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| Chamber President, Mr Franklin Brand |
Ladies and gentlemen I extend to you warm greetings from our Board of Directors on the occasion of our Annual Private Sector Banquet.
Tonight, this flagship private sector event celebrates its Silver Anniversary. I consider it an honour to be leading the organisation at a time when this milestone is being achieved by the Chamber and the Foundation for National Development (FND). This celebration has caused me to reflect on the beginnings of the annual Banquet and also upon what it took to sustain this event over the past 25 years. A quick review of the history of the Banquet would reveal that it was the brainchild of the Chamber’s first full-time Executive Director, Mr Ricky Skerritt, way back in 1983. Mr Skerritt envisioned the banquet as a platform from which the private sector could address business concerns and national interests, recognise and encourage outstanding achievement in the business community, and create a forum wherein the private sector could learn from a well-respected featured speaker about the key directional and developmental strides which a new, Independent Nation should be taking. ~~Adz:Right~~
Having fleshed out his ideas for the Banquet, Mr Skerritt sold it to his Board, and together with Mr Melvin Edwards, the first Executive Director of the FND, whom the Chamber had hired, both gentlemen set in place what is today a solid foundation for the Annual Private Sector Banquet. Ladies and gentlemen, Mr Skerritt is here with us this evening and so I invite him to stand and take a well-deserved bow.
As is customary, the Annual Private Sector Report outlines the private sector’s perspectives on business successes, failures, threats and opportunities for the previous 12 months. The Report is also designed to present a bird’s eye view of what it takes to create and sustain a favourable investment climate in the Federation. It also functions as a stimulus for discussion, debate and contemplation of the socio-economic realities of St. Kitts and Nevis that would either help or hinder us in our collective quest for positive and sustainable National development. It is my intention during the next 30 minutes to follow this well established formula, cognizant of course, that you have just had a solid dinner and definitely do not need a sedative.
A review of the statistics of the International Monetary Fund (IMF) illustrates that St. Kitts and Nevis appeared to have realised a growth rate of 4.6% in 2006. The IMF report also makes a projection of a 6% rate of growth in 2007. This picture is heartening, as it demonstrates consistency in the annual growth rate, given that in 2005 this rate was 4.5%. Regrettably, our national debt is still too high in spite of Government’s ambitious fiscal adjustment programmes. The Chamber realises that much of this public debt – which in 2006 was 183.4% of Gross Domestic Product (GDP) – was attributed in large measure to the debt levels being carried by various statutory corporations: the IMF report states that of this 183.4% debt 73.4% was directly attributed to statutory bodies. This sobering reality forces the Chamber to reiterate its periodic recommendation to Government that all public corporations must endeavour to control expenditure while improving transparency and accountability. The Chamber also repeats its suggestion to Government that debt management and reduction should be a constant focus, with accelerated reduction being realised when idle assets are divested as promised via Government’s Privatization Programme that has been in place for the past few years.
It has been a proven trend in the past several years that much of the growth being experienced in the economy is the result of sustained activity in the tourism sector. As our Federation further develops tourism and other related sectors it is anticipated that this pattern will continue, within sustainable levels, of course. Our tourism sector continues to demonstrate buoyancy, especially through the investment of both local and foreign investors. Most of these projects currently in progress appear to be concentrated in the South East Peninsula, Frigate Bay and White Gate, and include Ocean’s Edge, Kittitian Hill and a major developmental project being undertaken by the Auberge Firesky group. The Chamber looks forward to the completion of these ventures for their positive spin-offs in job creation, foreign exchange earnings and expansion of our tourism plant.
~~Adz:Left~~ Coupled with the heightened activity in the tourism sector has been the sustained activity within the construction sector. We realise that much of this construction in 2006 and early 2007 was the direct result of Cricket World Cup 2007 preparations. This activity has resulted in St. Kitts and Nevis now positioning itself to take better advantage of the benefits of sports tourism, a goal which will be further enhanced with the completion of the new athletic stadium currently under construction in the Bird Rock Commercial District in preparation for the 2008 CARIFTA Games to be hosted here.
Manufacturing in St. Kitts and Nevis has continued to face its share of challenges while still holding its own as an economic driver. That sector collectively provides approximately 2,000 jobs and is a significant contributor of consistent foreign exchange earnings. As can be imagined, most of these earnings are realised largely by production among our US-owned manufacturing outfits.
Our manufacturing sector continues to confront competition from South America and Asia where labour rates and energy costs are much lower and raw materials are easily accessed at the local level. The Chamber continues to lobby for a solid, transparent system of incentives for our manufacturers - be they local or foreign – given their importance to our domestic economy. It is very easy to take for granted the socio-economic stability that the manufacturing sector provides. Moreover, given our Nation’s perennial problem of having a negative trade balance with the USA, Europe, and even our Caribbean neighbour,Trinidad and Tobago, it stands to reason that manufacturing should be encouraged and given a solid support system. It is obvious to the Chamber that such a support system would promote greater exports, as well as growth in locally manufactured goods that would have a net effect of improving our trade balance.
