The intellectual argument that Barbados is in deep economic (and social) crisis has now been conceded by the deniers – those who talk nonsense about the nation punching above its weight and exaggerating the soft influence we have in the region and, the world. Of course, it is all self-praise, the unfortunate outcome of economic ignorance and wishful-thinking.
I have said before, and will repeat again, that: first, the narrative that we have had a period of prosperity in the first decade of the 21st century was a myth built on over-borrowing on both a household and government level, ignoring our inefficient productivity to such an extent that we even believed that life owed us a living.
The second point that needs stressing is one that is in danger of seeping in to the gilded story of our economic prosperity: again, let us concentrate it to the post-independence years, and that truth is that the official myth-making of our economic growth, generally given as three per cent annualised, is, to be polite, crap. Had Barbados had a three per cent growth rate over the last decade, compounded, our post-global recession story would have been totally different. As things stand, we are up to our necks in debt, tourism, the main driver of the economy, is in intensive care and the priest is standing by to perform the last rites, while, in the meantime, relatives are fighting over how to divide up the spoils even before the last breath leaves the body.
The observation has been made by BU et al from time to time that there is a lack of financial analysis by the local traditional media. While there is reporting about financial matters, the public continues to be cheated out of billions invested in the education system through the years which continues to produce accountants and graduates in many disciplines a dime a dozen. Our observation pertains mainly to financial entities where consumer risk is greatest for many.
Section 4.(e) of the Financial Services Act 2010 states that the Financial Services Commission (FSC) was established “to promote stability, public awareness and public confidence in the operations of financial institutions”. The last five years have wreaked havoc on the economies of countries all over the world, Barbados being no exception. It is therefore not unreasonable to expect that companies operating in Barbados are currently managing declining balance sheets and are therefore under financial stress.
BU believes that in the current environment the dearth of financial analysis has accentuated the risk for the general public. There seems to be the acceptance that if Company X meets its legal obligation to publish its Balance Sheet and Profit and Loss in the newspaper all is well. Unfortunately BU does not have the expertise and resources to effectively fill the void although we have sensitized our readership from time to time of the need to be vigilant in these matters.
Over the last twenty five years, I believe our small company has been a model corporate citizen on Barbados. We have no outstanding debt to either Government or the private sector, yet next week we will be forced to go cap-in-hand and beg our bankers for an overdraft facility.
Why, you may ask?
Simply to be able to cover our expenses, while we await several VAT refunds totalling over $32,000, which have been overdue for as long as two and a half years. We are told that all the claims have been approved, but are ‘warned’ not to call the VAT office, to chase when payment will be paid. Of course, we have tried to approach Government discreetly by writing to two Ministers with responsibility for either VAT or small businesses, but weeks later, neither have bothered to respond.
As a regular visitor to Barbados, I am concerned with what I am reading in the mainstream media in Canada and Barbados and the blogs. Tourism is in the tank, and the Ministry is creating two new entities to replace BTA. So now there will be two layers of bureaucracy. That should really speed things up. The Minister heads a delegation to Miami to convince the cruise lines to send more ships. I may be wrong, but I think I read somewhere that Barbados pays the cruise lines to dock at Bridgetown port; and less than 20% of the passengers disembark and spend money in Bim.
The matter about which I write is the “Tax-Haven” issue. I see that the post Low Tax Haven Jurisdictions Under Scrutiny has slipped into the older posts and is generally out of view. I may be over-reacting to or over-concerned with the Tax-Haven issue; but I think the discussion is important and should be kept in the forefront, so the Barbados authorities can not simply bury their heads in the sand.
I am repeating myself in some of the following, but I think it warrants repeating. According to recent media reports in Canada, Canadians or non-resident Canadians have $53 billion invested in Barbados in 2011. Whether Barbados is in fact a “Tax-Haven” is open to debate. In Barbados it is referred to as Foreign Direct Investment; In Canada it is being referred to as “off-shore” investments.
To make the harsh observation: Our foreign reserves would have dropped to $1.3 billion if not for that $167 million from the sale of the BNB shares….Was that sale strictly for window dressing purposes to impress the IMF and the ratings agencies? It would have meant 4 continuous years of declines in the year end foreign reserves.
The following article is written by Customs Officer, Arleigh Durant, for CESS NEWS (Customs and Excise Shop Stewards News). The shop stewards at Customs use CESS as an avenue to disseminate news among the staff.
