VOL 39 • ISSUE 31 CARIBBEAN INSIGHT NOV 04 - 17, 2016 THE EDITORIALLY INDEPENDENT PUBLICATION OF THE CARIBBEAN COUNCIL Venezuela to lose strategic refining Highlights this issue... hub in Curaçao Click and explore: The Chinese largely state-owned Guangdong Zhenrong Energy Co (GDZR) has said that it is planning, with support from some of China’s Chinese company close to owning leading energy and financing companies, to invest more than US$5.5bn Baha Mar in upgrading the Isla refinery on Curaçao.
Bahamas begins to plan for Until recently Venezuela’s state owned oil company PDVSA had planned post-Matthew reconstruction to renew its lease on the facility, which expires in 2019, and upgrade it, but appears to have been unable to proceed because of the precarious UN unanimously condemns Cuba economic situation in the country and in PDVSA. embargo as US abstains The decision has strategic implications for Venezuela, as well as for Dominica to develop geothermal China and the countries of the Caribbean and Central America. The production alone 335,000 barrel-per-day refinery, which is located 31 miles to the north- west of Venezuela, has become central to the nation’s ability to over- Dominican Republic: Central bank come inefficiencies in its own refining facilities and to meet its interna- releases economic data tional commitments.
Guyana off FATF watch list In recent years, the refinery has been used regularly to make up short- falls of gasoline and diesel when PDVSA’s own refineries have been Haitian elections face further delays unable to operate efficiently or have been shut down through lack of maintenance or spares. It has also been central to the country’s ability Poll puts Rosello ahead in Puerto Rico to supply oil and oil products under the oil-for-loans financing arrange- ment arrangements it has with China, or with the Caribbean which Improvements made to St Kitts and benefits from its concessional PetroCaribe provisions. Nevis CBI programme Venezuela also uses the terminal to store its heavy crude, some of New funding for LIAT which is shipped from the Isla facility to China and India. Reports in the
Continue on page 2 > trade press say that the terminal also receives imported light crude from the US for refining and to dilute Venezuelan heavy crude, and is used to produce naphthenic base oils for shipment through PDVSA joint ventures to Europe.
According to reports from Reuters and in the Curaçao media, discussions between GDZR and Curaçao are presently underway in China, with a visiting delegation from Curaçao and advisers negotiating the detail outlined in a memorandum of understand- ing signed with GDZR in September. This reportedly involves GDZR leading the modernisation of the refinery, oil terminal and the granting of a 20-year renewable lease from the date when the agreement with PDVSA ends.
The reports suggest that discussions involve the China Construction Bank, China Development Bank, the Industrial and Com- mercial Bank of China (ICBC) and the Bank of China, which are to provide the bulk of the financing required to upgrade the refinery and build a natural gas terminal.
Reuters said that the project will also involve some of China’s major energy related companies in upgrading the refinery and in providing technical and operational support. The news agency reported that while GDZR hoped to be the largest single stakeholder in the project, it has entered into preliminary co-operation agreements with some of China’s leading oil companies including the China National Petroleum Corporation (CNPC), Sinopec and the China National Offshore Oil Corporation (CNOOC).
The news agency quoted Chen Bingyan, a company advisor at GDZR and the project’s negotiator, as saying that Sinopec, China’s largest refiner, would revamp the refinery while CNOOC, which led China’s expansion of its LNG import facilities, has been identified as the potential builder and operator of the gas terminal.
Over the course of the past decade China has become one of the top buyers of Venezuelan crude and fuel through an oil-for- loans financing deal, and some of its purchases presently use Curaçao as a transfer point. In the first nine months this year it purchased nearly 490,000 bpd of crude oil and products from Venezuela, or around 6% of its requirements.
The news of China’s takeover of the Isla refinery when PDVSA’s lease ends coincides with reports that the company is strug- gling to meet its commitments to services suppliers in several Caribbean nations.
The countries in the Caribbean most immediately affected appear to be Curaçao, Bonaire, Jamaica and the Bahamas, as well as Cuba, which was previously reported to be sourcing oil from Russia, Algeria and Iran to compensate for falling supplies from Venezuela. Among those reportedly affected in the countries concerned are refinery operators, ship brokers, maritime agen- cies, terminal owners, and owners of towing operations with some governments becoming more generally critical of Venezu- ela for failing to meet its financial commitments and investment promises.
Although PDVSA obtained some financial relief in October through a smaller than hoped for swap of US$2.8bn of matur- ing bonds for US$3.4bn of new bonds due for repayment in 2020, it continues to experience pressure on liquidity, which reports suggest is likely to continue to impact negatively on suppliers of services to several Caribbean nations and its po- litical relationship with some of the governments concerned.
