Some thoughts on local content policy

Dec 20, 2019 Letters

DEAR EDITOR,

It is of great interest to read the debate over local content policy as it relates to the oil and gas sector. At the same time, one hears how the government plans to ensure the economy becomes more diversified, so that after the oil boom we will have a country that can stand on its own.
These two objectives would appear to run contrary to each other: it is already apparent that major local companies are committing capital to the energy sector that otherwise might have been spent in other parts of the economy.
For example, scarce real estate on the East Bank is already being used for shorebase and related operations, when there might be more long term beneficial uses for it. As for human resources, one already sees a wide set of skilled workers being drained away from non-oil sectors. This will only increase in the coming years, threatening to hamper the growth of established industries such as manufacturing.
So perhaps we need to step back and look again at the insistence of local content specific to the oil and gas industry, and plan instead to incentivise businesses to invest in specific areas that would be of more benefit to the common good. One thinks of safe public transportation, education, health and infrastructure.
In fact, it might be in the interest of the country to even quarantine the oil and gas sector, and simply leave it to foreign companies given its size and enormous appetite for capital and labour. This, of course, would not be a popular view among the local private sector, which is the loudest voice in the local content crusade. However this paradox between local content and avoiding the resource curse needs to be reconciled.
Yours sincerely
Albert Russell

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