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OUTLOOK FOR THE CARIBBEAN

OUTLOOK FOR THE CARIBBEAN. THE ECONOMIC CHALLENGES & OPPORTUNITIES. MAP OF THE CARIBBEAN. THE CARIBBEAN DEFINED. A composition of island chain from Bahamas and the Dutch ABC islands of Aruba, Bonaire and Curacao plus the mainland enclaves of Belize, Guyana, Suriname and Bermuda.

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OUTLOOK FOR THE CARIBBEAN

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  1. OUTLOOK FOR THE CARIBBEAN THE ECONOMIC CHALLENGES & OPPORTUNITIES

  2. MAP OF THE CARIBBEAN

  3. THE CARIBBEAN DEFINED • A composition of island chain from Bahamas and the Dutch ABC islands of Aruba, Bonaire and Curacao plus the mainland enclaves of Belize, Guyana, Suriname and Bermuda. • Though the Caribbean Islands may be thought of as a block, the reality is they are distant and far apart although most have similar historical colonization.

  4. FORMER EXPERTS SAY THE FIRST DECADE OF THE 21ST CENTURY HAS PROVEN TO BE A DECADE OF DECLINE FOR COUNTRIES IN THE CARIBBEAN COMMUNITY. HOW DO WE GET INVESTMENT BANKS INTERESTED?

  5. ECONOMIC CHALLENGES FOR THE CARIBBEAN Trade Policy Caribbean is a highly trade- dependent region undergoing major changes in its economic relationships with the world. Implementing the EU Economic Partnership Agreement (EPA) poses a challenge for the Caribbean.

  6. CHALLENGES FOR THE CARIBBEAN Trade Policy • The EPA is a reciprocal, WTO-compliant accord that replaces unilateral preferential arrangements in place since 1975. • Among the strict WTO requirements, the agreement forbids increasing overall protection and requires liberalization of “substantially all trade.”

  7. CHALLENGES FOR THE CARIBBEAN The EPA calls for all CARICOM products to enter the EU duty-and quota-free as of January 1, 2008, with The exception of sugar and rice, which will face tariffs until 2010.

  8. CHALLENGES FOR THE CARIBBEAN • The protected banana, sugar, and rum trade has been the economic lifeblood for many of the Caribbean Islands. The price paid for sugar in the EU has often triple the world market price. Given the Caribbean’s relatively high production costs, the treatment of these key traded goods in the EPA will likely determine the extent to which they will remain significant contributors to the Caribbean economies.

  9. CHALLENGES FOR THE CARIBBEAN • Financial services are also under threat as OECD nations are moving to curtail the activities of the offshore industry. It’s argued, that tax havens weaken developed nations regulatory and tax hold on banks and their customers and this threatens to undermine their financial systems.

  10. CHALLENGES FOR THE CARIBBEAN TOURISM – Caribbean Heads to Lobby UK on Air Passenger Tax (APT) • The need for the United Kingdom (UK) to upgrade Caribbean countries to a similar category enjoyed by the United States so that the UK visitors destined for the region will pay a lower Air Passengers Duty (APD). • APD is a tax applied on long-haul travel inside of UK. Any visitor that flies out of the UK has to pay APD on their ticket based on the length of their journey and class of travel. • The Caribbean is at a disadvantage because of the zone that it is now in (zone 3)while USA is in zone 2. Though some regional countries are much nearer to the UK than some of the American States.

  11. ECONOMIC CHALLENGES FOR THE CARIBBEAN

  12. ECONOMIC CHALLENGES FOR THE CARIBBEAN • Adjusting to the major economic changes through the CSME is its primary development challenge. • To realize the CSME vision, the member countries would have to implement considerably deeper commitments to integration in a manner that will meet individual country and regional development goals, in an equitable and mutually supporting way, without negating national identities and aspirations.

  13. ECONOMIC CHALLENGES FOR THE CARIBBEAN Perhaps the greatest challenge or failing is believing that we can unite the Caribbean without first uniting the people of the Caribbean.

  14. ECONOMIC CHALLENGES FOR THE CARIBBEAN TOURISM Global economic recession is causing visitors to cancel or delay travelling or to holiday closer to home or in a cheaper warm weather destinations.

  15. ECONOMIC CHALLENGES FOR THE CARIBBEAN Natural Disasters • The Caribbean region is located in the tropical zone which is prone to hurricane, storms, tidal waves, heavy rains, droughts, volcanoes and earthquakes. • Each year, Caribbean countries are threatened by significant loss of life, catastrophic property damage and total social disruption as a result of natural disasters.

