Category Archives: Columns

Why Should Any Airline Fly To St. Maarten?

There has been a lot of debate recently about airlines and the airline industry. Especially the cost of airline tickets for travelers. For us here locally, St. Maarten as a destination has been the center of discussion on what should be done to attract more airlines to our island. But we have to understand a vitally important factor in the airline business. The only real reason any airline would fly to St. Maarten is to make money. Airlines are not in the business of promoting any tourist destination. Airlines exist to make money for their shareholders in the form of profits, plain and simple.

Many airlines have increased or are in the process of increasing flight capacity at the expense of leg room and continue to increase fares despite lower fuel costs because they are in the process of recouping the losses they sustained from the reduction in air travel brought about by the ‘Great Travel Recession‘ of the past decade.

The management of most airlines have become forward-looking and see that the present recovery of economies in the United States and Europe is the perfect opportunity to make as much extra cash as possible. The money people save at the gas station as a result of declining oil prices can be used for air travel.

One of the problems with development of more air travel to St. Maarten is the seasonal flights that only occur during the winter months from North America and Europe. St. Maarten needs to promote itself as a year-round tourist destination that will encourage the seasonal flight operators to make a change to all year-round operations.

Getting the airlines to cooperate with this objective will take incentives. The negotiations may be a bit tricky in maintaining compliance with US and European restrictions on government subsidies of airline companies and St. Maarten’s government’s budgettary restrictions are certainly no help either. But the government of St. Maarten could and should make new deals with major carriers from the US and Europe, especially Scandanavian-based airline companies, such as Finnair, looking to expand their operations internationally.

This means paying the airlines to come to St. Maarten. This could be a financial stretch for a government that is seeing deceasing tax income and less revenues for businesses with the state of the present economy. But this strategy has worked well for Curacao and many more thousands of airports around the world. So why not St. Maarten?

St. Maarten needs to look at new markets that have established airlines such as the Arab Gulf states. China and South Korea have developed a growing airline industry. Certainly, not every person in China can come to St. Maarten, but a growing number of wealthy Chinese would see St. Maarten for its attractiveness that even the vastness of China cannot offer in terms of climate and its natural environment.

Finally, advertising will make people want to come to St. Maarten and the airlines will cater to their client’s desires with more flights to St. Maarten. Again, this could be a bit of a financial burden on businesses that are not making the revenues they once enjoyed but every other Caribbean tourist destination will be doing the same thing. The competition for tourist dollars in the Caribbean and elsewhere will certainly increase tenfold the coming years and St. Maarten needs to be at the forefront of innovative marketing developments to attract new visitors to the island.

The good news is that the ‘great travel recession‘ is essentially over in the USA, Canada and Europe. Higher employment rates and more disposable income in the USA alone will mean more tourists for St. Maarten and our island has all the accommodations, natural beauty, activities and night life that make the island attractive to tourists. The basic idea is that the island will have to spend lots more money to increase inbound air travel and get back to the levels of tourism revenues that the island previously enjoyed in the booming era up to ten years ago.

Finally, it is important that tourism authorities on St. Maarten select the right media to promote the island and attract new visitors and make it worthwhile for airlines to fly to St. Maarten. Here is an example of a good media platform to use: www.mapsxm.com. Because it is really necessary that we put St. Maarten back on the map as the preferred destination for the major airline carriers.

Disappointing registration for St. Maarten voting in EU elections

Disappointing registration for St. Maarten voting in EU elections
Illustration by Peter Schrank

Illustration by Peter Schrank first published in The Economist

Of the more than 19,000 Dutch nationals living in St. Maarten only 178 have the opportunity to play their part in guiding the future of the European Union (EU) by voting in the 2014 European Parliamentary elections. Dutch nationals, living in St. Maarten, had to register before April 10, 2014, to be able to cast a vote.

Policy Advisor attached to the Office of the Dutch Representation in St. Maarten, Bianca van der Lee, said although disappointed by the level of interest in this elections, the process is running smoothly for the persons who are registered. She said there is a constant flow of people dropping in to cast their votes. Registered persons have until May 22, 3:00pm to vote at the office of the Dutch Representation on Front Street # 26.

