EDITORIAL

Cayman Faces Economic Survival Of The Fittest

Tuesday, July 20, 2004

The news that three new radio stations will soon begin broadcasting in the Cayman Islands just days after another new station hit the airwaves is just the latest in a steady stream of developments in the Cayman Islands that sooner or later will lead to a fundamental shakeout of new and existing businesses, as each tries to compete for a viable share in its particular market.

The problem is that, even with a steadily growing population base, the Cayman economic pie is not increasing enough in absolute terms to be able to support a significant increase in the number of businesses sharing that pie. 

Inevitably, the result in everyone having to survive on a smaller slice of pie will be, for some, the commercial equivalent of starving to death.

We have heard from reliable sources that the number of applications for trade and business licences is sharply up from last year, with three or four new applications being received every week. One reason for this is very likely the result of thousands of new Status holders now having the opportunity to go into business for themselves. 

However, it is the dream of many native Caymanians to own their own business, too, and the post-9/11 economic recovery we are now seeing has undoubtedly spurred on the desire in many to see those dreams become reality.

The free-market battle for business survival that is bound to occur is also bound to create resentments. 

Some of these new Status holders enjoy substantially more economic “muscle” than established local businesses, and for some of these new Caymanians, starting a new company here is mainly an attempt to attain an attractive return on investment.

However, for many other local businessmen and women, their companies provide their very livelihood, and thus there will be much more at stake for them in the impending economic battle.

Even though the ICTA has stated that it was instructed by the Government to grant licences to all companies that qualify for them, it has also already resiled somewhat from the notion of a completely free market economy by dictating the rates that may be charged for telecom services in an effort to promote fair competition. 

Perhaps the time has come for the Government to look more closely at regulating other types of economic activity.

Should there be, for example, an absolute right to start a business of one’s choosing in every area? Such a right does not exist in certain sectors such as banking and insurance. Maybe this concept should be extended to other areas of the economy in order to promote fair competition and maintain the Island’s infrastructure. 

New restaurants are opening here all the time, and given the Caymanian tradition of gravitating to something new and the finite number of diners here, some of the established restaurants are going to hit hard times, and some will have to close. 

Compounding the problem is the fact that each new restaurant puts a strain on bulging Cayman’s infrastructure, from traffic to parking issues, from inventory to food supply issues, and from waste disposal to water consumption and sewage issues.

Back...