Category Archives: Columns


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.


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

Opinion Piece: Investing In St. Maarten

I would like to ask why you are here, but if you are on this webpage reading this opinion piece, you are interested in investing in St. Maarten.

As with any investment anywhere else in the world, there are a number of elements you have to look at when assessing a potential investment in St. Maarten and these are:

  1. Risk
  2. Return On Investment (ROI)
  3. Cash Flow
  4. Liquidity

In this article, let me talk about Risk.

If you are aware of an investment opportunity or deal on St. Maarten, I would definitely recommend you first come to St. Maarten to see the project firsthand. You can reserve a flight to St. Maarten on AirStMaartenClick here to book online.

When you are on St. Maarten, the key is to identify the areas that could cause problems and be of potential risk to your investment. In the majority of investment opportunities the potential for problems are:

A. The credibility of the sponsor of the investment deal. I would recommend hiring a local firm to do a background check on the sponsor and the investment opportunity.

B. Is the investment opportunity an existing project or is the sponsor looking to start from scratch? Starting from scratch means that you can help structure the deal to fit your investment profile. Else the structure of an existing investment project has to fit your profile and your needs. Is it a business, a real estate deal or a property development project? And what kind of investment vehicle or entity is being used to structure the investment?

If you are dealing with an existing project that is already productive and generating revenues, then there is historical data you can look at. Again, I would recommend hiring a local firm to do the necessary due diligence for you.

C. You have to be able to determine if the assumptions regarding the investment projections presented are reasonable and viable. Personally, I like to look at the cash flow projections.

D. Next, depending on the type of investment opportunity you are looking at, you have to access the operational or maintenance side of the project. Is there management in place? If it is an existing project, you will have to review the investment opportunity in terms of feasibility, production, output and operational costs. You will have to identify any opportunities to enhance production or to identify risks associated with the management or operating company. One area I like to look at, is to know if they are properly capitalized.

One recent example was brought to my attention by a client who contacted me with the urgent need to find a new place to rent. He was subleasing the previous place of business and the lessee he was subleasing from was collecting the rent monies from him but not paying the landlord the rent money owed. He was evicted. So you got to know if they have enough cash in the bank to pay their bills. Or in this case, pay the landlord.

E. Finally, if you are investing in a project under development by a developer, you have to assess whether they have the ability to live up to their obligations and deliver on their promises. This can be resolved contractually by identifying the risk potentials and making agreements to opt-out clauses. There are a number of unfinished development projects on St. Maarten and that is not good for the island’s investment reputation. But in general the investment climate on St. Maarten is just as great as the weather with sea, sun and sand to enjoy all year round.

How can Anykey Services N.V. help you?

If you are considering an investment opportunity or deal, we do the following for you:

  1. Assess the project
  2. Do due diligence
  3. Help structure the deal(*)
  4. Assist with the closing

This is a very brief outline, but it gives you a sense of the way we try to help you mitigate the risks when considering investing or doing business in St. Maarten. That being said, investment opportunities, deals or businesses you may get involved in St. Maarten may provide above average returns and that means that the return is higher than, say Government bonds, therefore, inherently the risk is higher.

Rule of thumb, don’t invest money you can’t afford to loose.

Terrance Rey
Managing Director
Anykey Services N.V.
Marketing * Management * Consultancy

This article is based on information taken from the upcoming book “Living, Working & Doing Business In St. Maarten” by Terrance Rey.

(*) There are a number of tax-exempt business structures and private foundations on St. Maarten you can use as an investment vehicle.