It amazes me how we as Virgin Islanders and residents get in a tizzy when development is discussed. Any reasonable person would say that we ought to look into opportunities when they are presented, and I agree. However, the opportunities need be considered from a historical perspective and put into a national context. Yes, we need to improve our physical port infrastructure, seaports and airports, and bring them up to a standard that reflects the quality of service we desire to deliver. We have known this for years, but we have not taken serious action.
Where I, and others, become concerned is when projects are presented to the public as a “sales pitch,” without objective analysis where we receive substantive information to be able to make an informed decision. Objective feedback, I think, is a reasonable response to an initiative that will commit this territory for almost 50 years — which means it is multigenerational, so I need to be looking out for my grandchildren’s inheritance. The Cabinet is the board of directors, so to speak, of Company Virgin Islands. I, as a shareholder, would like to feel comfortable that all interests are protected and the best possible decisions are being made.
Most people don’t walk into a bank for a loan and take the first thing that is put in front of them without asking questions about rate, term and penalties. Nor do they go to a car dealership and buy the first car the salesman says would suit them without asking a question about price and features. So let’s go looking for the devil in the details of unspoken agreements that can have a high price tag if we are not careful.
After some thought, here are what I feel are reasonable questions that came to mind after recent public meetings. If transparency is the rule of the day, they should be easy to answer. And please understand me: I’m not looking for right or wrong answers, but for information to come to a sensible conclusion, as we all should do for ourselves at the end of the day.
1. Where do the airport and cruise ship dock developments fit into our national development plan, if we have one? Having worked in the public service, I can say without fear of contradiction that we can draft plans well, but executing them is another story. Lack of plans has led to ad hoc development over the last 30 years, and projects to fix immediate problems are not development. Why? Because as soon as the next problem surfaces, we rush to deal with that and forget about the issue at hand until it catches fire again. We are playing catch-up when we could have been leaders of the pack — with annual government revenue over the last five years alone exceeding a billion dollars! No one builds a house without a plan, and a territory is no exception to the rule. Too often we put the cart in front of the horse and wonder why progress isn’t being made. With close to $900 million being spent in this small place a year as gross domestic product, we need to ask ourselves why we aren’t farther along. Then we need to fix the problem. Leadership that builds the territory through the people is where that starts, but that’s another conversation for another day.
2. Where do the airport and cruise ship dock developments fit in to our tourism strategy, which would include a strategy for cruise tourism? I believe I’ve heard one was being developed coming out of the tourism summit held last year, and these projects are means to an end. Yes, the developers have industry contacts we may not have, but we can’t rely solely on a developer to market the VI for us and hope to attract cruise or overnight visitors, because if and when the tide goes out and it’s not profitable to be here, what happens to our tourism sector?
From the days of the 1962 O’Loughlin Report, foreign investment in tourism was seen as the panacea to make us economically viable so we could be taken off United Kingdom grant aid. According to the report, which was carried out more than 50 years ago, the idea was that foreign investment would jumpstart the local business sector and Virgin Islanders would eventually dominate the economy. Ask yourself a question: Of the $900 million being spent annually, who are the producers and who are the consumers? This project is about something bigger than what is in front of us. Foreign investment is not bad in and of itself, but a dependency on it for national development means we will always be looking out on the horizon for help. It seems to me that we switched out one form of grant aid for another. Talk about things that make you go, “Hmmm.”
3. What concessions are to be a part of the cruise pier deal: lease for the property, duty exemption, payroll taxes and so on? Government revenue is recovering from the decline in the recession (the rest of the world is still trying to catch itself) and we have to rebuild our reserves. In a nutshell, we need to get our financial house in order, and to continue a “policy” of incentives at any cost worsens our financial situation long term. As a matter of fact, we need a proper investment policy that sets the stage for negotiations in line with our development strategy. Frankly speaking, if the developers have $75 million to spend, I think they should be required to pay at least a reduced rate of duty, rather than $0. Cash flow is needed for other equally important developments in the health and education sectors, and developers cannot and should not be depended upon to do things for which we should take responsibility as a territory. This leads to my next question.
4. Have we done our business homework? This is where the army of 3,000 public servants play a significant role:
a. Has a business case been done with such information as cost-benefit analysis and revenue predictions for developers, the government and the BVI Ports Authority? It is important for us to examine the different scenarios (best case, worse case and in between) and understand fully what we are getting ourselves into. Any serious shareholder wants to see the numbers behind the purported benefits. How many ships/calls are guaranteed in the cruise pier agreement, and for how many years? All 48 years of the contract? How many visitors are guaranteed for the 48 years? What are the exit clauses? What are the developers’ responsibilities, and what are ours going to be in terms of maintenance and improvement/upgrades of facilities during the term of agreement? We would want to stay current with design trends and not have the same product even 15 years from now. The industry changes, and we have to anticipate and plan for it.
b. Are these companies financially sound? What is their proven track record? Having a chequebook doesn’t mean money in the bank, and we have a sad history of dealing with companies that go bankrupt or prove not to be operationally viable because we didn’t pull back the curtain to see what’s happening behind the scenes. I found a lot of sketches but no actual construction or completed photos on the website of IDEA, the company that designed the plan for the cruise pier development. And no one should take offence to being investigated, because that is how business is done anywhere else in the world. What is the contingency plan if the project fails? What are the penalties to the developer if it fails? Urgency is no reason for not exercising due diligence, and lack of due diligence can be very expensive.
c. Has a socioeconomic analysis been done? Tourism is only one side to our national development, and we need to keep an eye on the big picture and understand implications on traffic, port management, the transportation network, increase in immigration of transient workers, health services and so on. If a ship comes in and there is a major accident, can our emergency services respond? We can’t just give lip service to these matters, either, because they could cost us the very thing we’re holding dear.
d. Have we crunched the numbers as to how to prepare ourselves to buy out earlier rather than wait 48 years? Have we considered how to involve VI investors? It is time we own a piece of the VI pie that everyone else is trying to get a slice of.
5. The Contractors Association in the Cayman Islands is very concerned about the China Harbour project that is in the pipeline there because marginal local participation is expected: The Chinese tend to bring in their own workers and set up work camps. They feed and house the workers, thus depleting potential revenue into the local economy and building China’s.
The reason given is that local labour is too expensive. It seems that part of the agreement also is that they will bring in stores, potentially to the detriment of local stores. What is going to be in our agreement to mitigate those tactics that are “hidden costs” to the free investment? Will a certain percentage of business be required to be done with VI contractors and suppliers? We’ve heard that 20 500-square-foot spaces are reserved for VI businesses, but what is the total commercial space so we can put that into context? Ten thousand square feet out of 50,000 versus 10,000 out of 100,000 is a big difference.
So these are five simple questions, of many that could be posed, that I believe we need to answer honestly for every project going forward — especially the airport expansion at Beef Island. That is, after we get a national development plan on line.
If some answers are less than desirable, it doesn’t mean we should scratch the project, but we should get a plan to put things in place to mitigate risks and facilitate success for the project and the territory.
We are a very intelligent people, and let’s not be afraid of having the healthy debates as to the direction we want to see our territory move. At the end of it, we should come together and selflessly do so in a sustainable way — not for us, but for the next generation. As we say on the Vigilate Dialogues, “Let’s continue the change in conversation for a better Virgin Islands!”