Shaina M. Smith
Photo Credit: File
You know it amazes me how we as Virgin Islanders and residents get in a "tize" (frenzy) when development a.k.a projects are discussed. Any reasonable person would say that we ought to look into opportunities when they are presented and I agree, however the opportunities need be looked at from a historical perspective and put into a national context.
Yes, we need to improve our physical port infrastructure, sea ports and airports, and bring them up to a standard that reflects the quality of service we desire to deliver.
We have known this for years but never took serious action. Where I and others become concerned is when, projects are presented to the public as a `sales pitch´ and not with objective analysis where we receive sustentative information to be able to make an informed decision. Not a fast pitch for a quick strikeout.
Objective feedback, I think is a reasonable response to an initiative that will commit this country for almost 50 years - which means it is multi generational so I need to be looking out for my grandchildren´s inheritance. The Cabinet is our board of directors, so to speak, of Company Virgin Islands and I, as a shareholder, would like to feel comfortable that their interests are protected and the best possible decisions are being made.
So since most people don´t walk into a bank for a loan and take the first thing that is put in front of them without asking questions about rate, term and penalties or to a dealership and buy the first thing the salesman says you will look nice in without asking a question about price and features, let´s go looking for the devil in the detail of unspoken agreements that can have a high price tag if we are not careful.
After some thought, here are what I feel are reasonable questions that came to mind post public meeting that if transparency is the rule of the day, can be easily answered. And please understand me, I´m not looking for right or wrong answers, just information to come to a sensible conclusion which everyone should do for themselves at the end of the day.
1.Where do the airport and cruise ship dock developments fit into our national development plan, if we have one? Having worked in the public service for a minute I can say without fear of contradiction that we can draft plans well but executing them is another story. Lack of plans has lead to ad hoc development over the last 30 years and projects to fix immediate problems are not development.
Why? Because as soon as the next problem surfaces, we rush to deal with that and forget about the issue at hand, until it catches afire again. We are playing catch up when we could have been leaders of the pack with annual Government revenue over the last 5 years alone exceeding a BILLION dollars! No one builds a house without a plan and a country is no exception to the rule. Too often we put the cart in front of the horse and wonder why progress isn´t being made. With close to $900 million dollars being spent in this small place a year as GDP, we need to ask ourselves why we aren´t farther along and fix the problem. Leadership that builds its country through the people is where that starts but that´s another conversation for another day.
2.Where do the airport and cruise ship dock developments fit into our tourism strategy, which would include a strategy for cruise tourism? I believe I´ve heard one was being developed coming out of the tourism summit held last year and these projects are means to an end. Yes the developers have industry contacts we may not have, but we can´t rely solely on a developer to market the Virgin Islands for us and hope people come (cruise or overnight visitors) because if and when the tide goes out and it´s not profitable to be here, what happens to our tourism sector?
SIDEBAR: From the days of the Foot report, foreign investment in tourism was seen as the panacea to make us economically viable so we could be taken off UK grant aid. According to the report done over 50 years ago the idea was that foreign investment would jump start the local business sector and locals would eventually dominate the economy. Ask yourself of the $900 million dollars being spent annually, who are the producers and who are the consumers? This project is about something bigger than what is in front of us. Foreign investment is not bad in and of itself but a dependency on it for national development means we will always be looking out on the horizon for help. Seems to me we switched out one form of grant aid for another. Things to make you go hmmm.
3.What concessions are to be a part of this deal? Lease for the property, duty exemption, payroll taxes, etc? Government revenue is recovering from the decline in the recession (the rest of the world still trying to catch themselves) and we have to rebuild our reserves. In a nutshell we need to get our financial house in order and to continue a `policy´ of incentives at any cost worsens our financial situation long term.
As a matter of fact we need a proper investment policy that sets the stage for negotiations inline with our development strategy. Frankly speaking if you have $75 million dollars to spend I think they should be required to pay at least a reduced rate of duty rather than $0. Cash flow is needed to do other equally important developments in the health and education sectors and developers cannot and should not be depended upon to do things we should take responsibility for as a country. This leads to my next question...
4.Have we done our MBA homework? This is where the army of 3,000 public servants play a significant role:
a.Has a business case been done with such information as cost-benefit analysis and revenue predictions for developers and Government/Port Authority? It is important for us to get the different scenarios (best case, worse case, in between) and understand fully what we are getting ourselves into. Any serious shareholder wants to see the numbers behind the purported benefits. How many ships/calls are guaranteed and for how many years - all 48? How many visitors are guaranteed for the 48 years? What are the exit clauses? What are their responsibilities and what are ours going to be as it relates to maintenance and improvement/upgrades of facilities during the term of agreement? We would want to stay current with design trends and not have the same product even 15 years from now. The industry changes and we have to anticipate and plan for it.
b.Are these companies financially sound? What is their proven track record? Having a check book doesn´t mean money in the bank and we have a sad history of dealing with companies that go bankrupt or prove to not be operationally viable because we didn´t pull back the curtain to see what´s happening behind the scenes. I found a lot of sketches but no actual construction or completed photos on the Idea website. And no one should take offence to being investigated because that is how business is done anywhere else in the world. What is the contingency plan if the project fails? What are the penalties to the developer if it fails? Urgency is no reason for note exercising due diligence; lack of can be very expensive.
c.Has a socio-economic analysis been done? Tourism is only one side to our national development and we need to keep an eye on the big picture and understand implications on traffic, port management, transportation network, increase in immigration of transient workers, health services, etc. If a ship comes in and there is an accident of large proportions, can our emergency services respond? We can´t give lip service to these matters either because they could cost us the very thing we´re holding dear.
d.Have we crunched the numbers as to how to prepare ourselves to buy out earlier rather than wait 48 years and looked at how to involve local investors because it is time we own a piece of the Virgin Islands pie that everyone else trying to get a slice of?
5.The Construction Association in the Cayman Islands is very concerned about the China Harbour project that is in the pipeline there from the standpoint that marginal local participation is expected because the Chinese M.O. is to bring in their own workers and set up work camps so they feed and house them thus depleting potential revenue into the local economy and building China´s. The reason given is that local labour is too expensive. It seems that part of the agreement also is that they will bring in stores that they foresee to the detriment of local stores. What is going to be in our agreement to mitigate those tactics that are "hidden costs" to the free investment? Will a certain % of business be required to be done with local contractors and suppliers? We´ve heard that 20-500 sq. ft. spaces are reserved for local businesses but what is the total commercial space so we can put that into context? 10,000 sq. ft. out of 50,000 sq. ft. vs. 10,000 out of 100,000 is a big difference.
So these are 5 simple questions, of many that could be posed, that I believe we need to answer honestly and apply it to every project going forward especially the next one in line, the airport at Beef Island. That is after we get a national development plan on-line.
If some answers are less than desirable it doesn´t mean scratch the project but get a plan to put things in place to mitigate risks and facilitate success for the project and us as a country.
We are a very intelligent people and let´s not be afraid of having the healthy debates as to the direction we want to see our country move in and at the end of it, come together and selflessly do so in a sustainable way - not for us, but the next generation. And as we say on the Vigilate Dialogues, "Let´s continue the change in conversation for a better Virgin Islands!"