US analysts writing in the oil industry trade press say that Venezuela’s failure to pay its Caribbean suppliers could also cause it to not have enough refining and distribution capac- ity to be able to provide product to international markets. PD- VSA’s Caribbean operations represent a quarter of its global refining capacity and act as a hub for around a third of its ex- ports of crude and fuel oil. They also note that the company has been using Caribbean deep water facilities to overcome storage, refining and port congestion problems in Venezuela and this alternative has become more critical as PDVSA’s do- mestic infrastructure fails. 02 INDEX Chinese company close to owning Baha Mar
The Hong Kong-based conglomerate, Chow Tai Fook Enterprises Ltd (CTFE), which owns Rosewood Hotels, has said that it is in discussions to purchase Baha Mar, the unfinished US$3.5bn mega-resort on Cable Beach in the Bahamas.
The property is presently owned by Perfect Luck Holdings, a Hong Kong affiliate of the Export-Import Bank of China (EXIM), the project’s primary lender. Perfect Luck recently acquired Baha Mar from the property’s receivers.
CTFE said that it had applied to the Bahamas government for approval as a potential investor and was in talks with both Hyatt Hotels and SBE, a leading international hotel and real estate management company. Both were previously scheduled to oper- ate Baha Mar’s hotels and other related facilities. In a statement, CTFE also said that it would re-engage the Rosewood Hotel Group in the Baha Mar project. Rosewood was originally contracted to operate the resort but withdrew last year.
Although the project’s original developer, Sarkis Izmirlian, has said that he would be able to offer a higher price for the project than Perfect Luck would receive from any other possible buyer, and that this would be in the best interests of the Bahamas, the Bahamas government said that it will not intervene on Mr Izmirlian’s behalf. Mr Izmirlian is believed to be likely to lose between US$600m and US$900m if there is no future opportunity for him to participate in the resort.
In a statement to the online publication Tribune 242, the Prime Minister’s office said that ‘if, as he states, Mr Izmirlian is in a posi- tion to, and wishes to work with China Export-Import Bank to deliver Baha Mar for the Bahamian people, then he should engage seriously with Perfect Luck and its advisors.’
A number of CTFE’s senior members are reported to have had close ties to the Chinese government and leading members of the Chinese Communist Party. The company said in a statement that it was now seeking the necessary permits and approvals from the Bahamas government for the acquisition of Perfect Luck Holdings, the special purpose vehicle established by China Export-Import Bank, Baha Mar’s secured creditor.
Although no such agreement is yet in place, the company appears confident that it will own the resort, saying that pre-opening activities and hiring “had commenced,” and that the group was investing “millions ahead of the official deal completion.”
CTFE has global interests in a variety of industries, including property development, hotels, casinos, transportation, jewellery, ports and telecommunications. Dr Henry Cheng, Tai Fook Enterprises’ Chairman, is a standing committee member for the Chinese People’s Political Consultative Conference, a body which informally plays a political advisory role, providing guidance.
Dr Cheng said in a statement: “CTFE is looking forward to having Baha Mar join its portfolio of world-class integrated resort development projects. We are fully committed to this project and plan to hire as many Bahamians as possible to work at the property.”
The statement does not make clear whether the company will also operate the casinos at Baha Mar, which are primarily aimed at US visitors.
China’s President Xi Jinping, has actively campaigned against corruption and has sought to restrict gambling, especially among members of the Communist Party. Gambling is illegal in mainland China. In recent months, the Chinese government has extended its desire to control the casino industry in Macau, and to discourage Chinese from travelling to nearby locations such as South Korea or the Philippines to gamble.
Commenting on the latest developments concerning Baha Mar, the leader of the Opposition Free National Movement (FNM), Dr Hubert Minnis, said that Bahamians had only learned of the new buyer through the media rather than from government, and called on the Prime Minister to reveal more details.
03 INDEX ARUBA Aruba Tourism Authority concerned about tourism growth. The Aruba Tourism Authority (ATA) has said that growth in the sector over the last 2 years has been “fictitious,” explaining that the surge in Venezuelan arrivals does not reflect actual tourism, but those coming to collect foreign currency. The ATA suggests that tourism spen- ding is on the decline, and projects a 4% drop in the number of arrivals this year, as well as a 2.6% drop in Revenue Per Available Room (RevPAR). September saw a 20.5% drop in the number of arrivals with Venezuelan arrivals down 50%. The occupancy rate dropped 8% year on year (YoY) during the month. They said that the addition of KLM flights has not translated into an increased share of Dutch tourists as part of the total, as the additional seats are being occupied by tourists from a number of European countries, including visitors from Scandinavia, Italy, Germany and Great Britain. It also said that the number of cruise tourists increased 10.1% YoY in the first 7 months of 2016 to 336,884 from 186 ships. The return of Pullmantur in 2017 will bring an additional 25 calls to Aruba.
