Whether we know of it or not, or whether we know and are indifferent about it, Nevis is one of the most undeclared enterprise zones in the Eastern Caribbean. There are several undeclared enterprise zones throughout the world, but the governments of those countries have not made any authoritative statements about the status of their undertakings. Whenever responsible governments realise that their economic positions warrant the imposition of developmental concessions for their countries or parts of their countries, they seek the assistance of their legislative assemblies to grant the necessary authority for their implementation. Under normal circumstances the authority for the operation of enterprise zones is given in an enabling act of the legislature of the country that is concerned. The enabling act confers the authority on the relevant minister to make declarations on the area of land(s) that are to be declared as enterprise zones. In the absence of such legislative authority, the granting of developmental concessions could be deemed as unlawful acts and, as a consequence, are open to legal challenge in the area of administrative law. So what is an enterprise zone? It is usually an area of land where economic activities are depressed due to the lack of development. A sizeable proportion of residents in those areas are variously unemployed and they find it difficult to achieve healthy standards of living. In order to redress the rigors of such economic depressions, some governments take drastic measures to reduce the severity of the effects of those devastating social and economic conditions by making provisions for the creation of widespread employment opportunities for the labour force. The operation of enterprise zones very often involves the reduction of certain tax burdens and the relaxing of or speeding up a number of administrative controls. It is believed that such moderate concessions would encourage private sector industrial and commercial activities in the zones. Before looking at the rudimentary undeclared enterprise zone as may or may not exist in Nevis, it is necessary to look at some enterprise zones that are in existence elsewhere in certain parts of the world. This article is not intended as a working manual to be followed verbatim by developing countries in general, but as an initial guideline for the budding legislature in Nevis in particular. For such brief references, I would like to refer to the current setup that exists in the U.K today. The operation of enterprise zones is of statutory creations. Under the provisions of s179 and sch. 32 of the Enabling Act of 1980, the Secretary of State is given power to designate, by order, an area of land as an enterprise zone. In other words, he does this by delegated legislation. The same schedule provides that each enterprise zone should be administered by an enterprise zone authority and is usually precise as regards to which body that should supervise the administration. An interesting point to bear in mind is that the schedule specifies a duration of ten years for the life of the enterprise zone. In Nevis, there are no specified enterprise zones, and no declarations; therefore anything that is done is done by the whims and fancies of governments of the day. The only developments that tend to point to areas of enterprise zones are those where the construction of hotels, condominiums, holiday flats, and villas take place. These developments have one common feature in them and that is that they are located by the seaside or coastal areas. To look at the stringent methods of controls for the administration of enterprise zones in the U.K. I would like to refer to the (10) ten-year period of the life of the zones. There are enshrined in the Act of 1980 several benefits to both new and commercial business, and such benefits include the following: (a) Under schedule 32 exemptions from liabilities are given to owners and occupiers for the payments of property rates. If a property is used for both domestic and business purposes, the rateable value of the property is divided between the two elements and the business part is exempt. (b) Section 74 of the Finance Act of 1980 applies and extends to enterprise zones the provisions of the Capital Allowances Act of 1968. This allows 100% of any expenditure incurred in the construction of industrial and commercial buildings or structures and hotels to be set off against corporation tax or income tax liability. (c) The power of industrial training boards under section 4 of The Employment and Training Act 1981 to impose an industrial levy on employers does not extend to employers located in an enterprise zone. (d) Consideration by customs and excise of applications made for consent for the opening of a customs warehouse within an enterprise zone are given priority. It also extends to applications for “inward processing relief”a relief given from payment of customs and other duties on goods processed within the U.K. but imported from and then exported to countries outside the EC. On a comparative basis, it is important to look at the period of time that the granting of concessions last in the U.K. that is a relatively rich country. The maximum period is 10 years. Here in Nevis the tax holiday appears to run for 25 years initially, and, if economic difficulties arise as a result of acts of God, there is a conventional precedent of an additional 25 year period available. This