Grenada, a profile of business opportunities

One year after the joint U.S. and Caribbean task force landed on Grenada, the Isle of Spice is returning to a peaceful existence. Today, Grenada's interim government, formed in November 1983 and headed by Nicholas Brathwaite, is concerned primarily with restoring Grenada's parliamentary, democratic tradition and expanding its economy. Considered the most beautiful of the Eastern Caribbean islands by many, Grenada's spectacular beaches, dramatic landscape and hospitable people provide vital inputs for a potential investment boom. With elections scheduled for Dec. 3 of this year, Grenada's interim government is focusing on a positive business and investment policy. The efforts of the Grenada government aim at encouraging renewed foreign and domestic private sector activity in Grenada. A key element of Grenada's economic program is close private and public sector cooperation.

The U.S. Government supports this program with economic aid, technical advisors and the provisions of President Reagan's Caribbean Basin Initiative (CBI). The CBI allows eligible products from designated Carribean and Central American countries to enter the U.S. duty-free. Grenada is one of 20 designated countries.

In response to the special mandate of the CBI, the Department of Commerce has established a regional foreign commercial service post in Barbados. This post, designed to serve the Eastern Caribbean including Grenada, will be able to assist potential U.S. traders and investors in developing new opportunities.

Another U.S. program to foster private sector investment in the Grenadian economy is the U.S. Agency for International Development's (AID) Project Development Assistance Program (PDAP). The program operates in nine Eastern Caribbean Countries through a contract with the U.S. consulting firm Coopers and Lybrand. Russell Muir represents Coopers and Lybrand on Grenada. With six years of active experience in the Caribbean, he opens doors for investors interested in the island.

"Two or three potential investors walk through my office every day. The most often-asked questions raised by foreign investors are: Can I get my goods in and out of Grenada? What kind of factory space is there here? Is there a stable government in Grenada now?"

The first question was answered Oct. 28 when the Point Salines International Airport opened for commercial traffic. The new airport will eventually make night landings of wide-bodied jets possible. Following an economic feasibility study and the subsequent redesign of the original plans, the Idaho construction company of Morrison-Knudsen is completing the airport. Funding for the airport has come from a $19 million grant by the U.S. government through U.S. AID, together with a $7 million contribution from Canada and lesser amounts from the EEC and Great Britain. Completion of the Point Salines all-weather international airport will supply Grenada with a modern passenger and cargo transport facility to help stimulate private investment and also improve product access to foreign markets.

"The airlines have taken a great interest in Grenada's new, international airport; in fact, two major airlines are Taking part in the Oct. 28 opening of the Point Salines Airport," reports Marilyn Marx of Karen Weiner Escalera Associates in New York. "PanAm and British West Indies Airways (BWIA) are flying from the U.S. direct to Grenalda. Several other airlines are currently contacting the Grenadian government about landing rights." Richard Todd, a travel agent acting as a consultant to the government of Grenada, has organized a special Oct. 28 PanAm flight for people interested in commemorating the anniversary of last year's rescue mission. As of yet, PanAm has not scheduled regular service to the island, but is considering that possibility, as are Eastern, American and VIASA, the Venezuela National Airline. BWIA expects to switch its regularly scheduled Flights from Grenada's Pearls Airport to Point Salines on Nov. 4. Located about five miles from St. George's and the central hotel and commercial areas, the Point Salines location greatly reduces travel time on the island for visitors to Grenada. The new airport also makes it possible for quick transport of goods in and out of Grenada, while at the same time furnishing a convenient access and departure point for tourists to enjoy the island.

Where Do I Store My Goods?

The second question of most concern to U.S. investors pertains to Grenada's infrastructure. U.S. AIRD is involved in projects aimed at rebuilding and developing Grenada's physical infrastructure. The projects range from awarding a contract to Continental Electronics to build, calibrate and install a 20 kw transmitter for Grenada Radio, to a $6 million grant to rebuild and renovate roads, bridges, schools and factory shells. U.S. AID has made $12 million in loan funds available to the Eastern Caribbean Central Bank (ECCB) for private sector capital investment projects which will have a positive effect on employment.

Complementing AID's efforts to improve Grenada's physical infrastructure, the Peace Corps is working to enhance the educational and institutional foundations of Grenada's economy. The Peace Corps have twelve volunteers on the island and eight more volunteers in training. The majority of volunteers presently on Grenada are teaching such subjects as English, Spanish, math and sciences. Two volunteers are working in the agricultural sector, the first as an agricultural economist and the second as an agricultural statistician employed by the interim government. The agricultural specialists are compiling statistics and conducting market surveys on potential domestic and export markets. The eight new volunteers, who arrive in November, will work in the fields of education, health care and small business development.

Elections

Grenada is a member of the British Commonwealth. Governor General Sir Paul Scoon is Queen Elizabeth's representative on ths island and an advisor in the interim government. On Sept. 20, he announced Dec. 3 as the date for Grenada's general election. He said he would invite observers from the United Nations, the British commonwealth, and the Organization of American States. Grenadians, he stated, would vote for "five years of peace and steady economic growth under the leadership of a government made of selfless, hardworking, humble and honest men and women who will put their country before self."

