A Bold New Caribbean

If investment opportunities in the transport and logis- tics (connectivity) sector in the Caribbean region were a classic novel, Charles Dicken’s introductory line in his book A Tale of Two Cities would be the most appropri- ate, “It was the best of times, it was the worst of times.” In the best of times, investment opportunities in the transport and logistics sector in the Caribbean region are ripe for the taking. With the right investments, this sector could become a catalyst for economic growth and development, driving productivity, trade, tourism, and foreign invest- ment across the region. But, as with any investment opportunity, there are risks and challenges that must be considered. In the worst of times, the region’s small, fragmented economies make it vulnerable to external factors such as economic shocks, climate change, and natural disasters. Additionally, inadequate infrastruc- ture and cumbersome customs and transit procedures can hinder the efficiency and sustainability of transport and logistics systems. Investment Monitor reports that the logistics sector was one of only a few FDI sectors to grow in 2020 during the height of the COVID-19 pandemic. Although there was a contraction in 2021, the sector has begun to rebound. Investment Monitor’s database showed that of the 872 logistics FDI projects recorded in 2021, most were greenfield projects, with Western Europe leading the way in the number of logistics FDI projects. They note 22 greenfield FDI projects for 2021 in Central America and the Caribbean. However, these challenges can be overcome with the right investments and strategic planning. By investing in transport and logistics in the Caribbean, investors can take advantage of a growing market with significant potential for growth. Services account for more than 70% of GDP in most CARICOM countries, making these economies depen- dent on imports of supplies - mainly from the United States and Europe - to satisfy the demand from their tourism activities. This presents a unique opportunity for investors to provide much-needed infrastructure and services to support these economies.

The World Bank has estimated regional logistics costs to be between 16% and 26% (as a percent of GDP) in comparison to the Organization for Economic Co-operation and Development (OECD) benchmark of approximately 9%. This presents a significant opportunity for investors to provide much-needed infrastructure and services to help reduce logistics costs, increase productivity, and drive economic growth across the region. Moreover, industrial and resource-based economies like Trinidad and Tobago, Guyana, and Suriname, which rely on oil and gas production and mining for their main economic and export activities, also require adequate logistic and transport infrastructure to fa- cilitate merchandise trade. By investing in transport and logistics in these countries, investors can support economic diversification and help reduce their vul- nerability to external factors.

CARIBBEAN INVESMENT FORUM

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Logistics infrastructure and services play a crucial role in determining a country’s productivity and compet- itiveness. Without a well-developed transportation and logistics system, the costs of moving goods can become an obstacle to trade and economic growth. Investing in both the hardware and software compo- nents of logistics infrastructure is essential to ensure that goods can be moved efficiently and traded ef- fectively. Similarly, Caribbean countries can improve their productivity and competitiveness by investing in logistics infrastructure and services. Public-private