The Cayman Contractors Association has recently requested Government to reconsider the award of a contract to a Chinese company for construction of the long awaited cruise ship landing. It is not before time that local business made its position clear and other interested groups such as equipment operators and materials’ suppliers should also be making their views known.
Most residents in Grand Cayman, whether they enjoy cruise ship visits or not, probably agree that we should have a proper berthing facility. Weather, waiting time, congestion and other factors are no longer conducive to tendering. Visitors no longer take away a good impression of the Island, particularly compared to our competitors, most of whom enjoy proper landing facilities.
The facility should not, however, be built at any cost. We must be in a position to afford it. Creative ways of funding the construction could be examined with Cayman businesses, particularly those directly benefitting from cruise ship visitors, participating in the investment. The country and its businesses must own and reap the rewards from the facility from the start and we should ensure that it is advantageous to this country alone. It has been stated on numerous occasions that the facility will be built at no cost to the country.
A recent report stated that cruise ship revenue may have to be given up for many years to pay for the construction of the latest proposal. A loss of revenue is however also a cost to the treasury. It makes no fiscal sense to throw away what little income remains after other commitments which themselves are onerous and over a lengthy period of time.
The feasibility of the latest proposal is currently being examined by KPMG and no doubt their report will be meaningful, well considered and made public. Until that report is published, simple arithmetic can be examined. Assuming approximately an average of 1.6 million cruise visitors per year (and this could vary between 1.4 and 1.8 million) each contributing between US$7.50 and US$9.50 landing fee (depending on the ship and the regularity of its visits), with the current value of money, with no increase in fees or visitors, an average US$13.6 million of income could be lost annually ($340 million over 25 years). If one also factors in an increase in visitors, an increase in the fee and even a loss in the value of money and inflation the cost to the treasury is substantial and the income could be lost off shore.
The calculation does not include a Port Authority fee of US$3, which is charged separately however is for their own account (US$4.8 million annually or US$120 million over 25 years) and not the government treasury.
Whether there is scope for an increase in fees, substantial or otherwise and as suggested in the proposals, remains to be seen; however, remaining competitive is a consideration.
There are many questions to be answered. Is additional retail with its potential rental income necessary and will it affect existing retail businesses? Is it necessary to incur the cost of constructing a facility in West Bay at the same time and what advantages does that offer?
Should elected government members be solely responsible for the negotiations? The responsibility of elected government should be limited to the approval process and a participatory role to ensure that there is compliance with the laws the country and that its people are protected and informed.
We do not have a cruise ship facility after years of procrastination, vacillation, rhetoric and simple stubbornness and inactivity by successive governments. Even now a long awaited announcement on progress reported further delays until September. A ground breaking cannot then realistically be made until early 2013 with completion in 2015 at best or 2016 depending on the scope of work.
A golden opportunity has been spurned. There have been at least three proposals. Atlantic Star, the Dart Group and Royal Construction with their partners all offered workable solutions. Any one of those three could have been well advanced at this time. An alternative solution has also been mooted at Red Bay.
It is a disgrace; however, that whatever the construction solution the actual work is currently not planned for local contractors employing local labour and with local equipment and other local businesses benefitting. To consider importing a contractor from China, a communist country whose history on human rights must be questioned, and who will no doubt in the final analysis provide the equipment, labour and perhaps materials, makes a mockery of government’s respect for local business.
To be bolted at the hip to a communist regime for decades watching profits disappear to their shores is scandalous.
Cable Beach in the Bahamas is currently being redeveloped. It is a massive project and sources have reported that not only is funding being provided by the Chinese but a Chinese workforce in excess of 5,000 has been imported to carry out substantial portions of the work. Sources also report that the Chinese are simultaneously constructing a large state of the art embassy. No doubt they will be able to supervise and coordinate their Caribbean and Central American interests from this hub as they expand their ventures in the region. It must be reasonably assumed that North American (and possibly European) authorities are watching this development carefully and perhaps with some concern.
A business relationship such as the one currently being pursued by the Cayman Islands must be carefully scrutinised to take into account all consequences and to consider the wisdom of the partnership.
Unless sensible action takes place sooner than later, however, the Cayman Islands could be left further behind or maybe left limping in the wrong direction.