Dramatic action needed to turn around economy

~ Says SHTA in statement ~

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PHILIPSBURG--The St. Maarten Hospitality & Trade Association (SHTA) on Thursday said that immediate and dramatic action is needed to turn the economy around.The association echoed recent statements by the President of the Central Bank Emsley Tromp that no growth or negative growth (-0.5 per cent) is projected for St. Maarten for 2011.

The SHTA said while it assumes that government is in the process of developing plans for economic growth, tax reform, labour reform, tourism development, infrastructure, most people, including key stakeholders like the SHTA, are not aware of the plans.

The lack of awareness, the SHTA stressed, is another deterrent to stimulating investor confidence. ?In times of economic distress, the community needs to feel that the political leadership has a clear vision and action plan to restore economic activity,? a SHTA statement read.

The SHTA said it is concerned that many businesses have depleted capital reserves, exhausted cost cutting and efficiency measures and simply don't have resilience to last another year of poor economic performance. The SHTA has based its opinion on several factors.

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Low consumer confidence

?Consumer confidence in our source tourism markets is low.�Turmoil on the global financial markets, fears of double dip recession, high unemployment, fears regarding job security, will all contribute to low consumer confidence and therefore lower discretionary spending. One of the first discretionary items to be eliminated is vacations, especially international vacations,? the SHTA said.

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Low Consumer and Industry Awareness

The SHTA said that since the closure of the ERF committee, the destination has had very little presence in the market place.�This�has left the consumer awareness and demand for the destination at historic lows. Ultimately, this results in lower occupancy and lower rates for the industry.

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Weak investment Climate

The association also opined that excessive bureaucracy and highly cumbersome system is a strong disincentive to investment.

?While the SHTA agrees with the need for a tax system that is simpler, more transparent and more fairly distributed, the current uncertainty about the future tax system is a high barrier to stimulating increased investment from current or future investors. Six months ago, upon request of the tax committee, the SHTA submitted a position paper for discussion to the tax committee and ministry of Finance but has yet to receive feedback or further discussion. Even though a new proposal was to be put forward to the stakeholders in June, it?s now September and we?ve heard nothing except rumours that the temporary 2 per cent TOT increase will now be extended for another year.?

This lack of confidence in the economy, the SHTA continued, will result in investors adopting a wait and see attitude towards making capital improvements and other investments and lower spending will translate into less economic activity, which will also mean less revenue for government and for the community in general.

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Traffic

?While the SHTA certainly understands and agrees with the need to upgrade infrastructure, the consequences for residents, tourists and businesses as a result of excessive delays caused by the traffic jams on the island has a major impact on the economy. Every effort to reduce the impact on traffic should be made. Some suggestions include temporary implementation of ferries/ water taxis, 24 hour or evening work schedule, increased traffic control officers to manage the traffic flow,? the SHTA said.

Source: http://www.thedailyherald.com/islands/1-islands-news/20516-dramatic-action-needed-to-turn-around-economy.html

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