BAHAMAS Bahamas begins to plan for post-Matthew recovery programme. A US$150m loan will help to cover the costs of the Bahamas’ recovery from Hurricane Matthew. Some 60-70% of the funds will be used for public infras- tructure repairs, including roads, schools and public buildings. The remainder will be used for citizen assistance efforts. The funding will be raised through a bond issue, including US$120m from commercial banks and US$30m from the public. Meanwhile, the State Minister for Finance Michael Halkitis has defended the government’s deci- sion to opt out of the regional insurance policy in favour of a sovereign disaster relief fund. The Bahamas has never been able to access the Caribbean Catastrophe Risk Insurance Facility (CCRIF), with Halkitis pointing out that New Providence would have to have taken a hit from a Category 5 storm in order to make a claim. Hurricane Matthew hit the Bahamas on October 6 with Category 4-force wind and rains. The recovery bill from the combined impacts of Hurricane Matthew and Hurricane Joaquin, which hit in July, is estimated to total US$800m (US$600m and US$200m respectively). With government seeking ways of raising funds, the Cabinet has apparently dismissed the idea of levying a special tax on tobacco and alcohol to assist in the recovery from Hurricane Matthew. Other measures under consideration include a cruise ship passenger tax, which would spare residents from a tax in- crease. The notion of some form of temporary tax to raise revenues has been embraced by certain members of the governing Progressive Liberal Party, including Chairman Bradley Roberts. Tourism Minister Obie Wilchcombe has proposed a national lottery to help in disaster recovery efforts, an idea backed by opposition party the Free National Movement.
barbados Water curfews imposed. As Barbados continues to seek solutions to ongoing water shortages, it has been an- nounced that the water supply will be cut from 11pm-4am in the parishes of St Thomas, St George, St John, and St Philip until further notice due to alarmingly low levels at the Golden Ridge Reservoir. In response, the government is sanitising six new water tankers to supply water, according to Barbados Water Authority (BWA) General Manager John Mwansa. A second borehole project in Sweet Vale will supply an additional 500,000 gallons into the system.
Lower than expected growth. GDP growth projections for Barbados have been revised down from 1.8% to 1.4% for 2016, according to a report prepared by Central Bank of Barbados (CBB) Governor DeLisle Worrell. The revision is mainly attributed to underperformance in tourism and construction, which at 3% and 5% growth for the first 9 months of this year respectively, are both below initial expectations. The outlook still compares positively to the Caribbean Development Bank’s projected growth level of 0.9%. Meanwhile, the Central Bank has printed US$57m amid pressures to provide some relief to government cash flow needs, according to Worrell.
04 INDEX BELIZE Blackadore EIA approved. An environmental impact assessment (EIA) for Blackadore Caye has been appro- ved, the developer Restorative Islands LLC has reported. Construction on the multi-million dollar resort is expected to begin in 2017. The environmentally friendly property will use organic, locally grown foods, zero fossil fuels, and will be entirely powered by renewable energy. Investors have chosen not to pursue overwater structures due to concerns raised about their impact on local ecosystems. Actor Leonardo DiCaprio purchased the 104-acre island in 2005.
BRITISH Smith leads mission to Hong Kong. The Premier Orlando Smith led the British Virgin Islands Asian Trade VIRGIN Mission to Hong Kong in October. Smith underscored during the trip that the Asia Pacific Region remains a funda- ISLANDS mental market for the Virgin Islands, noting that BVI will endeavour to remain a top business partner to the region. Smith signed a Memorandum of Understanding (MoU) with the Tianjin Binhai New Area that is meant to promote economic and trade co-operation with China. Smith also stressed that his purpose in Hong Kong went beyond courting new investment in the Virgin Islands, and he pledged that a new multidisciplinary team led by Elise Do- novan of BVI House will ensure that the MoU is followed through on by means of a joint plan of action. Smith also stated that, while committed to transparency and participating in the global development of a global regulatory framework for beneficial ownership, the Virgin Islands will not heed the UK’s demand that public registry be esta- blished.
Duncan: modern, functional accounting system necessary. Governor John Duncan has warned govern- ment to not let its accounting system shut down as occured for several months in 2015. The government declined technical assistance following that incident, which led Duncan to caution that an economy as developed as the British Virgin Islands cannot afford an ineffective accounting system in which contractors are not compensated in a timely manner. Duncan also expressed concern that the country has not handed over audited accounts to the House of Assembly since 2011, a breach of constitutional obligations. Duncan warned that action may be taken by the Foreign and Commonwealth Office if these concerns are not addressed.
