Cayman economy: Growth is good, 
more growth is better

Chamber of Commerce President Johann Moxam took to the podium last week to expound upon some economic truths that, while basic, are much in need of expounding in the Cayman Islands.

To wit: We need more people living in this country — be they Caymanian or expatriate.

Noting that Cayman’s population declined by about 1,000 people last year, Mr. Moxam launched into a clear explanation of the positive link between foreign workers and the local economy:

“While some in our society undoubtedly celebrate the loss of a thousand work permit holders competing for jobs with Caymanians, there are two sides to every story,” he said.

“The other side of the story is that 1,000 fewer residents means Cayman businesses have 1,000 fewer customers; Cayman landlords, 1,000 fewer tenants; restaurants, 1,000 fewer diners; the Cayman government, 1,000 fewer people spending money and paying fuel, stamp and import duties. That is real money, ladies and gentlemen, real money that is effectively really gone from our economy.”

In fact, Cayman is (and has been for decades) foreign dependent. Nearly everything in these islands is imported — from our food, to our tourists, to much of our workforce.

What Mr. Moxam says makes perfect sense. Rather than viewing each work permit holder as a competitor for a job, it is more useful to view each as a potential customer for the private sector — and a source of revenue for the public sector, the largest employer of Caymanians and provider of social services to the needy, sick and vulnerable in Caymanian society.

In addition to contributing to the local economy through their own efforts, work permit holders are also consumers — and taxpayers. The fact is, if the government hopes to maintain the civil service — and the salaries, benefits and pensions of civil servants — at a size greater than prescribed by the Ernst & Young and Miller-Shaw reports, then the government needs to collect more revenue.

The surest way to do that (and least-painful for Caymanians) is to increase the population: In addition to immigration and work permit fees, expatriates pay import duties and other consumption taxes.

Consider the obverse: Fewer expatriate taxpayers means less revenue for government, a less affordable (and, therefore, smaller) civil service, and far fewer dollars producing the “multiplier effect” in the local economy.

What Cayman desperately needs is more customers in shops, more diners in restaurants and more buyers looking to invest in the local economy.

From a strictly actuarial perspective, the only significant growth to the local population will be recorded at the Owen Roberts turnstile, not at the maternity ward at the Cayman Islands Hospital.

Business leaders and public officials cannot allow any anti-expatriate sentiment to dictate the debate on all-important, long-term policy decisions.

Whatever the particulars of future plans and strategies, the position of Cayman’s government must, first and foremost, be unequivocally “pro-growth.”

10 COMMENTS

  1. We need your members to take their prices down and compete with the rest of the world. People are always saying there is a global competition for jobs. How about businesses here compete also? How about realistic prices for goods and services. Jamaica has much higher duties on car parts ,bus parts. How about dropping prices lile the rest of the world? How about food prices, elect, TV, internet. The everyday prices of goods and services keeps going up and WAGES keep going down??
    Can somebody explain why that is happening? No one is trying to understand in business that it can’t work. If people know they are getting the short end of the stick every time then they will buy from somewhere else.
    When will the cruise ship piers be built? WWWWWWhhhhhheeeeeennnnnn?

  2. This is the most stupidest and most ridiculous line of thought. This very line of thought is what has destroyed the balance of this planet. Human population has exploded while all other forms of living organisms are being extinct. If that is the case why not get 100 million people from India or China and place them in Cayman. That way the economy and businesses will boom. India and China together have a population of more that 2.5 billion people. How can people be so ignorant? How can people lack knowledge to understand the broader concept of economy and society? Why is everything linked to growth in terms of dollar value? Yes a 1000 people may not matter much but if a million people from Jamaica decides to come to Cayman will that mean more business, more growth, and better economy? This is totally irrational line of thought.

