The following is the presentation by Commissioner F. Richardson during Monday’s Island Council Meeting.
INTRODUCTION
I.C. Meeting / Budget debate 2010 – March 29, 2010
Elucidation / Presentation by Commissioner F. Richardson
Mr. Chairman; members of the island council; fellow members of the Executive Council; members of the media; support staff; radio listeners; TV viewers; persons in the tribune; ladies and gentlemen:
Mr. Chairman, this being the very first budget presented to the Island Council by this new Executive Council, I would be amiss if I did not use this opportunity to make a number of observations.
First of all, this Executive Council is living up to its commitment – despite what the opposition might want the public to believe.
This Executive Council set out to follow a reasonable approach that would paint a more realistic picture of our island’s finances at this time.
We set out to calculate our monthly expenses so that we could remain as accurate as possible.
The next step, Mr. Chairman, was obviously to see how much is actually coming in, versus how much is actually going out.
Most importantly, this Executive Council needs to consider the preparations for country status and what happens after that.
Mr. Chairman, we have to recognize that some adjustments have to be made on all sides.
At the same time, we must give priority to those areas which are crucial to our development – and what is important for our people.
This Executive Council has had therefore to:
· adjust the budget to reflect the true nature of our economy
· continue to provide a strong financial base for the future, and
· prepare for what is required for country status.
Mr. Chairman, the sector Economic Affairs and Tourism falls under the portfolios of my office.
TOURISM
Tourism:
It is tourism that brings the revenues that keep our economy moving. In other words, tourism is the engine of our economy. The role of government in this area is not just that of facilitator, but also one of policy-maker and principal promoter of the destination.
Critical to any destination is its branding; the impressions we make as a destination is essential to:
· build our tourist base
· influence the market and
· motivate potential and existing clients to continue returning to the destination.
To this end we have created a whole new branding strategy.
This new branding is twofold:
1. it is geared towards preserving our existing customer base in the US, European and Canadian markets;
2. it is geared towards pursuing our long-term goal.
What is that long term goal?
It is tapping into alternative source markets.
All efforts are being made to focus particularly on the Latin American (for example, Brazil, Argentina, Chile and Venezuela) as well as the European Markets (which include Germany, Holland, Italy, France, Belgium, and Luxembourg, to mention a few).
We are also going after visitors from our neighbouring Caribbean Islands to ensure that we have a sustainable level of visitors to the island.
Mr. Chairman, what we want to do is to reduce the seasonality of the Tourism Industry and make it a year round economic activity where there will no longer be six months contracts that have been having an unbearable effect on our workers.
We are negotiating to have regular scheduled service by GOL Airlines out of Brazil.
We are expecting an increase in airlift from Jet Blue in the summer.
Additionally, we are in discussion with Air Berlin to have a direct flight out of Germany.
GOL airlines will have two flights a week in the high season and one flight a week in the low season.
When it comes to tourism, my office advocates quality tourism and less emphasis on quantity tourism. This would be in keeping with sustainable development of our economy and tourism.
Mr. Chairman, all these endeavours will preserve jobs in the main and supporting sectors of tourism as well as create jobs, especially in the low season.
This Executive Council favors a dynamic private – public partnership that will benefit our tourism industry even more.
Tourism Arrivals
2009 St. Maarten Arrival numbers are as follows:
Stay-over: 440,185 visitors, which is a 7.4% decrease
Cruise: 1,215,146 visitors, which is a 9.7% decrease
For the year 2009, all source markets recorded a drop in stay-over arrivals compared to 2008.
Noteworthy however, is that during the fourth quarter of the year, three of the main markets saw a rebound in figures with growth of 7% (North American), 38% (South American) and 4% (European).
The introduction of a Brazilian charter throughout the year, aided in the improvement of arrivals from that market.
Visitor arrivals from the Caribbean region however recorded double-digit decreases for most of 2009; in the fourth quarter, the rate of decline eased somewhat to -5%.
And why was this?
This was because of the high cost of air travel and an economic downturn throughout the Caribbean.
When this government came into office, we did so with a commitment to deal with the world crisis head on – which was in contrast to the attitude of the previous government which, in fact, played ostrich and did not recognize that there was a global crisis and how this would affect St. Maarten.
