The following essay, which examined Dominica's economic situation a few years ago, suggesting some ways of moving forward, was published in the View Point section of Dominica's Tropical Star weekly newspaper, in six parts, commencing August 21st 2002. For ease of reference the list below provides links to some of the various topics contained within the essay.
Tourism - promotion
an organic nation?
new levy on vendor
Dominica's Future - some food for thought
By: Colin A Lees - Nature Island Destinations Ltd.
Now that several weeks have passed, and much public debate has been aired since this year’s budget was introduced, I would like to express my own views, for what they may be worth. Some senior ministers have hit back at critics who complain, yet offer no answers to our current problems. The aim of this article is to suggest some new ideas and approaches, which may, at the very least, generate some thought and debate on ways to get us back onto the road to recovery.
I think we are all in agreement that Dominica is currently in a mess, with a spiraling 'black hole' of economic debt and no tangible means to service or reduce it. This current dilemma is due to many factors - a virtual collapse of the country's banana industry, an inability to attract sufficient tourists, a tiny industrial sector, a bloated and often inefficient public service sector and the failure of successive governments to either recognise the need for change, or have the courage at least to rationalise. Also, as members of the East Caribbean monetary system, the strength of our currency has remained protected from coming under pressure in the face of local recessionary trends. The end result is that the economy is faltering; most of us have less disposable income to spend and our traditional lenders have become weary, saying 'enough is enough', and have either 'gone home' or imposed stringent conditions upon new loans - and who can blame them?
This present government admittedly inherited an unenviable position. A tough and unpopular budget, designed more to impress our financiers than our citizens, has brought an understandable backlash from the population, both rich and poor. Many of our intellectuals, both businessmen and politicians, have observed that you 'cannot tax your way out of recession', and on that I am inclined to agree with them. When times are tough, people do not have any extra cash for the taxman. What simply happens is that we all spend a little less, the economy slows down further and our already serious 'brain drain' of talented individuals departing our shores accelerates, leaving an 'intellectual' black hole, as well as an economic one!
At least the recently televised debates with cabinet members have been encouraging, but have really focused only on three main topics - rationalisation of the civil service, bananas, and expansion of the technology sector, each of which I will comment on in turn, before looking at some other aspects of our economy. I was also encouraged to hear our Prime Minister talking of a more bipartisan approach to the operation of Government. For too long we have, as Lenox Honychurch aptly described in a recent address, torn ourselves apart through party politics. When intellectual resources are scarce, we must leave open the way to draw from the entire pot, and fully utilise what we have.
Civil Service: It was suggested that to cut back the civil service we have to lose doctors, teachers and policemen. To me, that argument is flawed - these are exactly the people we need most and on whom our society relies. Where the streamlining and rationalisation is required is in the administrative machinery behind them. We could easily cut out much of the bureaucratic red tape, to speed up and simplify many procedures. To me, having all these people employed by government is a waste, not just a drain on our financial resources, but intellectually, for if they were not employed by government they would invariably be active in the private sector, where their talents would be developing and contributing to the growth of the economy. It is easy to become complacent when in a 'secure' government job, but in the private sector you have to fight to survive. I can, however, appreciate why successive governments have been so reluctant to tackle the problem and cut back; in a small society where Government is the country's largest single employer, every minister must have countless friends and family members in the Government’s employ. To take such a step would be unpopular, not just with the unions, but also at home. Reducing the number of ministerial posts has been the first bold step in this direction, for which this government deserves credit, but the process must continue till we have a lean and efficient Civil Service.
