By Bonnie Benesh
Think To DO Institute
Multiple global financial institutions and think tanks are looking at the effects and hazards of country fragility. With the additional stressor of the COVID-19 pandemic, these threats have intensified. It might be surprising to know that each global institution has generated a list of countries that are caught in cycles that contribute to fragility; and each institution has independently identified similar weaknesses that prevent the countries from escaping this fragility cycle.
Alarm bells begin to chime when countries have a long-term struggle with things like political instability, weak capacities of state, low administrative capacity, weak economic performance, poor social cohesion, weakened financial institutions, or the inability to collect taxes to name some of the key weaknesses. As the pandemic infection patterns continue to stress all economies, those countries that are more fragile have a much greater challenge than ever before.
Resilience can be built in many ways. Crucial factors for future societies such as sustainable environment and social planning design will not be able to offer adequate tools to deal with upcoming challenges without first improving knowledge of resilience. Resilience that can mitigate the effects of the most fragile states must be built in a networked and interconnected multi-level governance approach on local, regional, national, international, and global levels. To best identify how to become more resilient, countries must first look at their fragility status and identify specific areas of weakness to improve. These areas will require much more than quick fixes in isolated projects; they will require systemic, long-term efforts based on keen analysis of specific data about the strength of laws and institutions. These laws and institutions are the foundation to support the needed resilience to sustain social and economic growth, and lift the nation from the perils of fragility.
Institutional strengthening is at the core of setting a strong foundation on which a more resilient nation can be built. Building state capacity includes cross sectoral attributes including integrity, democracy, public finance, data management, civil service, and media. Nation building, the act of forging “a common sense of nationhood”, aims at the unification of the people within the state, first by providing the basic social and economic needs to its people, and then, by constructing and structuring a national identity using the capacities of the state.
Fragile states have “cycles”, and these states must break out of those entry and exit patterns to move from fragile to resilient states. Counter-cyclical policies recognized by international research, and sound customized macroeconomic policies based on local profiles are first steps. The probability of success can be increased if these policies are supported by strong governance and anti-corruption measures that ensure proper use of resources to help create and maintain a stable economy. These cyclical changes require long-term vision, patient governance, and regular and on-going data collection to measure change over time. Too often, fragile states adopt strategies that they are not yet ready for because the necessary foundation is not present to support them. Too often, due to governance instability, strategies are aborted too soon because they are not producing short- term successes. Resilience is built around the ability to absorb disruption and operate under a wide variety of circumstances.
That definition is never more powerful than now, for the perils of fragility are testing all systems’ ability to adapt.
~ Think To DO Institute is an independent, apolitical think tank located in Curaçao, Dutch Caribbean. T2DI has as its purpose to help Curaçao become a more resilient society by producing research that is based on best practice, and which delivers practical solutions to the barriers that hold the community back from becoming more resilient. Research evidence shows that resilient societies are created by attention to people, organizations, place, and knowledge. Resilient societies design, redesign organizations, institutions and systems to better absorb disruption, operate under a wide variety of conditions, and shift more fluently from one circumstance to the next. For more information about Think To DO Institute, visit the website
www.thinktodoinstitute.com. ~
Dear Editor,
I would like to take this opportunity to respectfully comment on an article I read in The Daily Herald on August 31, 2021, related to a presentation given by the Honorable Minister of Finance Mr. Irion to the Parliament of St. Maarten about Tax Reform.
I am pleased to see some consideration being given to not wanting to impose a real estate tax on residents of the island. This being said, many residents of the island currently own property on government long lease land, and there should be some major concerns with how these fees and rates are going to impact the local population in the coming years when many of those leases will be up for renewal, but this was not part of the Minister’s presentation to Parliament so I will leave this as a topic for another day.
With regard to the suggestion of introducing real estate taxes on non-residents who purchase property on this island, I have several questions and comments. First things first, we run the risk of severely damaging our reputation as a trustworthy country to invest in, if we are telling investors that we have no property taxes today, but then a few months/years later we turn around and tell them a different story. Non-residents who have already invested on this island should be “grandfathered in” to the tax laws the way they were when they originally purchased their property.
By making sure non-residents who have already invested on this island are protected when the new legislation comes into effect we will gain confidence and credibility as a safe destination to invest in. It might take a few years to build up the tax revenue stream from non-residents, but in the long run this type of responsible approach will keep the real estate market stronger for decades to come. Announcing now that non-residents who purchase property before the new tax laws are implemented will be exempted from this tax in the future will help stimulate the local economy almost immediately.