CAYMAN Procurement bill presented to Legislative Assembly. Finance Minister Marco Archer has presented a new ISLANDS procurement bill to the Legislative Assembly. The bill contains a provision for the establishment of a central pro- curement office that will help cut costs and maximise the buying power of the government. The bill is designed to eliminate political interference and to improve transparency and efficiency in the public procurement process, which has raised numerous concerns from the Auditor General’s office over the years.
Cayman remains global M&A leader. Cayman accounted for 40% of the value of all offshore merger and ac- quisition (M&A) deals in the first half of the year, while accounting for one-third of all M&A transactions, according to Appleby. Total figures are down from last year, however Cayman claimed 4 of the 10 largest deals from January to June. Cayman was the target of 459 deals worth US$41bn, including a US$4.5bn investment in Cayman incor- porated software publisher Xiaoju Kuaizhi by a consortium led by the China Merchants Bank; US$2bn in funding for Cayman incorporated Uber China; and a US$2bn share buyback by Alibaba Group Holding Ltd.
EIA could terminate road project. An Environmental Impact Assessment (EIA) for the proposed 10-mile east- west arterial (running from the Eastern Districts at Savannah to the west near Red Bay) could kill the road project, says golf resort developer Ironwood. The developer has expressed dwindling hope that a partnership with gover- nment for construction of the road will be reached by the December 18 deadline. Environmentalists have raised concerns about the impact the road could have on central mangrove wetlands and on vulnerability to severe
05 INDEX weather events. Ironwood points out it could take a year to conduct the study and could add to the project’s US$61m price tag. Ironwood no longer holds the position that the road is necessary for the resort development to proceed.
CUBA Early debt repayment suggests desire for multilateral membership. Cuba has advanced the repay- ment of the first part of its renegotiated US$2.6bn debt to member nations of the ad hoc Paris Club Cuba working group which late last year agreed to forgive Cuba part of its debt, and to reschedule its remaining repayments. At that time the 14 nations concerned agreed to forgive US$8.5bn of the US$11.1bn official debt that Cuba had defaul- ted on, as well as interest payments incurred since 1986. The renegotiated schedule structured repayment of the remaining debt over a period of 18 years, with the first payment of around US$40m due by October 31. However, diplomats from some of the countries concerned said that the first instalment was paid early. The decision is seen as being closely linked to Cuba’s desire to re-join the international financial community and eventually to gain ac- cess to multilateral concessional funding, now possible following changes to US regulations as a result of the US policy of détente. Cuba is not a member of any major western multilateral lending institution.
UN unanimously condemns embargo as US abstains. In a further indication of the Obama administration’s changed approach to Cuba, the United States abstained from voting for the first time in an annual UN General Assembly condemnation of the US’ 50-year-old trade embargo against Cuba which took place on October 26. The abstention paradoxically meant that the vote against the US Congress-led policy was unanimous, as Israel, which normally follows the US vote on the issue, also abstained. It also publicly demonstrated President Obama’s recent comments when revealing a new US Presidential Directive on Cuba (Cuba Briefing October 17, 2016) that the administration believes that all further change in the US economic relationship with Cuba now lies with the US Congress. Cuba reported the outcome of the UN vote on the front page of Granma with the headline “Resistance triumphs.”
Trump says he will “make it rough” for Cuba. In an interview with Miami Local10 news, US Republican presi- dential candidate Donald Trump has provided more detail on how he would relate to Cuba if elected. Speaking to a reporter from the TV station, Trump said: “I would make it rough on Cuba until a really good deal can be made for the Cuban people and for the United States. We have to make a deal that’s good for the Cuban people and I would make sure that the deal is either made, or I’d have nothing to do with them.”
Havana’s private restaurants and hotels to be regulated. The provincial administration of Havana has said that it is to temporarily suspend the issuing of new licenses for private restaurants and bed-and-breakfast operations in the city as it moves to regulate the success of an increasingly significant part of the capital’s eco- nomy. The measure, which was introduced in September, comes at a time when tourism numbers are surging and are likely to increase further as scheduled US flights to Havana begin. It also coincides with a view expressed by growing numbers of visitors to many of Cuba’s major cities that they prefer to “experience the real Cuba” by eating away from what are often poor quality restaurants in state-run enterprises. More significantly, the interim measure responds to the impact that such restaurants are having on the supply and prices of foodstuffs in retail shops and markets, and the consequent creation of a black market for such supplies.
A longer and more detailed version of these and other stories on Cuba appears in Cuba Briefing, which is available by subscription or to Premier members of the Caribbean Council free of charge.
