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Stake Bank: a Belizean travesty!

LettersStake Bank: a Belizean travesty!

Editor Amandala

The Stake Bank cruise development project has been stalled by the Barrow administration on what appears to be purely political grounds. The stifling of development, particularly by elected officials, is bad enough, but when partisan venom is the motivation for such actions it should concern every right thinking Belizean. If the demise of the Stake Bank project was as a result of partisan bad mindedness, as the optics suggests, then this surely must qualify as a true Belizean travesty.

Mr Mike Feinstein, the Developer, is a born Belizean with an impeccable record of investments in his country. Few of the “nouveau riche” of the Barrow era have made such investments in Belize: they prefer instead to hide their money in offshore accounts. Belizeans who believe in Belize invest in Belize; they don’t take their money to foreign lands. We must learn to celebrate Belizeans who undertake activities that create jobs; we should not vilify them. Creators of jobs are the real economic heroes, not politicians who come bearing gifts.

We all know that Belize has the potential to become a cruise tourism Mecca but, surely we must all know as well that there is a chasm between having potential and realizing such potential. There are several structural deficiencies preventing Belize from realizing its cruise tourism potential. Principal among these are poor political leadership, distortions in the cruise tourism value chain, weak regulatory actors, lack of proper infrastructure and increasing friction between the overnight and cruise sectors.

In 2016 global demand for leisure travel saw the cruise lines hosting 24.2 million passengers. The Caribbean remained the most visited destination, receiving 8.16 million passengers (33.7% of global market share). Over the same period Belize received 1,005,394 cruise passengers, and though the BTB boasts of Belize finally breaking the one million passenger mark, Belize still lags behind other destinations despite having a far greater range of shore excursions. According to ECLAC, in 2015 St. Maarten led the Caribbean in terms of cruise tourism earnings with US$423 million whilst ranking third in passenger and crew onshore visits (2.23 million). They had the highest average total expenditure of US$189 per passenger and crew visit. The Bahamas was second in terms of earnings with US$373 million but led arrival numbers with 3.93 million onshore visits; earnings per passenger and crew visit stood at US$95. Tiny Cozumel had the second highest volume of onshore passenger and crew visits with 3.07 million visits. As a result of these onshore visits, Cozumel had an average total expenditure of US$119 per passenger and crew visit, earning total revenues of US$366 million, the third highest in the Caribbean.

I must point out here that these arrival figures are not manifested passengers: they are passengers and crew that actually disembark. Manifested passengers are important in the Belizean context because of the head tax levied, whether the passengers come onshore or not. Clearly, if passengers remain onboard they do not introduce money into the local economy. The key to increased expenditure is to get passengers and crew onshore and that remains difficult without a decent terminal facility. All of the aforementioned destinations have proper cruise terminals which facilitate the rapid and safe disembarkation of passengers and crew. The Stake Bank project would have provided Belize with comparable, if not superior, terminal facilities. The Developer estimates that within three years, arrivals would be around the 3 million mark. With such numbers, direct cruise tourism earnings (at the 2015 passenger expenditure rate: US$77.87) would be about US$223.61 million compared to the US$86.3 million reported by ECLAC in 2015. It stands to reason then that the GOB’s earnings would also increase substantially; estimated by the developer to be in the vicinity of US$40 million per annum.

In 2014, the Developer brought a claim in the Supreme Court against the Attorney General, the BTB and the Fort Street Tourism Village, Ltd. He was granted several of the reliefs sought, but I wish only to point out the fact that the Court found that the “head tax” was unlawful. However, the Barrow administration passed the Cruise Ship Passenger Tax Act, 2015, retrospectively putting the head tax on a statutory footing. This was done after the claim had been filed and after the learned Justice Mr. Abel had shared his draft judgement with the parties. The Act effectively changed “the center of gravity” of Feinstein’s claim, as the Court eloquently describes it.

It appears to me that the primary difficulty between the Developer and GOB is the insistence by GOB that the Developer provides an indemnity against any claims that might arise from FSTV if the Stake Bank project was to be advanced. Naturally the Developer has refused to do so. Despite the ruling by the Court that the offending clauses (2[E]; 2[F] and 5[7]) of the “Further Amended Agreement” are “unlawful and unenforceable as ultra vires the powers of the Executive; and so void”, Mr. Barrow has refused to bring the Stake Bank Act into force.

There are really only two things required to bring the Stake Bank project to fruition. The Commence Order bringing into force the Stake Bank Cruise Docking Facility Development Act, 2014 and an investment agreement between the government and the Developer governing the economic operation of the project. The Commence Order requires a simple signature by the Prime Minister which has already been authorized by the principal legislation. The investment agreement on the other hand would provide the framework that would ensure that the Developer can reasonably recover his investment; it would also set out the fee sharing arrangements as well as any tax exemptions/concessions. Just in case one might be interested in the nature of the investment agreement, I imagine that it would be no different than what was done for NCL. If a foreigner can be afforded such “accommodating” terms to invest in Belize, how come the Prime Minister has lost his motivation to do the same for a born Belizean? The Developer might be a PUP but above that he is a Belizean and if nothing else he should enjoy the support of his own Government.

The irreverence with which the Barrow administration has treated the Developer has to be troubling to any Belizean investor. It has laid bare the utter disdain we have towards each other in the name of partisanship. When Norwegian Cruise Lines (NCL) decided that it wanted to introduce the most vile model of cruise tourism—a private island retreat—the Barrow administration bent over backwards to accommodate them. Notwithstanding the strong objections of the overnight sector in Placencia and the NGO community, the flawed EIA process and the fact that the NCL project ran contrary to GOB’s own tourism policy, the Barrow administration rammed through the approval process. It now turns out that the 1,600 jobs promised never materialized and NCL did not even make an attempt to honor its promise to bring new ships to their island; they almost immediately diverted their ships from Belize City, making worse the already dire economic situation in the old capital.

The current economic outlook for Belize is dim. The economy desperately needs an injection of fresh capital and the 2017/2018 budget offers no real solutions to economic recovery; there is no bouncing back! With such an inclement economic forecast, would it not make sense to use the Stake Bank project as a catalyst to jump start the economy? Feinstein’s Stake Bank project promises US$125 million in investments, ~2,000 permanent jobs and more than 4,000 temporary jobs. Revenues to GOB could easily top US$40 million per annum and the magic of the cruise tourism dollar would be able to touch a wider swath of the country as opposed to only those destinations within two hours of Belize City, as is currently the case.

Additionally, the Stake Bank project would help tremendously with our foreign exchange challenges, especially in the face of declining primary agriculture outputs. Perhaps the best part of this project for me is the assurance given by the Developer that independent Belizean tour operators will be granted permanent presence on the island. Good news, as our people would not be left scavenging for bones outside as is the case at FSTV and Harvest Caye. It is for these reasons that I wish to go on record to support the Stake Bank project. And it is for these reasons that I am outraged at the naked and unabashed partisan sabotage, by the Barrow administration, of the Stake Bank project.

Lloyd Jones

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