St. Maarten’s President of Parliament Gracita Arrindell was among the first to cast her vote on Tuesday, “I call on all citizens, who registered up until April 10, to exercise their democratic right to vote between now and May 22. I made use of this right this afternoon and voted for the candidate of my choice. Not too long ago, not everyone could vote, including women. To date there are millions of people around the world who still cannot or are not allowed to freely vote for the party or candidate of their choice.”

Initiatives such as an information session at the University of St. Martin and an appeal by several political leaders were carried out in St. Maarten to improve the level of interest in the 2014 EU elections. But efforts proved futile. There was a very poor turnout at the information session and ultimately only 178 persons registered to vote.

Van der Lee said it is not the responsibility of her office to drum up support for the elections, however because there is an agreement to use their office facilities, there was an extra effort to get a strong support from Dutch nationals living in St. Maarten.

Brussels and the candidates are responsible for motivating voters, however EU candidates provided no broad-base public information about their platform to the St. Maarten public. The Netherlands has 26 seats in the EU parliament. As of 2009, Dutch nationals living in the former Netherlands Antilles and Aruba are able to vote in these elections. The fact that St. Maarten seems so far from the EU, has influenced a negative turn-out in this elections as some potential voters feel there is not much influence for policy that affect the daily lives of the people of St. Maarten.

The European elections give voters the chance to influence the future political course of the EU when they elect the 751 Members of the European Parliament (MEPs) to represent their interests for the next five years.

There have been 766 Members of the European Parliament since Croatia joined the EU in July 2013 but this number is being scaled down at the 2014 elections to 751 and will stay at that level in future. These MEPs will represent over 500 million citizens in 28 member states. The seats are allocated among the various states, by the EU treaties, on the basis of ‘digressive proportionality’, meaning countries with larger populations have more seats than smaller ones but the latter have more seats than strict proportionality would imply.

The new political majority that emerges from this elections will shape European legislation over the next five years especially in areas from the single market to civil liberties. The Parliament – the only directly elected EU institution – is now a linchpin of the European decision-making system and has an equal say with national governments on nearly all EU laws.

Of interest to St. Maarten is the European Union’s long-term spending budget which has to be approved by national governments and MEPs, then each year the two sides decide together how the annual budget will be spent. Policies such as agriculture, regional development, energy, transport, the environment, development aid and scientific research all receive EU funding. Parliament is also responsible for checking later if the taxpayer’s money has been used as intended and for signing off on the accounts if it is satisfied.

Is Peace In Paradise At Risk In The Caribbean?

The Caribbean is in every sense of the word the neighbor of the United States. All islands in the Caribbean and specifically those heavily dependent on tourism (like St. Maarten) know the saying: “If the US sneezes, the Caribbean gets a cold.” This is often used in relation to the economy. In today’s reality, the governments and peoples of the Caribbean have to be aware and prepared to deal with possible threats to US citizens in this part of the world.

Though the Caribbean is and, hopefully, continue to be peaceful, level-headed and not prone to any form of fundamentalist ideas, it is necessary to have contingency plans to identify, combat and quell any threat. A threat to US citizens in any part of the Caribbean is a threat to all the people of the Caribbean.

Any threat or suggestion of a threat means the life blood of our chain of islands in this azure sea is at risk. It means the livelihood of us as a people is threatened. It means our ability to take care of our children, ability to buy medicine, to look after our elderly, simply to grow from peaceful, developing countries to peaceful developed countries are challenged by forces, who do not belong or realize that the Caribbean is not a place to fight battles or to alienate.

The Caribbean has longer been a place that brought people together geographically and after many struggles have keep us together in one spirit with different backgrounds, cultures and beliefs. Our unique differences bind us. Our determination to build countries surpasses any divider.

It is unnerving to read the warning issued “out of an abundance of caution” on Sunday, February 9, 2014, by the US Embassy in Guyana that called on all US citizens booked to travel on Caribbean Airlines CAL flight to make alternative travel arrangements. No details – quite possibly for security purposes – were given about the “unconfirmed threats” which led the embassy to issue such a specific travel warning.

