New Chamber Chief
Private Sector Wants Gov't Relief
Private enterprise is feeling the crunchof the economic slowdown and wants Government to grant it somerelief through an ease in regulations, a review of the performancein the public sector along with that of state entities like CaymanAirways.
Newly elected President of the Cayman IslandsChamber of Commerce, Mr Burns Conolly, told Cayman Net News inan exclusive interview this week that the most affected areasare the construction and tourism industries which have triggereda chain reaction creating sluggishness in performances of othersectors.
The mostly migrant workers in the constructionindustry are being laid off and are returning to their homes inother Caribbean islands, while the currently under performingUnited States economy is forcing numerous would-be tourists tostay at home.
"Once you have less people on the islandsthere are less taxi rentals, less tours and less people eatingin restaurants," he said.
"The hospitality sector is experiencinga slowdown with hotel and condominium occupancy running between20 to 40 per cent or less at the moment. Some hotels and restaurantshave reduced staff hours in excess of what is normally realisedduring the slower summer months."
Owing to the close link of Cayman's commerceto economic activity in the US the performances of business hereusually dip whenever the North American economy tightens.
The irony of the Islands' economic slowdownis that at one time the business community wanted this to happenjust to put in check a too rapid growth but it is now provingmore than was bargained for.
"We were expanding at a terrific rate.The economy was very busy and we had a lot of development goingon. We were fuelling inflation, so the slowdown was welcome butit has become too slow," Mr Conolly said.
To take them out of the slump businesseswant an ease on Government revenue earning measures like a temporaryreduction in stamp duty, import charges and the transfer chargesin the sale of land.
A sore point is an immigration policy thatthe private sector believes creates an atmosphere of uncertaintyamong expatriate investors.
"We have to look at the immigrationissue so that it doesn't act as a deterrent to people wantingto invest," Mr Conolly said.
He said that last year when Government contemplateda rollover immigration policy - in which there was the suggestionthat expatriates resident here should leave and return at a laterdate property sales were severely affected as foreign investorsheld back on purchases owing to the uncertainty of their status.
Two areas the private sector finds burdensomeare a burgeoning public sector payroll and the unprofitable performanceof the national flag carrier, Cayman Airways.
Mr Conolly said that in the early '90s publicsector employees numbered 1800, but that figure today stands justbelow 4,000.
In calling for a reduction in the numberof government employees, he warned: "The ongoing growth ofthe public sector is fuelling further inflation in Cayman"
"We have not seen this government orany government make any substantial effort to reduce the publicsector cost. The private sector would like to know that each personin the public sector is doing a full job."
He said there is a need to review the operationsof Cayman Airways which he said is losing at least $1.5 millionmonthly.
"When you look at the losses of CaymanAirways, you would have to look at the possibly of shutting itdown. Anything that is losing $15 to $20 million a year when youare having a deficit budget is something to be looked at,"he said.
The Chamber of Commerce head was quick toadd that he did not think closing the airline's operations thesole option: "I am not necessarily saying we should shutdown Cayman Airway, but the information about its operations shouldbe revealed to the public and they be allowed to make a decision".
He said that burdens like the high publicsector payroll and continued subsidising of the national flagcarrier are contributing to a tight money situation within government.
"Government is in a cash crisis, this is the fundamentalproblem. It appears that the current economic problem is muchworse than we are led to believe."
He thinks that the administration's situation,in which it struggles to meet expenses month to month, may bea reason for its reluctance to temporarily ease up on some revenuegaining measures. He charges that government is concentratingon a cash flow problem rather than on the overall economic situation."
"What the private sector is sayingis that if you drive the overall economy and you fuel the economywith incentives, that the revenue coming back on a medium to longterm path would be significant and would take away their cashflow problems," Mr Conolly concluded.