Non-residents who purchase vacation condos or homes on our island are by far the most valuable and important tourism demographic of our one-pillar economy. They invest hundreds of thousands of dollars, sometimes even millions into our local economy. Their interest drives the real estate market and stimulates development, which in turn fuels the growth of the local economy. Many non-residents who own property here invest their time and money promoting St. Maarten, when they visit the island they support countless local businesses, and in times of crises they are the first ones to return to the island.
It was very disappointing to read in the article that non-residents who own property on this island were referred to as “those who do not contribute anything.” You never miss the water until the well runs dry. Government needs to appreciate the value of this demographic and if we are going to start taxing them, please let’s make sure we don’t chase them away in the process!
A few important questions:
* What kind of tax rate is being proposed for non-residents who purchase property on our island?
* What percentage of properties on the island is owned by residents vs. non-residents?
* How many real estate transactions happen annually on the island from residents vs. non-residents? Does the minister expect this number to increase, decrease, or stay the same as a result of introducing a tax on non-residents?
* How much money is government projecting to receive annually by introducing real estate taxes on non-residents?
* Are the projected funds from real estate taxes earmarked for anything specific?
* How much money is currently collected from transfer tax annually, and why would you want to eliminate this tax, which is very easy and cost-effective for government to collect?
* Why was the government unable to make a deal with Airbnb?
* If a non-resident purchases property for personal use, will they be taxed at the same rate as a non-resident who is doing rentals? What about a non-resident who owns a property used for commercial purposes? Will residents be exempt from tax on vacation rental income?
* How will the real estate tax laws be enforced? What will happen to people who don’t declare or don’t pay? Will there be user-friendly technology implemented for easy payments of this real estate tax?
* With all due respect to IMF’s FAD, I’m sure they have some very smart and qualified people, but why have no local stakeholders from the real estate sector been contacted about this idea of taxing non-residents?
Thank you for taking the time to read my thoughts on this matter. I hope someone from the minister’s office can publicly answer these questions.
Arun Jagtiani
Founder/Owner/Broker
Island Real Estate Team
Dear Editor,
With great interest we’ve read your editorial “clear answer” on August 24, 2021, and we fully concur with the statement that St. Maarten/GEBE is long overdue in establishing any non-fossil fuel energy production, also called renewables. St. Maarten does not even show up in international renewable ranking lists, together with very few other countries. Besides huge lost opportunities, this is devastating for its image as a green island.
It must be said, however, that several initiatives have been taken over the past decade and VWMC, a Curaçao-based consultancy company, has been participating in and even leading many of them. As an example, a full feasibility study has been executed for the St Maarten international airport proving a viable [megawatt – Ed.] MW-sized renewable scenario from a technical, financial and operational point of view. Unfortunately, for reasons unknown, this has not led to further steps towards implementation. Studies, advices, proposals, et cetera, related to other specific MW-sized projects also to the entire energy sector are readily available for years.
The opportunities are clear, a lot of preparatory work is done and the first steps are really straightforward. It only requires political willingness to simply take the first step. Not by reinventing but to act upon what exists.
VWMC
Dear Editor,
Recently, there has been a lot of talk in the media about the sale of ENNIA assets such as Banco di Caribe and the property in Mullet Bay, St. Maarten. This to save the insurance company. Dr. Jose Jardim, as one of the directors of CBCS (Central Bank) stated this at a press conference. Mr. Jardim has expressed himself several times in the same way.
As a professional, I think I have to make some reservations about such statements. CBCS has stated since the emergency regulation on ENNIA was issued that this mainly concerns improving the financial (solvency) position of the insurance company for the benefit of the policyholders.
During the first press conference on July 5, 2018, and the subsequent press conference on September 26, 2018, it was even stated that the process of restoring solvency will not take years. Three years have already passed. …
In my humble opinion, if it concerns the continuity of the ENNIA companies, so actually the so-called saving of ENNIA, why is there even talk of selling ENNIA assets? Under these circumstances, by selling assets, ENNIA obtains less than its assets are actually worth. And what is your alternative use of the obtained resources? Provided you have the continuity of ENNIA in mind, you will have to have a better reinvestment with sufficient return to be able to meet your obligations in the long term. Or there is a liquidity issue and you need cash to meet short-term obligations and possibly continue with help. Then ENNIA is in deep trouble.
In the case of the sale of Banco di Caribe for a price mentioned in the various media of around 60 million, ENNIA has an issue. According to the recently published annual accounts 2020, approved by the CBCS, Banco di Caribe’s equity is 182.4 million. Banco di Caribe still generates a profit which can be considered a return for ENNIA. What reason can you have to sell at a discount of 120 million? Such a transaction is not in line with an intention to ensure the continuity of ENNIA for the benefit of the policyholders.