As a result, one of the first things I did when taking office, was to invited representatives of all sectors of the business community to freely share their concerns and exchange ideas on proposals for jointly stimulate economic activity.
Prospects for St. Maarten for 2010 have improved, with an expected 3 to 4% increase in international arrivals for the full year.
2010 Outlook:
Mr. Chairman, we have indications that we face a challenging time but there are signs of recovery.
Looking at the U.S. Market, we conclude that:
SEI programs have helped. Tour Operators are optimistic.
European Market:
There are significant signs of bookings and we are excited about our marketing efforts in Holland and expected airlift out of Germany.
South American Market:
There has been an increase in activity due to marketing efforts with CVC and other marketing firms.
Some real opportunities are being offered with Jet Blue’s 2nd Flight from New York on Saturdays; Weekly flights from Boston.
This means 300 additional seats per week!
Other opportunities are that of West Jet Scheduled Service from/to Toronto, with 3 weekly flights during High Season and 1 weekly flight during Low Season.
Occupancy:
According to data from the SHTA combined occupancy rates continued to be lower in each quarter of the year compared to 2008. Year end 2009 figures were 59.7% versus 64.0% in 2008. Monthly declines continued through in the fourth quarter of 2009 at an average 3 percentage points lower than in 2008. This was particularly due to lower occupancies at hotel properties.
Mr. Chairman, in last week’s island council meeting, councilman De Weever talked about travelling…
Cruise:
Mr. Chairman, the Caribbean continues to be a prominent region for cruise passengers.
Yes, this region was affected by the Economic Crisis – yet St. Maarten is a success story.
Average Expenditure per person of 147.98 U.S. dollars is higher than most destinations.
St. Maarten had a 1.9% increase in Average Passenger Expenditure.
As the cruise sector continues to hold its own, one of the largest cruise vessels of the world, Oasis of the Seas, included St. Maarten in their inaugural port calls.
Of course, we recognize the importance of the marine sector.
Return of the Star Clipper
The Star Clipper is expected to return here on November 20. It will be home porting on St. Maarten.
The idea is that the vessel will sail from St. Maarten to various nearby Caribbean islands, before returning here.
This means that we can look forward to an additional 50 to 70 seats out of Europe every week.
The spin-off effects are certainly good: more passengers to be transported by our taxi drivers; more hotel rooms to be filled; more visitors visiting restaurants and business establishments; more people who may want to rent a vehicle etc. etc.
Mr. Chairman, tourism objectives remain:
Marketing
Exploit Growth potential by optimizing revenue from capacity resources without putting too much strain on existing infrastructure.
Counter downward trend due to world economic financial crisis
Repositioning St. Maarten in North America
Developing the Dutch (and European) Market
Further developing and positioning in Brazilian Market
Developing the Caribbean Market
Maintaining scheduled and airlift in general from all markets
Mr. Chairman, let’s look at the budget figures for tourism and economic affairs.
The total allocated budget for 2009 was over 21 million guilders. This year’s allocated Budget for 2010 amounts to 18.8 million guilders. So, what can we expect in 2010 in tourism?
How does our Tourism Budget compare to the other islands?
Mr. Chairman, we can expect increased summer traffic.
How does this affect the average person?
Increased tourism related activity means that more people can remain working, providing for themselves and for their families; it means a more solid economy.
ECONOMY
B. Economy:
While we recognize that tourism is our primary industry we also feel that it is important to build our small and medium businesses that support our economy.
Government will lead the efforts to increase the level of entrepreneurship through continued support of small business creation. A Partnership between government and various stakeholders and core players remains a critical success factor. This Government will promote the increasing involvement of the corporate sector, financial institutions, and non-governmental organizations, to foster entrepreneurship and small business development. The main areas of focus are on the training of small and medium enterprises (’s), creating job opportunities and strengthening these small and medium enterprises.
How do we intend to do this?
The island government provides a yearly subsidy to the Small Business Development foundation (SBDF) which is tasked with promoting SME development, through various initiatives. For the period 2009-2010 SBDF will receive over two million guilders for various trainings and entrepreneurship programs.
Business Climate:
Complimentary is the improvement of our business climate to ensure that the business community receives the best possible service. One such endeavor is the reduction of bureaucracy in the issuing of business licenses. We recognize the amount of time and expense involved in obtaining all the necessary permits and licenses.