Bananas: Bananas, bananas, bananas! I hear politicians and farmers forever discussing bananas. I listen to the radio and what do I hear? I watch the TV news and chat shows, what do I see? I buy the newspapers and what do I read? Yes...BANANAS! So much time and effort, yet where has it got us? The heyday of banana prosperity evaporated over two decades ago, when the big American players encouraged the development of a seemingly limitless supply, in countries with undervalued currencies, acres of flat fertile land and a ready supply of cheap labour. Banana production has more than halved in Dominica, as one farmer after another throws in the towel in an unrewarding marketplace. The DBMC, entrusted to buy from the farmers and sell to our overseas markets, could not even make a profit or simply break even. As production fell, it failed to trim its administration, sinking deeper and deeper into debt, until we now face around a forty million dollar debt crisis! Eugenia Charles recognized that there was no great future in bananas and encouraged farmers to diversify. A few did, but most chose not to hear. BANANAS - are we 'flogging a dead horse'? - I think so. Simply to maintain the banana industry at present levels, in a break even situation, takes a heavy toll on our island, for to do so we have to lace the environment with harmful chemicals - fertilizers, pesticides and herbicides, which are costly, degrade the soil, poison wildlife, pollute our rivers, damage our health* - and on this... our precious Nature Island! Our agro-chemical suppliers in the developed world would simply love us to continue buying from them.
Is there an alternative to bananas? Well of course there is. In fact, there are hundreds of viable farming alternatives. Dominica is very different from all of the other small Caribbean islands. It is blessed with rich volcanic soil, a warm sunny climate and a high mountain range, which generates a comparatively high amount of rain. Despite the steep terrain, this island has the potential to be the breadbasket of the region. Everything but a few cold climate crops grows well here. Not just well, but exceptionally well. Nowhere in the world have I seen greater variety, or tasted better quality and more succulent fruit and vegetables than I have here in Dominica. The options are limitless! To cite just one example; I last week returned from a vacation in Grenada, an island about 30% smaller than Dominica, with a current population about 30% larger than Dominica's and with probably just 30% of Dominica's rainfall. Unlike Dominica, the economy is very buoyant - miles of new wide roads, new shopping malls, supermarkets, and loads of new homes under construction. Yes, you may say, they have an international airport and a few more tourists than we do. Their most important earner is however nutmeg, and this generates more than half of the island's income. Admittedly, at inception, there would have been a five or six year waiting period before the trees began bearing, but after that - a low acreage, low maintenance, high yielding crop for the next sixty years, and a very versatile one too. The nutmegs themselves are simply dried then sold. The mace around them is removed, dried and sold either as-is or ground for seasoning. The fruit around the nut is used to make jelly, jam, syrup and liqueur. Another byproduct is oil for relieving muscular pain and arthritis. Grenada has nineteen collecting stations and three processing plants. We too have nutmeg trees growing in Dominica, but most are never harvested! The introduction of say three or four collecting stations and one small processing plant would be a start, whilst farmers are encouraged to plant more trees. If Grenada can do it, then why can't we in Dominica?
The Technology Sector: With the advent of the Internet, the world is our oyster! The opportunity is certainly there, but remember, the whole world is competing on a not altogether level playing field. The developed nations have an abundance of cash to throw at such development, whilst other 'developing' nations, such as India for example, have an inexpensive work force and a much greater pool for talent and ideas to emerge from. There are prospects - and these should certainly be encouraged - but don't gamble on it being our economic saviour!
Our only other significant industry right now is that of Tourism. The statistics, however, for annual occupancy rates of stay-over visitors are frighteningly and depressingly low, at around just 23%, having been in steady decline for several successive years. These figures are even more worrying when we realise that just a handful of hotels accommodate most of these visitors, thus pushing down the average further for the remainder. One reason for this has been the trend of 'mega-resorts' in popular destinations to team up with airline charter companies to provide cheap, all-in, bulk package holidays, which guarantee every plane seat and hotel room filled - easy and profitable for travel agents to sell. Another reason is ignorance amongst our potential pool of visitors. In the UK, for example, not only the average person, but most travel agency employees, are totally unaware that there actually exists an English speaking, East Caribbean island called Dominica available to visit. Our Government sponsored Tourist Department could do a lot worse than devote a section of its budget to some full page advertisements in The Sunday Times Travel Supplement, for example, with maps, editorials, advice on getting here, and which could be financially supplemented by a column of advertising by our local hoteliers, tour operators, manufacturers etc. Television’s Teletext and Cefax services are another medium that is a well used hunting ground for vacationers - I am sure a page on either would be money well spent. I believe the UK and Europe to be a far more logical recruiting ground than the USA, for though USA is nearer, getting here is often lengthy, tiring, and can at times be prohibitively expensive. The departure centres of Europe are, in contrast, more concentrated and competitive, and with the 4 to 5 hour time difference, the day time arrival and night time return make the journey far more comfortable.
