Global FDI may be fal­ter­ing, but the Caribbean is still prov­ing at­trac­tive to over­seas in­vestors — par­tic­u­larly in tourism, ser­vices and man­u­fac­tur­ing.


In the wake of the world­wide re­ces­sion, in­ter­na­tional in­vestors tight­ened their belts. Global For­eign Di­rect In­vest­ment (FDI) has been on a down­ward tra­jec­tory for the past decade, and fell fur­ther in 2017 with a 23% drop to US$1.43tr. The one bright spot in the con­tract­ing eco­nomic land­scape is the Caribbean, where FDI re­mains re­silient, largely thanks to its thriv­ing tourism sec­tor.


FDI in­flows to the Caribbean rose by 20% last year to reach al­most US$6bn, ac­cord­ing to the Eco­nomic Com­mis­sion for Latin Amer­ica and the Caribbean (ECLAC). The Do­mini­can Repub­lic was the re­gion’s strong­est per­former, amass­ing over US$3.5bn in 2017.

The bulk of the in­vest­ment was di­rected into the tourism in­dus­try. While Saint

Lu­cia has not yet re­leased its 2017 FDI data, the coun­try cer­tainly saw a ma­jor uptick in tourism-re­lated projects last year. De­vel­op­ments an­nounced or com­pleted in 2017 in­clude Cu­rio by Hil­ton; the lux­ury mega-ho­tel, Roy­al­ton Saint Lu­cia Re­sort and Spa; the Fair­mont Saint Lu­cia in Choiseul and the Black Bay Master De­vel­op­ment which is be­ing funded by Dubai-based Range De­vel­op­ments. In to­tal, the coun­try ex­pects to have around 2,000 new ho­tel rooms by 2021.

Some projects, such as the US$2.6bn

Pearl of the Caribbean de­vel­op­ment backed by Hong Kong devel­op­ers Desert Star Hold­ings Ltd., seek to use Saint Lu­cia’s Cit­i­zen­ship by In­vest­ment Pro­gramme un­der which for­eign­ers are of­fered cit­i­zen­ship in ex­change for in­vest­ing in a na­tional fund or gov­ern­ment-ap­proved project. These types of schemes have been used suc­cess­fully by most East­ern Caribbean states to boost their FDI and at­tract in­vestors from out­side their core mar­kets of Europe and the United States, gain­ing in­ter­est from Asia and the Mid­dle East.


While the tourism in­dus­try is the main re­cip­i­ent of FDI dol­lars across the Caribbean, in­flows have been more di­ver­si­fied in re­cent years as the re­gion, along with the rest of the world, em­braces the Fourth Industrial Rev­o­lu­tion. Other in­dus­tries at­tract­ing for­eign in­ter­est in 2017 were ser­vices and man­u­fac­tur­ing, in par­tic­u­lar re­new­able en­er­gies and telecom­mu­ni­ca­tions.

In the past two years, around 12% of to­tal FDI in­flows to Latin Amer­ica and the Caribbean have gone to the telecom­mu­ni­ca­tions sec­tor while 15% funded re­new­able en­er­gies. This ris­ing in­ter­est in con­nec­tiv­ity, tech­nol­ogy and sus­tain­able en­ergy gen­er­a­tion is re­flec­tive of global trends. As tech­nol­ogy ad­vances, there are more op­por­tu­ni­ties for Caribbean coun­tries to cap­i­talise on these niche mar­kets.

Saint Lu­cia’s na­tional in­vest­ment agency, In­vest Saint Lu­cia, is fo­cused on di­ver­si­fy­ing the coun­try’s FDI of­fer­ing and

recog­nises that solely re­ly­ing on tourism doesn’t pro­vide long-term se­cu­rity. The agency is now look­ing to lure in­vestors in smart man­u­fac­tur­ing, in­clud­ing agro-pro­cess­ing and smart tech­nol­ogy man­u­fac­tur­ing. It has also been suc­cess­ful in at­tract­ing Busi­ness Process Out­sourc­ing (BPO) op­er­a­tions such as KM2, Ark Te­le­ser­vices and Ar­tif­i­cal In­tel­li­gence spe­cial­ists Ojo Labs.