Despite for which country the threat is issued for, the one motivating fact in this un-Caribbean situation is Caribbean Airlines is as vital to these islands in the sun as milk is to a new-born. It does not matter to which country this regional airline belongs. What matters is those white iron birds so poignantly embolden with a hummingbird is a Caribbean symbol, through and through.

Any warning, therefore, is a resounding warning to the Caribbean as a region. It is a warning for every country and its people to become aware that we must be ready for the new realities of the world we live in. Being ready does not mean paranoid; it means we as a region need to become even more vigilant to protect our life source – tourism.

The Caribbean must remain a place where our neighbors to the north can visit us freely and not have to watch over their shoulders. But for that secure feeling to remain, all countries need to be prepared to deal with the fallout of travel warnings whether it is related to a mosquito disease threat or threats of a man-made and sinister kind.

Tourism officials, locally and regionally, must come up with contingency plans to deal with any travel warning. They must be ready to counter any misgivings, ready to accommodate displaced passengers – ready and always prepared to take care of their countries and by extension the wider Caribbean. The waters of the Caribbean Sea separates one island from the other. The innovations in air travel keep us forever linked together through airlines such as Caribbean Airlines, LIAT, Inselair, Winair and AirStMaarten.

No one in the Caribbean, not now in the reality of today’s world, can turn away and say: “No, it can’t happen to us.” Yes, when the US sneezes, the Caribbean catches a cold. Same holds true that when a symbol, a vital link for our islands, is cast in a shadow, the Caribbean can’t see its famous sun. Peace in paradise would definitely be at risked if that was to be the case in the Caribbean.

St. Maarten should be on the road to Economic Transformation

At this point in our development as country St. Maarten, we need to look at areas of possible economic transformation. Such a vision would incorporate and be part and parcel of continuing to improve the quality of life of people and that of the country.

The areas identified for sustainable development would not increase our foot print as a society on our fragile environment, but would only enhance our country’s wealth which in turn can be re-invested for future generations.

As part of the vision, why can’t we develop the “St. Maarten Shipping Registry” and achieve recognition from the global market as a top jurisdiction for vessel registration and a popular flag of choice. Yes we can, we have achieved as a destination where our Port of St. Maarten is one of the top cruise ports in the Caribbean. Yes, we can, and yes we have achieved in cruise tourism, so we can also become one of the top Shipping Registry destinations of the world. And besides a shipping registry, let us not stop there but also develop our own “St. Maarten Aircraft Registry.”

The Cayman Islands (a British dependency) has developed this sector and they see the enormous opportunity for growth and development of the shipping industry, which has been considered so significant as a third pillar of the Cayman economy in the long-run. The registry has 1,900 vessels carrying the Cayman Islands flag and over 800 are mega/super-yachts which we see every season docked in Great Bay, Simpson Bay or in the Simpson Bay Lagoon. Besides the Cayman’s being a top jurisdiction for vessel registration, the additional benefits in this area still to be explored and developed by the Cayman Islands are environmental studies, maritime law, naval architecture and servicing commercial and leisure traffic.

As part of the vision, why not develop the “St. Maarten Stock Exchange” (SSX). The SSX can be a supporting element of a shipping registry, and is considered as a cost-effective alternative to listing on larger exchanges in North America or Europe, and would provide benefits to ship owners and managers.

Why not envision the development of the “St. Maarten International Business & Financial Center” that encompasses asset protection, wealthy management, insurance and banking services. This area has successfully been developed in other parts of the Caribbean and has contributed to the wealth of those countries.

The Cayman Islands for example in this sector employs 12,600 people or 36 per cent of total employment, out of a total population of 57,000. In December 2010, Barbados had 45 offshore banks, 242 captive insurance companies, 3.065 international business companies and 408 international societies with restricted liability.

In Bermuda (British dependency), the international business & financial sector contributes 24.2 per cent of total Gross Domestic Product (GDP), so one quarter of their economy is based on this sector, and provides 3,867 direct jobs. The British Virgin Islands (British dependency) gets 45 per cent of its GDP from this sector and has 750,000 offshore companies registered.