06 INDEX Negotiations underway for partial free trade with the Dominican Republic. Cuba’s Ambassador to the Dominican Republic, Carlos de la Nuez, formally confirmed on October 21 that the two nations have begun nego- tiations for the signing of a partial scope trade agreement. In the first stage of the negotiations, the two sides will address reductions in tariffs on goods. Speaking during a presentation organised by the Federación Dominicana De Comerciantes, Mr de la Nuez said that the Dominican Republic has the potential to become a major supplier of products to Cuba and that “a partial scope agreement would facilitate that exchange.” According to Dominican statistics, overall trade in 2015 between Cuba and the Dominican Republic was about US$80m, of which US$54m were Dominican exports.
Curaçao Government formation talks continue. The new Parliament has been sworn in by the Governor, with only the MFK party leader Gerrit Schotte not present for the ceremony. Negotiations are underway between MAN, PAR, PNP and PS parties to construct a coalition, according to KdNT, while the opposition is eyeing a possible coalition invol- ving MAN, MFK, KNT, KH and MP as an alternative, though little progress is being made on either front. The overall power of MAN in any coalition is expected to be somewhat weakened due to the high number of parties involved in any scenario, with political uncertainty impacting on economic growth for the remainder of 2016.
SubCom invests at Port of Willemstad. Tyco subsidiary SubCom will move operations from St Croix in the US Virgin Islands to the Port of Willemstad. The move by SubCom, which specialises in submarine communica- tions systems, will involve the construction of a 600 square-metre warehouse and the permanent anchorage of a submarine cabling boat.
DOMINICA Work at airport progressing. Phase One of the rehabilitation of Douglas-Charles Airport continues. The US$11.5m project, funded by income from Citizenship by Investment Programmes, will see the airport better pro- tected from natural disasters, particularly the flooding of the Melville Hall River. Remaining work includes the repair of the second part of the apron and two taxiways, the extension of the sea wall, and road drainage. Phase Two will include further bolstering of river defences.
Dominica to develop geothermal production alone. Government will finance geothermal development on its own. Prime Minister Roosevelt Skerrit stated at a recent debate on the Geothermal Development Bill that none of the international partnerships with which Dominica has attempted to forge an alliance to construct a geother- mal energy plant has been successful. Government will assume all risk in building the plant, with a company to be established and made available through the purchase of shares at a later date.
DOMINICAN Central Bank releases economic data. Key economic indicators released by the Central Bank of the Domi- REPUBLIC nican Republic are as follow: • The growth rate in the Dominican Republic for 2016 is projected to be 6.9%, compared to 5.2% in Panama, 4.2% in Costa Rica, 2.2% in Colombia, -1.8% in Argentina, and -10% in Venezuela. • The GDP grew 6.1% in the 1st quarter of 2016, 8.7% in the 2nd quarter, and 5.8% in the 3rd quarter. The average for all three quarters was 6.9%. This was affected mainly by 10.6% average growth in agriculture, 22.3% growth in mining, 12.2% growth in construction, and 10.4% growth in financial operations. • There was a 7.1% year-on-year (YoY) increase in passenger arrivals to 4,524,261. • Inflation for the January-September period was 0.35%, as compared to 1.33% for the same period in 2015. Inflation
07 INDEX from September 2015-September 2016 was 1.35%. • Loans to the agricultural sector rose 12.2% in the last 12 months, 35.7% to the energy and water sector, 14.5% to construction, and 24.8% to the hospitality sector. • The monetary deficit for January-September 2016 decreased to US$281.9m, from US$441.1m in the same period in 2015. • For the period January-September 2016, exports brought in US$4,043m, while tourism contributed US$5,084.1m, remittances US$3,908.5m, and direct foreign investment US$1,802.2m, for a total of US$18,086.1m.
GUADELOUPE Investment and public consumption fuel growth. A 1.9% GDP growth rate in 2015 was supported by 2.1% growth in public consumption, and 2.5% growth in investment (supported by private sector investment growth of 8.5%). Exports grew 1.7%, while imports surged 2.9%. Household consumption edged up by 0.7%.
GUYANA Guyana off FATF watch list. Guyana has exited the Anti-Money Laundering/Countering the Financing of Te- rrorism (AML/CFT) watch list of the Paris-based intergovernmental organization the Financial Action Task Force (FATF), a development that the Minister of Business, Dominic Gaskin expects will lead to fewer restrictions on Gu- yana doing business with other nations. For now, Guyana remains on the watch list of the FATF’s regional branch, the Caribbean Financial Action Task Force (CFATF), which will continue to monitor Guyana to assure compliance to AML/CFT reforms.
