STAR Businessweek - 21 October 2017

THE STAR BUSINESSWEEK OCTOBER 21, 2017

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The push for faster aid to developing countries In late September and early October last year Hurricane Matthew smashed through the Caribbean. Winds of up to 145 miles per hour killed hundreds of people and caused extensive damage, devastating huge swaths of the region.

T&T Minister of Finance Mr. Colm Imbert (left) and Saint Lucia’s Prime Minister and Minister of Finance Mr. Allen Chastanet (right)

A TALE OF TWO BUDGETS

Comparing and contrasting Trinidad & Tobago’s economic roadmap with Saint Lucia’s plans for growth

E

BY CATHERINE MORRIS, STAR BUSINESS CORRESPONDENT

arlier this month, Trindad and Tobago released its 2018 budget statement outlining an austerity package that would require all citizens to make “a serious adjustment”.

Price hikes and tax increases will likely result in a higher cost of living for those in the twin-island nation and Minister of Finance Colm Imbert acknowledged the”hard and difficult choices” his government had made in trying to reverse the downward slump.

Saint Lucia, which faces many of the same threats and has also experienced climbing fiscal deficit, rocketing unemployment and low productivity, has taken a different approach. Focusing on tax relief as a means of building confidence in the economy, the government lowered VAT from 15 per cent to 12.5 per cent early in 2017 and created a VAT deferral system for manufacturers. Prime Minister Allen

Chastanet also pledged to “simplify” the Personal Income Tax, but declined to give details, promising only a more “progressive” system.

As Trindad and Tobago tightens its belt, Saint Lucia committed to spending over $1.5bn in 2017/18 - 6.1 per cent more than the 2016/17 estimates. Much of this money is being directed to capital expenditure, funding road improvement and rehabilitation works.

Saint Lucia’s budget is ambitious. Labelled a “reform and change agenda” by the prime minister, it is heavy on optimism and promises. In sharp contrast, Trinidad and Tobago is striking a gloomy note. Minister Imbert asks for “sacrifice” and for citizens and government to put their “shoulders to the wheel”. In this sector-bysector analysis, we look at how exactly each nation aims to address its challenges and drive growth.

Continued on page 4

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Lloyd’s of London pays out US$750m in claims from summer of storms

Lloyd’s of London said it had paid out almost US$750m on claims from hurricanes Harvey, Irma and Maria, which devastated parts of the Caribbean and the US in August and September.

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THE STAR BUSINESSWEEK

OCTOBER 21, 2017

Does Hope Really Float?

BY CHRISTIAN WAYNE – EDITOR AT LARGE

Last month the government of Trinidad and Tobago presented the country’s 2018 Budget Address which, according to Finance Minister Colm Imbert, would require citizens of the twin-island republic to make a “serious adjustment”.

As with most austerity packages, Trinidad’s budget contained no thrills, almost guaranteeing citizens will experience an increase in their costs of living as early as next year. Few sectors were spared what appeared to be Prime Minister Keith Rowley’s very specific plan of action for reversing the downward trend of his country’s economy.

It was not too long ago that the newlyelected government of Saint Lucia presented its 2018 Budget Address to the nation. Plagued by similar financial woes, Prime Minister and Minister of Finance Allen Chastanet’s strategy for turning around his economy is markedly different from that of his Trinidadian counterpart. For a start it seems less pessimistic, a tad more hopeful. But will high hopes and great expectations be enough to keep this ship away from the rocks? (See cover story)

CLIMATE CHANGE AND THE CARIBBEAN

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BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

lobal warming is a global challenge. It has the potential to impact the world as a whole, in tandem with individual regions. It will also impact specific industry in specific ways. The local fishing industry is especially vulnerable to its impact, given the region is already warm, coastal and reliant upon the ocean for ongoing trade, business, and, indeed, basic existence.

The impact of a hurricane upon the fishing industry is recognised. Not only is there the risk of boats and infrastructure being damaged but the damage to life above water

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is mirrored below it. Hurricanes not only dislocate an array of marine life but destroy much of the ocean’s natural ecology. Painful as it is now to imagine after-events of recent times, ultimately the displaced fish can return and so, too, the food sources upon which they feed.

There is no such prospect with the damage climate change can do. A rise in ocean temperatures that makes waterways too warm to be habitable for a species means displaced marine life will never return, and never can the fishing industry that depends upon it.

Identifying what can be done here first requires a recap of the essential issues as they exist.

WHAT IS THE ISSUE?

Measured from 1880 to 2012, the Earth’s temperature is held to have risen around 1.53 degrees. To those reading that statistic for the first time, it may sound incidental but the significance of it is apparent once it’s recognised it takes only a one degree increase in the Earth’s temperature for sea levels to rise up to six feet.

It is true that estimates vary from one authority to another - and, in turn, so too may a few sceptics suggest that 1.53 degrees over 132 years isn’t so bad - but this notion is quickly brought undone by the reality that 2016 was the hottest year on record. Put simply, it may have taken over a century for temperatures to rise over one degree, but hitting the milestone of two degrees could come far sooner. But how is climate change impacting Caribbean fishing here and now?