The Chamber further recommends that any fiscal incentive package being offered to the manufacturing sector be cognizant of the special needs of small and micro producers who are the most ill-prepared for regional and international competition insofar as standards, packaging, testing and marketing are concerned. This reality is especially true for our tiny but promising agro-processing sector. In an effort to assist Government with the design of a new manufacturing regime the Chamber has contracted the services of Mr Melvin Edwards to help our Manufacturers’ Division in formulating an industry position paper to be presented to the Ministry of Trade, Industry, and Commerce. We hope to complete this exercise by the end of this month.
In the past year, our agricultural sector appeared to have been kept afloat by the production of vegetables, herbs, beef, pork and mutton production. Although the private sector is heartened by this production activity we still feel strongly that we are producing well below our level of capacity. It is the Chamber’s vision that a strong partnership is needed between the Ministry of Agriculture and the private sector to make import substitution a reality.
We are blessed with enough fertile and arable land with which to feed ourselves, improve our own food security index, underpin our tourism sector with high quality local produce, and at the same time stem the flow of foreign exchange that drains out of this Country each month for the importation of agricultural goods that can be successfully grown here. The Chamber would even venture to go so far as to suggest that we could be a net exporter of agricultural products to neighbouring islands such as St. Maarten, the French Antilles, and Antigua and Barbuda. This move alone would have the effect of improving our trade balance. We wish to engage Government on this issue with a view to establishing a practical approach to its implementation.
The Chamber’s Board of Directors dedicated a considerable part of the past year to trade developments and trade negotiations at the OECS, CARICOM, and international levels. Obviously, our primary concerns centre around business facilitation in all markets as we neither want to see our business sector, the investment climate or our Federation become uncompetitive. Rather, what we want to see is a consistent effort on the part of our public and private sectors to (a) strengthen the business and investment climate; (b) improve competitiveness, including efficiency and dependability in public utilities; and (c) have the interests of the people of St. Kitts and Nevis front and centre at the trade negotiation table. For this reason, our Chamber is keeping a keen eye on the progress towards completion of the Economic Partnership Agreements (EPAs) currently being negotiated between the Europe Union and CARIFORUM territories. ~~Adz:Right~~
Just in the past six months the Chamber has made a heavy investment in keeping abreast of trade developments on all major fronts: this of course is in addition to the presence we have had at the meetings of the Trade Negotiating Group (TNG) in the person of Mr Adam Lynch of CONTEC Ltd. Much of this year’s trade-related meetings have been concentrated in the month of June which saw the Chamber participating in the following programmes that were held in Trinidad and Washington, D.C.:-
1. PANCAP HIV/AIDS Forum chaired by Sir George Alleyne
2. UK-Caribbean Business Council on Climate Change
3. Annual Private Sector Conference of the Caribbean Association of Industry and Commerce (CAIC)
4. 20/20 Vision Conference on the Caribbean
Each of these trade conferences are of major significance to the Chamber and our private sector. We are all well aware of the devastating impact that HIV/AIDS has had on the world of work, where the highest prevalence of infection appears among the 16-44 year old age range – our most productive workforce segment. With the Caribbean region holding the unenviable position of having the 2nd highest per capita incidence of HIV/AIDS after Sub-Saharan Africa, it stands to reason that the disease is not just a pandemic but could be a developmental catastrophe waiting to happen if our Caribbean human resource pool is compromised. If this happens, where are we to get our workforce from, and how will we compete as a global market player? To prevent this nightmare from materializing it is imperative that we as a Nation continue to educate our people on the realities of HIV/AIDS and the necessary preventive measures. We should also lobby for and seek out the alliances where we can source life-saving anti-retroviral drugs at the best prices for our people. Yet, to us in the Chamber, our second biggest problem with HIV/AIDS is that of stigma and discrimination which we emphatically condemn without apology to anyone.
The UK-Caribbean Business Council’s Meeting on Climate Change was a sobering and eye-opening exercise for business people in the Caribbean. This well-attended meeting in Trinidad served to remind us as business and Government leaders of the delicate balance that must be struck between sustainable national development and environmental protection in our quest to get ahead of the pack. It also highlighted the critical fact that for countries heavily dependent on tourism, extreme care must be taken not to over-extend ourselves for the sake of development. In other words, more hotels and attractions may mean more concrete and more jobs, but it also means less greening, poorer quality air, and greater stress on our limited water resources. Moreover, because we now live in “Hurricane Alley” in the Eastern Caribbean where there is heavy emphasis on tourism and related services, it is now a prime imperative that disaster planning be always high on our agenda.
