Panton tackles liquor license ‘black market’

The “black market” on which liquor licenses are bought and rented is one of the reasons Cabinet will consider lifting the current moratorium on new licenses, says Minster Wayne Panton.

In his 2014-2015 budget speech at the Legislative Assembly on Friday, the Minister of Financial Services, Commerce and Environment, addressed the controversial issue alongside Sunday trading and daylight savings.

Mr. Panton said the Liquor Licensing Review Committee had been reviewing the current Liquor Licensing Law and had recommended the existing moratorium be lifted.

“One of the reasons for that is, and a very significant reason for that, is the black market which essentially exists at this point in relation to these licensees, and I refer to it as a black market simply because that is how it is typically described in the business community, where licenses are being offered for sale at very substantial values, and in some cases, many cases, they are being essentially rented for significant sums of money as well,” Mr. Panton said.

“I think one of the issues there is that the government gets absolutely no benefit from this. It doesn’t limit the numbers of restaurants or bars that are serving the public because there are quite a number of these licenses out there.”

He said Cabinet would consider the recommendation in the coming month.

Mr. Panton also touched on the issue of daylight savings and said the Chamber of Commerce had advocated for its introduction for many years to bring the Cayman Islands on par with its competitors in the United States.

Also under discussion was the sensitive issue of Sunday trading.

“I think our determination has been that we will engage in a public consultation on this issue to essentially get the feedback of the public, of the country,” Mr. Panton said.

“It is clearly a sensitive issue and that has to be respected. Our traditional Christian values have to be respected, but equally there are a number of competing factors which suggest that it is something that we should consider and we should engage the public in discussion.”

In April, the Chamber of Commerce produced a draft letter that stated Sunday trading laws should be amended.

The letter suggested changes to the law would increase consumer choices while lowering prices, enhance economic opportunities and boost employment.

“We firmly believe that our proposed policy change would not pose any negative harm to our society or traditions,” the letter stated.

The Sunday Trading Law, 2003 revision, currently allows various businesses including bars, restaurants, gas stations and hair salons to open on Sundays. Mr. Panton also addressed the cost of living and the costs associated with businesses.

Small businesses account for more than 60 percent of the economy, so it was imperative to support them by decreasing the costs of operating a business, he said.

“These measures to relieve the cost of doing business allows businesses to lower the costs of their goods and services to be more competitive and therefore grow,” Mr. Panton said.

“Of course, lowering their costs to the public has the added benefit of lowering the cost of living generally. If they grow, that will at some point maximize the existing productivity of their employees and they have to create additional jobs and hire additional people.

“The combination of a growing economy, more jobs, higher levels of pay, plus reductions in the cost of living is a recipe for a strong economy, strong country and a stronger society.”

Environmental issues such as littering were also important, he said.

“It is a huge issue and one that impacts not only our quality of life but the quality of our tourism product as well. It is nothing short of disgusting … to see the numbers of beer bottles that are discarded along our road sides, aluminum cans, other trash, plastic bags; this is indicative to me of another problem in terms of the beer bottles, too much drinking and driving,” Mr. Panton said.

“I want to appeal to our citizens and residents to be more responsible, to have pride in themselves and their country and to show respect for both, through respecting the environment. “

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4 COMMENTS

  1. There are so many contributors to a high cost of living one would find it hard to know where to start to solve it. in a nutshell it have been stated; People have insufficient income to purchase the necessities of life. This challenge forces families to ration spending on essentials such as electricity, food, and
    health services while become increasingly dependent on debt and charity. This is the cost of living crisis.

    Interesting, CUC has taken on a very mature role with it’s recent statement of reducing by one percent cost to residences, economic management one would expect of government. Given that the basic necessities or the lack of access to reasonably priced essential goods, government would do well to address food costs first.

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  2. Small businesses account for more than 60 percent of the economy, so it was imperative to support them by decreasing the costs of operating a business, he said.
    Typically, in a healthy economy the SME’s (Small and Medium Enterprises) make up over 80 percent. This is an indicator that perhaps the the Cayman economy has been skewed by granting anti-competitive concessions to a small number of big players, giving them an unfair advantage over all the other companies.
    It is an issue for everyone when free competition is stifled and the marketplace ceases to be a ‘level field’.
    In that situation, the larger companies will continue predatory behaviour against their smaller brethren, new businesses will be unable to get a foothold and ultimately you reach a situation where monopoly or cartel type behaviour becomes a problem. If there is no (financially viable) legitimate pathway into the market, then yes, the ‘black market’ will flourish.
    In the UK, there is the CMA (Competition and Markets Authority – formerly the Monopolies and Mergers Commission) to ensure this does not happen.
    As we are talking about the liquor market, I would be interested in a breakdown of the sectors of the market compared to e.g. a decade ago. I’m sure that while the market has increased in size, there has been a significant reduction in the number of players in the import, distribution, and wholesale sectors, but the figures would be interesting (or Damning…)?
    Perhaps Cayman could work with the UK’s CMA to ensure good practice is followed, not only in the Liquor Market, but generally.
    At the moment, would be possible for an enterprising and entrepreneurial individual to set up in business and compete in e.g. Liquor Wholesale – I very much doubt it?

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  3. Andy, those statistics are only valid if you define a SME and consistently use that definition. It’s possible the minister is only using 60% as a very rough and possibly incorrect estimate and only referring to the smallest of businesses. One definition of SME is a business with less than 250 employees or 50 million in revenue. If you go by that definition, I can’t imagine 40% of business would qualify. Even large chains like Fosters might be considered a small business when using a US, UK or EU definition.

    But if you have an agenda against a certain large business here on the islands who just happens to be involved in the wholesale liquor business, then I can see why you might want to skew statistics.

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  4. Christopher, I think you got a little turned around on your logic. I agree that as cayman is a small economy, even some of ‘our’ largest players would still fall into the SME category – but surely that would push the SME percentage UP above the 80 percent to 90 or even 95 percent. It is precisely because Cayman is a small market that we need to pay extra attention to keeping things fair for all.

    Either way I think we both agree the ministers quoted 60 percent is flawed.

    And Yes, as a consumer I do have an agenda, as competition in the liquor market has dwindled, I have see less choice and higher prices. Thats why I want to see the figures and statistics – bring them into the public arena for discussion. Without both competition and regulatory intervention, it is likely Cayman will end up with cloned bars all serving the same beers at the same price, all be it with different themes?

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