HOW IT IMPACTS AND WHAT’S BEEN DONE

However one may worry with fear over the impact of climate change in the future, it’s a reality that immense damage has already occurred to our region’s waterways and our fishing industry as a result. A 2012 report by the International Union for Conservation of Nature found the region’s corals had diminished by more than half since 1970.

While the impact of this is devastating, the link to its impact on fishing in the region is not complex. With damaged coral reefs comes diminished marine life around it. This factor is already huge but even more so when compounded with the dramatic changes climate change brings to the ecology of marine life via displacement of species, their greater exposure to predators, and a host of other factors.

In turn, the business model of many fisheries can be impacted greatly by the loss of a particular species. While a healthy Caribbean reef may play host to a variety of species, a fishery operating out of Saint Lucia or Martinique no longer able to fish a particular species can find market demand and other business realities mean sourcing another fish for sale is not easy.

impact of its effects already has spurred action in the region.

Initiatives like the foundation of the Multilateral Investment Fund (MIF) and Caribbean Climate Innovation Centre (CCIC) have provided a strong foundation in promoting ideas and businesses that develop green solutions.

There has also been the successful promotion of growth at a grassroots level, as aid funding has seen new start-ups grow across the region.

Similarly, the development Immense damage has of pilot programmes like already occurred to our the Caribbean Ocean Assets region’s waterways Sustainability Facility (COAST) aspires to not only provide insurance to fisheries in the event of extreme FURTHER RISKS weather but also to grow cooperation and Beyond the direct environmental impact of action surrounding conservation in the region. global warming to fishing is the ancillary Each of these programmes represent ideas in effect of climate change to the industry. action, and each offers the potential to make Good work has been done in recent times solid inroads in future. by a number of Caribbean nations to work Another key initiative to watch going against the illegal fishing industry. The 2016 forward will be the outcome of the Climate treaty signed by Barbados, Chile, Costa Rica, Investment Fund’s Pilot Programme for Cuba, Dominica, Guyana, St. Kitts and Nevis, Climate Resilience (PPCR). The US$10 and Uruguay to combat illegal fishing is a million study will deliver key data to core example of this. aid in fisheries management across the These efforts should be observed and region. Climate change will always be an applauded. Yet it’s also easy to recognise how issue informed by partisan politics but the desperation of diminished business could contemporary and persuasive data will go a quickly lead a fishery in a nation like Haiti, long way to generate bipartisan consensus on Jamaica or the Cayman Islands to accept action in future. charter of an illegal fishing group. Desperate Alongside the aforementioned, the need to times for a business can result in desperate prevent overfishing also can’t go unmentioned. measures, and the growth of illegal fishing While warming temperatures have played a remains a real risk in future. role in the decline of Caribbean coral, so too More widely, diminished sea traffic in has overfishing of the parrotfish, a species that hotspots - such as bleached coral reefs that feeds upon algae that latches onto coral and were previous tourism destinations - can hastens its decline. Everyone involved in the grow the risk of dumping and other illegal industry, from a solo operator all the way up to activity that previously would not have been government leaders, has a key role to play in attempted with a more populated use of the preventing overfishing. area. This also applies to the greater cost of building new infrastructure and maintaining CONCLUSION maritime security when previous natural Beyond the challenges of generating action defences like coral reefs served to guard on the government level long-term, what against illegal sailing, smuggling, and more. cannot be debated is that straightforward‚ Just as ‘prevention is better than cure’ common sense solutions will always find an surely applies to climate change, so too is it audience, and have the potential to impact also a guiding star in addressing its broader today. A Caribbean fishery that practises effects. Keeping fisheries in business is environmentally friendly fishing‚ a tourism vital to those in the industry, certainly, but business that uses bicycles over buses, and also the broader community as it seeks to a resort that uses solar panels to power its maintain our natural resources and combat electricity‚ can ensure visitors leave not only the greater risk of crime and pollution that with happy memories and the promise to would come with inaction. The impact of visit again but also practical solutions to use climate change on regional fisheries is clear; back home. what about action to defend against it?

Sure the efforts of these changes won’t all be seen overnight, but nor shall the GREEN SOLUTIONS impact of climate change. Good work in the As a leader in tourism the Caribbean region former can yet see much progress made to can be a leader in the green movement as a stop the damage and danger of the latter. whole. It is known the region faces unique It can also create strong momentum on the strategic challenges. This is confined not grassroots level for greater action at the only to fisheries but to climate change all governmental level. over. This notwithstanding, the obvious

THE STAR BUSINESSWEEK

OCTOBER 21, 2017

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© The Financial Times Limited [2017]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

THE PUSH FOR FASTER AID TO DEVELOPING COUNTRIES

BY FT ENERGY CORRESPONDENT

In late September and early October last year Hurricane Matthew smashed through the Caribbean. Winds of up to 145 miles per hour killed hundreds of people and caused extensive damage, devastating huge swaths of the region. It was the worst storm to hit the area in a decade.