These sectors are all high paying jobs. All these new areas of opportunities for country Sint Maarten will have a spill-over affect into other areas of our national economy if we as a country were to facilitate economic transformation. It will besides creating opportunities for our educated people and those studying abroad first and foremost, it will also result in a better quality of life for all.

The trickle down affect will be felt throughout society; better services (education, health, senior citizens, youth care and development); better infrastructure; more public housing; and helping to create and build wealth for every member of society.

Again, do not let it become an excuse that because other islands already have these sectors that I mentioned, that we as a people cannot venture out and facilitate their development, because 25+ other islands in the region today are in the cruise and stay-over tourism business as well, and that never stopped us from developing both. We have succeeded in doing it the St. Maarten way; by being visionary, innovative, and pro-active; the hospitality and friendliness of our people both North and South; and the natural beauty of our country, are some of the feats and assets that have kept us ahead and up-front.

Key to economic transformation and development is a stable political, social and economic environment. The country has experienced some turbulent times within its first three years and two-months of country status.

The dynamics of country St. Maarten should not dare us to dream. We have done it before, but we need to continue. The region and the world are not static. What is an advantage today is a disadvantage tomorrow.

2014 and beyond will require 21st century thinking.

By Roddy Heyliger

Another area of economic transformation: St. Maarten E-Business Enterprise Center (SEBEC). Read more>>>

Is St. Maarten innovative enough?

Is St. Maarten innovative enough?

As St. Maarten tiptoes on some levels to prove its worth as a country, “innovation” still proves to be the illusive boon. This situation is not unique to St. Maarten. A recent World Bank report says Latin American and Caribbean entrepreneurs “lack innovation curbs” in creating quality jobs.

Are we so contented with the way things are, that we fail to risk the unknown, for fear of not making the grade? Too often, we see companies and people shuttered in their old ways of doing things.

The World Bank says “a deep cultural shame of failure” is hindering innovation in the region by dissuading entrepreneurs from taking risks. When will St. Maarten see more, new and innovative ideas?

We have heard talk over the years about plunging into offshore banking, expanding St. Maarten influence in the field of regional telecommunications, becoming the region’s shipping hub, restructuring or modernizing the way we embrace the adult entertainment industry and commercial sex workers to name a few. But, we are yet to see tangible steps forward.

What is innovation? The Conference Board of Canada defines innovation as “the process through which economic and social value is extracted from knowledge through the generation, development, and implementation of ideas to produce new or improved strategies, capabilities, products, services, or processes.”

Simply put, innovation can be described as the introduction of something new. The something new can be a new idea, a new device, or a new method of doing something. Something new does not necessarily have to be something entirely new; it can be an improvement of something that already exists.

Are we really too comfortable to risk it all on dreams of being the frontrunners. Why do we sit around and wait for the others to “come in” and do it.

To be fair, we are a young nation, though in the making for some years. Our visionaries need to be nourished with the food of all the possibilities. Visionaries also need to be empowered to return to the island.

The World Bank say entrepreneurs are “key actors” in turning low productivity around to create quality jobs and lasting economic benefit for the region.

Consequently, the report recommends establishing an economic environment, which enables entrepreneurs to innovate and compete, thereby reducing the grip of monopolies, increasing productivity and diversifying the business environment.

In launching the new Washington-based financial institution’s flagship report, chief economist for Latin America and the Caribbean, Augusto de la Torre, said “a massive” 60 per cent regional employees work for businesses with five or fewer employees. “This is evident as much in individual reticence at a business level as in the low levels of investment in research and development, especially from the private sector,” it said

President of the Central Bank of Curaçao and St. Maarten, Dr Emsley Tromp, at the National Economic Forum, organized by Fundashon Pro Inovashon Nashonal, Curaçao, in October 2013, said it is very important to make sure the necessary conditions exist or can be created to increase innovations. He was speaking on the backdrop of a recent visit by Netherlands Prime Minister Mark Rutte.

