Carekine Business Summit 2012

AmsterdamJune 22 2012

I believe it is good that before I start my presentation on the economy and business opportunities on St. Eustatius, it is good to introduce myself.

I am born here in The Netherlands some 61 years ago. I served for more than 17 years in the Marine Corps, and this is where my attachment to the Caribbean comes from. I have served three terms in, what used to be called the West, on both Curacao and Aruba. On Aruba I met my wife. She is born on Statia, which explains why I ended up on this lovely island. In the meantime I am living on Statia for 25 years already.

From the day I came to live on the island I have been an independent entrepreneur. I started out as an hotelier and later on I became involved in real estate rentals, sales and development, insurances, mortgages, business advice and a number of other things.

Besides my work I have been rather involved with the St. Eustatius Business Association and I am founding Chairman of the Chamber of Commerce for St. Eustatius and Saba. In the Statia Tourism development foundation I served as vice-president for many years.

In 2010 I became involved in politics; I am what they call in Dutch a “laat bloeier”. From April 2011 until January 2012 I have served as an island council member. Since February 1st I am appointed as member of the executive council. My responsibilities are finance, economic affairs, tourism, water and energy among others.

It is my intention with this presentation to give you an insight in the economic activities in Statia and the opportunities the island offers for entrepreneurs and investors in particular from the European part of the Netherlands.

Let me start by giving a general impression of the status of our economic development. Well, Statia is just in the beginning stage. Although already in the 18th century the island became the main transhipment port between the old world and the America’s, the last two centuries no developments took place on the island and the number of inhabitants dwindled from 20.000 to a mere 1500.

After the establishment of the oil terminal on the island, some 30 years ago, this tide has turned and slowly economic development and the number of inhabitants started to increase again. At present we are almost hitting 4000 inhabitants.

The oil terminal, owned by the American company NuStar, is a 14 million barrel storage facility where oil is stored from all over the world to be shipped mainly to the USA. The company is the largest private sector employer with approximately 250 employees including sub-contractors. The terminal over the years is gradually expanding and although a major expansion plan just recently have been called off, there are still plans to expand the capacity with some 2.5 million barrels and to construct a new jetty.

Tourism is in a rather embryonic stage. The island counts just about 75 hotel rooms, divided over 6 small properties. There is however great potential and at present the island government entertains talks with 2 serious potential hotel investors, while also one of the existing properties has plans for expansion.

At the moment only one airline, Winair based on St. Maarten, flies into Statia five times a day with a capacity of 16 seats per flight. St. Maarten is the major hub to North and South America and Europe.

Since April a licence has been granted to AIR BVI, a regional carrier, to fly the route Statia-St. Kitts. St. Kitts is a hub to the UK and Canada. It is expected that the inaugural flight will be sometime in July. In the meantime the airline is exploring other routes such as Statia – Bonaire (with connection there to Amsterdam) and direct flights to Miami

Also discussions are on-going with a third airline, Cape Air, a well established US-base airline, to fly the route Statia-Puerto Rico. Puerto Rico is also an important hub in the Caribbean with connecting flights globally. And just recently a sea- ferry service has been established between St. Maarten and Statia

Diving is the main attraction for tourists since the diving is known as one of the best in the world. There are three dive shops on the island. Plans are being made for a live aboard dive boat to visit Statia once a week.

Other attractions are the volcano, the Quill, with its miniature rainforest, the abundantly available historical remains, nature and simply the tranquillity and the very friendly people.

To accommodate air travel and to increase the standard a master plan for the airport is being prepared. Emphasis here is on the improvement of the accommodations for travellers including a new terminal building and improvement and possible expansion of the runway

Together with the oil company the possibilities of a public private partnership is being explored in order to re-locate the commercial part of our harbour away from the Lower Town area, which is in fact the main touristic area. If his will be achieved then the present harbour facilities can be solely used for touristic and passenger purposes and will offer investment

opportunities in marina development and other activities geared towards the yachting business. A commercial harbour offers opportunities in container storage and transhipment as Statia can be a hub for the many islands in the region.