FATCA agreement signed. Guyana and the United States inked an implementation agreement for the US Fo- reign Account Tax Compliance Act (FATCA) on October 17. The legislation is part of the US effort to crack down on tax evasion and avoidance and to improve the automatic transfer of tax data pertaining to non-resident financial accounts.
Guyana and Chile to open travel. During a state visit to Chile, Foreign Affairs Minister Carl Greenidge signed a Visa Abolition and Open Skies Air Services Agreement with his Chilean counterpart Heraldo Muñoz. The agree- ments, which open the door for the launching of commercial flights and visa-free travel between the nations, were signed during bilateral talks that included Presidents David Granger and Michelle Bachelet. The leaders also discussed the possibility of co-operation in the areas of mining, telecoms, trade, and the management of maritime zones.
IDB funding to cut infant mortality. Guyana will use an US$8m Inter-American Development Bank (IDB) loan to lower its infant mortality rates. The program will address maternal, perinatal and neonatal deaths through the improvement of care at 140 health facilities in 88 communities across the nation. With a maternal mortality rate of 121 deaths per 1,000 live births and an infant mortality rate of 22 per 1,000 births, mortality rates in Guyana are amongst the highest in the Latin American/Caribbean region.
Better extraction methods pursued. The Guyana Geology and Mines Commission (GGMC) is seeking to improve mineral recovery rates for miners while simultaneously reducing the environmental impacts of mining practices. To that end, the GGMC’s Processing Unit has been testing alternatives to current practices that will redu- ce the amount of mercury used, particularly in the mining of gold, though options such as circuits with chemical floatation requisites and cyanide circuits, considered less detrimental to the environment, are not readily available in all mining districts. Guyana will use a US$3m grant via the Global Environmental Facility (GEF) in its efforts to reduce mercury levels among small-scale and artisanal miners.
08 INDEX Barama suspending logging arm. Guyana’s largest forestry company, Malaysia-based Barama Company Li- mited (BCL), is scaling back its operations and has conceded 1.6m hectares. BCL will possibly suspend its forestry operations altogether in favour of plywood and veneer manufacturing and sawmilling. The company has opera- ted in Guyana for 25 years, but has been unable to secure a new investment agreement with the current coalition. Government will conduct a review of BCL’s economic impacts over the last quarter century, and labour officials will meet with BCL executives to discuss the future of its employees.
HAITI Elections could face further delays. The Provisional Electoral Council (CEP) has said that the severe damage to infrastructure ahead of the planned November 20 elections may result in a further delay to the election date. In an October 27th letter addressed to interim President Jocelerme Privert, Léopold Berlanger, President of the CEP, gave the government a 10 day deadline within which to implement a number of crucial measures. These include repairing the 280 damaged voting centres, ensuring that access roads leading to another 161 centres are passa- ble, providing voting cards to voters who lost theirs after the hurricane, and releasing forty schools used as voting centres which are presently being occupied by hurricane victims. He made clear that if this does not happen there will be no elections November 20. Some reports say that if this occurs there could be a mass resignation of members of the CEP.
Major losses from Hurricane Matthew. Among the estimated US$2bn in damages caused by Hurricane Matthew, damage to agriculture amounted to US$600m, with a similar level of damages to housing. The tourism sector has, to date, reported damages of US$15m from the storm, according to the Minister of Tourism, Guy Didier Hyppolite. A Ministry statement said that activity in the sector had not stopped, but noted that certain areas of the country had been particularly impacted. Total loan and grant amounts, to date, only account for around 20% of the total bill. In light of the severe damages, economic growth is not expected to exceed 1%. Meanwhile, assistance continues in response to the storm: • US$14m was contributed by USAID to support government efforts to provide food assistance and relief supplies. • Food for the Poor will construct 1,000 homes in 100 days as part of recovery efforts, after 13 of 29 fishing villages built by the charity were destroyed. • US$22m in assistance will be provided by the EU for the reconstruction of public infrastructure such as roads, bridges, and schools.
FDI project inaugurated in Ouanaminthe. A new textile plant has begun operations at the CODEVI industrial park. The Winds Group textile assembly plant will initially provide 1,000 jobs. The facility will produce athletic clo- thing for the US market.
JAMAICA Improvements to international business processes. Three bills were recently passed in the House of Re- presentatives that are intended to better position Jamaica to facilitate the administration of international financial and business services. They are as follows: • The General Partnership Act will formalise the process for foreign partnerships pursuing business transactions in Jamaica and facilitate mergers and conversion of such arrangements. • The Limited Partnership Act aims to accommodate commercial activities not deemed suitable for other catego- ries of business engagements in Jamaica. • The International Corporate and Trust Service Providers Act seeks to promote and maintain high standards of conduct, ethics and competence in the provision of international corporate and trust services. Additionally, the latter is also intended to ensure that international service providers adhere to modern, internationally acceptable standards of best practice.