So what about an international airport, I hear you say! Well, that certainly would be welcome, to make a cheaper, one-stop flight possible, but I believe its importance is over stated, and in current circumstances, unless offered to us complete as an aid package (some hope!), we have to consider not just the financial strain it would impose, but also its location. The journey by road to our Capital, Roseau (and the prime tourist areas in the Roseau region) should not, realistically, take more than 20 minutes, and on good quality road. Whilst the debate continues, we could in the meantime make night landing possible at Canefield, for there are existing flights passing over every evening, which might easily make one extra stop to bring in a few more visitors. Whilst pilots complain about cross winds whilst landing in a north- south direction, we should remember that, as the sun sets, so too do the winds settle, in normal conditions.
What about cruise ships? A touchy subject and one that has generated a lot of debate about how much benefit these actually bring to our island. Our delicate nature sites certainly take a pounding, lose their tranquility, and can become quite unpleasant when several hundred tourists suddenly descend on them at once! Whilst most cruise ship passengers enjoy an all-in package, few are inclined to 'lunch out' and the other islands offer greater shopping opportunities than we do, so who does that leave? Bus drivers and tour operators are kept busy, and a handful of Roseau shops, cafes and market stalls etc. do a little more business. How much income do we receive from the cruise liners themselves? Pitifully little. A few years ago, in an effort to extract a little more income from the cruise ship visitors, Dominica introduced 'Site User Fees', but these are relatively small, and to collect and monitor them, we have to spend to employ, or reallocate existing resources, primarily from the Forestry Division. We could introduce an 'Embarkation Fee' for all individuals leaving the ship, similar in concept and amount to the airport departure tax, but to realistically achieve this, in the face of the 'Bully Boy' tactics that the cruise liners themselves are known to employ, the whole region's islands would first have to agree, then act in unison. It could work, for the cruise ships need the islands far more than the islands need them. A lot to hope for though, as it then needs just one island's leaders to be 'bought off' and the deal collapses.
Our tourism product could and should I believe be improved and enhanced. Dominica is a 'niche market' attractive mostly to divers, nature lovers and the active outdoor type. Many of our hiking trails, however, are poorly or not at all maintained. Hiking is an important ingredient and we should make every effort, not just to upgrade and maintain our existing trails, in particular those up to the summits of our many mountain peaks, but develop new ones. The old French Road at Pond Casse for example, would not take much to reinstate as a trail and could link the Emerald Pool to Vena's Paradise. If there were to be created a network of trails, linking up a series of hotels and guesthouses around the island, a hiking package could be marketed to worldwide hiking clubs and adventure holiday promoters.
Litter is another subject that needs to be assessed and addressed. Despite the ongoing TV and radio ads, many Dominicans seem unable to break the habit of dumping rubbish in road sidings or over embankments, into valleys and down sea cliffs, making our Nature Island look most unattractive. Take a boat ride up the coast, just from Batalie to Point Round, and you will see what I mean. The skips placed along our roads are attracting a constantly increasing volume of rubbish, which the Refuse Division seems unable to keep pace with. Hence, these are often overflowing - both unsightly and smelly. Not the sort of sight to endear our discerning visitors.