Since about a decade there is a medical university established on the island. This is a phenomenon you see on many of the Caribbean islands. The school caters to an international group of students, who mainly arrive through the USA and Canada. The school recently explained their expansion plan to the island government and intents to double their capacity to 200 students by the end of 2013.

Earlier this year an MOU has been signed between the ministry of education (OCW) and the island government for the purpose of the establishment of a knowledge centre. Also the University of Wageningen, the University of Leiden, the NIOZ and others will be partners in this centre. This initiative is expected to have great benefit and also opportunities for Statia. It will guarantee a continuous flow of visitors to the island and it will be of benefit to areas such as preservation of nature and history, agriculture, fisheries etc.

Since the dismantling of the Netherlands Antilles, the islands also have to become independent in the area of electricity production and distribution. At present Statia, together with Saba and St. Maarten is part of GEBE, which is the electricity company for the Windward Islands. Together with the ministry of EL&I the islands Statia and Saba are being prepared to start their own electricity companies. To guarantee affordable tariffs plans are being put in place for alternative energy production. The ministry is assisting the islands with the establishment of a wind farm. Also a MOU is being prepared with a French company to explore, and if showing viability to produce geothermal energy. In these two options for alternative energy lies great opportunity for private investment as well.

Other yet unexplored possibilities lie in the area of solar energy and in a waste to energy project. The latter becomes more and more relevant as a solution needs to be found for the increasing waste problem on our island.

The infrastructure on Statia leaves much to desire although steps forward are being made. Examples for this are the nearly completed water distribution network, which is expected to connect 90% of all households to potable water, and the establishment of a fibre optic cable, which will connect the island to the outer world. Both projects will proof to be of great importance to the development of the island.

In the so-called “lente accord” it has been agreed to grant the three BES islands a structural contribution of 10 million euros for green and environment. Statia should get roughly 3.5 million US dollars from this amount. It is expected that the way in which these funds may be

spend will be broad and that there will be many possibilities to use these funds for the improvement of our infrastructure and touristic product.

With the right marketing there is great potential for the development of real estate. In this area you can think of medium and high income residential development, second homes for seniors and baby boomers, vacation homes etc.

You may wonder what are the advantages to invest in Statia or start a business.

In my opinion the most important reason is that, although the island lies in the Caribbean, it is still part of Holland. This is reassuring as laws and regulations are understandable.

The language is another important advantage. Although English is the mother tongue of most of the inhabitants, many master the Dutch language. Also all laws and regulations are in Dutch.

Since January 1st 2011 a special tax system had been introduced. Income tax has become a flat tax of 30.4% for everyone, with a tax free sum of more than 10.000 US dollars. The profit tax has been totally eliminated, while revenue tax is just 5%. For real estate there is a property tax of 1%, which is applied to second homes and business properties. By import a 6% ABB tax is levied, while ABB on services offered on the island is 4%. No value added taxes like BTW are levied.

Two years ago government has adopted a strategic development plan outlining the desired future development of Statia for the next 15 - 20 years. This plan also forms the basis for the last year approved spatial plan. The main intention of this plan is to guarantee a sustainable and manageable development of our island.

Other positive points that can contribute to the success of investing or starting a business in Statia are:

1. Government can offer affordable lease land options for selected tourism and economic development;

2. Government’s policy is to expediently facilitate and where possible support serious economic projects;

3. The lines to the decision makers on the island are short;

4. The geographical location of the island is strategically located between Europe and the America’s;

5. The island is practically crime free;

6. In particular for sustainable tourism development it is good to know that Statia has established nature reserves on island as well as a marine park. The latter is very important for the diving tourism industry.

To further attract development Government, in collaboration with private sector partners, is organizing an Investment summit on July 2 and 3. For this summit already a number of financial institutions, airlines and also a major brand name hotel have registered.

As I stated at the beginning of this presentation, Statia stands at the beginning of serious economic development. The new constitutional status combined with a fresh approach by government is creating an environment friendly towards investment on the island with great opportunities for the island, its people and the future entrepreneur or investor.

Thank you!