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A Virgin Islands direct foreign investment conundrum
The latest outcry appears to be sourced in a Virgin Islands News story, of June 28, 2012, that also appeared in BVI News Online, about a $75 million plan by the current Government, to transform the cruise ship dock area into a new cruise ship retail village and park, attractive waterfront with state of the art facilities, and with the aim of creating a much more pleasant experience for the cruise ship visitor and guest.
Apparently this is a project that will be financed mainly by foreign investment; with the government offering the usual carrots and incentives. Good thing, in this Observer’s view, considering the current precarious state of the national, regional, and global economy.
The cries from anonymous bloggers are as expected when something dramatic is proposed- wholly negative: ‘’who getting kickback on this one; we are going backwards giving away our birthright to Disney; I cry for my country; Americanized, South Florida, generic, oversized development. It will add to traffic, trash, beach crowding, and destruction.’’
‘’ It is the beginning of the end for the BVI and its uniqueness; a sell out; worse than Bi Water; the only thing missing is Donald Duck and Mickey Mouse; and the invaders have returned.’’
This layman cannot agree with these assertions, but the BVI when one last inquired, remains a democracy, so alternative opinions are a very healthy thing indeed!
One lone supportive post asserted, ‘’ tell us what you suggest we build there, and for the wider capital, and wider BVI, as it relates to tourism. Tell me how you suggest we pay for it, since we cannot borrow a dime, as we speak. It’s good to bash, it’s easy, simple, but not so easy when it comes to putting forward alternative and sensible solutions. So please tell us, how you suggest we develop, and who will pay for it.’’ Sensible comment in this layman’s view!
The responses in BVI News Online were less acerbic, but overtly negative nonetheless: ‘’ this is the most ridiculous project talked about to date; putting strain on existing problems; not a local company is it! Sovereignty no concern here; sea blast is going to ruin this; not reflective of the BVI; and so on and so forth.’’
Another lone positive response in the BVI News stream alluded to the same assertion made on VINO by the ‘pro the new pier development blogger;’ it may or may not be the same person: ‘’everyone wants to have this and have that, but they don’t want to spend any money, the people taking the risks must have a say.’’ True Blogger: AKA ‘’Guest! I totally agree!
And yes, that response in a nutshell contained the reason why international investment is the way forward for Virgin Islands development, albeit with a caveat: that Government must ensure that the local population must be both involved in, and protected, in any new direct foreign investment developments, and by the force of law.
Now an important thing to bear in mind is this: it is the inflow of cash and foreign capital, from tourism, financial services, and foreign direct investment that lubricates the engine of the national economy, and pays the wages and salaries in both the BVI public and private sectors.
It is where Government receives the critical public revenues that pay for education, public health, physical infrastructure, law and order, and everything else that makes life worth living in these Antilles this 2012. So what are these bloggers screaming about?
Is this country able to sustain itself? Of course not! When the BVI arrives at the place of self dependence, when it is able by its own efforts to support economic growth and development: to put bread on the table without the need for international trade and foreign investment so to speak, then residents can tell the foreign investor and international traveler to take the proverbial hike up the Himalayas.
The BVI is not a self sufficient country and economy: it is not able to feed itself by any means, and put its own roof over its head. Its beautiful seas, golden sands, luscious hills, bountiful livestock, great calypsonians, and myriad fish stocks, cannot by themselves put the proverbial piece of bread on the table. That economic model of an early agrarian and rustic paradise disappeared decades back, with the onset of globalization, and an economy driven by digital technology.
Even the internal economy: the internal exchange of goods and services; the local marketplace; that too remains wholly deficient. That is the reason the majority of residents shop in St. Thomas, and the USA. Furthermore, the goods and services that dominate the local markets are wholly foreign imports. Even staples are imported! The BVI is an import oriented economy. The day World War Three breaks out, and the ships stop coming from the USA, and are requisitioned for battle duty, and no longer dock at Port Purcell and thereabouts: then what?
However, simple observation will show that the international investor is the key factor in Virgin Islands economic development. It is the foreign investor, and that includes the visitor to these shores from the rich North, who supports the standard and quality of life of all residents, and BV Islanders. Yes, it is the foreign investor, and foreign visitor, who put the bread on the table. No one can deny that fact: try as they may!
More to the point, an article in Economy Watch of June 30, 2010, ‘’ BENEFITS OF FOREIGN DIRECT INVESTMENT,’’ highlighted a fact that, ‘’ one of the advantages of foreign investment is that it helps in the economic development of the particular country where the investment is being made. This is especially applicable for developing economies.’’
But even more noteworthy is the fact that, ‘’ during the 1990s, foreign direct investment was the major source of financing for most countries that were growing economically.’’ It is foreign investment that helps countries, when they face economic hardship.
Economy watch further asserted, ‘’ for host countries, inward foreign direct investment, has the potential for job creation and employment, which is often followed by higher wages. With globalization, companies now see the world economy as their market.’’
‘’Finance and Development, a quarterly magazine of the International Monetary Fund,’’ in an article going all the way back to June 2001, ‘’ HOW BENEFICIAL IS FOREIGN DIRECT INVESTMENT FOR DEVELOPING COUNTRIES,’’ gave four benefits of foreign investment: ‘’ it allows the transfer of technology to developing countries; recipients often gain employee training in the course of operating the new business, which contributes to human capital development in the host country; profits generated by foreign investment contribute to corporate tax revenues in the host country; Foreign direct investment is thought to be ‘bolted down’ and cannot leave so easily at the first sign of trouble.’’ Unlike other types of shorter term capital, such as offshore bank accounts and short term debt instruments.
Of course, there are drawbacks with foreign investment: ‘’ a high share of foreign investment may be a reflection of institutional weaknesses in a country,’’ and it may give the foreign investor leverage over the local governing establishment if unchecked.
However, the IMF, recommends that receiving countries should, ‘’ focus on improving the investment climate for all kinds of capital, domestic as well as foreign.’’ And that must mean good governance, good economic planning, good physical infrastructure, and ensuring the jurisdiction is a safe and secure place to live, work, invest, and do business.
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