Beggars are a further source of concern, especially so in the capital, Roseau. On cruise ship days, the pond life of Dominica descends onto the Bayfront to make the visitor's impression one of harassment and discomfort. I have seen visitors being aggressively harassed by beggars, clearly in sight of patrolling policemen who simply chose to look the other way. Many of my clients have made comment on this and some have indicated that they will not be returning to Dominica, for no other reason than to avoid confrontation with these human scavengers. Whilst many of these beggars do have genuine needs, which ought to be examined and addressed, allowing them to prey on our visitors is certainly not the answer.
When times are hard and jobs scarce, crime becomes more prevalent. The north east coast - a prime tourist development area - has in recent times earned a reputation for repeated muggings on the beaches and elsewhere. Though many such instances go unreported in the media, word quickly gets around and our reputation becomes irreparably harmed. How can this area continue to further develop its tourism product under conditions of police inadequacy? Swift and effective police action is urgently needed!
In recent years, successive Governments have offered a package of ‘incentives’ to encourage foreigners to our shores to develop new tourist facilities. These include the granting of customs concessions for the importation of building materials, fixtures, fittings etc., a waiver of the 10% Alien Landholder’s Licence fee and a ‘fast track’ program to assist and guide them through the regulatory procedures. As anyone who has actually followed this route will tell you, the reality is something quite different – an endurance course of misinformation, delays, indecision, fees, conditions, storage charges, more delays, more conditions... at the end of which we no longer expect to encounter the enthusiastic entrepreneur who first arrived here, but more likely a stressed and weary insolvent, wondering why on earth he ever chose Dominica in the first place. We must also examine the logic of some of the ‘conditions’. Much of Dominica’s charm lies in the small, individual and personal nature of its hotels, guesthouses and cottage resorts. To insist on a minimum of 10 guest rooms in order to qualify for concessions makes little sense and often encourages the developer to over extend financially or else compromise the quality of the facility. We must surely comprehend that quantity is less important than quality! In order to comply with current conditions, all items qualifying for concessions must be listed in one single application, even in the case of a phased development. This leaves no margin for error or change. If you miss something out first time round, you will not be given a second chance!
Whilst the main attraction of Dominica as a tourist destination is its unique and largely unspoilt natural environment - mountains, forests, rivers, lakes and pristine diving, visitors to the Caribbean nevertheless still like to enjoy relaxing at the beach. Our beaches are scarce by comparison with our neighbouring islands, though we could benefit more from the ones we have. The most popular and populated part of our island is the southwest, but from Scotts Head in the extreme south to a few miles north of Roseau there is not a grain of sand to be seen. Yet when we do eventually arrive at the first attractive beach – Donkey Beach at Canefield – what do we find? An industrial area! With the industry relocated, this could be designated a prime tourist development area, paving the way for guest cottages and restaurants, cafes and bars, boutiques, cinema and other recreational facilities.
I return now to the topic of farming, for farming has fuelled and sustained Dominica’s growth and development through much of the island’s recent history, and could and should, I believe, continue to do so. There were two basic traps we fell into, however, in recent decades. The first was, having discovered a lucrative crop, to plough almost all our resources into it - to become heavily reliant on it to the almost total exclusion of the other crops which Dominicans had traditionally grown or have the capacity to grow. This left us extremely vulnerable to fluctuating prices on the world market. Putting ‘all your eggs in one basket’ is always going to be a dangerous gamble, with serious consequences if it fails. Sometimes you can be lucky if, as in the case of Grenada and its nutmegs, the value of your crop does not come under excessive pressure from other new sources of supply. The big question though is usually not IF, but WHEN! Fair enough, one may speculate - take the gamble and ‘make hay whilst the sun shines’, but at least have a contingency plan to activate the moment you sense danger! The other trap was to allow and encourage our farming community to become reliant on costly, imported and harmful agro-chemicals in order to accelerate, protect and sustain this one important crop - bananas.