As ever when this sort of storm hits, appeals for help were not far behind. But many of the worst hit countries were part of an insurance scheme that paid out within weeks, rather than the months that it sometimes takes for aid to arrive.

By mid-October, the Caribbean Catastrophe Risk Insurance Facility had paid US$23m to Haiti, one of the worst hit by the hurricane. The policy also paid out to Barbados, Saint Lucia and St Vincent & the Grenadines.

The Caribbean scheme is not the only one of its type. Across the world, similar initiatives are proliferating, from insurance against pandemic outbreaks to cover for the cost of droughts and floods. While insuring for natural disasters is not new, the use of insurance as a form of aid to developing countries is gathering pace.

Supporters say that using insurance to respond to natural disasters can help to save millions of lives in the world’s poorest countries, by putting in place a quicker and more predictable source of funds when the worst happens.

In 2015 the G7 promised to deliver climate risk insurance to 400m of the world’s most vulnerable people by 2020.

Germany, Japan and the UK are leading the charge to put the promise into action.

“We are on the cusp of something really exciting,” Lord Bates, the UK’s international development minister, told a conference last month on the issue in London. Jo Scheuer, director of climate change and disaster risk reduction at the UN Development Programme, recently called it “a game changer” for the developing world.

Taking out insurance can leave African states “better equipped” to manage climate change, says Mohamed Béavogui, director-general of African Risk Capacity, an insurer set up by the African Union to help countries finance disaster response.

Otherwise, “by the time the response to a crisis arrives, much of the damage has already been done”.

The insurance industry has assembled a host of executives, alongside the UN and the World Bank, into a group called the Insurance Development Forum, which aims to extend the use of insurance and risk management techniques to “build greater resilience and protection” in the developing world.

“For the first time ever we’ve had [insurance] carriers and brokers at CEO level sat round a table and working together. I’ve never seen so many alphas in the insurance industry working together,” Stephen Catlin, the IDF’s chair, told the London conference.

Michael Bennett, head of derivatives and structured finance at the World Bank, says that “between 2007 and 2017 there was $1.5bn of risk transfer [by the bank]. But there has been $1bn” of transactions in the past two months. He adds: “There is a lot of momentum now.”

There is plenty of potential for more of the same. According to Swiss Re, natural catastrophes around the world caused US$166bn of economic losses in 2016. Only $46bn of that was covered by insurance.

Much of the rest, especially in the developing world, is left to humanitarian aid.

“The current humanitarian system works really badly,” says Owen Barder, a vice-president at the Center for Global Development, a think-tank.

He says there are two big problems. The first is the often late arrival of aid. Countries only ask for help when problems become apparent, and that help can take months to arrive. By that time the problem has become much worse, and much more expensive.

Second, aid is unpredictable. Governments that ask for help have no idea what they are going to receive, and so cannot make firm plans for how to spend it.

Stefan Dercon, chief economist at the UK government’s Department for International Development (DfID) and an Oxford professor of economic policy, says: “When there are appeals, often less than half of what is appealed for is actually collected.”

So-called parametric insurance, say its backers, can provide solutions to both problems. Here, the insurance policy pays out not when there is firm evidence of a loss, but as soon as the first sign of trouble emerges. That can be when a storm happens, for example, or in the early stages of a drought.

The policyholders, in this case the governments of the countries affected, know exactly what they are going to get and when they are going to get it. They can then spend the money in the worst affected areas.

“If you give people money straight away, they can stay put. Otherwise they leave their land and sell their assets in a fire sale, which turns something bad into an absolute catastrophe,” says Mr Barder. Prof Dercon adds: “Faster payouts really help with slow onset disasters such as droughts.”

A recent US$322m pandemic insurance bond sold by the World Bank shows how this should work. Governments should receive money in the early stages of an outbreak, when there is still time to contain it. According to the DfID, it would have cost $5m to contain the 2014 Ebola outbreak when it was first detected in Guinea. Eight months later the cost had increased to $1bn. The pandemic ended up killing more than 11,000 people.

Kenya has introduced an insurance scheme to help farmers deal with climate change, whereby the government pays premiums for up to five cows in arid areas

in the north and north-east. At times of drought, the payouts are designed to provide food and other necessities to keep the animals alive, not to compensate for dead cows.

“It’s all about prevention rather than replacement,” says Richard Kyuma, who runs the Kenya Livestock Insurance Programme. “It’s a new idea and there’s a lot of research going on to make it even better.”

Despite those potential benefits, not everyone is convinced that insurance is the answer to disaster response in developing countries. “There is a lot of hoopla from the insurance sector and from donors,” says Debbie Hillier, senior humanitarian policy adviser at Oxfam.

“The rhetoric has massively gone beyond reality. They say that insurance can make everything fine but that’s patently not true.”

One of the big problems, say critics of the idea, is called basis risk. This is when the insurance policy does not pay out because the specific nature of a particular disaster does not meet the conditions laid down in the policy.

