An article by a former business-minister, Angel Bermudez, in response to a publication by economist Ben Marapin. I will also publish Marapin’s opinion, but for now here we go with Bermudez, translated from Dutch
He raises many interesting points, worth public discussion.
“Our millennials must redefine the meaning of our Aruban autonomy together with the Netherlands (and a number of other sister islands?)”
The opinion article ‘Unexpected visit of the corona virus to Aruba,’ in Antillean Dagblad on Saturday by economic advisor Ben Marapin, in which he describes the origin of the current challenge, is clear and I would like to leave this type of analysis to economists and accountants.
However, I would like to add a number of nuances, for further discussion.
The tourism economy, the white elephant of Aruba has been on its back since mid-March 2020; national borders are closed, hotels and restaurants dark.
Evidently this means major loss of income for GOA, business, and locals, as well as the loss of needed foreign exchange.
In my opinion, a comparison of this crisis with that of 1985 is flawed: In my opinion, the current crisis is more serious than that of 35 years ago. At the time, we had access to both continents: The US and the Netherlands. Moreover, we still had the charm of a young country that tried to give substance to its newly acquired autonomy and future.
Nobody was afraid to lend a hand.
Both factors are now missing; the US and the Netherlands have also been hit hard by the pandemic, with all its dramatic consequences, while Aruba has accumulated a loss of approximately 4,500,000,000 florins in 35 years of autonomy.
No reason, therefore, to expect any solidarity.
Moreover, solidarity is usually reciprocal and it was not, for example, brought up by the islands during the austerity or austerity years of the first Rutte cabinet.
We should not be surprised that a request for help, for a transfer of 1,300,000,000 florins only resulted in a stern response: “Put order in your house, first.”
The aforementioned accumulated loss is due, to mediocre institutionalized financial management over the 35 years, but it is also decisive proof that our economy can never, ever, sustain that autonomy.
Apparently, we didn’t learn anything from the Holloway debacle, the global banking collapse, the SARS crisis, etc.
Most of our income, and therefore GOA’s income, is generated nationally by the tourist sector.
So this white elephant is on its back and the government is flat broke.
Most companies have seen their sales evaporate overnight and are therefore forced to lay off in mass.
Now that we are slowly but surely awakening from the shock of Covid19, the question is obvious: How do we get the white elephant back on its feet? GOA now needs hundreds of millions in liquidity for the social safety net, and for locals who have lost their income.
The wage subsidy should therefor “defuse” the ticking socio-economic time bomb, for a while.
Tens of thousands of locals with no income to pay their rent, shop or cover other needs is an excellent recipe for disaster.
Likewise, the expected liquidity needs are high for business, which can hardly sustain its regular fixed costs. But the private sector will be able to achieve the necessary cost minimization, in an effort to get the white elephant back on its feet.
The government cannot just watch!
If it wants the Netherlands to assume its responsibility as “lender of last resort”, it must demonstrate decisiveness.
Indeed, GOA’S personnel costs must be sharply reduced, as must those of the state-owned companies. Transparency is badly needed here.
Another must: Broad political support. So all parties and all sectors must seriously be involved in the effort, so that the sacrifices made are perceived legitimate and just by the community.
Setting up a “corona crisis fund” that can provide bridge loans to companies under favorable conditions is a good move. This fund should be backed by the Netherlands, Aruba and the local financial institutions.
Management should be carried out by De Nederlandsche Bank (DNB) and the Centrale Bank van Aruba (CBA), with the help of local experts and institutes.
Opportunity now also becomes the question, whether we should restore the “old” normal. Meaning, how big should the white elephant be allowed to grow?
With the boundless expansion of hotel rooms, Aruba has steadily built an economy for second-class citizens. Welcoming tens of thousands of Latinos in the low-wage sector who can hardly afford an apartment and therefore often live together in clusters. Most of them work to support their families in their homeland, and often cannot even afford an old and cheap RWD car.
From now on, let the big employers themselves own the legality of their foreign workers. In the case of mandatory repatriation, these employers must bear the costs themselves; they select the right work force themselves and the mediocre worker can return to their homeland.
The big employers have professional HR departments (human resources) who know exactly which hands they need to recruit and get the white elephant up and keep it ticking.
GOA’s departments such as DAO (Department of Labor and Research) and DPL (Departamento Progreso Laboral) cannot compete with these HR departments.
GOA should focus its enforcement on small entrepreneurs who often pay their workers under the table, and abandon their foreign workers to illegality.
We baby-boomers must now make way for our millennials who have the future and so together with the owners of the white elephant must determine how it can function sustainably!
Aruba must come up with a common vision, quickly, for how the ‘new’ normal should be. This perspective must be broadly supported by all parties and sectors, including the FTA (Federacion di Trahadornan di Aruba) and other unions.
GOA should only act as a facilitator in this regard; ensuring innovation of our outdated regulations, infrastructure and logistics including digitization.
Meanwhile, unprofitable departments that do not produce value, should be offered to the private sector. (Arubus, Aruparking etc)
Allow financial institutions to finance this privatization then money will come into the treasury and GOA’s payroll will shrink, services will become more effective, etc.
Above all, transparency in all public companies must be a norm with annual reports published including remuneration structure, annual payments of dividends, etc.
Finally, with an accumulated loss of more than 4.5 billion in 35 years, financing new losses for Aruba will be virtually impossible.
Autonomy in this form thus appears neither realistic nor affordable.
Our fragile economy cannot bear it, despite more hotels and more foreign workers.
Our millennials have to review the definition of our autonomy together with the Netherlands (and a number of sister islands?).
The quality of our tourism must be the guiding principle here and hopefully operators will still find the path to ‘sustainability.’
If not, the quality of education, healthcare, environmental protection and safety will not be guaranteed by the aging white elephant and all sacrifices and financial assistance will only lead to the beating of a dead horse.
The author, Angel Bermudez, is a former Minister of Finance of Aruba (2014-2017) and also a former Minister of Transport and Communications (1987-1989). In both appointments, he indicated that he would act as a partisan minister of trade. He studied Civil and Business Law at Erasmus University Rotterdam and obtained his postdoctoral Fiscal Law at Leiden University. After his inspector training, Bermudez returned to Aruba, where he became head of the Tax Inspectorate. Between 1989 and 2010 he worked as a tax specialist in the private sector. From 2011 to 2014, Bermudez was director of the Tax Authorities of the Caribbean Netherlands on Bonaire. In 2017, he became head of the Zorgverzekeringskantoor BES (ZVK).