ST. LUCIA Choosing the Puerto Rican Road
Kelly, Deirdre
This tiny island nation in the eastern Caribbean has some things in common with its now famous neighbor, Grenada. Each has a population of just over 100,000, lush volcanic scenery that...
...We have some of the richest soil, but we can't live on bananas only...
...Lucia experiCastries graffiti: Comoton Must Go: Canitalism Gone Mad MARCH/APRIL 1985 enced the inevitable in 1980, when Hurricane Allen leveled parts of the island and completely destroyed the year's banana crop...
...Domestic Investors Shunned Other complaints come from St...
...In the open-air markets women vendors complain that no one has money to buy their goods...
...Lucia is attracting "fly-by-night" industries with no real commitment to the island's economy...
...Answers the government officer quoted earlier: "What we have to do is create our own jobs...
...The officer says he takes the "unpopular view" that strict import quotas are necessary to encourage consumption of local goods, and that the main focus of government concern-and money-should be the agricultural sector...
...There will be serious discontent if there is no reversal in unemployment," he predicts...
...Despite the drawbacks, Lewis found St...
...Lucia sends its brightest to the United States or England for higher education...
...Insurance broker Servillus Jeffrey, for example, would like to begin a sizeable electronics assembly plant on the island, but he says Compton's proforeign investment policies discriminate against local entrepreneurs...
...Lucia Labour Party (SLP), made up of moderates and some radical socialists...
...Natural disasters...
...His company is serious enough about the venture to designate St...
...She is currently a research associate with the Pacific Studies Center in Mountain View, California...
...His example: last year the St...
...One result, as characterized in a recent World Bank report, is a St...
...Lucia says he understands well the pitfalls inherent to an economy dependent on foreign investors...
...At the moment the government is not geared properly for industrializing," asserts Lewis...
...Lucia is able to feed itself over the next 10 to 15 years...
...In the short run he is betting that a flagging tourist industry will revive and generate badly needed foreign exchange...
...In the countryside, families living in rough shacks wait resignedly for long-promised electricity and running water...
...In addition, the government has designated areas of the country "free zones," where companies are exempt from customs procedures and some civil codes...
...But in reality, the investors sometimes have the mentality that St...
...You come here with a factory, and you want some water pipe-there is no water pipe...
...Located square in the hurricane belt, St...
...The result: severe liquidity problems," warns an authoritative newsletter published for investors interested in the Caribbean...
...Basically, they cannot hack all the problems," he says...
...He pays his workers about $18 per week...
...So there have to be some government supported incentives for farmers to grow vegetables and dairy products...
...Cheaper Latin American bananas dominate markets elsewhere...
...Each has a population of just over 100,000, lush volcanic scenery that steals the visitor's breath-and a gravely underdeveloped economy that places it among the hemisphere's poorest countries...
...But we are in a very difficult bargaining position, and one that is very simple...
...Among the problems holding back St...
...Lucia government "handicapped by the scarcity of administrative and professional skills...
...While Grenada's Maurice Bishop courted Cuban and Soviet-bloc aid, St...
...Too much bureaucratic red tape and a lack of service industries to support the manufacturing sector are among the problems he cites...
...asks one prominent labor leader who is skeptical about the government's plan to expand exisiting free-trade zones and develop others...
...I don't think this should be tolerated...
...Jeffrey, who holds an MBA from the University of California at Los Angeles, says he has started operations "through sheer determination," even though his efforts to expand have been thwarted by local lending institutions, and ignored by government...
...These incentives include tax holidays up to 15 years, duty-free importation of raw materials and, in some cases, full repatriation of profits...
...electronics firms inREPORT ON THE AMERICAS 6cluding Mattel Toys...
...Once tax holidays end, he says, many transnational companies move on...
...But for Harry Joseph, general manager of the government's National Development Corporation, the strategy is one of necessity...
...But this is looking at it very pessimistically," says Jeffrey, who has worked for U.S...
...The companies operating in these zones can hold life or death power over the government...
...After presiding over an unspectacular but growing economy for 15 years, he and his United Workers Party (UWP) lost a 1979 general election to the St...
...The thing that is always thrown back at me is that if I go bankrupt, they will have trouble selling my equipment anywhere else...
...And does it want to...
...Compton's formula for recovery is what Caribbean development specialists refer to as the "Puerto Rican model...
...Lucia's electronics industry...
...Their demands are excessive...
...His request for a loan of 50,000 Eastern Caribbean dollars (about $18,500) was turned down by the banks, says Jeffrey, because he was unwilling to offer virtually all his personal property as collateral...
...The year before, the Soufribre volcano erupted next door on the island of St...
...His fledgling company, Caribtronics, so far comprises a college-trained production manager and eight women workers who conduct simple testing of components...
...Lucia...
...Kitts/Nevis...
...Lucia was still suffering the aftereffects of bad management by the SLP...
...And there many of them stay, lured by higher pay and a wider choice of careers...
...Lucia needs them more than they need us...
...troops invaded Grenada in October, Compton hailed it as a victory over "the moving finger of Marxist dictatorship...
...We have a crime problem, at a level not known for a while," says Guy Ellis, editor of the island's newspaper, The Voice...
...He would like to see more farming co-operatives on the island, as well as industries he calls "indigenous," such as solar drying of fish and processing of local fruits and vegetables...
...Lucia's low wage rates ample incentive to come to the Caribbean...
...Our so-called development bank does not take a cooperative attitude towards even a local manufacturer who is going to employ 100 persons...
...Lucians who consider foreign manufacturers like Lewis part of, rather than a solution to, their country's economic difficulties...
...Lucia's present ills on his predecessors...
...Lucia's exports...
...Lucia lost out on 700 jobs...
...Jeffrey says he is the only St...