A recent drought in Malawi showed basis risk in action. According to a report from Action Aid, an NGO, the country paid $5m for an insurance policy from African Risk Capacity, which was supposed to cover drought.

But when the rains failed last year and 6.7m people needed help, says Action Aid, the policy did not pay out. That was largely because the types of maize seeds used by the farmers were not the same ones envisaged by the policy, so the damage caused by the drought was worse than the insurer’s model predicted. After adjusting its model, ARC agreed to pay out $8m but Action Aid says the total cost of the drought response was $395m.

In its report, Action Aid argues that: “The G7, World Bank, Insurance Development Forum, ARC and others promoting the expansion of climate risk insurance markets for the poor and vulnerable should pause and reconsider this quest in the face of a lack of evidence of its equity and effectiveness, and indications that it may be exacerbating inequality and vulnerability.”

ARC responded that some of the NGO’s claims were flawed and its recommendations were misguided.

Thomas Kwesi Quartey, a Ghanaian diplomat who is deputy chair of the African Union commission, says the ARC has paid out $34m over the past three years to countries affected by drought, including Senegal, Niger and Mauritania.

“This is solidarity combined with innovation in practice,” he says.

Rowan Douglas, chair of the Insurance Development Forum’s implementation group, says the experience in Malawi shows there will always be some basis risk with this type of insurance.

“The question has got to be: if these instruments work effectively say 90 per cent of the time, is that better than not having them at all and losing all the benefits of this important innovation?”

Mr Douglas asks. He says there are many situations where schemes such as the ARC have worked well: Haiti’s rapid payout for Hurricane Matthew is an example.

One of the solutions to this problem is better modelling. Risks in Europe and the US are extensively modelled, partly because there is a well developed insurance industry. Insurers will know, sometimes down to a few metres, the flood risks for a specific property.

That is not the case in the developing world. “Only around half the world’s population is covered by mainstream insurance risk models at the moment,” says Mr Douglas. “Although the expertise has been around for three decades.”

Experts say climate change, which could make weather patterns less predictable, is compounding the modelling problem. But even if the models can be more finely tuned and the basis risk cut down, there are still obstacles to the wider use of insurance in response to natural catastrophes.

One is the question of who pays the premium for the policy. In some of the schemes operating at the moment, donor governments pay. In others, it is the recipient countries.

According to Mr Barder, there are reasons why both donor countries and recipients are reluctant to pay up.

“Politicians have short-time horizons,” he says. “You could pay a premium while in office and not get a payout.

Why would you spend your scarce resources on an insurance policy?”

Likewise, he says, some donor countries hold back. “It is very rare for donor countries to pay the premium . . . there is a real reluctance,” he says, partly because some donors prefer to wait until the aftermath of a disaster to decide how much they want to give.

There is also, he adds, some suspicion of the private sector.

Finally, some NGOs argue that the focus on insurance detracts from more important work in building resilience to natural disasters.

“The insurance debate has crowded out everything else. There is a place for insurance, but it is a small place,” says Ms Hillier. “It is crowding out disaster risk reduction and social protection, where there are massive gaps.”

Richard Ewbank, global climate adviser at Christian Aid, says: “Having a more efficient system to shovel money out of the door is important but we need to focus on early action and early warning to bring the costs down to a more manageable place.”

Even supporters of the idea argue that there is a long way to go. “We are in the 21st century when it comes to lending to the developing world, but only in the 12th century when it comes to risk,” says Prof Dercon.

“We are just trying things out.

If something doesn’t work well, then we’ll learn the lessons.”

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Continued from page 1

FOCUS ON TAXATION

In keeping with its aim of increasing government revenue, the Trindad and Tobago budget ushered in a raft of new and increased taxes. Long viewed as a haven for business, the country risked this reputation with an increase in the corporation tax rate from 25-30 per cent to a flat 30 per cent for companies and 35 per cent for commercial banks.

It also imposed a 10 per cent tax on all winnings from the National Lotteries Control Board, an increase in the various taxes and duties imposed on the gaming industry, a revamped property tax system to be implemented in 2018 and a crackdown on the tax system in general to stem leakages in the system.

This hardline approach is expected to deliver big returns. Trindad and Tobago is expected to collect over $30.8bn in taxes during the 2018 fiscal year.

Saint Lucia’s stance is less punitive, but also less clear-cut. Although the prime minister has promised to re-examine Personal Income Tax (PIT) on the basis that the scheme is unnecessarily complicated, he said only that there would be a cap on PIT and deductions would be reformed. Further details are expected before the end of 2017, ahead of implementation in 2018.

Saint Lucia’s manufacturers will also be getting a tax break in 2018. To ease costs for importers, the government will introduce a deferral system allowing them to defer VAT payments on goods as they enter the country. This is expected to improve efficiency within Customs and Excise Department as well as clearing the way for businesses to immediately use goods even if low on funds.

INCENTIVISING MANUFACTURERS

Incentivising manufacturers is a key priority for both Trindad and Tobago and Saint Lucia. The former nation plans to incentivise manufacturers by giving them a break on tax - introducing export allowances that would reduce tax for revenues generated from incremental exports to existing markets.