He said, “In the central bank, innovation plays a role from things as basic as the central bank’s office operations to new ways of fulfilling our main tasks laid down in the Central Bank Charter. In our general office operations, we are constantly seeking ways to reduce costs. Some recent examples are internet phone services, the replacement of fluorescent light bulbs by LED light bulbs, and the placement of solar panels.”

Tromp went as far as calling for “innovation” in the way Kingdom partners co-exist. “Three years of new constitutional relations have been overshadowed by frequent tensions between the new Kingdom partners and the Netherlands. These tensions included the intended limitations on settlement in the Netherlands for citizens from the Caribbean Kingdom partners and instructions by the Kingdom Council of Ministers to balance the government budget and improve public governance.”

Another suggestion from The World Bank is modernizing ports, transport, and customs. This “can add a competitive edge to products from the region”. Currently, it said poor public services, communication links and transport infrastructure are “adding to the obstacles to boosting production capacity in the region.

St. Maarten is miles ahead in the areas of cruise tourism and (trans-)shipping, as a regional airport hub and is looked to by others in the region as an example of (positive and negative) infrastructural development. But more innovations are needed. St. Maarten has the languages, the geographical position and the drive of its people to become more of a forerunner for the next big thing in the Caribbean, be it clean energy production, e-zone hub or just an outstanding holiday spot that exceeds expectations.

St. Maarten Should Romance Regional Caribbean Shoppers

St. Maarten Should Romance Regional Caribbean Shoppers

by Rajesh Chintaman

St. Maarten should be doing more to attract regional Caribbean shoppers.

Large groups of people crowding the corridors of St. Maarten supermarkets and meticulously packing boxes and barrels on the outside are becoming a normal and welcomed spectacle. They chat in melodious Caribbean dialects as they bustle obviously to beat a travel clock. These big spenders and year-round visitors are a major group of shoppers St. Maarten too often overlook.

These shoppers are worth romancing. They are from “sister islands” as far as Dominica, Montserrat and Antigua & Barbuda, Grenada, St. Lucia and St. Kitts & Nevis. Just a glimpse at their boxes and barrels tell the stories of their final destination scrawled in permanent marker: St. John’s Parish, the Gut, Roseau, …

There is no doubt this homogenous group of visitors are here to enjoy St. Maarten’s duty free shopping, an escape from their islands’ high Value Added Tax (VAT) on many items. They come to shop, but they also squeeze in a mini vacation by staying in small hotels, dine in our restaurants, and shop on Back Street and Front Street and, in some cases, visits with family and friends. They are a steady flow of economy boosting visitors who purchase everything from food items, electronics, household items, clothing and even brand name luxury goods such as watches and jewellery.

Observing all of this, the following question comes to mind…

Is St. Maarten doing enough to fuel this money making sector?

St. Maarten Small Properties Association (SSPA) President, Nzinga Lake says, “St. Maarten is not doing enough for our Caribbean brothers and sisters. They spend, from my estimation, more than most traditional stay-over visitors and, definitely more, than cruise passengers. We see them here three to four times a year.”

These regional shoppers stay about three to four days and can easily spend at least US $300 to US $400 a day just shopping and about US $350 alone on hotel stay. They shell out still more cash on car rentals, meals and incidentals.

Lake says it is time St. Maarten bands together. Stakeholders should make it a priority to better facilitate the Caribbean visitor. “We need to make our Caribbean brothers and sisters feel more welcomed in our Friendly Island.”

Lake says St. Maarten is not alone in vying for the attention of these regional shoppers. Several other Caribbean islands (with lower VAT than small Caribbean islands) have woken up to the spending trend and are trying to lure these big, frequent shoppers from around the Caribbean.

Several major United States stores have already spotted the spending trends of these often overlooked Caribbean relatives. Big chain stores are now targeting these shoppers with online shopping, shipping and even delivery schedules.

Focussing on regional shoppers is not sexy enough for our tourism decision-makers.

Chief Executive Officer (CEO) of AirStMaarten, Terrance Rey says, “Definitely, more can be done. I posted the idea a couple of years ago that we should offer free flights to St. Maarten. You know how much money this island can make? Caribbean visitors come here and load up boxes and barrels and send them home by boat. However, this is not sexy enough for the attention of our tourism decision-makers and overlooked by many in the business community.”

