CARIBBEAN: Economist calls for more relevant economic and trade policy instruments in the OECS

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CARIBBEAN: Economist calls for more relevant economic and trade policy instruments in the OECS

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CARIBBEAN NEWS NOW – David Jordan, a UWI and USA trained trade and economic policy economist and a former director of international trade and investment in Saint Lucia, now an adviser to Giordano Associates Ltd, has advised the government of Saint Lucia and the governments of the Organisation of Eastern Caribbean States (OECS) that the time is right to revisit the trade licence arrangements and economic areas of economic activity reserved for nationals in the respective member states.

news2.jpg “These instruments, which mark their beginnings from as early the 1974 era, have served their specific purpose and need an overhaul. In most instances these instruments are now deemed weak and no longer relevant in a globally changing environment” to guide the economic development of the economies of the OECS which are now more services industry oriented, he said.

Jordan, who provides business advice to the private and public sectors, further outlined that “these instruments were designed to work in tandem with a trade regime of the day, which promoted a policy of import substitution and restriction trade mechanisms on trade in goods and investment, while attempting to promote a local private sector investment thrust and business environment.

These policy instruments were designed so as to govern how non-national entities interfaced and integrated with the respective national business environment.

Jordan explained that “these instruments, serving over 30 and 40 years, have proven archaic and are currently also poorly managed”.

He said, coupled with this, an important beneficiary – the private sector – has been silent and negligent and ceased advocacy to preserve the wholesomeness of the instruments and their relevance. These instruments have hardly experienced any fundamental change in an environment that has had to react and adjust to world trade adjustments and regional CSME harmonization of regional legislation.

While he has praise for the architect(s) of those instruments, which were complementary and appropriate several years ago, he provided a critique of those trade licence instruments and areas reserved for nationals in the region that now do not adequately address the needs of a new liberalized regime and the approaches in the OECS region to adopt to recent phenomena, for example the economic citizenship programmes.

Jordan outlined a major characteristic of these instruments that they have been accompanied by weak monitoring and compliance, implementation administrative mechanisms. The revenues gained by governments tend to be miniscule and were just an administrative nightmare in terms of the costs of administering those mechanisms. The ministries in the OECS region are hardly able to develop and maintain proper databases to enable policy refinement and improvements where necessary.

Jordan identified a few areas, highlighting the growth and development of the distributive trades sector as an example. The sector has grown, contributing to the growth of GDP but this has come against an expense of seeing indigenous family businesses in the region experiencing challenges, even dissolution, while non-national (indigenous) businesses continue to grow at a faster phenomenal rate.

He presents an argument that “the appropriate capital sourcing mechanisms should be a major complementary mechanism by the development banks of the region, to enhance the growth of the areas reserved for nationals (if the indigenous would benefit from a window of opportunity to survive). It has not been easy for the indigenous investor in recent times post the period of the adoption of liberalization of trade and the advent of CSME and globalisation policies.

A similar argument can be raised for all of the sectors. He advocates seeking new sources of capital including the IADB, and other non traditional diplomatic sources of funding to propel the private sector. Some of those lists of areas reserved for national enlist 20 and sometimes 30 areas of named economic reserved activities.

He lamented that, with the absence of properly kept databases, policy refinement to assist economic development is weak and proves meaningless. New areas of economic activity are emerging, he said, and the instruments need to cater for that phenomenon if development is to occur.

Jordan wants to stimulate debate and is ready to challenge the private sector and public sector officials in the OECS in particular “that the efforts at the respective national levels ought to be and should be the promulgation and the engagement of relevant policy instruments that make it mandatory to pursue an Investment focus of the country in a more strategic manner.”

The strategy, he said, must detail the investments to be encouraged and revised periodically; establish quantitative and qualitative review processes. How these are to be manifested, and better serve the indigenous national interests and encourage compliance, while integrating non-national businesses attempting to relocate to Saint Lucia and the region, without impacting negatively on the indigenous business activities in contributing to the economic development of the respective OECS countries.

“In simple words,” he asked, “are we ready to improve doing business in this part of the world and target our own unemployment issues and challenges? The policy needs to be updated; the focus should be adopted via single well known piece of legislation and accompanied with regulations that would better monitor and adopt compliance requirements and enforcement and implementation of policy.”

He said he wishes to have dialogue with current policymakers and the private sector of the region to better enable transparent, effective and efficient political buy in by the political directorate, private sector and investor and other economic and social beneficiaries.

“The orientation of these economies has changed. The areas of economic activity have traditionally been concerned with products but have not addressed the growing needs of a transforming services oriented economy. We have made offers to the World Trade Organisation in areas of services and have not promoted the sectors as we should. The most important is data on these areas remains scant… the focus, which has to be the promotion of exports of services, seems to be lost… It is a solid foreign exchange earner that will support the economic policies of the Eastern Caribbean,” Jordan argued.

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