Further details are expected to be released in the country’s upcoming Finance Act 2018.

Dealing with low productivity, a lack of competitiveness and challenges within the labour force, both countries acknowledge that diversification and increasing competitiveness are essential.

“The road to our destination will be bumpy and implementing change is sometimes messy.” – Prime Minister Allen Chastanet (Budget Statement 2017-2018)

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sewage treatment plant and new commercial, retail and residential development. In his statement, Prime Minister Chastanet did not clarify how much the Castries redevelopment would cost, or how it would be funded.

Demand for good, affordable housing in Trinidad and Tobago is far outstripping supply. To increase construction activity in this area the government launched the Housing Construction Incentive Programme (HCIP) which it hopes will tempt private developers into the market. Income from the sale of houses under the HCIP will be tax-free. In addition, the government will contribute cash (up to TT$100,000) or land to all approved developers who meet government standards. Beginning in January 2018, the HCIP is expected to cost government $50m and provide around 1,000 new homes.

EXPLORING ENERGY

“This new paradigm will call for serious adjustment from all sectors of society.”

– T&T Minister of Finance Colm Imbert (Budget Statement 2018)

Although Saint Lucia’s budget was largely silent on how to improve competitiveness and productivity for manufacturers, it did, however, suggest that creating linkages with other industries such as tourism and agriculture could prove profitable.

FUNDING FARMERS

Farmers were one of the few groups that caught a break in Trinidad and Tobago’s austere budget. To encourage local food production, the government will create an Agricultural Financial Support Programme that can issue farmers grants of up to TT$100,000. Applications will be reviewed by a panel and must come from trained farmers.

The government also removed a provision that granted a “tax holiday” to farms less than 100 acres - hoping to encourage commercial farming on a larger scale.

Saint Lucia’s government is pouring EC$49.3m into its agricultural sector, $13.8m of which will fund the Banana Productivity Improvement Project designed to grow exports of the fruit to 60 to 70 thousand tonnes in its third year.

It also launched the Youth Agri-Enterprise

Facilitation Programme. Under this scheme, around 150 young entrepreneurs will enter the market through an incubator programme.

Trinidad and Tobago also recognises the importance of bringing new blood into the sector and has its own incubator initiative the Community Environmental Protection and Enhancement Programme. This aims at increasing labour force participation in all areas of agriculture.

BOOSTING CONSTRUCTION

Construction is one of Saint Lucia’s most dynamic sectors, accounting for around 60 per cent of GDP growth in 2016. The sector is expected to continue this trend and show strong gains in the coming fiscal year with several, large FDI projects coming onboard.

These include the Fairmost Saint Lucia Resort, the Honeymoon Bay Resort and The Curio by Hilton.

The government will also do its part in stimulating the sector by embarking on a large-scale EC$479m road improvement project and capital works programme.

Ambitious plans were laid out for Castries, including construction of a new cargo port, a

Given how the performance of the energy sector strongly influences all sections of the economy, it’s unsurprising that this was a major area for both budgets.

Despite declining revenues from oil and gas, traditional stalwarts of the Trinidad and Tobago economy, that country’s government remained optimistic. Citing new gas projects in the pipeline, Minister Imbert forecast that the country’s production could well climb back to 2010 levels. Amid concerns that energy companies are not contributing their fair share in taxes, the government imposed a 12.5 per cent royalty rate on the extraction of all gas, condensate and oil.

In Saint Lucia the focus was on building capacity in renewable energy. The Sustainable Energy Sector Development Strategy seeks to increase the demand for sustainable energy services. Government-led initiatives include installing photo-voltaic and solar hot water systems on public buildings, advance solar farm development and increase manufacturing in the alternative energy niche. It also seeks to reduce dependence on fossil fuels and encourage energy innovation, However, few details were given on how these aims would be achieved.

BECOMING BUSINESS-FRIENDLY

With small businesses suffering throughout the region, both Trinidad and Tobago and Saint Lucia are trying to create a better business climate.

In Saint Lucia that takes the form of “a

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comprehensive re-engineering of the public service”. The Public Service Management Bill is due to be tabled in parliament before the end of the fiscal year and a resultsoriented framework is being developed for the government’s internal budget. In addition the government wants to see greater uptake of technology, with online services coming onstream. These measures are expected to improve Saint Lucia’s Ease of Doing Business ranking, another aspect of which is improving access to credit. In the coming year, the government has committed to establishing a Credit Bureau, a Registry of Movable Assets and a Secured Transactions System. These are intended to reduce risk and therefore help small businesses access a greater range of financial products.

Trinidad and Tobago takes a similar approach - focusing on small business as the engines of the economy. It has created a new $50m business development fund to provide working capital and seed capital through grant funding. However, apart from a commitment to special audits of government departments, the budget is largely silent on the issue of public inefficiencies and ease of doing business.

LOOKING AHEAD

There is still much to be determined in Saint Lucia’s and Trinidad and Tobago’s budgetary plans and, although both attempt to navigate the road ahead, neither can fully anticipate all obstacles.