~~Adz:Left~~ This meeting on Climate Change also reminded the Chamber of our Federation’s urgent need for an energy policy. We are far too dependent on foreign oil whose sky-rocketing prices continue to deplete our foreign reserves. It is the Chamber’s wish that a public/private sector partnership be established to design this energy policy with a view to encouraging businesses and residents to use alternative sources of energy. Such encouragement could be done in the form of granting duty free concessions on such energy conservation equipment, or rebates on property tax rates.
By far, the most significant trade forum for the Government and people of CARIFORUM held this year was the Conference on the Caribbean held in Washington, D.C. from June 19-21, 2007. This three-pronged meeting was held with US President, George Bush; Congressional leaders including Charles Rangel, Chairman of the Ways & Means Committee of the House of Representatives; CARICOM leaders in Government and the private sector; and the CARICOM Diaspora. Although some seven (7) years in the making, this landmark meeting focused - to a considerable degree - on trade and economic partnerships, education and security (inclusive of the drug trade).
The Conference on the Caribbean also saw the US Government agreeing to extend and upgrade the duty free provisions of the Caribbean Basin Initiative (CBI) and the 1991 Trade and Investment Framework Agreement. The CBI should have come to an end by September 2008. In our context, the extension of this agreement means (a) the protection of over 1600 jobs provided by US-manufacturers based here in St. Kitts; (b) the uninterrupted stream of foreign exchange earnings; and (c) the ability to secure the income of hundreds of households headed by single mothers who make up the bulk of manufacturing workers in this Country.
While it is clear that an economic partnership agreement between the USA and the Caribbean is a major expectation emerging from the Conference on the Caribbean, it will be foolhardy to think that the US Government is not fixing its gaze on the way we finalise negotiations of the Economic Partnership Agreements (EPAs) between the European Union (EU) and CARICOM. Similar sentiments were recently expressed by Barbados’ Minister of Foreign Affairs, Dame Billie Miller, in an interview with The Nation newspaper where she made it clear that the US Government will be expecting no less than similar concessions with the Caribbean as those eventually negotiated between the EU and us. The Chamber could not agree with Dame Billie more, and strongly recommends that our CARICOM Governments widen the scope and mandate of the Caribbean Regional Negotiating Machinery (CRNM) by creating a strong and influential Caribbean trade lobby in Washington, D.C. as a matter of urgency. To fortify this lobby, it would also be wise for CARICOM Heads to forge solid alliances with US political leaders, especially the Congressional Black Caucus.
By far, the segment of the Conference on the Caribbean that was most beneficial to the Chamber was the “Private Sector Dialogue” held at the headquarters of the Inter-American Development Bank (IDB). Apart from the eye-opening presentations and lively discussions held on aid, bi-lateral trade flows, shipping, and CARICOM exports of goods and services, there was also the realisation that the OECS Sub-region’s non-membership of the IDB was the primary reason why our region has had limited access to well-needed developmental funding from the IDB. This is unfortunate, given the positive economic impact that IDB-member states in CARICOM have been able to achieve through large scale financing of developmental projects in areas such as energy, transportation and economic transformation. Armed with this knowledge, the Chamber will of course channel its concerns about IDB non-membership through our Prime Minister when next we meet.
No Annual Private Sector Report is ever complete without the private sector’s examination of those socio-economic concerns that affect us as a people, as a Nation, and as a favourable place to live, work and do business. In keeping with tradition I wish to outline the following issues that have confronted us in the past year, as well as the private sector position on these matters:-
1. Crime – This social scourge continues to plague law-abiding citizens, the business community and Government alike. What is even more disheartening is the negative impact that crime has on our investment climate and on the confidence of both local and foreign investors. The cost of crime on our judicial and medical systems is also escalating, as is the cost to families whose lives are disrupted whether they be victims of crime or relatives of perpetrators. This, coupled with the fact that most serious crime is being committed by young men, is a dangerous recipe for social decline. The Chamber realises that the response to crime must be forthright, decisive, comprehensive and firm, with full collaboration from the public and private sectors. Such a response must insist that the malady of crime be attacked on all fronts – from absentee fathers, poor male role models, poor parenting skills, to greater parent/teacher alliances in education and child development. To do otherwise, would be to continue applying Band-aid® remedies for the symptoms rather than addressing the root causes of crime. I also wish to place on record that as recently as June 15, 2007 our Chamber penned a letter to the Prime Minister in which we appealed to him to take charge of this upsurge in crime – of course with our full support. We look forward to a reply to our letter, as well as a date on which we can meet to seriously address the matter. ~~Adz:Right~~
2. Electoral Reform - Much has been said in the press recently about the Chamber’s stand on the issue of electoral reform. Our position on the issue remains unchanged. While we consider electoral reform to be a major undertaking, it is also a very critical undertaking that should be done and be done well. Electoral Reform touches our very democracy as a people, and reform we should. In the Chamber’s view, the outcome of a positive electoral reform process is one that should build legacies for future generations and, as such, it should be fair, transparent, comprehensive, and above reproach. There should also be full disclosure in the entire process as the matter affects us all. We are living in the 21st Century, the Age of Information, and we must govern ourselves by the tenet that people can only make the best decisions about their lives, their future, and the things they value when they are provided with the necessary information prior to making those decisions. Electoral reform is one of these decisions and demands no less disclosure and transparency.
