Sandals Resorts

Dear Minister,

We are writing this open letter to you on behalf of the Grenada Foundation (UK) in order to elicit accurate information regarding reports on the recently announced sale of the La Source resort to Sandals. The Grenada Foundation (UK) is a UK based group of nationals and other concerned with ensuring and supporting the social, political and economic development of the people of Grenada.

We believe that this letter will give the Government pause for thought if the information in the public domain is correct or provide an opportunity for correction, if it such information is incorrect. Summarising recent media reports it appears that the Government has awarded tax and customs breaks to Sandals Resort International (SRI), the rationale beign, it was reported, to ensure economic development and job creation.

These incentives appears to comprise a suspension of corporate taxes for 29 years, property taxes for 25 years, customs duties on all capital inputs for 25 years and the duty waiver on alcohol for 25 years. It is reported that in return SRI will invest $100 million dollar in Grenada.

Whilst the dire economic situation facing Grenada is not to be understated, nor the current administration’s desire to protect jobs and tourist income, this proposal, if correct, presents the Grenadian people with the following dangers: -

1. SRI is a large, financially well equipped international commercial entity. They operate for the benefit of their shareholders and not as an alternative charitable body. Their planned arrangement with the Government appears to be very one-sided in nature and makes the Government appear both dotish and a pappy show.
2. This arrangement appears to have been entered into outside of any coherent tourism and/or economic development policy. Whilst government is about providing for the citizen in the here-and-now and on occasions making ad-hoc decisions. Such long-term compacts of this type can create a poisonous legacy for future Governments and generations of Grenadians yet to come.
3. The concessions described above will not only result in a loss of income to the Treasury and people of Grenada but will place local businesses at a huge competitive disadvantage. With SRI importing goods and services into Grenada without pay taxes or duties, Grenadian companies wishing to supply the Sandals will need to substantially reduce their prices in order to be considered as suppliers. The effect of such a situation on the profits of Grenadian companies or the earnigs of citizens is yet to be assessed. SRI will also be able to import labour for construction, maintenance and refurbishment from abroad free of tax, placing local labour and contractors at a huge disadvantage.
4. Indeed SRI will not need to act like other local capitalist enterprises with the necessity of having to strive to make a profit, as it will be able to create a surplus from these tax waivers. Thus SRI shareholders will obtain dividends from their operations in Grenada directly from local taxpayers, who will be subsidising the operation. Therefore, we will end up with a situation whereby the poor and disadvantaged of Grenada will be subsidising wealthy foreign speculators.
5. It is unclear if other operators, local hoteliers or other Grenadian businesses will be offered such generous terms. The precedent for investment opportunities of any type in Grenada will be reduced unless new investors are offered similar deals.
6. It is also doubtful that if such incentives were to be offered to local enterprises they would be able to compete with SRI. In any event the Grenadian Treasury and people would be starved of income, were such a course of action to be followed.
7. Whilst the need to protect jobs is of importance to the Government and appears to be the motivation behind this decision, the overriding function of any Government is to protect the people of Grenada. The securing of 200 to 400 hoped for jobs is too large a price to pay for such a nebulous arrangement. This proposal can be viewed as slavery Mk II, with the enslaved arranging their own servitude to a foreign owner.

Is the information regarding the tax and duty exemptions being offered to SRI correct? If so has the Government published its rationale for taking this decision? If such a rationale exists can we be directed to it?

If the information regarding the tax and duty exemptions being offered to SRI is incorrect can the Minister clarify the situation?