Inc., a privately held investment company of which Lee-Chin is chairman, purchased 75% of the National Commercial Bank of Jamaica from the government for 6 billion Jamaican dollars. In 2004, he announced plans to set up the AIC Caribbean Fund to invest throughout the region. In 2006, Portland acquired an 85% stake in the United General Insurance Co., the largest auto insurer in Jamaica.
Diversification is found among the islands. Even tiny St. Kitts and Nevis boldly closed its 300-year-old sugar industry in 2005, yet continued to register positive rates of economic growth and now ranks No. 1 in the Eastern Caribbean on the United Nations Human Development Index. “We are now focusing on services,” says Prime Minister Denzil Douglas, also the country’s minister of finance, “but our development thrust remains rooted in a multipronged, diversification strategy.”
In an effort to become more trade- and investment-friendly, Barbados places no restrictions on foreign ownership, and foreign investors pay no capital gains tax. There is full repatriation of capital and duty-free access to the United States and other Caribbean countries. “Barbados has traditionally focused its efforts on attracting companies in the areas of information and communication technology services, financial services, and manufacturing to all investors in North America. However, we do welcome the opportunity to specifically reach the African American business community, a segment of the market which to date has been virtually untapped,” says Annalee Babb, former chief executive officer of Barbados Invest.
BIG DEBTS OF THE CARIBBEAN
While they may be poised for growth and ready to move beyond one-sector economies, Caribbean nations face the challenge of sustaining the industries they hope to draw. Their relatively small size and high debt levels have caused investors to either overlook or shy away from the region’s emerging business opportunities. Years of fiscal mismanagement and large national debts have also encumbered many island nations, making them appear risky to foreign investors. According to Ratna Sahay of the International Monetary Fund, 14 of 15 Caribbean countries ranked among the top 30 highly indebted emerging markets in 2003. Since the mid-1990s, the average national public debt in the region has virtually doubled, with debt-to-GDP ratios exceeding 100% in some countries.
Free trade agreements, however, together with ease of transportation, the Internet, and government programs are creating favorable conditions for business sectors in the Caribbean. And U.S. exporters stand to capitalize on the untapped potential. In 2006, there were nearly 246,000 exporters in the United States, an increase of 2.3% over the previous year. Small and medium-sized companies with fewer than 500 employees account for 97% of all U.S. exporters but represent less than one-third of the known value of U.S goods exports.
Despite the downturn, many are seeing value in the Caribbean. “We’re still finding companies are still pursuing diversification,” says Curt Cultice, senior communications specialist for the U.S. Commercial Service. “Some are traveling a bit less to ease costs, but I didn’t have a single trade specialist telling me that [companies are] dropping their [Caribbean] strategies because of the