It only makes sense if you intend to settle the whole thing. Then you need cash to buy everything off at probably a discount. But then you must not pretend that your intention is to save ENNIA and ensure continuity. This is then misleading policyholders and the public. Under these circumstances, every guilder put into his pension by a policyholder will be worth maybe 30 cents immediately if I keep the proportions for Banco di Caribe. In any case, worth much less. If it takes a long time to clarify what the intention is and to act on this, ENNIA will have the same fate as Girobank but with a greater impact.
The same applies to the land in Mullet Bay, St. Maarten. A life insurer or a pension provider should also consider long-term investments. Because you also have long-term obligations (sometimes of 40 years or longer). Around the world, these insurers will also invest in land that will be developed over the years.
In Curaçao we can even compare with APNA/APC which had acquired the land on Jan Thiel and sold the land by parceling out little by little in phases. That is also how the investment in Mullet Bay should be seen. Instead of developing the territory only selling below the possible realizable value, you have lied to the policyholders again. The value of their pension will decrease accordingly.
How is it possible that the CBCS advocates the sale of assets, i.e., an erosion of the value of the group, and at the same time claims to represent the interests of policyholders.
In any case, CBCS has caused unrest among policyholders and the public in general. Under no circumstances will the sale of assets for less than their book value and without a more favorable alternative use be a responsible business. Only in the event of settlement does the sale make any sense, but it will seriously affect the assets of policyholders.
Reinald Curiel
Reinald Curiel is a former board member of ENNIA insurance company
Dear Editor,
I visited the Chamber of Commerce on Tuesday and was attended by a young lady who involuntarily obliged me to write to you.
I am not computer savvy. The only things that I can do on a computer without hesitation are to type a letter or look up the weather channel. Because of this I go personally to pay my bills.
I continue to hear complaints about the lack of “customer care” by the different offices on the island where bills have to be paid and service given. I personally have not really experienced negative treatment, which I believe is because I usually make the person attending to me comfortable from the onset. Notwithstanding, I was present on a few occasions where I thought things could have been handled differently by the attendant.
My concern though is that getting information via the telephone is different. It takes self-control and patience. Which to me is understandable, because parties cannot see each other's facial expressions, there is no personal contact, no perception of body language. As is a custom, words are often taken out of context and/or misinterpreted. I dare say that this happens too often because even if it happens one time, one time is too often.
Like I stated at the beginning of this letter, I found myself obliged to write to you because of the professional treatment I received from that young lady at the Chamber of Commerce. I congratulated her on that on leaving the office. I will not mention a name because I do not believe in singling out people publicly whether good or bad because there is always a reason for good or bad behavior. Oftentimes it is the influence, whether good or bad, of the parents and not to omit in too many cases the lack of both parents.
From the time I entered the door of the Chamber of Commerce until I left there were only positive vibes. I chose to remain standing at the counter at the entrance of the office while waiting for the person who was busy attending to a client. During this time, which was approximately 10 minutes, three different workers approached me ready to attend to me. I told them who I was waiting for. When it was my turn and I sat down and spoke to the young lady I earlier referred to the pleasant way in which I was welcomed, was just the beginning of the professional way in which my visit continued.
I went to that office for information and at the end of my visit I did not have to return, because I was guided step by step and in addition to getting the information I went for, I also completed my business. I went to that office with the presumption that this is going to be another “go come back”. I was wrong.
I am aware that not everyone will get through like I did, because that is the reality, but I tip my hat to whomever is leading that office.
In light of the above I will say this. Of late several other things are being imposed upon the people of this country, which brings the word “inconsiderate” to mind. I do not believe in leaving a text or an email and expect me to rely on my phone or computer to know everything. When I get home I look for my wife and my children, not a computer or phone. And whether they like to hear it or not or whether it is an excuse or not, everybody is putting the bad reception of the phone and the slow working computer on the Internet, which in turn again have to take them right back to the office to be attended to by those same persons who they complain about.
So because service is prime where there is tourism, what about doing something which could serve the people positively; for instance, in-depth courses in “customer care”, which would benefit both our tourism product as well as the taxpayer?
By the way, we are constantly complaining about the motorbike riders. It is time enough we start doing the same thing to the drivers of heavy equipment, trailer-trucks and dump trucks. They also drive very recklessly and irresponsibly over the roads. The speed limit is still 30 and 50 kilometers per hour. The streets of St. Maarten have not grown and the curves and corners are still the same. Respect your fellow driver.
Russell A. Simmons
