Rebranding the Caribbean
Senior Caribbean officials and business executives are promoting the region as a free-trade, emerging market economy whose growth rate is higher than that of Eastern Europe and Central Asia and more in line with that of booming East Asia. They pressed their case during Caribbean-American Heritage Month in New York City in June, at the second annual Invest Caribbean Now forum. Moderator W. Dave Dowrich, vice president of risk and capital markets in the Financial Institutions Group at Goldman Sachs, set the tone in opening remarks: “There are some who deem the Caribbean a playground. We hope through this forum to change that image. It’s certainly a vacation spot, but it has a strong and growing economy that cannot be ignored,” said Dowrich, who was born in Canada to Barbadian parents.
Richard Skerritt, chairman of the Caribbean Tourism Organization and minister of tourism and transport for St. Kitts and Nevis, followed with specifics. “We need investors who will not only invest in buildings, technology and infrastructure, but who will also spend an equitable amount of resources on developing our easily trainable Caribbean people and on expanding markets for our tourism products ... With the public investment programs of so many of our Caribbean governments having been compromised because of recent fiscal shocks, there should now be more opportunities than ever before for private investors to get involved in financing, designing, building, and even operating, select public-sector infrastructure and services projects.”
Invest Caribbean Now was created by Felicia Persaud, founder and CEO of the New York digital media company Hard Beat Communications Inc., owner of News Americas Now and CaribPR Wire. The June forum came on the heels of the “Going Green” Invest Caribbean Now forum, held in Guyana in April as a new feature of the Caribbean Tourism Organization’s annual Sustainable Tourism Conference. With the Caribbean accounting for a negligible portion of the $211 billion invested in renewable energy globally in 2011, the region must begin “to position itself to take advantage of this new sector sustainably,” Guyanese-born Persaud said at the time.
At the June forum, Jay Yeo, president and co-founder of Solamon Energy Corp., a Canadian renewable-energy developer, addressed the region’s potential in renewable energy. “Over ninety percent of the electricity in the Caribbean is generated by burning costly fossil fuels, giving one of highest average utility rates in the world. Located in the global sunbelt, the Caribbean is ideal for solar energy, for PV (photovoltaic) technology,” he said, referring to the technology that converts solar energy to electricity. “In the next twenty years,” he added, “several Caribbean nations have pledged to transition their energy mix to over 30 percent renewables. Given their market potential, we decided to invest in PV solar technologies.” Solamon has a 60-megawatt solar farm in Jamaica, as well as solar projects in the Cayman Islands, Barbados and the eastern Caribbean, totaling 120-plus megawatts of projects, a value of $600 million.
The New York City forum, held at the Marriott Marquis Hotel in Times Square, brought out such heavyweights as Jean Arnell, vice president of the French St. Martin Chamber of Commerce; Damion Crawford, minister of state, Jamaica; Rupert Griffith, minister of tourism, Trinidad and Tobago; Hubert Hughes, chief minister of Anguilla and minister of finance, economic development, investment, commerce and tourism; Alain Richardson, president, French St. Martin; Daniel Orlando Smith, premier and minister of finance and tourism, British Virgin Islands; George Vincent, minister of tourism, civil aviation and culture, Grenada; and, via video from Madagascar, Sir Richard Branson, founder of the Virgin Group and recipient of Invest Caribbean Now’s inaugural Leadership Award.
Branson won the award for The Branson Centre of Entrepreneurship–Caribbean, which he launched in Montego Bay, Jamaica, last September through Virgin Unite, the nonprofit foundation of the Virgin Group. “We’re empowering a whole new generation of entrepreneurs in Jamaica and the rest of the Caribbean. Through the Branson Centre and other initiatives to train up young entrepreneurs, we want to work with you to build an ever-workable Caribbean now and in the future,” Branson said in accepting the award.
The Caribbean is ready, regional officials and business leaders insist. “St. Martin has never been closed for business,” said Arnell, who is also co-founder and managing partner at Computech, a local IT services company.
Arnell cited the French St. Martin’s “strategic” location and qualities that make it a potential regional hub-and-spoke for business. These include weekly maritime connections and daily flights to North America and Europe; “good” air, sea and Internet connectivity to the rest of the Caribbean; its duty-free port, with no customs and other duties for imports and only “limited formality” for exports; low corporate tax; a bilingual, sometimes trilingual, skilled, young workforce with a $11.50/hour minimum rate; and the quality of its public infrastructure. “We intend to use this hub-and-spoke quality to our advantage in the coming years,” he said.
Arnell also outlined priority projects for the next five to 10 years. “One of the priorities in the next ten years is to diversify the economy and prepare St. Martin for the future in terms of technology and technological innovation,” he said. In addition to new road, water and sewage networks, electrical grids and expansion of the seaport and airport, a major plan in the works focuses on waterfront development to accommodate light cruise ships, expansion of the existing marina and hotel resorts. “We’re looking forward to seeing this development get off the ground in the next four years or so. We’re looking to create two thousand to three thousand jobs over the next ten years, especially with a view toward youth employment,” Arnell said.
Another key project is a Computech Technology Center, a public-private venture for technology development to be launched in October. Designed to satisfy investors’ demands for broadband connectivity to facilitate international access and for adequate infrastructure for data storage and data processing, the center will have connectivity to all technology centers in the region. “[French St. Martin] will be making significant investment in IT, not just infrastructure but services, capitalizing on cloud computing,” Arnell assured the packed audience. In addition, over the next five years St. Martin will create a free zone for light manufacturing and knowledge activity development, comprising a warehouse and office park exempt from local taxes.
In other areas of investment potential, Jonathan Blue, chairman and managing director of Blue Equity L.L.C., a Louisville, Ky., private equity firm with Caribbean interests, said the private equity focus is shifting to other emerging markets, including the Caribbean, as opportunities in the BRIC countries (Brazil, Russia, India, China) become overly crowded and their economic growth rates stagnate or decline. “There are many advantages for investment in the Caribbean markets for European and U.S. private equity firms: Linked closely together by geography, history and culture; trade agreements such as the Caribbean Basin Initiative and the Caribbean Community and Common Market; liberalization of foreign investment policies; diversity of investing in an individual country or a combination of countries; IPO vehicles; climate; and the acceptance of mezzanine rates for traditional commercial debt instruments,” Blue said.
However, he noted, “perceived” challenges — foreign exchange risk, minimal institutional capital, crime and corruption, letter of law, management depth, lack of scale or size, stability of government, low discretionary income, access, and language barriers — are primary deterrents for international private equity investors in the Caribbean markets.
“We, as current investors and stakeholders, must work diligently with the individual and collective markets and governments to overcome these perceptions,” he argued.
Does the Caribbean deserve a much closer look by U.S. investors? Persaud addressed that point on the eve of the 2012 Invest Caribbean Now forum. “In Caribbean-American Heritage Month, as we pause to remember the millions of Caribbean nationals who have lived in the United States since slavery and served and contributed to its heritage through finance, politics, the arts, science, education, business, sports, the military and government, it is important to focus on the strong investment potential of this region and the entrepreneurial spirit of its people,” she said.