A good starting point is the reviewing of the process and in response a plan was developed to streamline the process by the introduction of an automation system and standardizing licenses. Furthermore, the Executive Council gave the Sector Director of Economy and Tourism the mandate to approve and sign licenses in accordance with:
The "Vestigingsregeling voor Bedrijven" with the exception of licenses pertaining to Lottery, Telecommunication, transport, Airline companies and medical practices.
Under the new mandate, the Sector Director of Economy & Tourism is now authorized to approve and sign business licenses as of July 2009. This has greatly reduced the processing and approval time to within 2 months.
For the month of February a total of 71 licenses were signed.
Mr. Chairman, on the agenda for last Tuesday’s Executive Council meeting were the economic indicators for year-end 2009. This was approved.
The Department of Economic Policy and Research (DEPR) will be given the green light to distribute copies of the presentation to the general public, more specifically to businesses, banks, educational institutions, libraries, students and other organizations such as the SHTA, Chamber of Commerce and Labor unions.
A summary of economic indicators for 2009 indicate that although an expansion in the economy was sustained in 2008, the rate of growth began its decline within the second half of the year; this was, following the effects of the global economic recession.
Mr. Chairman, according to the Central Bureau of Statistics (CBS), the inflation rate dropped considerably in 2009 to 0.7%, representing a sharp drop of 85% compared to the inflation rate of 4.6% in 2008.
A review of the standard economic indicators reveals the following:
Turnover Tax receipts collected in 2009 were 6 percent lower than the previous year, down from 7% growth at the end of 2008.
This indicates that reduced business activity was sustained for most of the year (first three quarters) compared to 2008, with a moderate improvement during the final quarter of 2009, showing an increase of 3 percent.
This must be seen against the background of all that government is doing to promote business; I will mention some of these endeavors shortly.
Government Revenues
Mr. Chairman, Government earnings on a cash basis contracted by 6.8% in 2009 relative to 2008.
Although the revenue situation worsened in 2009 compared to 2008, this overall decline still represents an improvement when comparing double-digit decreases during the second and third quarter of 2009. During the fourth quarter of 2009, growth in revenues was recaptured reaching 22% above fourth quarter figures of 2008. This surge was associated with high growth in income, profit and ‘other’ revenues.
Mr. Chairman, during 2009:
receipts from room taxes declined some 9% in line with reported diminished hotel occupancies;
receipts from rental taxes saw an overall drop of approximately 9% for the full year 2009 compared to 2008, but did register growth of 10% in the fourth quarter of 2009 compared to the same quarter in 2008.
Timeshare taxes increased in 2009 over 2008 by about 3 percent. This followed growth of over 25% and 3% in the third and fourth quarters of 2009 respectively.
Receipts from direct taxes for the year 2009 were lower than levels in 2008, with the exception of profit tax which noted a double-digit (16%) rise.
Wage tax earnings decreased during each of the first three quarters of 2009 relative to 2008, accounting for a slump of 7% for the full year 2009 compared to 2008. A slight improvement was however recorded in the final quarter of 2009 with growth of 1.5%.
During the past year, a number of public projects were completed; they include:
the Midas & Bishop Hill round-a-bouts,
Phase 1- Soualiga Road,
the Cargo expansion project and
second Cruise Pier at the Harbor and the Sea Palace Wharf for water taxis in Philipsburg.
PJIA parking and road re-routing
Ongoing projects scheduled for completion in 2010 include:
the inter-island cargo dock, as well as the inter-island cargo building and warehouse at the Cargo Facility.
Approval of Beach and Vending Policy
Several new policies were approved in December 2009. These include the general vending and beach policy, Economic Residential Policy and new opening hours for businesses.
The goal of the Vending Policy is to regulate economic vending throughout the island (Dutch side) and our beaches.
The new policy will create new entrepreneurship opportunities, while providing regulations that will look at safety.
The goal of the Economic Residential Policy is to encourage an appropriate mix of residential and commercial activities that protect the residential character and integrity of neighborhoods while promoting and facilitating the co-existence of commercial activity.
The Dutch side is 16 square miles of land and inevitably land usage conflict will arise. The goal is not to hamper economic activity but to allow us to enjoy our homes and neighborhoods with an appropriate mix of commercial activity.
