The Government of St. Vincent and the Grenadines has signed a letter of intent with the Export-Import Bank of the Republic of China (Taiwan), which governs a loan facility of US$50 million to the government of SVG for the construction of a hotel at Mt Wynne.
The loan, however, will only be finalised with the approval of the Parliament in Kingstown.
Asked on Monday at a press conference about the terms and conditions of the loan, Minister of Finance, Camillo Gonsalves, said he would speak to that when the loan is brought to Parliament.
“But what I can say, the loan rate is LIBOR plus 1.2 per cent so that will be at current rate, just under 4 per cent loan, two-year grace and I believe it’s a 25-year term.”
LIBOR is the average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another.
Gonsalves signed the letter of intent on Sept. 19 during a visit to Taipei at the helm of a four-member delegation.
He reiterated at Monday’s press conference that his Unity Labour Party administration intends to add 350 rooms of state-owned hotel space.
Construction of a 250-room, state-owned hotel at Mt Wynne is being targeted for the first quarter of next year, with the chance of a groundbreaking before year-end, he said.
The finance minister said the reason for the construction is that the International Airport at Argyle is getting important and valuable airlift, including weekly flights to Canada, New York, and Miami.
“And in order for us to increase airlift, we have to increase rooms. We have to have more rooms if we want more planes,” he said.
He said his government has paid attention to the development of tourism in neighbouring countries “and the degree to which, sometimes, the tourism development does not, necessarily, benefit as much as it could the citizens of the country.
“And there are a lot of countries now in the news in our region where their tourism numbers are higher than ever before but their economy is not growing at a rate that reflects these high tourism numbers.
“You have one minister come out and say, ‘Great news is tourism is up a hundred per cent.’ and then the minister of finance would come out the next day and say, ‘Bad news is we have to go to the IMF.’ and those two things don’t seem to gel in some situations,” he said.
Gonsalves said that his government thinks that one of the things it can do in the early days of its tourism development is “maintain a little bit more control over the quality of the hotel and the standards and setting the bar at a particular level to define where we want St. Vincent and the Grenadines to be as a tourism destination…
“You notice that I said we hope to build 350 rooms. So if you do the math, you know that there is another hundred rooms coming somewhere else but I don’t want to make that announcement right now. I want to focus on the larger of the two hotels, which is the facility at Mt Wynne.”
The minister said the government has engaged “in very, very fruitful discussions with a major hotel brand.
“We have an agreement with that brand. They will manage the hotel that we construct and we will construct it in such a way that it meets all of their quality standards and the various specifications that that brand has. But it’s our hotel and we are building it.”
Gonsalves said two architects, in consultation with the hotel brand that will manage the hotel, have generated design concepts for the government.
“They came to St. Vincent and the Grenadines, they visited Mt Wynne, we shared with them out topographical maps and all the other technical information and they produced for us concept designs independently.”
He said there is a committee headed by the Ministry of Tourism, Invest SVG and himself “to evaluate these concept designs, to massage the process, to figure out which of the two we prefer”.
He said architects are refining the government’s feedback and are expected to report back in a week or two.
One of the two architects will be chosen to produce the detailed designs of the hotel.
“They anticipate that the entire process would conclude very early in 2019 – the design process, but, of course, prior to that, cleaning of the land, doing some of the work with the infrastructure that has to go into the Mt Wynne site can begin in advance of that.”
He said the hotel is expected to begin operating 30 months after construction begins.
“They have shared with us their projections on how much money they think the hotel will generate two years from opening date, five years from opening date, seven years from opening date. And based on their projections, we can conservatively estimate that this hotel will pay for itself, in that the revenue it generates will be able to pay the loan.
“So we don’t anticipate having to tap the Consolidated Fund, outside of the fact that the money will be coming through the Consolidated Fund,” the finance minister said.
As tourism keeps booming elsewhere in the Caribbean, the Prime Minister of SVG has just announced that the largest hotel in the country, the slowly decaying Buccament Bay Resort which closed shop in December 2016, is unlikely to re-open this year, as many officials had predicted, because of continuing squabbling among its many overlapping owners (https://www.iwnsvg.com/2018/10/02/buccament-resort-unlikely-to-reopen-this-year/).
The unwillingness of large, name-brand developers to invest in the mainland’s hospitality industry because of the absence of white sand beaches or compensating attractions has now prompted the government to borrow $US 50 million from Taiwan to build a hotel of its own, a bad public policy decision by an overdebted government, if there ever was one.
If the private sector decades of experience building hotels and resorts all across the Caribbean doesn’t see St. Vincent’s mainland as a desirable mass tourism destination, how can this government keep saying they are wrong?
As far as I know, correct me if I am wrong, most if not all the major hotel brands operating in the Caribbean are doing so in government own hotels or gov+private sector own hotels. So what the Government is trying to do in Mt Wynne is not a different template.