...You want some electrical wiring-there is no electrical wiring available...
...The longer vision is that cheap wage rates and an array of financial incentives will bring many foreign manufacturers to St...
...Incentives Not Sufficient If local investors feel that foreign manufacturers are getting a better deal, Michael Lewis, co-director of Brabo Ltd., the plastics firm recently arrived from Hong Kong, argues that the advantages to foreigners are often not enough to lure them...
...Financial inducements have attracted a few foreign-owned garment and electronic component factories as well, but more are slow in coming...
...Unemployment stands at 27%, imports exceed exports by $100 million a year and the GNP is declining...
...In return the government has made special allowances: Amerada Hess pays lower than usual taxes and is not subject to normal labor regulations...
...Infighting, and an economy buffeted by Hurricane Allen and world recession brought that government down early, and in May of 1982 Compton's UWP was voted back into power...
...Lucia leave within two years...
...And they worry that agricultural development is suffering while foreign industry is courted...
...Right now," says Joseph, "what we need is jobs, jobs, jobs...
...It is more important to maintain a job than to create one," he states...
...Discouraging statistics like these seem to go with the territory...
...Incentives Attract Investors This approach was given its biggest boost in 1977, when the U.S.-owned Amerada Hess company decided to build a multi-million dollar oil transshipment facility in St...
...Deirdre Kelly, a specialist in international development, recently spent four months studying women in St...
...Minister of State Peter Patrick Phillips admits that, "Industry in St...
...The five-million barrel operation, which opened in 1982, has created jobs and foreign exchange, and the company's chairman, Leon Hess, provided most of the funding for an island-wide school reconstruction program...
...It is all very well to theorize that the foreign investor will pay attention to your culture, that he shouldn't get more than he is giving...
...To attract more investors the government is sinking money into a publicity campaign that last year included a several-page advertising section in Business Week magazine...
...Right now we import too much food, and we don't export the "Times are especially hard now" right kinds...
...Lucia is still in a state of infancy," but he enthusiastically ticks off what foreign investors like to hear: "All the basic infrastructure is in place...
...Maynard claims that, increasingly, Caribbean countries are being played off against each other by potential investors...
...Everybody applauds my attempt to create more industry here but nobody wants to put their money where their mouth is," he says...
...Lucia's conservative John Compton looked to more traditional western sources for help...
...Compton orated in a recent address to his party in which he explained that St...
...Such concessions rankle some of Compton's critics who complain that under his guidance St...
...Lucian government failed to attract a New York-based television manufacturer, PICO, because it couldn't match the incentives being offered by nearby St...
...Without .a fullfledged university of its own, St...
...Lucia is becoming too dependent on outside investors, and is not getting enough in return...
...Lucia's shores...
...Some companies even want immunity from unions...
...Virtually every bunch goes to a protected market in Great Britain, but prices are not guaranteed and Britain's own recession has put island growers in a tough bargaining position...
...Firm Believer in Free Market Ask just about any St...
...Vincent, seriously damaging that country's harvest...
...In the capital city of Castries, knots of unemployed men gather on street corners and eye oblivious tourists...
...And that's the bottom line...
...Lucia become another Puerto Rico...
...According to Maynard, St...
...The signs are evident...
...Lucia's per capita annual income is well under $800...
...Tyrone Maynard, president of the National Worker's Union, the largest on the island, is worried that St...
...It is ridiculous that we import these things from Barbados and other islands...
...The two former British colonies are separated by less than 100 miles, but in recent times opposing policies and prime ministers have made the distance seem far greater...
...You attract foreign investors, that's one thing, but to keep the jobs they provide is another...
...Lewis offers little encouragement, though, to those who might follow his example...
...Lucia its headquarters...
...Lucia's business community...
...We have two airports, fine seaports, adequate power, telecommunications, maintained roads, available factory shells . . and the fiscal incentives, of course...
...Scant capital...
...Indigenous" Industry Sought One government officer, who asked not to be named, says, "I think what is important is whether St...
...Lucian attempting to start up electronics assembly on the island, but he claims to know of others wanting to open garment factories who are experiencing similar frustrations...
...What concessions are given for 40 or 50 jobs...
...They argue that an island nation should become more self-sufficient by growing food and making products that are consumed at home...
...A key question on this small, beautiful and poor dot in the Caribbean seems to be: Can St...
...In Hong Kong, if you need some wiring or spare parts for your machines, you go out in the street and buy it and you're back to work immediately," explains Lewis, who has also operated factories in Taiwan and South Korea...
...Lucia's commercial banks are unable to attract a significant inflow of capital-in large measure because of high interest rates prevailing today in the United States and other financial markets...
...The brain drain...
...The road will be long and trials sore and many a sunshine soldier will fall by the wayside as the storm clouds gather and the going gets rough...
...And when U.S...
...The only outsider to set up shop on the island in 1983, a Hong Kong-based maker of plastic goods, so far has hired only 14 persons...
...He maintains that eight out of every ten investors who come to St...
...They call bananas "green gold" here-the fruit makes up about 80% of all St...
...Compton, a firm believer in the free market, blames much of St...
...We have the problem of maintaining our identity as a small country while at the same time having to accept the stipulations, the influence, whether fair or unfair, of outside investors...
...On his own island there is less to cheer about...
...Size shouldn't be a basis for one taking advantage of another-it's not just...
...There are some St...
...What Bishop called a "mixed economy" in Grenada, Compton termed "communist...
...Lucian and he or she will tell you that times are 5especially hard now...
...Lucia and many other struggling Caribbean states: One crop economy...
...We can't base long-term development on these foreign companies that come and go all the time...
...The man whose job it is to bring more manufacturers to St...
Vol. 19 • March 1985 • No. 2