In Saint Lucia questions remain over what form Personal Income Tax reform will take and whether it will be sufficient to ease the burden on the public sector which has struggled to implement the complicated process.

In addition, many reforms are yet to materialise. Promised measures such as the Credit Bureau and the Secured Transactions System are still being established and it could be a long time before businesses feel the benefits.

Similarily, many in Trinidad and Tobago are waiting for the upcoming Finance Act, due to come into force next year, to shed more light on the government’s plans for improving the business climate.

Economies are always a work in progress and governments need to be responsive, flexible and prepared. Only time will tell if the economic agendas of both Saint Lucia and Trinidad and Tobago can make good on their promises, follow through with their goals and deliver on the results.

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OCTOBER 21, 2017

CORPORATE

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HANDS

GEEST SHIPPING LINE TO THE RESCUE

Representatives of NEMO, M&C Shipping and Geest Shipping Line

Geest Shipping Line, through its local agent M&C, has come to the rescue of the National Emergency Management Organization (NEMO).

The shipping line has generously offered NEMO assistance with an unlimited amount of shipping containers and free shipment of relief items to the Commonwealth of Dominica. It is with much gratitude that NEMO has accepted this offer on behalf of the government and people of Saint Lucia to aid the island of Dominica.

The containers will be shipped every Monday out of Saint Lucia until further notice.

Mr. Peter Dixon, Managing Director of Geest Shipping Line, UK, described the situation in Dominica as “a tragedy” and pledged Geest’s support to the relief efforts for the island.

General Manager of M&C Shipping, Ms. Karen Lawrence, was pleased to report that Geest readily volunteered to support the free shipment of the supplies from Saint Lucia to Dominica.

She also emphasized that the recovery of Dominica will be a long one and that support should not just be of the immediate kind.

The Saint Lucia Government Gazette

Company Registration

Notice Of Company In Dissolution Logistics & Brokerage Services Inc “Beyond the boundaries of expectations”

(International Business Companies Act, Cap 12.14: Section 94 (8)) APIT Holdings Ltd. IBC No. 2014-00461 Incorporated: December 19, 2014 Liquidator: KWOK Ling Fung Louisa (International Business Companies Act, Cap 12.14: Section 94 (8)) Anglo Funding Corporation Ltd. IBC No. 2003-00053 Incorporated: February 11, 2003 Liquidator: Giselle Millington (International Business Companies Act, Cap 12.14: Section 94 (4)) Campbell Enterprises Ltd. IBC No. 2012-00061 Incorporated: February 27, 2012 Liquidator: David Arellano, Schottegatweg Oost 10, Unit A1K, Willemstad, Curacao (International Business Companies Act, Cap 12.14: Section 94 (4)) Reef Holdings Ltd. IBC No. 2002-00029 Incorporated: February 11, 2002 Liquidator: Evan Hermiston, 10 Manoel Street, Castries, Saint Lucia

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File No (210): TM/2015/ 000074 Mark name: PIXUVRI Applicant (730): Biofarma Filing date (220): 12/03/2015 Agent (740): Nicholas John & Co. Class (511): 5 Pharmaceutical preparations and substances.

Name: Geon Holdings Inc. Description: (a) Manufacturing (b) Agriculutre / Agroprocessing ( c ) Wholesale / Retail Distribution Directors: Johanan Dujon Date Filed: 6-Oct-17

Name: ADG Consulting Inc. Description: Business Services Processing Directors: Christopher Roberts Date Filed: 6-Oct-17

Name: Cornerstone Constructions Inc. Description: Quarrying, Construction, Sales & Distribution of Construction Products Directors: Rex Suckoo; Vivian John Date Filed: 6-Oct-17

Name: HSL Ltd. Description: Property Owner / Landlord Directors: DTCo Services Ltd. Date Filed: 6-Oct-17

Name: Exeqtech SLU Ltd. Description: Construction Management Company Directors: Michael Paty George Eugene; Kevin Hanville Date Filed: 10-Oct-17

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© The Financial Times Limited [2017]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

The neighbourhood of Cojimar was destroyed by Hurricane Irma in Havana, Cuba (source: Yamil Lage / AFP – Getty Images)

LLOYD’S OF LONDON PAYS OUT US$750M IN CLAIMS FROM SUMMER OF STORMS

BY FT CORRESPONDENT

Lloyd’s of London said it had paid out almost US$750m on claims from hurricanes Harvey, Irma and Maria, which devastated parts of the Caribbean and the US in August and September.

The London insurance market is facing about $4.5bn of payouts in total from the

three storms.

Jon Hancock, performance director, said: “When you get three catastrophic weather events as well as earthquakes in Mexico and flooding in Asia all happening so close to each other, it’s essential to make sure the market’s claims response moves as quickly as possible

to help people rebuild their lives.”

He added: “We have made advance payments on a range of reinsurance programmes for local insurers to make sure they have the funds to pay claims locally — both in Texas and the Caribbean.”