A member of the business community was having a candid conversation with a Customs officer. The businessman told the officer “time is money I have instructed my broker to do whatever customs require. If the customs officers wants to up my values or change the tariff number so that I have to pay more duty, I am not wasting my time quarrelling with them. I will pay whatever they want me to pay. That additional cost is passed on to the consumer. My bottom line will not be affected. That man in Enforcement or the one in Outdoor they can do as they like “. We are all consumers; the price of items can erode our purchasing power. There is no special price for Customs workers.
The way Customs does business is critical to the survival of some small businesses. The big businesses may be able to pass on the cost. With the small business increased cost could cause the business to close down. In these hard economic times one must take into consideration the commercial realities and our societal duty to assist the national efforts to keep people employed. With people out of work, there is a greater threat to the society. Crime and violence will increase. Our tourism industry can be crushed by the ravages of crime and violence.
All across the English speaking Caribbean, there is an ominous movement of sorts, a movement of low frequency rumblings without patterns, without form, not like the rhythms of bumbatuk or soca or the one drop of reggae or mento that we are accustomed to.
The essence of all of these known rhythms is that they link us to a past of chattel servitude where there was little choice for self fulfillment. In time these rhythms. isolated as they were in tenantries and yards and the dancehall, fortified our resolve towards freedom and independence.
Over the last 40 to 50 years, we built indigenous institutions in every sphere, oblivious to the rumblings that were moving across the region. We dismantled the psychological prison of plantation inheritance, killed off the skills we developed to feed and clothe ourselves while we were taught to assemble products that we never used. We set a precedent by bribing investors that our labour was cheap and responsive to training and we told ourselves we could depend on these jobs.
Compiled by the Department of Management Studies, UWI, Cave Hill
Should You sell Those Shares To Finance Christmas Shopping?
In the two years we have been publishing this report, we have noticed an increase in share trading around the end of the year. This has led us to suspect that some investors may be liquidating their shares to help finance Christmas and New Year holiday expenditures. Is this a wise decision? Like so many things it all depends. In general, you should not use investment funds to finance consumption. If you are holding the shares as a means of financing some future expenditures like retirement, education and so on, then you should desist from liquidating shares to finance holiday related consumption expenditures. However, liquidating shares to help finance Christmas and New Year expenditures is generally a better financial decision than undertaking expensive hire purchases or neglecting to pay other bills. In general, I would suggest that you save over the course of the year to finance holiday expenditures, avoid debt to finance holiday expenditures, exercise moderation in holiday expenditures and if you must, then only finance holiday expenditures from the gains on your investments rather than liquidating your capital.
In a moment of euphoric celebration, the Opposition BLP published a 15-point plan which it hopes will be a roadmap to power when the DLP Government finally decides to call a general election. It appears as if the BLP is so confident that the ruling DLP is destined to lose power whenever the general election is called, that it has decided to break with all conventional orthodoxies by publishing the fifteen key points, which presumably will be the centre of its manifesto. What makes this so surprising is that although former prime minister Owen Arthur is not considered an intellectual, he is widely regarded as one of the most astute political tactician of his generation.
Conventionally, opposition parties hold their powder dry, especially if the ruling party is digging a hole for itself through gross mis-management of the economy, preferring to maintain a ‘negative’ strategy – pointing out the weaknesses in government policy and reminding the electorate that had they been in power they would not have introduced such the policy being criticised. In such circumstances, one thing is clear, after nearly five years in power, the DLP government is still at sea, with some key advisers, who ought to know better, supporting its ineffective policies apparently purely out of self-interest.
I have a deep and consuming passion for small rum shops, apart from the fact they tend to take up too much of my time when visiting Barbados.
But then again, I have a confession to make: I am the product of a rum shop culture, on both sides. My paternal grandfather had a rum shop and bakery in Nelson Street (Ye Olde Grogge Shoppe), which ran from the 1930s to the 1960s. And, on the maternal side, my mother ran a shop for years in the Ivy, until she immigrated to the United States. But being called rum shops was about all they had in common, along with selling the amber nectar to people who were a bit too careless about their earnings than was good for them. The clienteles were totally different. While my paternal grandfather, later grandmother and aunt, ran an establishment which also functioned as a low-cost food provider, with my mother’s establishment, it was more hard drinking, and non-stop gambling, especially poker. To this day I do not like the idea of gambling – or drinking rum. However, on hearing that there were moves ahead to bring stubbornly independent rum shop owners together, my first reaction was: about time.
Small business people are always the first to be forced out when a society is developing and the emerging middle class wants to move away from the old customs – their parents’ generation. In Barbados, post-independence, one of the first casualties of the emergence of a middle class was the small rum shop. But, a question I always ask myself, have we been throwing out the baby with the bath water? But, if the proposed rum shop body, let us call it a Cooperative, is to work, then the business model must be simple, transparent and practical.