Dominica has long been regarded as, and is proud to be recognised as the Nature Island of the Caribbean. Our heavy dependence on agro chemicals, however, is in total contrast to this concept. We should not forget our national motto; ‘After God – The Earth’. In our evaluation of the current circumstances though, we need to consider not only the ecological strain that the practice of heavy agro-chemical usage places on our unique environment and the many health hazards* this poses, but also the trends which are becoming apparent amongst consumers in the countries we export to. Over the last two decades in particular, we have seen the produce sections of supermarkets in the UK, Europe and North America expanding their displays of imported tropical fruit and vegetables. The novelty value continues to increase, as does the demand for 'organically grown' produce. Nutrition - a varied and healthy diet - is becoming the priority of a constantly swelling number of consumers. Even though organically grown produce is often more expensive or looks less inviting, shoppers have demonstrated their willingness to pay a little more for it, to feel comfortable and safe with what they are eating. Now this is where I believe that the seeds of Dominica's future prosperity may be sown.
If Dominica were to make the transition to becoming a totally 'organic' farming nation, we would probably be the first in the world to do so. I believe this would generate considerable interest and support from the many ecological and conservation societies around the world. It would open the door for us to tap into a wealth of resources, attracting expertise, training and financial aid. Some societies or organizations may choose Dominica to set up 'pilot projects', whilst aid donor countries may view Dominica in a more sympathetic light. If our hotels and restaurants could all boast a menu of organically grown produce, then this in itself could entice a more discerning class of tourist to our shores. It would certainly make me feel very proud, if Dominica were to follow this course and lead by example.
* Note: many agro-chemicals can be harmful to our health, containing toxic or carcinogenic ingredients. When a young farmer friend of mine died recently, I was moved to write a poem about him and the harmful effects of the Gramoxone, which he often used. This was printed in the Tropical Star newspaper on July 24th 2002, and may also be viewed, along with some Internet researched data on Gramoxone, by following this link.
The importance of diversification cannot be overstated, for not only would this cushion us from the volatility of fluctuating commodity prices in the world marketplace, but in the worst scenario - one of world war, recession, nuclear disaster etc., the tourist sector would be the first to suffer, but we would at least be in the enviable position of being able to feed ourselves adequately, along with our regional neighbours. In the banana heyday, the DBMC fulfilled a useful roll in assisting farmers, organizing, collecting and distributing this single crop. What is required now is a similar facility, though one that focuses not just on one crop, but on everything Dominica is capable of growing and which travels well. The fortnightly cargo boats from Woodbridge Bay to Southampton ought to be leaving not laden merely with bananas, but with a wide selection of produce destined for the organically grown produce shelves of the British Supermarkets. If a small Brazilian pawpaw is able to command a price of £1.50 from the British consumer, then so too could ours. The most lucrative produce, however, is often the most new and novel fruit to appear. I have never seen displayed in England, for example, golden apples, mammy apples (apricot) or Easter apples. Rarely have I seen tamarind. A fair price is also commanded by the better-known varieties of fruit and vegetables. - limes, pineapples, passion fruit, avocado, carambola, plantains, pumpkin, sweet potato etc. Even if access to foreign markets were to prove elusive, the huxters will no doubt continue their splendid roll of selling our produce on neighbouring shores. To pursue this goal does not necessarily imply immediately abandoning our banana fields, but making a gradual transition, whilst farmers are encouraged to set aside, little by little, areas of their lots and estates for the cultivation of alternative crops, and most importantly, that there is adequate incentive for them to do so.
Alternative sources of Renewable Energy - solar, wind and hydro - are also more sympathetic to our environment and would compliment an organic farming policy. These have become more affordable and readily available in recent years as technology in this area has advanced, especially now that worldwide suppliers may be sourced over the Internet. Commendably, our national supplier DOMLEC already provides a large chunk of our electricity via hydro stations in the Roseau Valley. This is not, however, sufficient to service the entire island, leaving us dependent on dirty old diesel generators for the remainder. Encouraging conversion to renewable energy amongst individual users and businesses would ease the pressure on DOMLEC to increase its diesel generating capacity as the demand for power continues to grow. For now, oil (from which diesel is refined) remains cheap on the world market, but that could change overnight if war were to revisit the Middle East.