makes a total of 50 years of concessions. This extension was granted to the Four Seasons Hotel executives following the devastation of part of its premises by Hurricane Omar in September 2008. The sad fate of economic loss to Nevis does not end with acts of God. There is the possibility of change of ownership of any concessionary establishments on Nevis; this would call for further extensions of tax holiday periods, or a complete close down which calls for a complete renewal or a restart of the whole process of the grant. The best way for Nevisians to assess the extent of the crippling concessions that were granted by previous and present governments is to ask for copies of contracts that were made with foreign property developers up to the end of May 2009. The sting in the tail is that concessions are not only granted to property developers but also to contractors who are employed to undertake civil engineering and construction works. The form of concessions in this area is exemptions from the payment of import duties on plants and machineries. One particular contract went as far as to say that at the end of their contractual period, their used plants and machineries are to be sold and then the responsibility for the payment of the import duties rests on those who purchase them. The contractors then departed Nevis with their money leaving Nevisians not only to pay for the plants and machineries but also the import duties. The crippling concessions are automatically tied to the undeclared enterprise zone of Nevis. There seems to be an unofficial handbook for prospective investors in Nevis and it is well read and understood by them… The first clauses that they include in their contractual negotiations deal heavily on terms that are most favourable to them and much to the disadvantage to the Nevisian negotiators. This has to be the case because the contracts are always one-sided in favour of the foreign investors. Look at the contract for the sale of 600 acres of land to the Newfound Company and also to the contract dealing with the geothermal energy with West Indies Power. In both of these we have failed to extract enough economic gains for the long term benefit of Nevis. If we had a properly constituted enterprise zone in Nevis with all of the statutory powers governing it, we would not have found ourselves in this guessing game that plagues us every time contracts have to be drawn up between us and a foreign investor. We can look at ourselves as an island that has an undeclared enterprise zone that is artificially set up not by our parliament, but by the executive branch of past and present governments. The implication of this state of affa
irs is that governments change, and whenever they change, the executives change as well resulting in no uniformity, consistency, stability and certainty of the approach towards enterprise ones. We cannot, should not, allow successive executives continue to grant unreasonable and excessive concessions to foreign investors and developers whose only motive is to extract maximum and superfluous profits from their investments at the loss of their employees and to the detriment of our treasury. We need effective legislation to control enterprise zones in Nevis that would encourage the desired development in a future and prosperous community. The legislation would also act as checks and balances on the entire field of enterprise zone management and would eradicate the personal element of members of the executives on the grant of development in the zones. Neither the present government nor previous Nevisian governments are responsible for this informal approach to the elusive enterprise zone of Nevis, but they all follow one another to apply this conventional and inefficient procedure. It engenders a party orientated approach that creates a weak and vulnerable part of our system that foreign investors prey upon. In other words, Nevis is a very vulnerable prey for foreign investors who are prepared to squeeze every ounce of concession from the land that falls victim to them. From an insular point of view, we want to maximise our gains from the services and facilities that we have on offer and the only way in which we could achieve this is to make sure that :- (a) We build up a highly specialist team of negotiators to match our foreign counterpart and (b) We work out precisely what we want and instruct our negotiators to achieve those requirements with minimal derogations. It must be borne in mind that every foreign team of negotiators has a specialist agent whose job it is to provoke and upset the other team. The psychology behind this is that if you upset the other side, you stand a better chance of getting what you want because the other side would not be able to make rational decisions. This is a mug’s game. Politicians are not trained negotiators to weather such tempestuous storms unless they had been specifically briefed over a sustained period of time to foil a trap no sooner than the other side sets it. It is evident that the enormous economic benefits that foreign investors derive from their investment in Nevis far outweigh those that Nevisians receive. Their onslaught on the Caribbean is equivalent to the economic and predatory activities of the colonists of the 15th. 16th., and 17th. Centuries. These tremendous economic imbalances are due to the unequalled ability of our negotiators to extract better bargains for the people of Nevis.