"The date has been announced and we are all getting ready for it," commented Herbert Blaize, leader of the newly-formed New National Party (NNP), a coalition of three centrist parties. The NNP is made up of former Chief Minister Blaize's Grenada National Party; the National Democratic Party, headed by economist George Brizan; and the Grenada Democratic Movement of law lecturer Dr. Francis Alexis. The three moderate parties agreed to the alliance at a meeting in late august of this year on Union Island in the Grenadines.

Approximately 50,000 Grenadians are registered to vote and observers expect a lively political campaign. Other parties to be represented include the Grenadia United Labor Party and the Maurice Bishop Patriotic Movement.

Grenada Encourages Investment

As the election day approaches, Grenada's interim government has been working steadily to improve the business and investment climate there through the enactment of a variety of fiscal incentives. The government of Grenada revised its investor's guide and is preparing parallel changes in the investment law under the Fiscal Incentives Act. The new investor's guide establishes time limits under which the government will act on investment incentive requests and includes, in an appendix, a sample investment proposal. This revision cuts the time required to approve or reject requests and increases the predictability of the investment review process. In addition to the guide, the government has embarked on a comprehensive review of fiscal policy with the intention of reforming the tax system to promote rather than restrict private enterprise.

Of particular interest to U.S. investors, Grenada has relaxed its foreign exchange controls to simplify the remittance of profits and dividends. Further relaxations are under consideration, according to the U.S. Embassy in Grenada. Also, interest rate limits have been raised from 12.5 to 16 percent, and may even be lifted further. The interim government is considering the gradual elimination of import monopolies in order to encourage increased price competition among Grenada's importers. In addition, the government is looking at the establishment of an Industrial Development Corporation to simplify and streamline the investment review process. The Industrial Development Corporation would establish an institutional capability for investment promotion and develop the overall objectives for industrial development.

U.S. Investment Activity in Grenada

The number of U.S. investors interested in the opportunities offered by Grenada is growing as more U.S. business executives visit the island, either individually or with the support of U.S. government agencies. Over 50 investment proposals are currently under review by the government of Grenada, according to the U.S. Charge d'Affaires in Grenada, Ambassador Loren Lawrence.

In January of this year, a joint White House and Overseas Private Investment Corporation (OPIC) investment mission introduced U.S. executives to Grenada.

Noel Blackman of Shore Lobster and Shrimp Corp., New Jersey, was impressed with what he saw. He has applied to the Grenadian government to establish a concern to process lobster and conch for regional consumption and export to the United States.

After hearing of the January visit, Ben Vernazza and Bill Ingle contacted OPIC seeking information on investing in Grenada. Ben Vernazza, jointly with the Grenada Cooperative Nutmeg Association, began producing a Grenada Nutmeg Kit in June. The kit consists of an attractively packaged bottle which includes whole nutmegs, a grater, and a specially designed nutmeg recipe book. Bill Ingle, a Virginia toy manufacturer, came to Grenada and established Ingle Grenada Ltd. to produce wooden toys for export to the United States. After the disbursement of a $450,000 direct loan from OPIC, his factory started production in early September and at press time employs more than 38 people. Ingle hopes to train and employ a total of 200 before the end of the year. He explains, "the people are friendly, hard working and intelligent. Also, we are getting tax concessions from the United States under the CBI."

The President's Advisory Council on Private Sector Initiatives is sponsoring on Oct. 31 a seminar at the White House titled "Grenada Revisited," and targeted at U.S. business executives interested in Grenada. Sheldon Weinig, chairman of the Advisory Council's international affairs subcommittee, describes the White Houses's efforts to encourage job creation in Grenada. "I feel strongly that U.S. entrepreneurs interested in Grenada should work together with a Grenadian partner. In the way, a business structure is established which will continue to provide ongoing contributions to the Grenadian economy."

Norm Kaufman illustrates the possibilities for individual investment activity in Grenada. After reading about Grenada, Kaufman researched the textile manufacturing opportunities there. When he found a manufacturer with excess capacity, Alston Johnson, Kaufman took advantage of Section 807 provisions of the U.S. tariff schedule and contacted Johnson the producer an initial order.

OPIC has worked closely with the U.S. business community in developing support for investment in Grenada. Following its January mission of 20 firms, OPIC took another group of U.S. investors down to the island for a second investment mission from Oct. 28-Nov. 1, 1984.

Clark Fisher, insurance officer for the Caribbean at OPIC, describes Grenada's efforts to foster investment on the island. "Clearly, the interim government of Grenada is committed to encouraging renewed U.S. and domestic investment and has proven its willingness to make tough decisions that have dramatically improved the policy environment for private sector initiatives."

St. George's Chamber of Commerce

As part of a larger program started in 1982 by Caribbean/Centra American Action (C/CAA), the Grenada Chamber of Commerce has been paired with the Raleigh, N.C. Chamber of Commerce. The goals of this pairing process are two-fold: first, to strengthen the Chamber of Commerce institution itself, so that the local Carribean or Central American Chamber can stand up for the role of private enterprises; and secondly, to promote investment through conferences, training and network-building.