The public is understandably upset at new taxes introduced in order to sustain a Civil Service that we can all see is massively over-staffed for the services required of it. A staggering 68% of all tax revenue collected, we are told, simply goes to pay the wage bill each month, not to mention the other overheads. No wonder therefore that the IMF has asked us to trim down somewhat. When times are tough and recession is upon us, people have to lose jobs – it is a sad fact of life, unfortunate though it is for those who are made redundant. In the private sector Dominicans are feeling the pinch, so why should those employed by our civil service and who are excess to requirements, enjoy the luxury of being cushioned and subsidised at taxpayer’s expense? In recent years the Government has had to borrow heavily to maintain this workforce, and we now have the additional burden of loan servicing, which, we are told, costs the taxpayer over 20% of all revenues collected. We do not need to be mathematicians to realize that what remains to service and improve our essential services – police, hospitals, schools, roads etc. is (if there is anything left at all) just a tiny few percent!
When an economy is flagging, we need to examine the reasons why, in order to formulate a package of corrective measures to reverse the trend. As I see it, one of the biggest disincentives to business creation and expansion in Dominica lies at the ports. Customs duties on both personal and commercial imports are often crippling and confusing. The levy on some items reaches a staggering 98%! There are so many different categories of goods, each with a different levy, that there is much ambiguity, for an item may be charged according to any one of several different charge bands, however the customs official interprets his manual. This has led to an atmosphere of contention and mistrust of Customs among the public in general. To make matters worse, duty is charged not only on the goods, but on the freight charge also – and at the same rate! If, for example, I need to replace my motor vehicle’s starter motor or generator and this part is unavailable locally, I first have to source and purchase one abroad - this price may also include a foreign sales tax. On top of that I must pay for carriage (air freight if I need it urgently). Then, when it arrives, I pay customs duty on both the part and the freight. When I finally have the unit in my hand it is likely to have cost me more than three times the actual sale price! I would therefore advocate both a reduction and simplification of customs duty, with duty on freight removed entirely and a standard charge of say 25% levied on absolutely everything (other than medical supplies, books and educational materials - which should remain tax exempt), and applicable to everyone. Whilst the number of customs inspectors may remain the same, the clerical staff supporting them could be drastically reduced. This may, in the short term, result in a drop in customs revenue collected, but will also result in considerable savings in wages, administration costs, paper and print, and will in the long term increase, as the economy improves and volume expands.
One area where I believe a sound case can be made for raising tax is in relation to the increasing number of heavy vehicles utilizing our roads. Most of our road surfaces are pretty old and were built at a time when the number of vehicles using them was in the hundreds, compared to over 20,000 today. Those that cause our road surfaces to break up and deteriorate so rapidly are the heavy vehicles. The larger and heavier they are, the more damage they inflict. Even after a pothole has formed, drivers of cars, jeeps, and even buses, are adept at dodging them and cause little further damage even if they fail to avoid the odd one or two. Heavy vehicles, on the other hand, do not have the same manoeuvrability and consequently punish our road surfaces mercilessly. I would therefore propose a vehicle licence charge directly linked - increasing on a parabolic scale - to the loaded weight of the vehicle. Let those most responsible for the deterioration they inflict on our road surfaces shoulder more of the cost of restoring them.
The sale of land and property already generates a considerable amount of revenue for Dominica. On top of the sale price, the purchaser has to pay an additional 10.5%. 3% of that covers legal fees, whilst the remaining 7.5% goes to the treasury in the form of various taxes – this compares with a mere 0.5% stamp duty in the UK. Additionally, a foreigner wishing to buy more than 1 acre for residential or 3 acres for commercial purposes is required to pay a further 10% in order to obtain an ‘Alien Landholder’s Licence’. In the Government’s recent budget, a further 2.5% levy was imposed, this time upon the vendor who, if he has employed an agent, also pays typically around 5% for this service. As an example, let us take the worst-case scenario of a foreigner who comes to Dominica and purchases a property for which he needs to obtain an Alien Landholder’s Licence. Then, for whatever reason, he decides to leave Dominica and has to resell his property, employing an agent to assist him. Simply to recover his original investment in a break-even situation, he has to sell his property at the enormous premium of 28%!
