Dear Editor,
Even if the opening up of the Cuban economy does not have a huge negative impact on the tourist economies of the Eastern Caribbean, these economies will continue to be challenged by the tapering off of their tourism success due to a variety of other reasons.
These other reasons are (1) new developing destinations worldwide, including Central America , Kenya, West Africa , Sri Lanka, etc. are taking increasing market share.
(2) Our difficulty in competing with new destinations due to an ageing infrastructure and quality of properties.
(3) The inability to boost the economy through new Greenfield tourist developments, as has been the methodology in the past.
(4) Our need to tax at a high level in order to allow us to keep growing a large government apparatus.
We can do nothing about the growth of competition. Our best response is to make our own offering as competitive and well marketed as possible. Ageing properties and infrastructure could be ameliorated by government facilitation and stimulation; if we could ensure that such efforts were efficient and did not lead to corruption, which would only worsen our situation. Present examples of government supervising commercial matters is not inspiring.
In respect of Sint Maarten does not have much left as far as undeveloped land for the traditional new hotel expansion. It does not have what St. Kitts has. St Kitts has been developing the Southern Peninsula, which has helped create the fastest GDP growth in the Eastern Caribbean in the last few years .We simply do not have a “southern peninsula” that could be used as a springboard to resuscitate our economy .
Our taxation is not only high, but it also holds back our economy in a structural manner. Ironically, we had great growth when our taxation was low and many of our competitors had destructive tax structures. The design of our present tax system is mainly based on short-term budget deficits that needed quick fixes without incorporating considerations for long-term economic functioning.
So where will Sint Maarten find itself in 20 years’ time, when the conventional stay-over tourism, cruise ship tourism and second home tourism have all become significantly tougher than they are now, the population has increased a little more than it currently is, and our expectations for higher quality living have gone up another notch ?
The challenge is not new. Many people have addressed the problem, if not for the longer term interest, but because in the shorter term our immediate growth, budget management and revenue shortfalls are calling for action in the shorter term.
The most significant point to note about future planning in Sint Maarten is that we have not yet taken on board any plan for solving the fundamental future economic problems, and the need to replace activity and grow activity. There is absolutely no shortage of efforts to identify the problem and broad descriptions of how to work towards solutions, but no actual solutions are being worked on. No shortage of consultant reports that reviewed all options. But in spite of this, no significant allocation of resources with a game plan to really set the ball rolling on any significant plan.
Every single broad plan that has come in the form of a document has defined that diversification of the economy would be wise and probably essential. But not one plan has been adopted and converted into a real serious effort to make it happen.
Most Caribbean islands claim to be doing future planning, but in actual practice the real activity only starts when a foreign investor shows an interest. Could it be that the lack of such foreign investment interest is the real reason for nothing much happening in Sint Maarten? Could it be that without such investor interest nothing much will happen? Could it even be that if nothing much happens by the time an investor does come, we will be so desperate for investment, we will accept any investor profile no matter what the long-term risks associated?
Almost all of the diversification options involve investment with a likely considerable lead time before benefit will accrue to the country. In order for them to succeed, it would require political will that would remain constant for the lead time required to achieve success. It would almost inevitably require sacrificing short-term projects that would provide immediate employment to current voting blocks. It would require a tax system that inspires confidence to the investor that it not only is competitive, but structured in a manner that is long term sustainable.
What is the likelihood of finding a political coalition that will commit (not just agree to how good a plan it is), allocate resources with the necessary sacrifices and stay in power long enough to ensure success of any essential significant diversification in Sint Maarten?
Robbie Ferron
