Tired of spending millions of dollars on overseas promotional programs, Caribbean countries are now mulling plans to persuade existing investors to unzip their purses and expand operations. In a recent workshop organized in St. Lucia, McHale Andrew, president of the Caribbean Association of Investment Promotion Agencies (CAIPA), said it is “logical” to engage with existing investors rather than fight to bring in new investors.
“It is a great idea and I have heard it for the past 20 years. But such a plan is less likely to be successful, because investment agencies are geared to bring in new businesses by offering incentives and other help,” said Anton Edmunds, an emerging market expert and the chair of the U.S. Department of State’s Foreign Service Institute’s Caribbean Area Studies program.
“If a foreign company operates in our country for more than 10 or 15 years, we tend to treat it as a local company and we no longer provide any incentives,” said Edmunds. “Investment level will certainly be increased if you continue to back up the investor who already has an operation in your country.”
Edmunds suggests that Caribbean investment plans should focus on bolstering local firms as they have the capacity and interest in expanding operations. Persuading existing investors to expand their operation is not only a shrewd plan but also inevitable for the regional investment-promotion agencies faced with shrinking budgets and a rising demand for jobs.
CAIPA’s new plans to increase investment include connecting local firms with foreign investors. But Edmunds, who served as a senior manager of business development for St. Lucia in the 1990s, says such a plan is easier said than done.
“It is easy to say I want to match a foreign investor,” said Edmunds. “To do that successfully, investment promotion agencies probably need to have core business skills. If you don’t understand my business you will not be able to do what you promise to do. More than anything else, they will turn out to be business supporting entities rather than investment promotion agencies.”
According to Edmunds, the problem with the Caribbean is that most of the countries in the region are small and lack adequate infrastructure to meet the needs of foreign investors. “First, they need to identify their specialization and find out which industry sector suits them well.”
“If you want to develop medical tourism, you have to train nurses and change legislation to encourage medical specialists and foreign doctors to come in and practice,” said Edmunds. “If you want to get into a high-end service industry such as technology service and outsourcing, you should be able meet the educational needs.”
Some countries, such as Jamaica and the Dominican Republic, are quickly reforming their policies to make the investment climate more conducive. Jamaica, for example, recently made its tax codes a lot easier to understand.
“The Dominican Republic has also adjusted a lot of policies, and governance there looks for more transparent,” said Edmunds. “The Cayman Islands have embraced medical tourism and they too have reformed their policies to support their new initiatives,”
According to World Bank’s 2015 “Doing Business Report,” it takes about 15 days to start a business in Jamaica, which was ranked 20th for ease of doing business. The next best Caribbean island for starting a business is Puerto Rico, which is ranked 48th.