09 INDEX martinique Investment drives economic growth. It has been reported by Comptes Économiques Rapides pour l’Ou- tre-Mer (CEROM) that the island’s 2015 GDP growth figure of 0.4% was driven largely by a 0.6% increase in invest- ment. Household consumption meanwhile grew at a rate of 0.2%, according to CEROM. Public consumption was offsetting, contracting at a rate of 0.5%. Imports were up 2.2% while exports grew at a more modest 1%.
puerto Poll puts Rossello ahead. Pollster Pablo Ramos has just released his latest survey, which projects that Ricardo rico Rossello, a college professor, scientist, and President of the New Progressive Party, will be the winner of the race for Governor, taking 40% of the votes. David Bernier of the Partido Popular Democrático (PPD) is forecast in second place with 28.9% of the votes, and Alexandra Lugaro, running as an independent candidate, is commanding 10.5%. These projections would translate to 600,000 votes, 433,500, and 157,500 votes, respectively. The election takes place on November 8.
SME loans rise by double digits. The US Small Business Administration (SBA) has approved US$95.5m in loans to small and medium-sized businesses in Puerto Rico and the US Virgin Islands during the 2016 financial year. That figure represents a 19% year-on-year increase. The loans will impact 9,000 businesses in the two territo- ries. The SBA has recently added 516 new Historically Underutilised Business Zones in Puerto Rico in order to help small business owners with financial and technical resources.
Gas port reconsidered. The Puerto Rico Energy Commission (PREC) will reconsider the amendment it passed that stopped the construction of the Aguirre Offshore Gasport. Without the port, the Puerto Rico Electric Power Authority (PREPA) would be unable to comply with mercury and airborne toxin standards for up to six years, and would be subject to fines of up to US$93,750 per day, as it would be unable to procure gas for its converted plants.
ST KITTS CBI programme getting stronger. Among the reforms being made to the Citizenship By Investment pro- & NEVIS gramme (CBI) is an accelerated application process according to CBI head Les Khan. In future the Citizenship By Investment Unit (CIU) will fast-track applications and process them within 60 days. The CBI has undergone a number of changes since September when the leadership of the CIU was assumed by Khan, an industry expert. Other changes reported are the implementation of a technical committee and the improvement of its overall ve- tting process. The programme had come under international criticism, with the United States government being particularly vocal about a lack of transparency and adequate vetting, weaknesses that were believed to leave the country vulnerable to transnational crime.
Plans for reform of SIDF. Sugar Industry Diversification Foundation (SIDF) CEO, Terrance Crossman, has been dismissed. Though the reasons for the dismissal have not been made public, the SIDF is soon to be held up to parliamentary scrutiny, according to Prime Minister Timothy Harris, who announced recently that investigations into the operations of the SIDF are nearly complete. The programme has recently received criticism for its lack of transparency and accountability. The SIDF was established in 2006 with the goal of diversifying the previously sugar-based economy through the pursuit of investment in alternative industries.
Harris: Economy growing but ease of business needs improving. St Kitts and Nevis’ economy is outpa- cing much of the region at 3% projected growth for 2016, says Prime Minister and Minister of Finance Harris. Spea- king at his monthly press conference on October 26, Harris noted that growth in St Kitts is favourable compared to 2.6% projected for the Eastern Caribbean Currency Union and 1.8%, 1.6% and 1.2% for the UK, US and Canada, res- pectively. Furthermore, construction activity is providing ample opportunity for both temporary and long-term em-
10 INDEX ployment. Where the federation needs improvement is in its World Bank ease of doing business ranking, which is 134 for 2017. That ranking will improve through reforms that Harris says will not happen instantly, such as the inte- gration of ICT platforms that can link multiple government agencies to create a better one-stop shop experience.
ST CDB focuses on youth and education. The Caribbean Development Bank (CDB) has approved a US$23.4m LUCIA project to strengthen the island’s education system by means of the Saint Lucia Education Quality Improvement Project (EQuiP). The programme will address the planning, leadership and delivery of education services, as well as capacity building and physical infrastructure needs. Additionally, the CDB is providing US$3.7m in support of at-risk youth. The funding will be used to bolster existing social services and to develop new programmes in select communities.