Airline prices are “a huge hurdle” to many shoppers. Small hotel representative, Nzinga Lake says airline tickets should somehow be subsidized by at least US $150.

We would then see much more Caribbean big spenders, says Nzinga Lake.

These Caribbean visitors are some of our biggest shoppers and spenders. Boutique hotels such as Paradise Inn, Llama Guesthouse, Bute Hotel and Seaview Hotel and others have capitalized on this development.

Paradise Inn, for example, has the advantage of close proximity to several major supermarkets and superstores and is usually solidly booked out by regional shoppers and tourists, who spend a day, a weekend or often at the most an entire week.

Llama Guesthouse is a hub for visitors from St. Kitts and Nevis who arrive by ferry to St. Maarten regularly. One downside for these visitors is that they lose valuable shopping time waiting on Immigration Officials at the dock. The boat often arrives around 5:00am and passengers have to wait some two to three hours for go through the official screening which in itself takes time.

For many of these regional visitors, it is a race against the clock to get everything on their shopping list. Some smart local businesses have learnt this and try to facilitate their needs with delivery to the ferry service at the dock when possible.

We need to make our Caribbean brothers and sisters feel more welcomed in our Friendly Island. – Nzinga Lake

St. Maarten needs to fully embrace its position as a hub for the North-Eastern Caribbean. With this embrace, there needs to be the respect for our Caribbean visitors, who share so many commonalities with the people of St. Maarten.

As they shop, there is some grumble of dissatisfaction about the way they are sometimes treated. Though technically tourists, they don’t fit the perception of the “typical tourist” to some in St. Maarten’s tourism and hospitality sector and can, at times, be treated as a bother than the big spenders that they are.

They are still faced with that unfriendly official, the unscrupulous taxi or gypsy driver who tries to overcharge them and, of course, the “fancy” Front Street store that snubbed them often just based on looks alone.

It is time to show more love to this very essential economy moving group of shoppers, so St. Maarten can add another feather in its cap, the Friendly Island that welcomes regional Caribbean shoppers with open arms and a welcoming heart.

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Rajesh Chintaman is an editor at St. Maarten’s main daily newspaper. He is also a freelance writer and an avid volunteer for HIV/AIDS awareness and eradication of poverty. Rajesh Chintaman is a regular contributor to the StMaarten-Info.com Blog, StMaartenNews.com and the new newspaper subscription site, StMaartenNews.net.

Who is prepared to clock in overtime to improve the economy of St. Maarten?

WHO IS PREPARED TO CLOCK IN OVERTIME TO IMPROVE THE ECONOMY OF ST. MAARTEN?

Terrance Rey

By Terrance Rey

Jacob Gelt Dekker wrote an interesting column about what Curacao needed to improve its economy immediately. Contrary to Curacao, eventhough both islands share a joint central bank, St. Maarten does not have much export products that can generate foreign currency revenues – dollars, euro’s, francs, yens, yuans, etc. – because all we have basically is sea, sun and sand and that has generated enough tourism dollars over the years to sustain our island’s one pillar economy.

But what about the future? How can we enhance our tourism economy to make it sustainable and give it longevity? The Today newspaper has been featuring some small business entrepreneurs on St. Maarten that make their own little contributions in stimulating our island’s economy, like the gentleman that makes his own cigars and sell them at the cruise terminal. We need more of that, no matter how small.

Even the internet offers us a lot of great opportunities to generate a positive cash influx of foreign currency into the island’s economy. Especially for the young people, the internet and ecommerce can offer them great opportunities, not only for stimulating the island’s economy and alleviating its job market, but also offer young people themselves great opportunities to become rich as well. I read about a young kid in England, 14 years old, who developed an app that made him the youngest self-made millionaire ever.

Why can’t a young kid right here in St. Maarten do that as well? What’s to hold them back from doing the same? All that is required is ingenuity, creativity and lots of perspiration, meaning lots of hard work. I say hard work because I don’t want them to think that it will be easy. Other people make it look easy, but it isn’t really. You’ve got to clock in the hours. Who is prepared to clock in the hours?

