Contributing writer Dickson Igwe
VIRGIN ISLANDS SENATOR ARCHIE CHRISTIAN’S ASSERTIONS ON FOREIGN DIRECT INVESTMENT ARE PUT IN A GLOBAL PERSPECTIVEOne of the allusions made against the Beef Island airport expansion is this one: ‘’it is a project meant to cater for the private jets of multi millionaires and billionaires; a facility for the global jet set.’’ That is a naïve assertion, however.
The fact is that the wealthy investor is a crucial driver of Virgin Islands commerce, development, and prosperity. The millionaire and billionaire capitalist from beyond these shores is key to the viability of national, regional, and global trade: he or she is the risk taker, willing to put their cash in play when and where it is required; making things happen.
The wealthy capitalist owns and manages the multinational businesses that invest internationally, employing millions of people, creating a new global middle class, pulling millions out of poverty. He or she is crucial to the flow of international capital from critical financial hubs like New York and the City of London to emerging powerhouses such as Rio de Janeiro, Johannesburg, Mumbai, and Shanghai.
And from Hong Kong, Singapore, Peking, and other South Asian cities, the global investor is crucial to linking the world to Pacific Asia, allowing free access to and from the fastest growing region on Earth. He it is who enables trade between the Pacific’s booming economies, and cities in North America, Europe, Australia, Latin America, the Caribbean, Africa, and elsewhere; a global trade that has led to lower prices, greater choices, and higher standards of living.
And even in these Virgin Islands, the international investor owns marinas, resorts, oil companies, retail and investment banks, offshore businesses, technology companies, large retail concerns, and so on, that employ both Virgin Islanders and alien residents: assets that contribute to the quality of life of all inhabitants of these islands. The foreign investor is a key employer in West Indian community; critical to the viability of Caribbean commerce and prosperity.
Senator Archie Christian
An important news story of September 11, 2012, in the British Virgin Islands Platinum Online newspaper, also appearing in one form or another on the country’s major online news media,‘’ FIVE STAR HOTELS, CRUISE DEVELOPMENT, AIRPORT EXPANSION, NEEDED FOR JOB CREATION,’’ described how Virgin Islands Senator, Honorable Archie Christian, believed that, ‘’ the expansion of the Terrence B Lettsome International Airport, cruise ship development, and at least two five star hotels, are all needed to create jobs for the next five years.’’
Now, speaking with a number of persons recently has revealed to this observer what many have already suspected: that the Virgin Islands may be experiencing a slowing of economic growth; that the country still has a long way to go to achieve the type of booming growth that was enjoyed pre 9/11.
He hears a litany of stories of persons unable to rent their homes, normally affluent commercial property owners concerned at the length of time it is taking to find a tenant, youngsters unable to find work, and even a dreaded migration of financial service type businesses to jurisdictions in the Panama and the Pacific.
The recent announcement by Federal Reserve Chairman Ben Bernanke, that the US Federal Reserve will sink half a trillion dollars into the US economy as stimulus over the next 12 months, is a sign that the world economy may be slowing. Europe is in deep rescission, and even China’s economy is growing more slowly, than the norm of 7% and above growth. This is due to the recession in one of China’s largest export markets: Europe.
A major player in Virgin Islands tourism, just the other day, informed this Observer, that the improvements in the tourism offerings in nearby islands mixed with 5 star customer services meant that travelers were getting better value for money elsewhere. The idea that all travelers care about when visiting the Virgin Islands, is sea, sand, and a pristine environment, is fast becoming a worn out rendition. Today’s traveler expects the best in accommodations, travel facilities, and customer service, and for less money.
A Public Officer at the highest level asserted at a meeting with this Writer recently, that the current airport and seaport infrastructure was severely limiting to tourism and travel. So, readily available luxury accommodations, exquisite service, and excellent physical infrastructure matter after all!
Strangely, one hears persons, especially in the national press, expressing skepticism about foreign direct investment, FDI, in the form of the proposed cruise ship development, and other types of mega project such as large five star resorts, and similar developments: projects designed to stir the economy, create jobs, and generate economic growth.
In any event, the country may have arrived at what is commonly called an INFLECTION POINT: and this determines that the Virgin Islands gets with the global program, or get left behind. Yes, the Virgin Islands are at that stage. A certain level of neglect over the years has left this country with a limited infrastructure, and struggling to compete successfully in an increasingly aggressive international market, and highly competitive global commercial environment.
Even financial services, accounting for 65% of Virgin Islands GDP, may be about to see a downturn; and it is understood that but for the considerable expertise the country possesses, and its connection with Great Britain and the City of London, a number of offshore businesses would have long gone. Offshore accounts and businesses can disappear as swiftly as they appear. And if that happens, is there an alternative economic pillar? Or is the present infrastructure capable of lifting tourism to the place where it can replace financial services as this country’s economic mainstay? One thinks not!
Still, there are cries that the country is selling off its wares to foreign and alien interests. But are there any locally owned businesses willing to invest the hundreds of millions of dollars needed to get the economy growing robustly? Do local companies posses the type of reach and logistic capability of the multibillion dollar global multinational?
Federal Reserve Chairman Ben Bernanke
No. Only a mix of Foreign Direct Investment, good public policy, and an educated and skillful workforce can get the type of development required to make the Virgin Islands truly competitive in the current global climate.
And that age old dependency on government for everything, for getting the economy on the move is a non starter. The world’s successful economies are all driven by free markets, international trade, international capital flows, and globalization. In short, they are private sector driven. Government is meant to act as watchdog, monitor, and regulator: not manage and create businesses.
So the Honorable Senator is absolutely right. He is a businessman, and he has seen the writing on the wall. Development in the Virgin Islands will come through well thought out public policy that welcomes globalization and foreign investment! It is that simple!
The Virgin Islands are unique somewhat, when compared with other West Indian countries that are much poorer. This country possesses one of the highest incomes per capita anywhere, and the US dollar has linked this country’s social economy with that of the USA; and that has given the society a much higher level of affluence, than found elsewhere in the Caribbean.
Then, the level of local land ownership is much higher than elsewhere, giving citizens and residents higher levels of personal equity. Nonetheless, mortgage, loan, and credit card debt, coupled with a slowing economy has put many Virgin Island consumers in financial hardship, with increasing home repossessions, and a struggling commercial and housing, sales and rental market.
West Indian countries such as Nevis and St Kitts, Aruba, Turks and Caicos, and the Bahamas, are very happy to attract Foreign Direct Investment in the form of large 5 Star resorts, casinos, and leisure type facilities. This has given them employment opportunities, and the type of infrastructure improvement they never would have realized without FDI.
The task of government in Foreign Direct Investment is balancing the public good with that of the financial interest of the foreign investor. And that is a matter of creating an exceptional environment for business and free trade, through thoughtful and wise policy formulation, and implementation.
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