But concerns are growing about the impact that the payouts will have on the market.

Last Thursday Standard & Poor’s Global Ratings revised its outlook on Lloyd’s to negative from stable, although it left its A+ credit rating intact.

“These losses are significant relative to peers and Lloyd’s annual earnings, and emphasise the market’s exposure to catastrophe risk,” S&P said in a statement.

It added that the market could restore its capital position after the payouts, but there was still the chance of further significant losses and uncertainty about the potential for insurance premiums to rise because of the storms.

Last Friday S&P said that it expected the credit ratings of US property and casualty insurers to be “resilient” after the hurricanes but it was not so confident about the global reinsurance industry. It said that the storms, together with the Mexican earthquake: “will likely wipe out the industry’s annual earnings and ultimately become a capital event for the global reinsurance sector.”

The wider impact of the losses on the industry is becoming clearer as insurers have

updated investors on their exposure in recent weeks. This week Scor, the Francebased reinsurer, put its exposure at €430m.

Analysts said the company had managed to almost halve its potential losses because of retrocession, which is the insurance that reinsurers buy.

In the US, AIG said it expected a $3bn hit from the three hurricanes, along with the earthquakes in Mexico.

It is not expected to get protection from reinsurance because each event cost it less than $1.5bn, the level at which the cover kicks in.

Analysts at Barclays said that the impact of the storms on the US property and casualty insurance industry should be “manageable”. “Although [third quarter] US P&C industry underwriting results are expected to be among the worst ever, it should result in break-even US industry earnings for the year including the benefit of recurring investment income,” they wrote last week.

Not everyone is so sanguine, however.

In a blog post, Dominick Hoare, the chief underwriting officer of Munich Re’s syndicate at Lloyd’s, predicted that “there will be a material number of (re)insurer failures, and, in addition, many (re)insurers will have to retract their underwriting due to capital constraints”.

FINANCIALLY SPEAKING Financial Literacy 101 presented by Bank of Saint Lucia

ACCESSING CREDIT & THE IMPORTANCE OF BUSINESS PLANS Accessing credit has been for the most part one of the most salient issues for small and medium sized businesses in Saint Lucia. The hard truth is that Banks are less likely to finance startup businesses. Bankers differ from investors, in that depositors’ funds are lent to those who need it with the expectation that these funds are paid back. Banks will not loan money because you “believe” in your business plan. After all, ideas do not pay loans. Banks and financial institutions have an obligation to protect depositors’ money, and will not risk these funds solely on speculation.

On the path to accessing credit, it is important to know the basics even before you approach your financial institution for funds. Knowing who you are and what you bring to the table are essential. If your business is relatively new or if your relationship with the bank is new, you will be required to provide further information.

The more information provided, the easier it is for the bank or financial institution to thoroughly assess the eligibility of the applicant.

Banks and financial institutions require key documents to determine if a business qualifies for a loan, and having a solid business plan is critical in this regard. Here is a brief guide on what is typically expected:

The most important questions to address: Introduction & Overview/Executive Summary – What is it about?

Management Structure – Who are you?

Operating/Strategic/Marketing Plans – What do you plan to do? Who is your intended market?

Financial Statements/Requirements – What do you need? How do you intend to repay?

What are the Banks’ Expectations?

Clear Indication of Business Background Your Experience/Qualification in the given field Introduction of Management of your business Financial Projections Three Critical Statements: Income & Expenditure Balance Sheet Cash Flows Projected monthly for first year and annually thereafter A comparison of your projections to similar industry averages if available

Alignment of Financials The credit sought should be in line with the financials outlined in your plan Ensure that your cash flows are realistic and explain How much cash is required and why it is needed A manageable business plan with realistic projections will assist considerably in approaching your financial institution.

“Banks and financial institutions have an obligation to protect depositors’ money, and will not risk these funds solely on speculation.”

1 Bridge Street • P.O. Box 1860 • Castries LC04101 Saint Lucia • Email: info@bankofsaintlucia.com

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THE STAR BUSINESSWEEK

OCTOBER 21, 2017

MAKING

WWW.STLUCIASTAR.COM

MOVES

RAMON’S AHEAD OF THE GAME!

S

BY KAYRA WILLIAMS

upport from family and friends is tantamount to the success of any individual and, to that, Ramon George Esper’s life is testament. Ramon, CEO of Blue Waters Saint Lucia, Food Express, and Meat Express has surpassed even his wildest aspirations, starting his journey into entrepreneurship at the age of 17 with his own clothing store (Ramon’s Boutique). He’s never been short of encouragement, inspiration and drive, and this week he spoke with us about just what it takes to stay ahead of the game when doing business in Saint Lucia.

“You have to work hard to keep what you have. We are fighting for a very small piece of pie.

That pie is going to be cut into smaller and smaller pieces so you really have to be on top of your game.”

WHERE DOES YOUR FASCINATION WITH BUSINESS COME FROM? RAMON: I was born in Saint Lucia in 1970.