Furthermore, the new opening hours policy extends the regular shopping hours on Thursdays to 9:00 p.m. The idea is to revitalize the Philipsburg area by bringing back shoppers to the area with various activities and attractions.
The new Philipsburg experience will also serve to attract our stay-over guests to the town and stimulate more business activity and job opportunities.
Mr. Chairman, my main focus, as commissioner for economic affairs has been for St. Maarten to keep up with the worldwide trend of economies, eventually becoming 24/7 operational.
The change of the opening hour’s policy is therefore also to provide more service and offer options to the general public and opportunities for businesses.
Changing Lanes Project
This government recognizes that a good public transportation is essential for the economic health and prosperity of the island. A good transportation system provides access to jobs, improves productivity and reduces congestion. The Executive Council has just approved the start of "Changing Lanes", a 7.6 million guilder project funded via USONA (SEI). The project is a comprehensive approach to the improvement of Public Transportation and focuses on:
increasing transportation availability and access to jobs;
enhancing service quality;
substantially improving the cost effectiveness of transportation funding;
infrastructural enhancements
job creation
The plan includes major infrastructural improvements, such as bus terminals, bus stops, signage and lighting.
Modernizing of the existing legislation and development of a comprehensive public transportation policy is also being addressed.
Changing Lanes is a two year plan and will address key concerns by the public, such as underserviced routes, congestion, established routes and gypsies. The Changing Lanes plan will also provide job opportunities in the public transportation sector due to the new changes.
However, beyond those traditional aspects, government will also execute PR campaigns to inform commuters’ as we recognize that merely focusing on the physical will not reduce and/or eliminate our challenges.
Mr. Chairman, we should not forget that it was this government that reversed the notorious business labor policy of the previous government, which had many businesses very upset.
This has also contributed to a better business atmosphere and averted possibly more closures and more people losing jobs!
AVIATION
C. Aviation:
v Start of the PJIAE – RESA Project
We have come a long way since Princess Juliana Airport started as a small military base built in 1942, and converted into a civilian airport in 1943, the first in this part of the Caribbean.
The transformations taking us to where we are today have been numerous; for that we have countless visionaries to thank.
Today we continue with the development of this airport, not only as a main port of entry but more importantly as an airport complying with international guidelines and safety standards.
On March 8, 2010, the Princess Juliana International airport initiated its Runway End Safety Area (RESA) project.
This means, among others, that aircraft passengers will in the future be exposed to minimal harm in the unlikely event that an aircraft over runs or lands short of the runway as happened in Jamaica recently.
The project entails the following:
the diversion of the existing airport road, including utilities, along the shorelines of the filled-in area;
the construction of a drainage system to provide for a proper run-off of rain water from the area;
the relocation of the airport perimeter fencing;
the condemning of the existing road;
the extension of the runway and installation of a new turning pad to the north, as opposed to the current turning pad to the south; and
the shifting of the runway declared distances for takeoff and landing, including the re-painting of the runway markings and re-alignment of the runway thresholds and runway-end lights on both ends of the runway.
The project represents an investment of almost US $8.7 million and is expected to be completed in eight months.
The St. Maarten government is interested in all measures that will enhance the level of aviation safety and the safety of the travelling public.
With tourism being our main economic pillar, we need to continuously address possible obstacles that may pose a serious risk to aircraft and passengers.
As commissioner responsible for aviation, I wish to emphasize the priority government attaches to safety in this runway extension project. Bringing PJIA in line with international safety standards will further enhance its reputation and rating as the second busiest airport in the region and make airlines more comfortable in deciding to service the destination.
PJIAE parking and road re-routing
The re-routing of the road and car park works represents yet another step in the development of St. Maarten’s Airport within the framework of the airport master plan.
It is another step aimed at optimizing the effective use of our airport as the gateway to our island and as a hub for the surrounding islands.
The improvement works has resulted in a road through which traffic coming from the direction of the WINAIR offices are being rerouted with the help of a new roundabout.
The public car park is extending on the open land to the north east of the current parking lot; to reach the public car park motorists can enter the airport premises via the roundabout to the east or via the airport frontage roads coming from the west.
All in all, we now have a more secured and more adequate traffic flow to/from the airport and airport parking;
The idea is to increase the overall car parking capacity for the public.
SPORTS
D. Sports:
Mr. Chairman, just this month, March 5 to be exact, we were privileged to witness the signing of financial agreements for the funding of a few sports facilities. That is certainly good news!