3. Labour – The training and re-training of our labour force is a constant priority for the private sector. In an age where we have begun competing on the world markets in terms of tourism and services, it should be no secret to anyone that our competitive edge rests with our people. Somehow, we must make the paradigm shift that education and training are life-long practices, regardless of age. We have an ideal opportunity to make this shift – challenging though it may be – in the face of the closure of our sugar industry. However, to make this shift our people, our workers, our employers and our Government must also change the culture with regard to training and empowerment. On this score, the Chamber commends the Ministry of Tourism, Sports and Culture on the wide scale service excellence training, Promises®, which was recently launched in St. Kitts in collaboration with the Freeman’s Group out of Texas. The Chamber itself has committed to partnering with Freeman’s Group to deliver similar, industry specific training to our private sector employees.
4. Civil Service Reform – This has been an ongoing project for Government over the past few years, with limited visible results. As we have noted in previous reports, there is a competitive advantage for Government to shrink as an institution. We live in an age where operations in the public and private sectors must be streamlined to realise greater efficiency, costs-saving, productivity and a work ethic. Moreover, a civil service run as a business is a plus for a destination serious about attracting foreign investment: no one has to remind us that service providers who respond more quickly and more accurately to the needs of customers are the types of people with whom customers prefer to do business. The Chamber also recommends that Government consider favourably the outsourcing of certain public sector functions that can be better managed by former civil servants with a proven track record for professionalism. We also feel that supervisory training is also key to any civil service reform programme: with even the best will in the world, such a reform programme will fall flat on its face if the middle management or supervisory level in Government does not lead by example, set standards of performance and empower subordinates where necessary. In other words, civil service reform must have a “Top-Down Approach” or it will fail.
5. Business Facilitation – This area continues to be of primary concern for the Chamber, especially insofar as the creation of an enabling environment for the development of Small and Medium Enterprises (SMEs) is concerned. The Chamber has lobbied for an SME regime; we have drafted the necessary SME legislation with input from all major stakeholders since 2004; and we have provided a suggested policy document to govern the treatment of SMEs. We now want the Act to be passed in Parliament and, as such, look forward to continuation and completion of the current deliberations over these critical draft documents.
It should also be underscored that a key reason for our desire to have a favourable SME environment is that of influencing a culture of entrepreneurship among our young people. The Chamber wants to mentor these people, knowing full well that the backbone of our domestic economy will, in the long run, be a thriving SME sector. We owe it to our youth to give them all the tools they need to achieve this. By September the Chamber will be further advancing such youth empowerment in entrepreneurship when we assume responsibility for the Junior Achievement programme currently being managed by the ECCB.
6. One Stop Shop for Investment – Again a Chamber priority. Our vision of the One Stop Shop is that of a business facilitation centre in Government whereby investors – be they local or foreign – can go to get help from registering a business, to applying for incentives, to understanding labour laws, to getting direction with technical assistance and trade facilitation. It has worked in countless jurisdictions the world over, and is responsible for the consistently high investment-friendly ratings that countries such as Taiwan, Singapore, Australia and the USA continue to bask in and profit from. The establishment of the One Stop Shop also takes away the bureaucracy and confusion that very often accompanies an entrepreneur’s quest for enterprise development. Moreover, by placing the services of this facility under one roof, namely the Ministry of Trade, it stands the greatest chance of survival with support from the Chamber, as well as other Government Ministries and Departments with facilitating roles such as the Ministry of Finance, the Customs and Excise Department, and the Inland Revenue Department.
~~Adz:Left~~ It is the Chamber’s intention that this Report will serve as the discussion point for interface with Government on a number of the critical issues we must confront TOGETHER as a Nation. As has been emphasized time and time again, what the private sector wants from Government is meaningful partnership, dialogue, and respect for our opinions, values, ideas and suggestions. We would imagine that Government should want no less from the business community either. I think that at the end of the day, we should all want the same thing, even if we feel we should travel a different road to get it. At the end of that road, however, the goal should be the same – and in our mind and heart it should simply be the positioning of St. Kitts and Nevis as a preferred regional and international destination in which to live, to work, to invest, to grow and to do business. Hopefully, at the end of that journey we would have realised that we did all we could for the good of our people and that of our Country through meaningful, demonstrative partnership.