  3. Cayman desperately needs .. more customersThis argument is logically valid, but quite demonstrably wrong,
    It starts with the wrong premise that a potential customer is one of the major drivers of the local economy and arrives to the erroneous conclusion it would significantly contribute to the local economy.
    When one understands that the economy is based upon the RESOURCES OF THE IDEAS (not potential customers or other finite or limited resources) then he realizes that huge amount of money, an enterprise and businesses that are happening today were not even possible 20 years ago because the ideas were not even there.

    The following joke from Plato and a Platypus Walk Into a Bar illustrates the wrong premise point:
    An old cowboy goes into a bar and orders a drink. As he sits there sipping his whiskey, a young lady sits down next to him. … She says, ‘I’m a lesbian. I spend my whole day thinking about women. …’ A little while later, a couple sits down next to the old cowboy and asks him, ‘Are you a real cowboy?’ He replies, ‘I always thought I was, but I just found out I’m a lesbian’.

    The Miller-Shaw report includes Recommendations for Addressing Fiscal Sustainability. It doesn’t recommend a population increase.

    Good reading for those who has time:
    Long-Term Impacts of Non-Sustainable Tourism and Urban Development in Small Tropical Islands Coastal Habitats in a Changing Climate: Lessons Learned from Puerto Rico.
    by Edwin A. Hernndez-Delgado

  4. Because of the local experience, people tends to be negative once you mention increase in population.But one has to remember that there are three factors of production identified by economists like Maynard Keynes up to Samuelson and other text writers. These are land labour and capital.Any of these lacking can affect production and wealth negatively. A low population is not always good and a high population is not always good. Economists also speak of an optimum population which must exist in order to reach equilibrium. This when wealth is at its greatest. All factors of production land,labour and capitalmust match up with each other and produce the highest wealth and full employment. These near perfect conditions are really idealised,(the mean being more realistic than the idealised situation) but the picture is clear. Let us keep an open mind.

  5. I personally think what it comes down is if the CIG wants to continue to operate the way is is they will need a lot more people to Milk. Because what they are currently bringing in is not enough to continue to support their projects and all the people they employee, while continuing the sweet freebies they get as well as social services. Work Permits contribute a hefty amount to government coffers. Replace a lot of them with Caymanians and the CIG losses a lot of money. The alternative to Work Permit fees would be Income Taxes.

  6. Let me start by saying this. For many years, I was Caymans biggest fan.I couldn’t speak highly enough about it to any one who would listen! I loved the place! My goal in life was to move there. I visted every year, twice a year for nearly 10 years. I came by cruise ship on two visits and by plane the rest of my visits. Please know this is only my opinion of why people might be leaving Cayman or not coming back… because I am now one of them.
    Until the government makes it easier for people to come to Cayman, search/interview for a job, then stay on Cayman soil until the work permit clears… more and more folks in the future will be looking else where in the carribean to work and live. The process to become employed in Cayman is unbelievably rediculous/strange. My husband and I considered and almost moved to Cayman 15 years ago, but found the entire work permit situation to be very costly – to come and go from the island before employment is even secured and again after a period of time of having been employed- to leave and then return, as if playing some game.In fact, one employer I spoke to actually said to me, (when I inquired about why I couldn’t stay in an apartment while waiting for the work permit to clear)it’s a crazy game we all must play in order to get educated employees from over seas to come and work for us.

    We wouldn’t have been taking any jobs from Caymanian citizens back at that time.. my husband with two degrees in computer software engineering -and me with a degree in both cosmetology and business management.
    Although we both were offered jobs in Cayman… it wasn’t until after returning to the US.Unfortunately, we chose not to play the ‘game’ the goverment requires. It’s just easier to come and visit, so we did for several more years.
    However, we just made our last and final visit to Cayman in August of this year. I don’t intend to come back, nor recommend the island any longer to friends as the safest place in the carribean for a vacation. I recently found the island to have deteriorated in both safety and beauty..and friendliness. The people seem angry, where they used to have an attitude of kindness like no other in the world. The prices on real estate are sky high and the homes are being built on concrete slabs rather than raised up a level to prevent flooding when the next big storm hits. The downtown area just looks awful with the tall fences around the cruise ship terminal as though people aren’t safe there anymore? It looks as though a tourist has arrived in Jamaica, rather than Cayman!(I’ve been to Jamaica) Obviously Cayman is no longer a safe place… this is the distinct impression the cruise passengers are going to pick up on by that enormous fence.
    …just my perspective.