Who is prepared to clock in overtime to stimulate St. Maarten’s economy with new products and services that can be ‘exported’ and used to generate a nett inflow of foreign currency into the island’s economy? Remember, this is the kind of overtime where you don’t get 50% or 100% overtime pay, but you get 100000% or more in income if you do a great job. I am quite sure there is an app that can do that. So I ask again: WHO IS PREPARED TO CLOCK IN OVERTIME TO IMPROVE ST. MAARTEN’S ECONOMY?

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Terrance Rey is owner and operator of AirStMaarten, Caribbean’s first virtual airline based in St. Maarten; organizing and coordinating commercial flights, shared charters and private charters to and from St. Maarten, St. Barths, Anguilla, Antigua, San Juan, Puerto Rico, Aruba, Bonaire and Curacao and throughout the rest of the Caribbean.

IS IT DOLLARS OR NOTHING FOR ST. MAARTEN?

Is it Dollars or Nothing for St. Maarten?

As it seems, many are sitting on the fence as it relates to dollarizing the St. Maarten economy. The Social Economic Council (SER) has taken a strong position calling for “immediate steps” to be taken for an orderly transition to the circulation of the United States Dollar (USD) as the official currency in St. Maarten. The Dutch Caribbean Country St. Maarten currently uses the Netherlands Antilles Guilder (ANG) as its official currency.

The reluctance in some sectors in the community to take an active stance baffles outsiders, who ask why the business community isn’t demanding this change. Even after SER released their follow-up advice on dollarization there is still deafening silence from in the country.

That advice from SER comes as reports surface of the mounting current account deficit of the joint monetary union of Curaçao and St. Maarten reported by the Central Bank of Curaçao and St. Maarten (CBCS). This deficit is primarily caused by Curaçao.

The SER advice, published on November 22nd, 2013, in the National Gazette, also urges government to take measures to avoid any negative price effects on consumer goods from the elimination of the Netherlands Antilles guilder.

From the point of view of risk aversion, SER emphasized that a well-prepared and organized move to dollarization “will probably take at least a full year.”

Government also has to “accept compliance” with fiscal rules and benchmarks. Those include rules and benchmarks implemented by the Committee for Financial Supervision CFT and measures to compensate for the loss of seigniorage and licence fee revenues. Government must find ways for the maintenance of sufficient reserves in the event of external shocks as this is among the central concerns in the new dollarized situation.

In the CBCS report, “Is Dollarization the Right Approach?” the banks makes the case for dollarization. The report concludes, “Dollarization is a viable alternative monetary system for Curaçao and St. Maarten, as it eliminates the balance of payments risk. Hence in our case, dollarization is not a prescription for inflation but a measure to protectus from perils and promote sound and sustainable economic growth.”

Conventional wisdom is that countries dollarize to restore monetary stability and to impose fiscal discipline. However, the lessons learnt from the 2008 great recession have served to drive home the fact that St. Maarten and Curaçao are susceptible to other kinds of risks including balance of payments risk and supervisory risks, according to Central Bank President, Emsley Tromp.

Now the onus is on St. Maarten authorities to get the ball rolling, but some support from the wider community will definitely help fuel the dollarization movement.

Is St. Maarten’s engine set for overdrive?

KLM Jumbo Jet Landing over Maho BeachIs St. Maarten’s Engine Set For Overdrive?

Talking to businesspersons in St. Maarten you initially get the complaint mode that most of everything is bad. But delve a little deeper and you will uncover a complex explanation that leaves any newcomers wondering what makes St. Maarten the place “to be”.

The majority of the country’s well oiled businesses are making money and this can be attributed to the fact that there is a sense of global recovery. This year’s “slow season” is being described as better than last year’s…a good sign for the layman trying to gauge if St. Maarten is in recovery mode.

This “good sign” brings high hopes for the people of St. Maarten even as speculations swirl and a congregation of businesspersons debate the impact the American government shutdown and the debacle over the raising of the US debt ceiling.

As the Friendly Island’s economic engine picks up pace and speeds into our “high season” optimism is high; mainly due to the fact that most of our visitors have already booked their vacations.