Secondly public sector funded projects are never design to reflect the same outcomes as private sector projects. The major role of any Government is to create the necessary climate in a country that guarantees stability through the rule of law, promotes investment, ensure adequate access to government services, provision of adequate services in health, education and public safety and invest in projects that maximizes the public good. Their are others but for simplicity we can stick with the above.
Now a lot of Ben-David’s essays focusses on the same underlying theme: The financial viability of Government spending especially when it comes to public sector projects. But as far as I know Governments no where in the world invest in public sector projects solely on the basis of making a profit. They tend to do so on the basis of maximizing the public good in a sustainable way or to a certain point in the future. If the project turns out a profit that is an ancillary benefit. Therefore it doesn’t matter how much statistics we can use to show financial problems, the forecast for the project would have taken that into consideration and even if the forecasting turns out to be wrong the underlying stated goals with regards to public good are often achieved. So in my humble opinion, that discussion around these projects should not focus solely on their financial viability but on the underlying public good that is being targeted and the stakeholders who are going to benefit directly or indirectly from the project.
Any responsible government have to balance capital spending between the maintenance or replacement of current infrastructure and the building of new ones. No government is going to ever get that balance right because the competing forces are going to pull for one more than then other and infrastructure maintenance is mostly the one people want, it’s always the most costly and it’s the least likely to score political points on because people expected that in the first place.
Practically everything you write makes no sense whatsoever. I would have to write an essay of several pages explaining why. Instead I hope those reading what you write can reflect on real life instead of believing that governments own all the hotels in the Caribbean and making a profit is not the goal. Your claim that it is for other reasons including infrastructure also does not hold water. Look at SVG! bad roads and a failing airport that drags down the country even more than before. What a load of nonsense!
Robertson, we are all entitled to our opinions. I shared mines and would be more than happy for you to prove me wrong if you disagree. Our society is in need of good intellectual discussion on the things that matter to us. I am looking forward to what you have to say.
Also, while you contemplate your essay be sure to indicate why hospitals, schools, bridges, roads etc aren’t built by a government for profit because after all they usually fall under capital expenditure and they are usually carried out as infrastructure projects either to replace old and failing infrastructure or add new infrastructure to the country. What makes them so different from say the new airport or the planned hotel development? What really is the ‘Public Good’ and why should we be bothered or not bothered
about it? Should we segment government capital spending into for profit and non-profit items? How much for profit and non-profit items a government should pursue to balance development? Should development be only measured in terms of the quality of a countries road network and other transportation infrastructure? I eagerly anticipate your indulgence Robertson.
Rubbish, top to bottom.
There are many studies that show that tourism has many negative effects on countries. Governments support it reluctantly to create jobs knowing that hoards of tourists cause environmental degradation, see most of their profits go back overseas, increase crime, promote prostitution, create dependency, and other bad things.
Nearly every hotel in the Caribbean, outside communist Cuba, is privately built, owned, and managed with governments offering mainly exorbitant concessions to entice foreign developers.
Governments build or buy hotels on their own out of sheer desperation — the private sector isn’t interested — or Marxist ideology.
Ben-David, Sandals hotel in Tobago, Hilton Trinidad, Hyatt Regency and Magdalena Grand are own by the Government of Trinidad and Tobago, managed and operated by third parties. https://newsday.co.tt/2017/11/11/how-are-govt-hotels-performing/
Does that also mean that the TNT Government was acting out of sheer desperation or have a Marxist ideology?
I am one of the Vincentian-born who believes that our country will prosper. That we are capable of developing our country. I believe that we have a place in this region that is our place. I believe that our people deserve better than what they are getting. I believe that a government that is debating endlessly while the people are dying a slow death do not deserve to be in charge. Before they fix what is wrong they are off to the next mistake. I believe we can do just a well as the next person or even better. I believe this because I see it in my own life.
Real prosperity was actually achieved for our white slavemasters for around 50 years between 1770 and 1820 on the back of an evil labour expropriation system.
We have never been nor will we ever be prosperous again an assertion tens of thousands of our people have proven over and over by migrating to countries in the Caribbean, Western Europe, and North America where true prosperity is a reality, not the empty dream you talk about.
The problem is not this or any other government: the problem is our lack of economic and other resources.
We have the resources. We need to do inventory. We just need to organize. We need to come together.
r, kindly list and inventory some of our resources. Please tell us also how we need to come together.
@ C ben-Laden, you are just another ULP lackey. Stay clear of me and I will do the same to you. Don’t react to my comments I am not talking to you. This country maybe a sewer pit to you but not to me.
r, I have never supported the ULP or the former Labour Party and I will never stay clear from people like you who can only talk f*rt from morning to night.
Again, please tell us dunces what resources we have to develop our country and why we can’t “come together” to do so.
C Ben-Laden, I will not dignify your question with an answer. I don’t think that my fellow Vincentians are dunce or backward like you do. I don’t come here to try to convince Vincentians that every effort they make is futile like you.