  7. Leslie I am sorry about the way you feel, but I believe you would be short changing yourself if you do not try other destinations. There are many other Caribbean Islands much bigger than Cayman with much more to offer. There is Jamaica, Cuba, Honduras, Dominica, Haiti, St Lucia, Barbados, Bahamas, St Marten, and the list goes on. The population is bigger and they are more industries. Good luck.

  8. Leslie, welcome to the club. it’s even hard for people to come and stay in Cayman that don’t even want or jobs. It sometimes advertised as a place to retire to. But unless you have Millions of dollars to throw around you don’t have even a chance. I myself own a home in Cayman I have no need to work because of personal investments, I also have plenty of money in a local Cayman Bank yet I am only allowed to stay for short periods then told to go and I am still treated like I’m taking something away from the Caymanian people when all I do is spend money while I’m there.

  9. It looks as though a tourist has arrived in Jamaica, rather than Cayman!(I’ve been to Jamaica)

    Leslie

    That perception is much more than just looks; trust me.

    I’ve only recently returned to my original island home from years in the UK and I now too think that I’m in a little Jamaica and…

    I should know, I grew up there.

  10. This comment is directly related to the editorial.

    This is about Puerto Rico(see my first comment),but one can easily replace PR with CI.

    Many examples of inadequate approaches implemented by the local tourism and urban
    development sectors may be cited in PR. These include unprecedented planning strategies
    and policy changes recently implemented by the local government that may make these
    practices far from sustainable. Many of these must also be relevant to other tropical island
    nations and will be discussed in this chapter. We have identified the following: (1) Old-style,
    non-participatory, top-down approaches tourism and urban housing projects being planned
    and executed without meaningful participation of local communities; (2)
    Significant permanent negative environmental impacts projects built on top of or immediately
    adjacent to ecologically sensitive habitats, impacts to threatened or endangered species,
    destructive activities (i.e., dredging, blasting of coral reefs/seagrasses, wetland filling,
    deforestation, etc.); (3) Socio-economic degradation globalized, top-down approaches of
    tourism and urban development has often resulted in social and economic marginalization
    of base communities, increasing unemployment, crime, drug abuse,
    prostitution, child abuse , declining quality of
    life, and impoverished livelihoods; (4) Lax regulations local governments derogate stringent
    zoning and planning regulations, implement flexible environmental standards and establish
    fast tracking procedures to facilitate permitting processes without proper evaluation that
    often favor private interests often over public interests; (5) Non-sustainable operations the
    only model envisioned by local governments as an expected tool against economic crisis is
    largely based on a non-sustainable approach (i.e., focused on construction on sensitive sites,
    rapid revenue often at the expense of the environment, very limited revenue to local
    communities); (6) Decision-making processes with significant conflicts of interests and corruption –
    in many instances government contracted consultants or regulatory agency key personnel
    are/were also consultants of project developers, or instances where project developers are
    also significant economic supporters of political parties; (7) Revenue leakage Large portions
    of the economic revenue of the massive tourism industry often end up on a large transnational company far from the local community. (8) Constructions often envisioned as the
    solution to economic constriction Construction if often synonymized as progress leading to
    rapid project approvals without adequate planning and environmental impact evaluations,
    and to project construction on inadequate sites (i.e., sensitive habitats, soils prone to
    landslides, lands prone to flooding or vulnerable to coastal flooding or tsunamis); and (9)
    Climate change impacts are still largely neglected by many local governments as a significant threat
    many nations, including the Commonwealth of PR, are still yet to adequately accept and
    much less address the threats faced by increasing climate-related impacts, particularly to
    coastal habitats where the vast majority of the tourism activities and large housing
    construction occur. Many of these factors, with very few exceptions, have been poorly
    addressed in the literature as many could be often considered taboos by the tourism and
    urban construction industries, as well as by local governments that do not want to upset the
    both industries and risk the possibility of maintaining wealthy revenues, even though the