Not every Caribbean coun­try is suited to the same type of FDI. While Saint Lu­cia has the re­sources to ac­com­mo­date BPO ser­vices and the proven de­mand to sus­tain its tourism of­fer­ings, other coun­tries can play to dif­fer­ent strengths. The Do­mini­can Repub­lic re­ceived US$410m last year into its min­ing sec­tor, Guyana at­tracted US$90m in its en­ergy in­dus­try and Ja­maica re­ceived US$60m from a Chi­nese iron and steel com­pany to re­open alu­minium plant Al­part.


The amount of FDI a coun­try re­ceives is im­por­tant, but the qual­ity of that in­vest­ment is equally cru­cial. In 2015, the United Na­tions cre­ated a set of 17 Sus­tain­able De­vel­op­ment Goals (SDGs). These in­clude af­ford­able and clean en­ergy, cli­mate ac­tion, qual­ity ed­u­ca­tion, an end to poverty, gen­der equal­ity and sus­tain­able cities and com­mu­ni­ties.

ECLAC sug­gests that FDI has a vi­tal role to play in help­ing the Caribbean meet its SDGs and ad­vises coun­tries to strate­gise on how to at­tract the right kind of in­vest­ment, where it can be used most ef­fec­tively and how FDI can con­trib­ute to struc­tural change. “In or­der to meet the SDGs, greater in­vest­ments will be needed to in­crease pro­duc­tiv­ity, re­duce poverty and broaden ba­sic ser­vices, and some of these will need to come from FDI,” ac­cord­ing to a re­cent ECLAC brief­ing pa­per.

ECLAC pre­dicts that global FDI will re­main weak but sta­ble in the short-term. As FDI in the Caribbean re­mains solid, an­other ma­jor source of ex­ter­nal finance is wan­ing. Of­fi­cial De­vel­op­ment As­sis­tance (ODA) is de­clin­ing as a per­cent­age of Na­tional Gross In­come (NGI). In the 70s, 80s and 90s, the Caribbean ODA was an av­er­age of 0.4% of re­gional

NGI. In 2016, it amounted to just 0.17%.

It’s clear that if Caribbean coun­tries want to make progress on the SDG roadmap, set out in the 2030 Agenda, they can­not rely on ODA alone. FDI must play a big­ger part in meet­ing those goals.

FDI can be lever­aged to ben­e­fit lo­cal com­mu­ni­ties in a last­ing way, build­ing links be­tween in­ter­na­tional firms and lo­cal SMEs so that skills and ex­per­tise are as­sim­i­lated by the host coun­try. In­vest­ments into re­new­ables can lower elec­tric­ity costs, con­serve the lo­cal en­vi­ron­ment and re­duce pol­lu­tion. Fund­ing for emerg­ing tech in fields such as agri­cul­ture will help coun­tries in their bid for food se­cu­rity. FDI at work in the man­u­fac­tur­ing sec­tors should in­volve on-the-job train­ing to re­duce unemployment and cre­ate op­por­tu­ni­ties for lo­cal youth. In this way, the ben­e­fits can be felt through­out the lo­cal pop­u­la­tion and into the fu­ture.

“It is not sim­ply about cre­at­ing the con­di­tions for for­eign cap­i­tal to en­ter,” said ECLAC Ex­ec­u­tive Sec­re­tary Alicia Bárcena, “it is about at­tract­ing in­vest­ments that be­come sources of tech­no­log­i­cal, pro­duc­tive and em­ploy­ment-re­lated over­flow, and that are ori­ented to­wards sus­tained, in­clu­sive and sus­tain­able eco­nomic growth.”

Roy­al­ton Re­sort , Saint Lu­cia. With over 12,000 rooms un­der man­age­ment through­out Cuba, Ja­maica, the Do­mini­can Repub­lic and An­tigua, the ver­ti­cally in­te­grated travel and leisure con­glom­er­ate shows no signs of slow­ing growth

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