I know that there are a lot of like-minded people in SVG who think like me and are willing to defend SVG, voice our concerns and contribute towards the progress of our country and people. I refuse to let the likes of you influence me. So just knock it off and be on your way. You don’t convince me. You have my permission to continue your useless crusade against SVG. Time well tell.
Why not put this money towards purchasing Buccament Bay? It’s closer to the airport and already built. Can you imagine tourists driving past an abandoned hotel in Buccament on the way to Mt Wynne?
Wow! Someone who is really thinking! READER, where did you come from? Your comment is genius in short simplicity. I admit I did not think of that. Any good reporter should ask your question to our policy makers.
LOL. Still, the Comrade has always implied that he would take over the resort if there were no other bidders. A desperate government does desperate things.
I totally agree with you READER. I also agree that it’s a question that should be put to our policy makers as Robertson says. Mt. Wynne has huge potential for a variety of uses and I don’t want another white elephant taking up limited space in this country. I keep wondering why is it so hard to attract foreign direct investment for Mt. Wynne despite the now open international airport. We were told that that was the limiting factor in the past. So what’s wrong now?
How many times do I have to repeat that Mt.Wyne has course, hot, black sand beaches fronting deep and dark waters — not silky soft and cool white sand beaches fronting shallow aquamarine waters — which will always be the “limiting factor.”
Nothing “went wrong” with Mother Nature; everything “went wrong” with unrealistic human development plans.
C Ben, you always thinking that the glass is half empty, no matter what.
On a related note: Camillo makes deal with Digicel. Camillo engaged in talks with CCB. Camillo going after tax fraudsters. Camillo tackling high cost for ATM usage. Camillo making a deal for a brand new hotel. Camillo rescinds forex policy towards Trinidad. Camillo working for fiber-optic cables throughout SVG. Camillo just returned from business trip to Asia. Camillo’s photos in the newspapers everyday. Camillo holding strain. Camillo thanking business owners at press conference.
Apparently Camillo is the hardest working man in the ULP cabinet.
I still can’t endorse Camillo, on moral grounds. But, he is certainly looks smart.
Don’t you know that looks are deceiving or do you accept that flash without substance is better than substance without flash?
SVG on the right track, continue Sir.
How is it that you don’t you know that SVG fell on third track (rail) as has been electrocuted.
Without knowing credit ratings and the seeing the financial feasibility of the project I will say it’s a good project. I do have a few concerns and questions
1. I think a partner in the project/government should have already been selected and they should be bringing some $$$ to the table.
2. The loan should be made to the joint venture not to the government thus protecting the local taxpayers (residents).
3. I think the interest rate while “low” could be lower especially since it’s backed by the full faith and credit of the government.
4. $50M will not build two hotels we will need more
5. This hotel investment project should pay for the land
By the way will we be allowing gaming at this hotel? If not it will become very difficult to meet numbers.
1. There is no partner, just a manager who will make all the profits.
2. Only a fool would invest in a joint venture like this that is bound to fail.
3. The land is owed by the Crown (goverment) so there is nothing to pay.
4. The whole project is a lottery. We all know that lotteries and other forms of gambing produce mainly losers.
selective commentary posting? chasing behind the facts?
This arrangement sounds very fishy to me as building Contractor and who have close friends in the accommodation business. This 50milllionus$ that the Government is borrowing to build this 250room hotel does it include the cost of the land? In my experience I can’t see one of these rooms furnished cost more than 200thousand ec$ but even at a maximum of 300.000$ per room that’s about 75millionEc$ ..how can one justify this 50milllionus$ or 135millionEc$?
Not fishy “EW” it stinks like high hell.Why is Camillo signing letter of intent without the approval of parliament? I’m sure there is a good explanation.The same things were being said about Buccament before the scam.So they can’t fill Buccament they going to fil buccament+.Well if we build it they wil come. Bring the money. They 1st group of young people will be formed to operate the business advocated by RVA of supplying Bio-gas to the 100 houses in the leeward by now it would have grown. The second group of young of young people would be formed to operate the shuttle as advocated by the man at the chamber of commerce. make that group large enough so they will become their own clients.Like flying to spend weekends in Canouan.The third group of young people wil be formed legaly structured to produce formal functions with the intent to grow the formal fashion wear industry.Like the carnival prize giving ceremony,which should be a high fashion Dinner and dance.A Civil Service Awards. A Teachers Dinner and Dance and many more. The Next groups wil be formed around Seines. Yes Seines must no longer bethe domain of old fishermen, but must be main stream for those so inclined to form small businesses. which will necessitate the building of more small boats.and teaching by experiencd fishermen Taiwan must not engage in trying to sure up a corrupt, incompetent government we are truly grateful, but our sovereignity is not for sale. There is more, but now I pause.
Oh I forgot ! Spare the Country the “POLITICAL GOBBLE”.