The property market in Dominica right now can at best be described as stagnant – many will tell you it is in decline. In such a situation some stimulation is necessary. This will not be achieved by applying further taxes; in fact further taxes will have exactly the reverse effect. What is required is an injection of incentives, to lure back both sellers and buyers. One further obstacle I observe currently is that there are a lot of property owners around with land they would like to sell, but are unable to do so as they have so far failed to apply for registered title. To obtain registered title now requires them to pay taxes, not on the price they paid for it at the time of purchase, but at current market value! Of course, in the majority of cases, this is far beyond their humble means, so the land continues to remain unregistered, and consequently a lot less marketable. One way to get these properties moving again would be for the Government to offer an ‘Amnesty’ – a period of say 6 months during which any owner of unregistered land may apply to have it registered at a nominal tax penalty of, say, $100 per acre or part thereof. Whilst this would generate only a small amount of revenue for the exchequer, a small amount is nevertheless more that none at all. The properties would, however, then become much more marketable, thereby generating more revenue.
A further cause for concern is the ambiguity relating to the 7.5% in taxes paid by the purchaser, for these are applied to the ‘market value’ of the land, as opposed to the actual ‘sale price’. In some instances, a Government appointed valuer might assess this ‘value’ to be a sum in excess of the ‘sale price’, invariably leading to a conflict situation between Government and purchaser. Logically, one may argue that the sale price achieved reflects the ‘true value’ of the land, for every vendor wishes to achieve the highest possible sale price, and its true value cannot realistically be interpreted to be any more than that which the highest bidder is willing to pay for it. It would therefore make more sense if these taxes were applied to the actual ‘sale price’ and not to an ambiguous ‘value’.
The offshore sector was in the late 90’s bringing in a much-needed source of additional revenue and appeared to be growing at a steady pace. The scope of our offshore legislation provides for the creation of Trusts, IBC’s (International Business Companies), Offshore Banks, Internet Gaming Companies and Exempt Insurance Companies, along with an Economic Citizenship Program.
Though I have never personally favoured the policy of selling Dominican passports, the Economic Citizenship Program has nevertheless generated some much needed income, which has in turn been utilized, in the form of cheap loans, to further encourage expansion of our tourism facilities. This is fine, so long as agents are thorough in screening applicants as required by the law. One of our two principal aid donors, Canada, was angered after certain individuals of dubious background and intent, were found to have entered that country on Dominican passports which they had obtained through the program. The reaction was to introduce a visa requirement for Dominicans wishing to visit Canada, thus devaluing Dominican citizenship, inconveniencing all Dominicans, putting in jeopardy further aid packages from Canada, and tarnishing our reputation internationally.
The price of Citizenship was pitched at US$50,000. This was on a par with several other small nations that at the time were also offering a similar facility. In the recent budget, however, the Government increased this fee to US$150,000, in the rather naïve expectation that this would triple the revenue collected from the sale of passports. The reality is, of course, that they have effectively ‘killed off’ the citizenship program by overpricing it. This has now placed tourism developers in mid project and who were reliant upon the program in a quandary, for their source of funding has suddenly evaporated! If it was the Government’s intention to ‘kill off’ the citizenship program, then why not do it cleanly, and simply announce its termination? This would at least restore some credibility with Canada and other nations increasingly suspicious of Dominican passport holders.