At the age of 17 I decided that school was not for me. Basically I told my father that I would like to open up a clothing shop in town, which I did. He helped me out. That was in 1989. Things took off from there.

To tell you the honest truth, I never felt like I was 17. I just wanted to be my own boss. I was never good at taking orders from anybody. Everybody says to me I’m exactly like my grandfather, Abraham George. He was like my father. In terms of business, I can remember one thing he said to me: “A man that doesn’t need anyone is a king.”

WHAT ROLE HAS FAMILY PLAYED IN YOUR SUCCESS? RAMON: Family has a big part to play.

The support is not only from my immediate family but everyone. You learn from them.

They are all big business people. Generally, we are very close in terms of family and that’s a big push, honestly. You ask the questions and they lead you in the right direction. It really takes a village.

HOW HAS YOUR PORTFOLIO GROWN OVER THE YEARS? RAMON: In 1999 we had Food Express.

Five years after that I opened Meat Express Limited, which is the frozen food side of the company. Basically, we supply hotels and restaurants. Those are the two businesses I got into when I finished with clothing.

Tourism was on the upswing and I said why not go into something that will service the industry, which is food and beverage. That’s how we started off. After that, I started importing Blue Waters from Trinidad. We were the agent here from 2002 when we brought in the first container of Blue Waters.

It was part of Food Express at the beginning of distribution and we were just for the hotels, the supermarkets, and restaurants.

Then we started to branch out and put on more trucks. We realized there was an opportunity. Blue Waters Trinidad saw the opportunity for us in Saint Lucia because the volume was there. They saw the opportunity in Saint Lucia to establish a plant and we established a partnership. They wanted me as a full partner with them. I partnered with them in Saint Lucia and we started distributing to the OECS.

Ramon George Esper has come a long way since opening his first clothing store in the city of Castries. Now he’s the CEO of three blockbuster successes!

HOW WOULD YOU DESCRIBE THE WHOLESALE FOOD INDUSTRY IN SAINT LUCIA? RAMON: Very competitive. You always

have to be ahead, and that’s the game. You always have to be thinking of new items and figuring out how best you can serve your customers. It’s important to make sure you have the right people around you, the right managers and, of course, the respect of your workers. You need your workers to feel they are part of your business for that business to grow.

WHERE DO YOU SEE THAT LOCAL INDUSTRY HEADING? RAMON: In terms of growth, the more

hotels and restaurants we have, the more demand there will be. There is a lot more competition than there was five years ago.

You have new companies that are coming in, aggressive pricing, so now you have to up your game. At the end of the day you have your workers and your workers have their families to feed. You have that responsibility to make sure their jobs are there and they remain there.

YOUR THOUGHTS ON IMPORTS VERSUS THE LOCAL MARKET? RAMON: I don’t have the ratios of exports versus imports but one thing I know is that we have beautiful land here in Saint Lucia. I think we could do a lot more for our farmers.

They could play a much bigger role. We

can’t be importing stuff like tomatoes, and cucumbers. We have some of the best tasting vegetables in the world. We don’t have to import these things. Let us help our farmers: show them the ropes, get them the distribution and get them the connections with the hotels and supermarkets. Let us be competitive. Let us make them be our competitors. As a nation, we have to help them. We have beautiful land and we have rivers. There are people in the Middle East who plant in deserts! You mean to tell me, we have fertile land, and we can’t plant? I don’t want to be political or anything but I think we can do a lot more especially when it comes to the fresh food products.

YOUR MOST RECENT SUCCESS? RAMON: Blue Waters. We’ve just

invested a huge amount of money into our new plant and, basically, it’s to give the best quality. We are very proud of our labs. It’s a nice process. We never thought bottled water would be what it is today. It’s been an exciting journey. I learned a lot and I’m very grateful for the people I’ve met along the way.

WHAT IS YOUR BIGGEST CHALLENGE AND HOW DO YOU OVERCOME IT? RAMON: Traffic. Our trucks have to

leave a lot earlier than usual because of traffic. You have to keep all of that in mind.

To go deliver something and to come back, it’s always a problem. You have to think one of two things: you put on more trucks or you send them out earlier. Our number one challenge is delivery and that is because of traffic. Five or six years ago one truck would be three trips. Now you’re lucky if it does one.

YOUR OPINION OF THE ECONOMY IN SAINT LUCIA? RAMON: I can only talk about our

business. Thank God we are surviving. I’m keeping my employment, that’s the most important thing. We employ over 150 people. We’re very happy we can keep our staff. You have to work hard to keep what you have. We are fighting for a very small piece of pie. That pie is going to be cut up into smaller and smaller pieces year by year so you really have to be on top of your game.

HOW WOULD YOU DESCRIBE THE “EASE OF DOING BUSINESS” IN SAINT LUCIA? RAMON: Doing business in Saint Lucia

is not difficult. I don’t find it difficult.

Regardless of what party was there, we’ve found that both parties were always open to us. We never had an issue. I hope that is everybody else’s experience also but, for me personally, I have never had any issues doing business in Saint Lucia. It’s a lovely island and we want people to come and do more business here.

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