Government strikes deal with Chinese investors: A perfect example of the status quo


What just happened to St. Maarten? Did our government really strike a deal with the Chinese government to build a huge hotel at the Belair beach front? Is this the way WE accomplish things?

This is such a momentous decision made behind closed doors. The St. Maarten Development Movement wonders if the Prime Minister or the Minister of Finance did due diligence behind the Chinese intentions or more basic, made themselves informed of what it means to enter into commercial transactions with the Chinese government. Probably not.

When we talk about Chinese government ownership, we are truly talking about enterprises controlled by the Communist party and mostly owned by the People’s Revolutionary army. It has been the practice over the last decade, due to lack of investment options in China, that Chinese government-owned enterprises team up with domestic companies to expand the Chinese interests abroad, as long as they remain in control and as long as the Chinese directly benefit from the investment.

So the bottom line is that the Chinese are offered to purchase a little of St. Maarten’s sovereignty to do its business unhindered with making money as a prime goal. The method used here is not a Foreign Direct Investment (FDI) where the Chinese are willing to invest in the business interest of St Maarten. We are talking about an Overseas Direct Investment (ODI) in which the Chinese simply expands its business interest from China to St. Maarten. What does this really mean for us?

The plan of building this hotel and apartments could be compared to building a permanent cruise ship on land. Like a cruise ship the business operation is totally contained, except the hotel is a one-time purchase, whereas cruise ships continuously arrive and have to pay to do so.

In this case, the hotel will probably be built entirely by the Chinese. All materials and labor will probably be shipped in and once built it will be probably be managed and staffed by Chinese. The services that spill from the hotel will also probably be controlled by Chinese. It need not be like that. However, it all depends on how strong our government has bargained to ensure St. Maarten’s best interests are protected. Remember nothing comes free in commercial dealings with the Chinese.

Given the secrecy to date, without a doubt the Chinese will demand favorable (tax) concessions and will seek favors from politicians who will be keen to protect the(ir) Chinese investment. This status quo got TO GO!