Offshore banking, by its very nature, suggests a facility to avoid controls imposed upon businesses or individuals of other countries. That allegations of money laundering are in frequent circulation should therefore surprise no one. It was not long before Dominica (along with several other Caribbean jurisdictions offering similar ‘offshore privacy’ services) ended up on OECS and FATF ‘black lists’ of nations offering offshore services with inadequate regulation and control. To satisfy conditions for removal from these ‘black lists’ Dominica introduced hastily prepared legislation, some of which is contradictory, designed to compromise bank privacy. We are finally off the OECS black list and are now told that the FATF blacklist has been abolished (though this remains unconfirmed). This has nevertheless left our offshore sector battered and battle weary. To move forward, the sector now needs to ‘re-invent’ itself. Maybe this could be achieved by transforming into a complete Financial Services Sector, of which offshore is merely ‘one string of the bow’.
One saving grace for Dominica, during these recent years of economic decline, has been the steady inflow of returnees – Dominicans who have spent decades of hard work in the cities of UK and North America and who return to Dominica to enjoy their retirement years back home. Their savings and pensions are being spent on new homes, cars and other consumer items, all of which help to keep our fragile economy ticking over, providing additional tax revenue and sustaining jobs. Maybe more ought to be done to encourage this trend and to facilitate them further on their return.
Salaries of ministers and MP’s in Dominica remain amongst the lowest in the Caribbean. Consequently, many appropriate political candidates are not lured into the political arena for purely economic considerations. I would favour an urgent review of this situation, so that when elections come around once more, we may have a greater pool of talent and experience from which to select our parliamentary representatives.
Finally, I would make an observation on the subject of corruption, as this was a major issue in the run up to the last election. During times of economic prosperity, when business is booming and everyone is making pots of money, a certain amount of corruption among politicians may go unnoticed, or even tolerated to a degree, but in times of recession and declining fortunes, that tolerance vanishes abruptly; the government’s conduct, as well as its performance, comes under close scrutiny from the suffering electorate. Under such conditions the public is unforgiving and politicians misbehave at their own peril!
In conclusion, I will attempt to summarize my considered agenda to take Dominica forward.
1. Listen to the electorate - remove the recent unpopular taxes, not just to ease their economic hardship, but in realization that they do nothing to stimulate our flagging economy. They serve only to stifle it further.
2. Rationalize (simplify, streamline and reduce) the Civil Service, not simply to satisfy the IMF, but because it is unaffordable and to do so is essential to our economic revival.
3. Diversify - recognize that our ‘love affair’ with bananas is over and take appropriate measures to encourage and support our farmers in the process of diversification.
4. Improve our tourism product - night landing at Canefield - develop more hiking trails - move industry from Donkey Beach and make this a tourist development area - tackle the problems of litter, beggars and crime - ease conditions for concessions.
5. Targeted promoton - market Dominica as an eco-tourist destination, not by squandering our budget sending delegations to trade shows, but by targeted advertising in the newspapers and on the teletext services of Britain and Europe.
6. Renewable Energy - remove the legislation that gives DOMLEC monopoly over power generation and encourage renewable energy projects wherever possible.
7. Customs - reduce and standardize customs duty to a level where it is no longer a disincentive to returnees, entrepreneurs, and to our economic development and expansion in general.
8. Increase heavy vehicle licence fees to finance the road repairs they make necessary.
9. Stimulate the Property market - remove the new stamp duty imposed on vendors and offer an Amnesty to owners of unregistered land to apply for registered title at a nominal tax penalty they can all afford.
10. Economic Citizenship Program – either re pitch the price at an affordable level likely to generate some business, or else scrap it altogether. Personally, I favour the latter option.
11. Increase MP’s salaries, bringing them into line with the regional average, thus attracting more talent into our political arena, but insist on them remaining ‘in state’ to serve the electorate.
12. Go 'ORGANIC'! - transform Dominica into the first totally organic farming nation, putting Dominica on the map, attracting interest, guidance and financial assistance from worldwide resources. In a world where environmental standards are being so flagrantly abused, let us lead by example, adopting a more caring approach to our unique natural heritage and adding legitimacy and significance to our reputation as the ‘Nature Island of the Caribbean'. We could all then feel proud at doing justice to our national motto: After God – The Earth!