TREVOR SUDAMA
Much has been said and written about Sandals International’s decision not to pursue its involvement in the Sandals Tobago project which required merely the provision of management services for the proposed resort. There has been much speculation about the real reasons for the withdrawal as many people have not accepted the explanation that negative publicity by locals and the media was responsible for the decision. I have a few questions of my own with respect to the reasons for the withdrawal and the scale of benefits that would have accrued with the operationalising of the resort.
The first question is whether Dr Rowley when he first approached Sandals as Leader of the Opposition, had asked the hotel resort chain to invest in Tobago by providing the funds to build the resort. If he did and Sandals refused to commit its own funding but merely agreed to provide management services, this decision perhaps may have reflected its initial reservation about the feasibility of the project.
Then there is the issue of the Government sourcing the funds to finance the project which, given the Government’s current fiscal situation, meant that the funds would have had to be borrowed and much of it in foreign currency. A ballpark figure for the cost of building the resort is probably between $2-3 billion which, in the end, may turn out to be an underestimate. The question is whether Sandals had some concern about the Government’s ability to source this significant sum in a timely manner.
The preliminary feasibility of the 820-room facility was based on an occupancy rate of 80 per cent. Although the Memorandum of Understanding did not indicate any sanctions to be levied on Sandals should this occupancy rate not be realised, another question is whether the group itself felt that this occupancy rate was problematic and, if not achieved would have reflected negatively on the international image of the company.
The Environmental Management Authority a few months ago made a number of requests for additional information and the results of an Impact Assessment study. It also laid down some provisions with which the Government had to comply given the ecologically sensitive nature of the location of the resort. It begs the question whether the requirements of the EMA, prior to the issue of a Certificate of Environmental Clearance were deemed to be too onerous and the period for compliance by the Government too long drawn out to enable the timely construction of the resort. If Sandals was of this view and took into account the strong advocacy of the environmentalist lobby, this assessment could have constituted another reason for its withdrawal despite Rowley’s assertion that he would allow no hairy crab to frustrate the project.
On the issue of returns on the investment, it is the taxpayers who are the investors and they have a legitimate right to question the Government on the net benefits to be derived from such a large investment. Would the net return be able to service the loan and provide some dividends to the investor, that is the Treasury? Minister Colm Imbert has blandly stated that the investment will bring in US$80 million annually to the Treasury. No one knows how this figure was arrived at and on what assumptions, credible or otherwise, given the generous tax incentives and concessions indicated in the MoU.
On the provision of job opportunities, there is no doubt that a significant number of jobs would have been created on completion of the project, ranging from the low-skilled to the substantially qualified. The actual opportunities for locals would have been a matter of debate. As Afra Raymond has pointed out (Express 5/12/18) that the MoU allows “for the employer to decide on staff at its sole discretion, be the final determinant regarding the suitability for employment of all candidate employees such that the standards of the brands can be attained and maintained”. The Government is also required to expeditiously grant as many work permits as are required. There appears to be no provision for the training of locals.
As regards the quantum of net foreign exchange earnings that would accrue can only be determined by calculation of the total foreign exchange funds expended including for management fees and the substantial foreign exchange expenditure for operation of the facility and an estimate of the total receipts accruing to the economy in light of the fact that the resort is intended as an all-inclusive one. It is a matter of speculation as to how many of these tourists will venture from the facility to supplement the earnings of local transport operators, tour guides, restaurant owners and entertainers.
Spin-off benefits for the local economy will be another area of uncertainty. As regards agriculture in Tobago, a letter writer to the press has deemed it a virtually non-existent sector.