Government has finally passed a workable budget adding another layer of good spenders to strengthen economic growth. This development is making savvy political observers breathe a lot easier with the knowledge that by averting possible austerity measures, which was more than likely if the Dutch were forced to balance St. Maarten’s budget, the country is continuing to climb the “growth hill”. And of course now this means that money should be available.

So as we meander into the coming New Year our next big challenge is passing that long overdue 2014 budget.

Fields of Dreams by Jacob Gelt Dekker

Jacob Gelt Dekker“Fields of Dreams”

by Jacob Gelt Dekker

Kevin Costner in “Fields of Dreams” as an Iowa corn farmer, hearing voices, interpreted them as a command and built a baseball diamond in his fields and the Chicago Black Sox came. Market economy theories try to explain the workings of perfect and free markets. The ultimate gospel of Supply Siders being “If you build it, they will come”, where as Demand Siders firmly believe that viable markets only react to demand of the consumer, although, nowadays, even Demand Siders admit that demand can be created by marketing.

Reality is probably somewhere in the middle since market mechanisms are no longer free and perfect, but heavily regulated and influenced, by governments.

I was taken by surprise, hearing nonchalant remarks at the failure of DAE; remarks of “Airlift is only created by demand. There was not enough demand.”

In tourism, Supply siders may find their ultimate dream reality in the creation of the Yucatan, a god forgotten piece of abandoned, malaria invested, Mayan jungle in Mexico, as a world attraction, tourist resort. Investors built it, and tourists came, day-after-day, month-after-month and year-after-year. Since Maya cultures abandoned the area under mysterious circumstances, no demand existed in the world to ever return there. If-you-build-it, they-come became reality in the Yucatan

Demand siders will eagerly quote you China’s new cities, built as replicas of Paris, Venice or Rome, now abandoned and boarded up, since, no matter what developers tried, no demand could be created.

Curacao, as a tourist destination, is not a Holy-Mary-apparition destination, like Lourdes. It also does not have one unique selling proposition— one USP — to pull in streams of tourists, but a number of fairly attractive attributes that could work together as a nice package product for the eager adventurous tourist. If all ingredients of hotels, community, culture, nature, health, security, hospitality, friendliness and service work together, Curacao could have a very good product. It is the task and duty of the Curacao Tourist Development Board to advertise this package product in international markets and thus create demand. That demand than requires airlift. No matter how many nice hotels and golf courses Curacao builds, overnight tourists do not arrive by cruise liner or ferry board, but by airplane. The only organization able to facilitate the needed airlift, is the government.

Complex international air traffic conventions, rules and regulations, as well as an extensive set of local laws—written and unwritten— authorize government only to set up and enable airlift. In the past, many reputable airline companies, like KLM, Delta, American Airlines, applied for extensive permits, but were only granted limited access by governments, no matter what the markets demanded. To suggest that airlift is only a function of market demand is a fallacy, it is a question of politics, more than anything else.

Under which commercial circumstances an airline must function is also in the hands of government, since landing fees, taxes, employers benefits, handling costs etc. etc. are all under control of the State and not the entrepreneur. In the case of DAE, an estimated 50% of its gross revenue flowed into government coffers directly, and indirectly through the expenditure of its passengers, considerably more. DAE was the chicken that produced golden eggs for the island.

It was most surprising and baffling to witness the local government’s refusal to become the financier of last resort for DAE, and for an amount that was only a small fraction of what government received annually. The Curacao government decided that it preferred to butcher the golden egg producing chicken. The damage for government and community will be far greater than the small loan that was requested.

The question for community and government is where to draw the line as financier of last resort, and that can only be answered by political preference and ideology. With all business on the island working for the community and government for at least 50%, government can no longer, just stand by, and not assume responsibility. The time that governments were leeches only, is long over. A more creative funding and financing strategy is needed. As an autonomous nation, we should take responsibility.

Source: https://www.facebook.com/jacobgelt/posts/10151667382015073

Jacob Gelt Dekker, is the founder and owner of Hotel Kura Hullanda and the Kura Lodge & Beach Club resort on Curacao.