Sunday, Jun 07th

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Editorial - Clear explanation

The conclusion in Tuesday’s headline that St. Maarten has become less dependent on tourism based on the Central Bank’s 2014 annual report could be misinterpreted. The latter says the share of direct tourism revenues in the total foreign exchange earnings dropped from 79 per cent in the year 2000 to 73 per cent last year.

Diversification is always welcome, of course, as relying on only one economic pillar makes any society vulnerable. However, it’s a good idea to put these latest findings in the proper perspective lest people start thinking the hospitality industry sector is significantly losing importance to the country.

After all, it was also stated that the contribution of “other services” covering real estate and tourism-related businesses had almost doubled ­– from seven to 13 per cent – during the same period. Everyone knows that the local sale and purchase of property regards vacation homes to a considerable extent, so this growth too at least partly has to do with a rise in the number of repeat visitors.

Moreover, the actual income from the tourism sector has continued to go up since 2010, including last year by US $0.1 billion. Nevertheless, that bunkering activities have increased is no doubt good news, while the 50 per cent decline in financial services is consistent with global developments, with the international community cracking down on so-called tax havens.

One thing that could help inspire investors’ confidence is clarity about the future currency. The envisioned Caribbean guilder that was supposed to replace the Netherlands Antillean guilder shared with Curaçao after 10-10-10 obviously has been scrapped.

A split-up of the monetary union and joint Central Bank was warned against recently by Central Bank President-Director Emsley Tromp. Some might find that confusing, because he is also a strong advocate of dollarisation, incidentally a call backed by St. Maarten’s Social Economic Council SER.

It is therefore high time that a clear explanation is provided on how switching to the US dollar while maintaining the monetary union and joint Central Bank would work, so that people, including politicians on both islands, can better make up their minds.