    private sector of both industries often obtain the largest economic benefits in comparison to
    that obtained by local governments.
    .Together, these
    projects represented the development of more than 4,000 condo-hotel units, apartments, and
    villas; sand extractions; a population growth of more than 5,000 residents in a community of
    2,400 residents; and an increase in infrastructure pressures for public services that were not
    optimal for the local community (i.e., water supply, wastewater management and
    treatment, road capacity, etc.)
    The rapid-growing cruise ship industry: Increasing revenues, but for who?
    .. cruise tourism has been the fastest growing sector of the tourist
    industry for the past decades. Since 1980, the industry has had an average annual passenger
    growth rate of 8.1% Cruise tourism has exploded around the Caribbean
    during the last two decades. This growth is expected to
    continue into the future . However, the economic bonanza
    attributed to the cruise ship industry can be misleading because they are not corrected for
    leakagethe occurrence of tourist revenue flowing out of the country in which it was spent,
    a particular problem for many small islands . One of the
    most critical concerns by residents from small island nations is the final destiny of economic
    revenues associated to the cruise tourism industry. ..
    more than 50% of land-based activities are sold on board by the own cruise ships.
    From the value paid by cruisers for on shore activities, the local tour operator is left with a
    level of only 50% to 25% of that value. Tourism service providers who want to appear in
    advertisements delivered on board (videos, brochures, etc.) have to pay significant amounts
    for it. Others incomes provide from private dream islands, privatized islands property of
    each cruise line, most often within the territorial waters of developing island nations. This
    clearly reduces or eliminates the economic benefit to communities not to disembark at the destination. As a result, unequal revenue distribution has been associated with social and
    environmental costs to local people , which have
    also to absorb the socio-economic and environmental burden of massive pulses of visitors to
    locations which often lack most of the necessary infrastructure to support such level of
    visitors. Such a wrong economic model drives even some of the alleged green tourism far
    from sustainability, often creating a situation of environmental injustice. There are also
    issues of tourist pack behavior. A key impact of cruise tourism is the delivery of substantial
    numbers of tourists to remote destinations , and its
    consequent localized pollution pulses on port cities that may often lack adequate
    infrastructure to cope with a high density of people, pollution, etc. Overcrowding caused by
    this behavior can inconvenience and annoy local residents, causing the locals to alter their
    daily behavior to avoid the central business district while cruise ships are in port . Also, local residents from port cities have complained about deriving little economic
    benefits but feeling a loss of quality of life on the other (London, 2005). Thus, socio-economic
    benefits vs. the cost of impacts need to be weighted in the formula, besides considering only
    the economic revenues, when strategies for expanding the tourism industry are considered
    by local governments.
    Cruise ships operations also generate significant environmental pollution. This results in
    direct discharges to the marine environment, including sewage, gray waters, hazardous
    wastes, oily bilge water, ballast water, and solid waste .
    Cruise ships often dump this waste, legally or illegally, into international waters, which are
    carried by currents throughout the Caribbean and Antilles. They also emit air pollutants to
    the air and water. The environmental costs of the sector are incalculable given that the cruise
    ship industry is unregulated and impacts are difficult to gauge. Even small-scale incidents
    such as propeller wash and anchoring can produce
    substantial physical damage on coral reefs habitats . This represents an extremely high environmental and socio-economic cost
    for an operation which is still too far from sustainable. Further, local governments in many
    small island nations have recently invested large amounts of money in high quality
    infrastructures to attend the new lines of colossal ships and thousands passengers arrivals
    but without any assurance that the benefits of attracting cruises to a tourism destination are
    higher than the costs . Therefore, the rapidly growing cruise
    tourism industry is actually forcing local governments from poor small nations to invest
    money on building new infrastructure to prevent large cruise lines from abandoning the
    destination.

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