff to liaise with Department of State Development officers and project proponents on the specific capacity for Queensland and Australian industry inputs to major projects.

All of these activities are consistent with the mandate of TTMA and its services. Hence, the Association is confident that; with the TTMA’s resources and the required funding, it is capable of fulfilling a role similar to the duties of the ISO.

SELECTION CRITERIA
The Government of Trinidad and Tobago will, through its agencies, become a major purchaser of goods and services to develop competitive local industries. The TTMA is of the view that a local content and participation policy which provides the local industry with “a 100% of the time” selection criteria is anti-competitive and would not facilitate efficiency amongst our local suppliers.

As a result the local industry will be given a 15% price differential over foreign suppliers of goods and services.

This will be supported by the Government’s assurance that procuring agencies will give preference, firstly, to locally owned, controlled and financed enterprises, once the goods and services satisfy the criteria of competitive quality, price, standards, and delivery schedules. Resorting to imported goods and services will be entertained only where domestic suppliers are unable to meet the requirements of procuring agencies.