August, 2006 - I welcome the opportunity extended by the Minister of Tourism to the Dominica Academy of Arts and Sciences (DAAS) to comment of the subject draft policy proposal. These comments are not intended to be negative towards what I perceive to be an honest initiative to seek out at least one niche within which Dominica might design a progressive tourism strategy.

    My difficulty at the outset is that the subject proposal appears to be advanced without an appropriate and more widely-based policy setting which illustrates how “residential tourism” so-called integrates within the overall drive to develop Dominica as a desirable visitor destination. What is the intended scale of this market? Is the proposed clientele additional to that addressed through the “resort tourism” programs now being advanced or can they both be combined?

    The term “residential tourism” is perhaps a contradiction in terms and by the nature of the case throws up important inconsistencies that the policy paper must address. This is not a semantic problem, as the implication of a “residential” commitment requires the host country to make available an adequate of social services for the residents attracted. (No comment needs to be made at this stage as to the standard of such services and expectations of the residents, local and non-national. The implications are obvious.) It cannot be simply dismissed as irrelevant simply because the resident tourist is not a tax-paying citizen. This might logically lead to issues of “user fees” in lieu of conventional taxes, but that is for another time.

    Though labouring the issue of a “residential” stay, the paper does not address either a required maximum or minimum stay-over, and in fact an applicant having once met the requirements and built or deposited funds accordingly, may never return to Dominica. Do any policy implications flow from such eventualities? I suggest, they do. In terms of financial, social or resource impacts, are there any differences between “residential tourists” so-called and longer stay or seasonal tourists occupying lease/rented facilities or share-ownerships within resort projects? How do the principles of qualification relate to persons who buy into a resort tourism complex (eg) owner-occupied villas? (Case 1). For example, would the value of “common areas”, apportioned by units, go towards meeting the $300,000 (US) value of land and buildings? These questions deserve answers.

    The internationally accepted definition of “tourism” refers to travel away from home for a period exceeding twenty-four hours, and for purposes unrelated to work, military service, or to escape natural or man-made disasters. Typically, these are journeys for recreational, leisure, personal and spiritual upliftment including informal education, pilgrimages and sporting events. The proposed Case 2 residential tourist implying travel for professional reasons that may have a commercial aspect challenges the above definition. In fact, such persons may well compete against local persons and professionals in the same or similar line of work and raises issues of licensing, work permits, and such-like. It is not clear whether or not the list of professions/occupations is definitive or illustrative. If the former, under what criteria are some included and others excluded?

    A rather important nuance to this issue of employment and the Class 2 clientele is that modern economic life has moved dramatically from having “work” tied to physical “place” Through the Internet, one can conduct work, occupational endeavours, business from anywhere on earth. The journalist can submit his script to his editor from the remotest village; the investor can manage his stock market portfolio, and the realtor his client without the necessity of being on site. In other words, there are real difficulties in framing policies related to the world of work.

    So stripped of all the trimmings, the crux of this policy proposal is that any qualifying non-resident willing to invest in real estate to the value of $300,000 (US), or to lease/rent accommodation while maintaining a bank deposit of $100,000(US) will be entitled to a number of tax and duties exemptions:

1. Will Case 1 beneficiaries be allowed to take in fee-paying guests or to rent their properties to others in their absence? Will such incomes be likewise tax-exempt? Whether or not they are tax-exempt, what implications of unfair competition would such a practice hold for “regular hoteliers”?
2. Extension of tax exemption to interest earned on bank deposits, and on capital gains (pursuant to sale of real estate) are surprising allowances that require further explanation (other than competing jurisdictions allow them).
3. Are withdrawals of deposits payable on demand (presumably on the beneficiary leaving the state) or on initially agreed-upon terms? Should government not be allowed to limit the call? For example, following a devastating hurricane, Case 2 depositors may exercise a “run on the bank” just when such deposits are required for rebuilding!

1. If the White Paper passes into law, it renders resort projects more attractive and financially viable. In such cases, the issue should then not be assessed as personal to the individual investor-occupier but as to the feasibility of “the project” itself.
2. Such concepts for attracting longer stay visitors with a residence-ownership option might better be accommodated in designated districts or zones where adequate infrastructure exists, where services can be properly delivered, where issues of safety and security can be addressed.
3. By designating areas for intensive tourism, government can better manage the spill-over impacts of escalating land prices to the benefit of nationals.
4. The above notwithstanding, a concomitant of longer stay visitors and repeat tourism is a more extensive exposure of those persons to the activities, locations, culture and lifestyles of local residents. This is not necessarily a bad thing if mechanisms can be put in place to use such persons on a voluntary basis to further national development agendas in a suitable and appropriate way.

    I further suspect that policies such as these are being advanced in a desperate haste to mimic those already in place in other Caribbean jurisdictions without clear identification, examination and analysis of appropriateness related to true benefits and costs. In this “beggar-my-neighbour” approach to policy development, we should be wary of competing in a “race-to-the-bottom”.

    The Paper realistically recognises that if the proposal or some variant of it is approved, this must be in the assurance of being able to validate some assumptions. In this exercise, the chicken must lay the egg. The anticipated projections should be enunciated first:

1. Will the assumed revenue, employment and foreign exchange earnings emerge in the amounts and phasing to defray associated public and private costs and if not, how will deficiencies be addressed?
2. How will the economy meet the demand expectations for health, education, social and cultural amenities. What incentives will be required to create these?
3. How ready and acceptable is the country to the emergence of a “dual society” defined by wealth and possibly colour?
4. Does the country have the necessary administrative capacity for vetting of applicants, processing/approvals and monitoring the performance of this policy program?
5. Are there sufficient protocols in place to deal with the expectations of an influential sector accustomed to non-national standards of public and private sector service provision including law and order and the criminal justice system etc?

    Longer stay-over tourists and repeat tourists are by their nature not “footloose” and are attracted to their destination by intrinsic qualities of the place. There is the need to identify what aspects of Dominican life and environment would make it attractive for that kind of clientele and at what cost (and inconvenience) would they be prepared to come and enjoy it as partial residents along with the local population. For years Dominica has not been in the mainstream of Caribbean tourism, preserving unique features and qualities now lost to many of our sister islands that have travelled the “beaten path”. We need to learn from their mistakes, while being sensitive to our own condition and aspirations.

    I hope this contribution is helpful in charting the course forward.

    Thanks again for the opportunity to contribute.