An exchange of technical expertise and training between the Raleigh Chamber and the Grenada Chamber is bringing the Chamber of Commerce in St. George's closer to its goal of playing a vigorous role in Grenada's economy. The Grenada Chamber now has a full-time paid executive in the person of Deputy Director Jenni Killam, in addition to over 120 members.

The Grenada Chamber of Commerce, along with C/CAA and the Caribbean Association of Industry and Commerce, in August sponsored a Caribbean Basin Economic Recovery Act (CBI) seminar in St. George's. The seminar was designed to acquaint local entrepreneurs both with the details of the free trade provisions of the CBI, which went into effect last January, and to illustrate the real business opportunities that exist for Grenadian industries. The seminar attracted about 60 Grenada business leaders and was opened by U.S. Ambassador Lawrence.

Also, the Grenada Chamber is establishing a multi-media center on the island. The center aims to develop television and radio capabilities in Grenada and is expected to become a central resource for the entire Caribbean region.

Regional Cooperation

Grenada is an active member of several regional organizations in the Caribbean. These regional ties serve not only to support Grenada's economic development, but also provide a network of established markets and additional resources for Grenada's growing economy. The countries of the Eastern Caribbean use the East Carribbean dollar, which is pegged to the U.S. dollar by the East Caribbean Central Bank (ECCB). Grenada's economic and foreign policies are coordinated regionally through the Caribbean Common Market (CARICOM). Founded in 1973 to promote economic integration by means of a common market, CARICOM brings together 13 member states and territories, including the Bahamas, Barbados, Dominica, Guyana and Jamaica. Grenada also belongs to the Organization of Eastern Caribbean States (OECS) and the Caribbean Development Bank (CDB). The operating policies and procedures of the CDB are modeled upon those of the World Bank. The CDB lends to Caribbean governments for development projects such as the renovation of factory shells and the building of roads in Grenada. Since 1971, U.S. AID support for the CDB has exceeded $75 million, of which over $55 million has been disbursed.

Unspoiled Scenery

In recognition of Grenada's improved tourism climate, cruise ships are once again docking at St. George's. Tourists from the United States, Western Europe, and other Caribbean countries are visiting the island in growing numbers. "Grenada is an extraordinary beautiful island," comments Marilyn Marx of Karen Weiner Escalera Associates. "The scenery is unspoiled and the people are incredibly friendly--especially now to Americans. There's even talk of building a championship golf course; of course, the yachting on the island is fabulous." She reports that nine cruise lines, including Windjammer Cruises, which has a line of sailing ships, have announced calls into St. George's.

One probelem with the increasing number of visitors on Grenada is a limited number of hotel rooms. Currently, about 460 rooms are available, with another 180 rooms of the Grenada Beach Hotel, the largest resort hotel on Grenada, tied up until sometime next summer when the last of the U.S. military leaves the island. Various strategies for hotel development are under consideration; the Grenada Hotel Association has proposed a gradual development of the hotel base, emphasizing upscale accommodations which would not disturb Grenada's quiet charm.

All in all, the tourism market is growing as fast as Grenada can handle it. Marilyn Marx believes that "the tourism potential is absolutely tremendous. At this point, there is no looking back!"

U.S. Enterpreneurs

An impressive case of private sector initiative in Grenada is exemplified by a program organized by Doug Greene of the American Corps of Entrepreneurs. Greene is bringing approximately 30 U.S. business executives down to Grenada for five days of workshops and training seminars for over 300 Caribbean businessmen. The program is wholly funded by the U.S. private sector participants and is offered free to interested Grenadians. The U.S. enterpreneurs, from such corporations as Allstate Insurance, The Calvert Group, New Hope Communications, Natural Foods Development, and Shearson-Lehman American Express, among others, will be sharing their business experience, management and understanding of the U.S. market. Greene feels that Grenada is a place where the private sector can substantially help economic development through the establishment of an active business community.

"We feel that it is very important in any economy to have a very healthy and upwardly mobile middle class," Greene says. "These are the entrepreneurs that provide the balance for a healthy social structure. We are hoping to set up a 'pen pal' program with Grenadian entrepreneurs and American entrepreneurs so we can foster risk taking in Grenada. We are exploring innovative financing techniques and will know more about that after our visit. We realize that strategic importance of the Caribbean and feel that many innovative steps are being taken to bring not only a sense of stabilization to this region but also a sense of economic hope."

Greene believes that Grenada, in view of U.S. Government support there for an expanding market economy and a stable political environment, provides an exciting opportunity for private sector investment. As Russell Muir states, "Grenada is on the threshold of a very significant move forward. The election on Dec. 3 will hopefully produce a government which is pro-business, the new airport will greatly facilitate trade and tourism in Grenada, and the commitment of U.S. AID funding gives Grenada an important advantage over many other areas of the world. This combination of factors, plus the relative proximity to the U.S. market, make Grenada an attractive investment opportunity."

COPYRIGHT 1984 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group