  16. ECONOMIC CHALLENGES FOR THE CARIBBEAN Natural Disasters Over the past two decades, the disasters have cost the region billions of dollars in damage, with an attendant negative impact on economic health and development. As efforts have to be diverted to help the country in need this slows up the greater progress that would have been made by CARICOM.

  17. ECONOMIC CHALLENGES FOR THE CARIBBEAN January 12th 2010 Earthquake - Haiti CARICOM Urges UN to Bring Order to Haiti Aid Effort CARICOM leaders are urging the United Nations to rein in non-governmental organizations (NGOs) that rushed to the assistance of Haiti in the wake of the massive January 12 earthquake but are now doing more harm than good.

  18. ECONOMIC CHALLENGES FOR THE CARIBBEAN Crime, Violence , Narcotics Trafficking and to an equal extent partisan politics are dividing factors of the people of the Caribbean. These are fear factors and/or high risks factors for offshore investors.

  19. POTENTIAL ECONOMIC CHALLENGES FOR THE CARIBBEAN • Falling remittances from nationals overseas. • A significant decline in tourism/visitor arrivals (forecast by some governments to be down by between 30 & 40 per cent for the year). • Volatile exchange rates and in particular a fall in income and reserves as a result of the decline in the value of sterling. • A fall of in overseas investment. • Increase levels of unemployment in key sectors including construction and tourism.

  20. POTENTIAL ECONOMIC CHALLENGES FOR THE CARIBBEAN • Falling tax revenues. • Difficulties in raising money on international markets to cover the day to day operations of Government. • Budgetary pressure related to the cost of delivering policies intended to mitigate the worst effects of the recession and/or stimulate future economic growth.

  21. PROGRESS MADE BY THE CARIBBEAN • Assistance rendered to Haiti in the wake of the January 12th earthquake. • Regional Institutions eg. University of the West Indies. • The movement towards Caribbean Single Market Economy. This will allow investors to take advantage of investment in goods and services across the region without much red tape.

  22. PROGRESS MADE BY THE CARIBBEAN • Caribbean Court of Justice (CCJ) is implemented and will only need the confidence of the nations that will be developed with time. • Caribbean Insurance Fund is established – amounts paid out in St. Lucia, Grenada and Haiti. • Recognition of the European Partnership Agreement (EPA).

  23. What Will Attract Investment Banks To Invest In the Caribbean?

  24. WAY FORWARD FOR THE CARIBBEAN • Integration of the Caribbean Islands. Our greatest opportunities for meaningful investments in the Caribbean will result from our working together with a united goal.

  25. WAY FORWARD FOR THE CARIBBEAN • A regional approach would be more appealing to the Investment banks, where partnerships and alliances could be developed throughout the region taking advantages of economies of scale.

  26. WAY FORWARD FOR THE CARIBBEAN • Investment banks will invest in those projects that will result in attractive yields/rate of return and long term relationships with customers/governments. • They will also be interested in investing in infrastructure projects based on solid financial models. Advanced infrastructure in countries such as Barbados allows for low investment costs.

  27. WAY FORWARD FOR THE CARIBBEAN • Political & Social stability will encourage investors confidence. • Legal & Regulatory Framework in each jurisdiction – Government must guarantee to the investors that their investments are secured with a solid legal framework.

  28. WAY FORWARD FOR THE CARIBBEAN • Investors can take advantage of zero tax havens such as St. Lucia therefore allowing for tax free distribution of income. Shareholders can therefore benefit from tax free dividends. • Economic indicators show that there will be a good recovery in the region after the recession especially in the areas of tourism and remittance. Investors can therefore take advantage of acquiring good long-term undervalued assets.

  29. WAY FORWARD FOR THE CARIBBEAN • IB can form alliances with local investment firms. In turn the local firms can use the international experience, service and products of the IB to sell to its clients. There is an underdeveloped market for this service in Jamaica for instance. Despite the Caribbean being a small market compared with the rest of the world, the IB earn additional fees from this area. Many IBs now have a Caribbean & Latin America wealth arm.

  30. WAY FORWARD FOR THE CARIBBEAN • Real Estate prices, for instances in Jamaica, are attractive when compared the other areas in the region and the Americas. Furthermore, the prices tend to be stable and moves more on an upward trajectory than down, even during a crisis. A REIT similar to that of Carlton Savannah can create significant long term growth.

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