Belvedere Colt league sports field
Belvedere is a relatively new residential area with many one parent families and with persons from various income levels.
Many young people form part of the Belvedere community.
While there is now a community center, there are no adequate sports facilities for the youth.
Belvedere is then a prime location to have a sports field. It would serve not only the area’s residents, but also those of neighboring areas such as Dutch Quarter, Union Farm and Middle Region.
Schools in those neighborhoods can make use of the field.
Dutch Quarter Basketball court.
This project had its ground-breaking on Friday last.
Dutch Quarter is another area of St. Maarten with specific needs affecting the youth who may want to practice sports.
It comprises relatively large areas with sections such as Garden of Eden, Union Farm and Zorg en Rust.
This government plans to build a basketball field close to the Martin Luther King School and the Dutch Quarter community center.
Young people from throughout the neighborhoods and those attending school would be able to make use of the facility – since its location would be centrally placed.
In the morning, the school can make use of the field and in the afternoon hours, after school programs can be held there.
Upgrading of sports facilities
The Island Government of Sint Maarten, considering the importance of sports, has plans for the upgrading of our sports facilities.
Mr. Chairman, the public deserves good sports facilities if we are serious about training our youth for future positions on the international stage and if we are serious about a sustainable development of sports in Sint Maarten.
My office is looking at the terms of reference primarily to provide good sport facilities whether by building new ones or by upgrading existing facilities. The preliminary result of an assessment, based on a visual inspection, indicates the need for extensive upgrading of existing facilities.
Most of these facilities, considering the present status, can be upgraded and used more effectively. The need for good facilities has been increasing and Government has acknowledged the necessity of providing the organizational and financial means to create or improve the sports facilities.
Priority is to upgrade the following facilities:
The Raoul Illidge Sports Complex
The L.B. Scot Sports Auditorium
The John Cooper and Jose Lake Ball Park
Raoul Illdige Sports Complex
The Raoul Illidge Sports Complex is located in Cay Hill on an area of approximately 50,000 square meters.
The complex dates from 1979.
The general condition of the complex is below standard. The facility needs extensive maintenance and improvements to provide better service to our sporting community.
All areas of the sports complex reflect a condition that is far below standard of maintenance — to the extent that it requires complete refurbishing.
Only then can we be in a position to host international events, such as regional soccer championships.
L.B. Scot Sports Auditorium
The Great Bay Sports Auditorium is located in Philipsburg and servers mainly the sportsmen and women playing the indoor sports of basket ball, volley ball and indoor football.
Basic improvements were implemented in 2006 when a leaking roof problem was structurally eliminated. New window shutters were also installed in 2006.
The facility requires improvements to comply with higher standards. These additional improvements are for the players as well as for the spectators. The air conditioning and ventilation has to be addressed as well as the seating, toilets and concession area. The actual use of the building will be reevaluated for a more efficient use of the spaces.
The change and bath rooms need to be refurbished.
John Cooper and Jose Lake Ball Park
Improvements are required at the Jose Lake Ball Park in the Cul de Sac / Mary Fancy area.
Baseball (Soft ball) is the main sport at the Ball Park.
Improvements have to be made in the for better accommodation of proper locker rooms where players and kids using the facilities can change clothing and uniforms; adequate wash rooms are needed; proper men and women toilets are needed; a better concession area is needed and so are offices and store rooms. The building is projected at the same site as where two containers are currently located.
The total area of the sports facility covers 19,500 square meters — including the parking area.
For the new facilities, the Island Government is looking forward to receiving and following up on preliminary sketches, showing us what the new facilities would look like, once the project is completed.
Fort Willem Basket ball court
For the island of St. Maarten, a total amount of 188.thousand guilders was made available by the Antillean government for the promotion of sports for the youth and in particular, investing in facilities.
The building of a basketball court at Fort Willem is one of the initiatives this government is looking to realize, as part of the aforementioned.
Mr. Chairman, upon taking office, one of the first things I did was to visit Fort Willem. What I saw at the time convinced me even more of the necessity of such a court in that area.
It saddened me to see how young people from the area have to do with playing basketball in the street, right on a corner where cars have to pass.
Our youth deserve better, Mr. Chairman – and where these things have been ignored in the past, we cannot continue doing so now.