Part of any dynamic strategic development plan should be based around carefully locating industrial policy at the heart of that plan. But, as has been mentioned before, this generation of policymakers and politicians do not have a natural impulse for industry. They prefer to base development strategy on tourism, because it provides the ready cash, and on the provision of services such as law, medicine, offshore health and education, and accountancy, because they fit in with their professional training. In other words, these are areas in which they feel professionally and politically comfortable. But one example shows the weakness of such thinking. There is a small company in Britain, called LondonBioPackaging, a small environmentally friendly packaging firm, as its name implies. Part of the products it provides are food containers made from bagasse. In the mid-1960s one of Barrow’s promises was to develop a chip-board company made from bagasse, which he said the Cubans would train young people in developing. Today there is no such industry.
Barbados was also the home of the early stages of what became the Iraqi super gun, trialled at the Barbados Foundry; we have now lost those skills. In the mid 1960s, Texas Instruments came to Barbados with its compute chip manufacturing plant, but as soon as the tax free period was out it moved to Malaysia. So, our failure to gain any knowledge transfer from these industries is not a recent phenomenon, it goes back to the 1950s.
But spin-offs from bagasse is not our only significant industrial failure. Barbados has a premium grade rum, or so we are told, yet it remains a family-run family cottage industry, or one which uses the Barbados brand but is owned by some French company or mainly identified with Bicardi. There is no training programme for would-be distillers, no trade association, no collective advertising. We drift along hoping that people would like and buy our brands giving us further reason to talk about being world-class.
The post-independence experience of Barbados is one of missed opportunity after missed opportunity and nothing demonstrates this more that the Diaspora conference which is now coming to an end in Barbados. Here was a rare opportunity to draw on the collective knowledge, enthusiasms and skills set of the great Barbadian Diaspora to add to the mix of ideas and proposals for the development of this small, but proud island-state, across a number of disciplines, sectors and industries?
Here was an opportunity for overseas-based Barbadians to contribute in a fundamental way – not just through the vulgarity of semi-naked dancing and alcohol-induced unprotected sex – to the short, medium and long-term development of their island home.
Sadly, the notion, first developed under the late David Thompson, has been taken over by a group of people without any idea of how to take forward what was a dynamic and brilliant idea and make it bear fruit. From reports and conversations with people who have attended, the conference was a talking shop, lacking in substance, and acting as a break between the entertainment and recreational shopping.
Message from the Board of Directors of Almond Resorts Inc – Published in the Nation and Barbados Advocate today.
Shareholders were asked to approve the sale of Almond Beach Club to Fairweather Holding Company, but it appears they were only acting as a nominee for Lazy Lagoon (Barbados) Ltd. Is this a nearly formed company and where is it registered? I have tried searching the CAIPO Corporate database but cannot find it.
Who are the shareholders of Lazy Lagoon (Barbados) Ltd and what is the commonality with Lazy Lagoon Limited which is as associate company of the Goddard Group (33 per cent shareholding) or Lazy Lagoon Holdings Limited an associate company of Neal and Massy Holidays Ltd (44.5 per cent shareholding).
Annie Lowrey,A Harvard grad who is an economic policy reporter for the New York Times’ Economix blog – Credit:: Policymic
…what percentage of investors who invest in Bim are driven by ratings? what rates can we raise money at if we need to? The fact is that Jamaica with a much lower rating has been raising money globally at comparable rates to Barbados, actually lower in some cases.
My general point is that all the people who have been opining have not bothered to check or try to get info on the trading in currently outstanding Barbados government bonds graded internationally. has there been any selling off, have the yields gone up. How can we claim to be serious about these issues?…
Of concern to BU and others we know is the lack of financial Reporters employed by traditional media. One only had to observe the Central Bank of Barbados press conference yesterday. The traditional media whether it wants to accept the responsibility is an opinion shaper for many Barbadians.
Greece’s political leaders struck a historic deal Thursday to make deep cuts in government jobs and spending to help save the country from a default that could shock the world financial system.
Greece needs the bailout by March 20 so it will have enough money to redeem €14.5 billion worth of bonds coming due. If it doesn’t make that payment, it will be in default. Financial analysts fear that could set off a chain reaction similar to the financial meltdown triggered by the collapse of investment bank Lehman Brothers in the fall of 2008.
What would be the implications should the worse happens? What about our already fragile investments in Four Seasons? Shouldn’t we be more prudent and at least wait for the March 20th deadline before swinging another cent . Make “cents” to me, what do you think?