It was an interesting question that businessman Michael Chastanet posed to Dwight Venner during the ECCB governor’s recent “conversation” hosted by the Chamber of Commerce. Referring to Venner’s statement that for countries such as Saint Lucia foreign exchange was vital, Chastanet said:
“Many people don’t understand that even though we lose money on the production of a commodity that produces foreign exchange, it may be advisable to stick with it anyway. My question is, how close to the wind should we sail before abandoning a commodity that brings in foreign exchange, however small?”
Before permitting Venner to answer, Chastanet added: “One of our main problems with tourism is the cost. Tourists cannot fly like birds or swim to Saint Lucia; they must hop on planes. Flying is expensive for two reasons: one, we have very high taxes and there is also the high price of oil. Governments cannot randomly hire planes. So what do we do when, as you’ve already noted, we can get nowhere without foreign exchange?”
Venner: In any industry, if you liquidate you can find bits and pieces. There is good and bad stuff. What you have to try to do is see if you can keep the good and eliminate the bad. We missed a tremendous opportunity with bananas, in terms of diversification. For diversification, bananas is the best crop; it’s a cash crop.
I’ll tell you my experience with the banana industry: when WINBAN was suggesting things like diversification without getting rid of bananas, the farmers to a man protested. They had become so specialized that they couldn’t look at anything else as worth going into. Then there was, of course, the infrastructure that the industry had laid down. You could now move stuff from Micoud to Marks & Spencer in London. You have to pay through the nose to put things like that in place. Prime Minister John Compton was always concerned about that.
When you look back at the banana industry, it’s remarkable how it started. Almost at the stroke of a pen the British told the Windward Islands ‘you can no longer do sugar. You can do bananas together to get the critical mass.’ And that’s an important, critical mass. They set up WINBAN to do research as to what kind of crop, whether Lacatan or Gros Michel, and to consider the diseases.
They said to Geest, ‘We will ship it’ and they said to Marks & Spencer ‘you will sell it’ and an industry was created which is responsible for what I call a socio-economic revolution in this country and the other Windward Islands.
But of course we ran into headwinds with the trade arrangements. It is difficult now to compete out there. In terms of tourism, we do not have the critical mass and we always get on like we are competing with one another. So everyone is trying to find a solution in Saint Lucia and it’s not there in terms of critical mass.
You have to have a critical number of rooms to pay for the infrastructure and planes coming in here that are not subsidized. That’s the magic figure we have asked the economists in the research departments to look at. You can have individuals with nice plans who are doing well while the economy is not, because you don’t have the critical mass.
The cost of transition in Saint Lucia from agriculture to tourism has been huge: airports, seaports, roads, electricity, water, telephone connections . . . all of that must be paid for out of public funds. You have to move people from the south to the north where the hotel plants are. I was involved in some of the road projects. It cost a lot of money and it has not been amortized up to now.
Saint Vincent is doing an airport. It’s going to cost them a couple hundred million. They have to amortize. They don’t have enough rooms. They have now to get this critical minimum. So in my view tourism is the industry we now have to treat as what I call the lead transformational sector. Everybody has to understand it is going to cost us big bucks to get to that level. But if you get to that level, then I think the backward and forward linkages are there. It integrates you into the world and it is a modernizing industry. But we have to realize it has to develop the linkages and therefore the policies have to be consistent.
If you are going to support agriculture on the tourism regime, then you have to organize the farmers. You can’t have duty-free concessions for food and expect to develop an agricultural industry. There are lots of policies all about the place that are just dysfunctional.
Finally, in respect to tourism . . . to be successful an industry needs to be planned and regulated. This belief that things happen by osmosis or that the market dictates, it’s all a myth. Things don’t just happen. You have to have that body of experts that can make things happen. If you take Trinidad & Tobago’s oil industry, one thing I am very proud of, over there you have a tremendous amount of expertise to deal with it. Where are the hundred experts in Saint Lucia to deal with anything? Big problem, small results. We should have a lot of people, not just Berthia Parle and three others, who are skilled in tourism, in negotiating, in training.
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