ST MPs sworn in. Fifteen Members of Parliament had their credentials approved on October 31. They include: MAARTEN • United People’s Party (UPP) members Theo Heyliger, Franklin Meyers, Sidharth Bijiani, Claret Connor, and Tamara Leonard. • National Alliance Party (NAP) members William Marlin, Silveria Jacobs, Rodolphe Samuel, Christophe Emmanuel, and Ardwell Irion. • United St Maarten Party members Frans Richardson, Chanel Brownbill, and Silvio Matser • Democratic Party Members Sarah Wescot-Williams, and Emil Lee. The election took place on September 26, with the UPP and NAP each claiming 5 seats. The parties have yet to form a coalition government.
Loan extension from Netherlands. The Dutch Government is to extend its US$14.5m loan by 7 years. Because it has failed to comply with financial supervision requirements, including the provision of its 2015 annual report on government-owned companies and institutions, St Maarten has been deemed ineligible for a new loan. The loan extension prevents the island from defaulting on its obligations. The loan period expired on October 12.
Marlin: share in geothermal development. The Prime Minister, William Marlin, is calling for joint geothermal energy production for the Caribbean. Noting that geothermal energy development is an expensive prospect that not all islands should consider, he nonetheless stated that joint development in several jurisdictions could allow the region to “say goodbye to fossil fuels,” or at least vastly reduce dependency on them. Geothermal production is currently advancing in St Kitts and Nevis and Dominica.
SURINAME Hoefdraad explains bond issue. A US$550m bond in international markets will not be used to finance pu- blic expenditure, says Finance Minister Gillmore Hoefdraad, consistent with the tenets of the ongoing fiscal re- form project. Of the US$550m, US$300m will be funnelled to Staatsolie, largely to repay the oil company’s debts. US$88m will be used to repay an Oppenheimer loan, due in September 2017. Another US$27m will be used for government’s 5% stake in mining operation Newmont Suriname. US$54m will be used in the repayment of Petro- caribe debt. The remaining US$50m will be used for the repayment of Energy Companies of Suriname loans. As for Staatsolie, the company will use the funds to repay short-term bank loans, which will leave more funds availa- ble for daily operations. The 10-year loan comes with a rate of 9.25%. Staatsolie has invested over US$2bn since 2008, including a refinery expansion, exploration activities, a drilling programme and investment in the Merian Gold Mine.
11 INDEX Fly Allway’s future unclear. Startup carrier Fly Allway’s future appears to be in doubt as the airline faces sig- nificant financial challenges. Poor load factors and outstanding creditor bills are casting a shadow on the airline, which has been forced to use one of its two Fokker 70 aircrafts for spare parts, as a request for additional time to conduct maintenance on major components was recently denied by the Aviation Authority. The aircrafts currently can only be serviced in Curaçao as Fly Allways has no maintenance base in Suriname. Load factors for flights between Suriname, Guyana and Barbados are currently below 30%.
TRINIDAD Gopee-Scoon on plans to jumpstart economy. The Minister of Trade and Industry, Paula Gopee-Scoon, pro- & TOBAGO vided key economic indicators and developments during a recent address to the Couva/Point Lisas Chamber of Commerce business forum: • Unemployment is at 3.8% as June 2016. • The Heritage and Stabilisation Fund stands at US$5.454bn. • Inflation is 3.3% to 3.5%. • Foreign reserves stand at US$10B. • The government will reduce its expenditure pattern via the sale of some of its assets, including the National Gas Company of Trinidad and Tobago, its shares in First Citizens Holdings Ltd, one half of the industrial estates under the Evolving Technologies and Enterprise Development Company Ltd, the sale of Trinidad Generation Unlimited, and the partial sale of Lake Asphalt. The sales are projected to bring in over US$596m. • The sales will place increased equity in public hands, reduce the risks and costs to government, and increase private sector participation. • The tax on online purchases and the additional income tax on individuals and companies will provide additional revenue streams. • The Maritime sector has been targeted as an alternative sector to fill the gap left by falling energy revenues. • Marina development, transhipment, cold stacking, bunkering, and ship repair are areas that are being looked into. • Tourism sites in Maracas, Las Cuevas, Manzanilla and Vessigny are being studied along with the proposed San- dals Resort in Tobago. • Manufacturing will be helped via the increase in space for manufacturing and the Special Economic Zones. • Cocoa and coconut development have been pushed to the front of the agriculture agenda.
CARIBBEAN Funding for LIAT. St Vincent and the Grenadines will join Barbados and Antigua and Barbuda in injecting capital REGION into regional airline, LIAT. St Vincent’s contribution will amount to US$222,000 compared to US$1m from Barbados and US$667,000 from Antigua and Barbuda, for a total contribution of US$1.9m (ECD$5m). The Prime Minister of St Vincent, Ralph Gonsalves, had previously stated that the country would contribute no additional funding unless LIAT operations improved. Gonsalves justified the decision to release funding, saying there are areas which have improved, though certain challenges remain.
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