Sint Maarten may be considered the culinary capital of the Caribbean in part because, with two million cruise ship passengers and 583,000 air travelers arriving in 2014, food service is the island’s fastest growing sector. But the appetite of investors and business developers is what the country’s stakeholders are also eager to attract.
Located three hours from Miami by air and with a combined population of 83,000, Sint Maarten and St Martin are part of the Kingdom of the Netherlands as well as a French collectivity, respectively.
Dutch colonists, who negotiated with French settlers in 1648 to share the island, saw value in its salt pond and geographic position as a midpoint between New York and Brazil. Today, the salt is gone, but St Maarten’s role as a transportation hub is of tremendous value to companies that supply products and transport travelers across the region.
Aside from historical documents and exhibits, there’s little evidence that cotton and tobacco once fueled commerce in St Maarten. In their wake, the island was declared a duty-free port, which prompted the Dutch government to begin developing a tourism industry in the 1950s. Six decades later, a lack of diversification away from dependence on tourism is the thorny situation that presents opportunities to innovative investors.
During a recent visit, Business Guardian met four local proprietors who shared insider insights on existing infrastructure, market demand and incentives that may attract new investment.
“We don’t currently have a credit bureau on the island,” explains Anna Rabess-Richardson, who worked in banking for nine years before opening MJR Bailiff Marshall Services in 2010 with family members. As a business development officer she provided financial guidance. “I went to businesses to meet with employees to present a holistic view of how to structure yourself and be prepared for the known and unknown. The cost of living is extensively high here, a lot of times we live above our means.” In lieu of a credit reporting agency, banks have “a very good mechanism where they communicate with each other,” confirms Rabess-Richardson.
For foreign investors seeking financing, she says banks require “credit reports, background checks and financial statements to verify what is on the credit report.”
With the exception of Windward Islands Bank and Banco Di Caribe, Canadian institutions have a dominant presence. “I don’t think banks here are set up, willing or able to assist a small business or medium-size business to expand, in terms of offering certain facilities,” declares Stanley Lint, vice chair of the St Maarten Chamber of Commerce & Industry.
“This is a discussion I have several times with my friends within the industry. It all comes down to one answer: it is not local! The main office that sets the rules and criteria is somewhere else. We need locally-owned and operated banks that understand the culture and environment, and can assist small entrepreneurs with starting and growing their business.”
On the flipside Lint feels, “small businesses many times have a great idea, know how to work hard and sell their product or services, but they don’t know how to manage the business or finances. That could be a reason why banks are reluctant to finance smaller operations.”
The Chamber of Commerce (www.chamberofcommerce.sx) registers all businesses and offers insights to startups and investors. Recently, the Chamber created a business centre that can help “educate entrepreneurs on how to manage finances.”
“If you’re coming to set up a company, government will welcome you with open arms. If you’re coming to work that’s the difficulty,” attests Brenda Wathey, managing director of Artemia Event Planners (www.artemia-sxm.com). “We’re only 37 square miles. We can’t continue accepting people from abroad who are labourers or workers.”
To curb the 11 per cent unemployment rate, government assesses whether service providers with similar skills already exist on the island (www.sintmaartengov.org). For investors government has implemented measures to expedite the processing of business permits and managing director licenses, according to Wathey. “The one good thing, after you get your permit and licence, you get status to live here. It makes sense because you can’t own a business here and not live here.”
In October 2014, the Port of St Maarten hosted the 21st Annual FCCA Cruise Conference and Trade Show, one of the largest cruise industry conferences. “We exceeded expectations,” adds Wathey. “Government had to invest in a temporary structure to house the conference. Occupancy at most hotels tops at 600-800; there is an opportunity for a conference arena to be built.” More rooms and a state-of-the-art concert hall could expand their reach into the incentive travel market.
While St Maarten Nectar cosmetics, Topper’s Rhum and a variety of Guavaberry products are manufactured on a small or medium scale, there are not enough natural resources to sustain manufacturing at a level that could significantly influence the GDP (ppp) of US$798 million (2010 est) (www.stat.gov.sx).
“There are farmers starting to do little projects, though land is limited and the terrain isn’t very conducive to agriculture,” observes Wathey. “When you see Coca-Cola they distribute here but they don’t bottle here, we would have to import water.”
Wathey estimates that 80 containers arrive weekly to deliver produce. “Shipping is very competitive as 99 per cent of everything sold here is shipped in. Most shipping companies are locally owned,” said Lint, who has 10 years in the industry and is managing director at STM NV, a freight forwarding company. “It is a good industry to be in.” He advises newcomers to avoid undercutting the market too much just to attract business. “It’s difficult for those who are established to go back to market levels.”
“We’re establishing St Maarten as a sub-hub to the region,” notes Lint. “We have major shipping lines coming here. St Maarten is ideal for persons who want to do business in the region but need a base.” Twenty-two scheduled airlines serving 34 destinations directly is the sort of impressive factoid that gives St Maarten stakeholders leverage for courting new investment.
Representatives of the chamber recently visited Miami and Panama to showcase the possibilities of working via St Maarten to cover the region, Lint said. “We are now focused on Trinidad, Antigua, Barbados, St Lucia and Montserrat.”
While labour isn’t cheap, appealing real estate costs help to attract luxury brands such as Michael Kors, which opened last October. “My rent on the Boardwalk is U$2,800 monthly for 700 square feet, very reasonable,” shares Giovanella De Weever, owner of Island Blush (www.islandblush.com) boutique and wholesale company. Cruise ships dock near the picturesque beach at her shop’s doorstep. “On Front Street rent is U$5,000 and up. Rental properties have decreased in the last two years,” she adds.
De Weever recently franchised her business and started a private label for her nail polish, perfume and chapstick inspired by St Maarten’s alluring beaches. In the Dominican Republic, she discovered, “a law (permits) only US$250 you can use online to bring merchandise into the country, above that it’s taxed at a higher rate. That encourages you to shop in your local economy. We want to offer the same price they find online.”
Lint said: “We should focus on developing telecommunications, marine industry, banking and education. The environment for banking and doing business in St Maarten is very comfortable and safe.”
In the meantime, “We’re a one pillar economy, our industry is tourism. We’re blessed that St Maarten is such a beautiful island,” affirms Wathey, an event manager for the illustrious Heineken Regatta and a member of the country’s leading business family.
“Don’t get me wrong, St Maarten has made a lot of money for people who are not necessarily from St Maarten. They’ve set up businesses selling liquor, cigarettes, food and beverage. While we may not have the ability to produce those things, the consumption rate is through the roof. The potential for growth and to do well in St Maarten is huge.”
Resourceful Web sites:
SXM official Web site: www.vacationstmaarten.com
SXM Small Business Development Foundation: www.sbdfsintmaarten.org
SXM Hospitality and Trade Association: www.shta.com
www.doingbusinessdutchcaribbean.com
www.theodora.com/wfbcurrent/sint_maarten/sint_maarten_economy.html
