Good neighbours?

Good neighbours?

Published: June 08, 2010

Foreign Direct Investment

Haiti and the Dominican Republic have endured a fraught relationship over the past 200 years, but could the latter’s response to the former’s recent earthquake lead to a more mutually beneficial partnership in the future? Michael Deibert investigates.

(Read the original article here)

When an earthquake devastated a large section of Haiti in January, no country responded more empathically than the Dominican Republic, which shares the Caribbean island of Hispaniola with Haiti.

Despite what has been an often stormy and distrustful relationship between the two countries – due in large part to the many Haitian occupations of the Dominican Republic, as well as the long history of abuses committed against the almost 1 million Haitians living in the Dominican Republic – Dominicans almost immediately began fundraising drives and gathered supplies. These were then ferried across the border to Haiti by a combination of local relief organisations and ordinary citizens.

“I had been visiting Haiti for such a long time, and have such good friends over there, that I knew I had to do my best to help,” says Juan Pablo Fernandez, president of Químicos & Plásticos, a Dominican company that supplies raw materials to the industries of both nations. After the earthquake, Mr Fernandez and his employees joined other Dominican businesses in transporting privately donated relief supplies to Haiti’s stricken capital, Port-au-Prince.

The Dominican response to the earthquake just might have eased some of the mutual recrimination brought on by an oft-tragic shared history stretching back two centuries.

In 1822, then Haitian president Jean-Pierre Boyer invaded the eastern part of the Dominican Republic. Despite this, country succeeded in declaring its independence in 1844. Another Haitian leader, Faustin Soulouque, who would go on to declare himself emperor of Haiti, then invaded the Dominican Republic twice.

In 1937, following the expulsion of Haitian cane cutters by Cuban dictator Fulgencio Batista, even more Haitian labourers flooded the Dominican Republic, then led by dictator Rafael Trujillo, who would rule the country from 1930 until his murder in 1961. That October, under Mr Trujillo’s orders and for reasons that still remain unclear, Dominican soldiers and police massacred an estimated 20,000 Haitians.

Haitians continue to stream into the Dominican Republic looking for work today, even though they continue to face “severe discrimination”, according to the 2009 Human Rights Report issued by the US State Department’s Bureau of Democracy, Human Rights, and Labor. But though both countries have experienced authoritarian regimes and high levels of corruption, their economic and investment portfolios paint a markedly different picture, analysts say, especially over the past two decades.

Revealing data

Before the earthquake, according to the CIA’s World Factbook, the GDP real growth rate for the Dominican Republic was 1.8% during 2009, and the GDP per capita was $8300. In Haiti, these figures were 2% and $1300, respectively. While average life expectancy for the Dominican Republic is 73 years, the figure in Haiti is just 57 years. To add to Haiti’s woes, according to its government’s Preliminary Damage and Needs Assessment, the damage bill from January’s earthquake was in the region of $7.9bn.

While two-thirds of Dominican exports remain bound for the US, foreign remittances, mostly from the US, continue to account for nearly one-tenth of the country’s GDP, and there remains a robust tourism industry. Boasting the largest economy in the Caribbean, the Dominican Republic currently has approximately 50 free trade zone parks, producing everything from textiles to electronic devices and pharmaceuticals. The country’s financial sector has also largely stabilised since the collapse of its second-largest bank, Banco Intercontinental, in 2003, which had to be bailed out by the Dominican treasury at a cost of some $2.2bn.

“Business is increasing on a daily basis [in the Dominican Republic] and there is much optimism,” says Aryam Vázquez, an economist who covers country risk for Wells Fargo’s emerging markets unit in New York. “The banking sector is much better regulated than in the past, and we have seen concerted efforts by successive governments to stabilise the domestic demand market.”

Across the border

Before the earthquake, Haiti seemed to be regaining some of its financial footing following the chaotic presidency of Jean-Bertrand Aristide between 2001 and 2004 and the often erratic rule of the interim government that replaced him. Relations between Dominican president Leonel Fernández, in office since August 2004, and Haitian president René Préval, who has governed since May 2006, are said to be warm. During their mutual first term in office in the 1990s, Mr Fernández made the first official state visit by a Dominican leader to Haiti since the 1937 massacres.

Political instability in Haiti has led to environmental degradation and economic atrophy. While Haiti was ruled by a series of ravenous civilian and military dictatorships for much of the past 50 years, Joaquín Balaguer, a long-time Trujillo consigliere who led a series of authoritarian governments in the Dominican Republic over the past half-century, was taking steps to prevent the country from sliding into the environmental disaster that was befalling Haiti, including using the Dominican army to prevent extensive deforestation. Haiti, on the other hand, has lost 90% of its tree cover over the past 60 years (and about one-tenth between 1990 and 2000), with the resulting erosion destroying two-thirds of the country’s arable farmland.

Hope beyond the despair

Despite such statistics, there is hope that out of the tragedy of January’s earthquake there lies an opportunity to help Haiti advance beyond the modest improvements in economic stability and security of recent years.

Haiti’s garment industry, once a pillar of its economy, has benefitted in recent years from measures that provided certain Haitian textiles with duty-free status when entering the US. Last year, Haitian firm the WIN Group, along with the Soros Economic Development Fund, announced their intention to construct a $45m industrial park in Port-au-Prince’s Cité Soleil slum region, a project that has been put on hold in the aftermath of the earthquake.

The OTF Group, a competitiveness consulting firm, has continued to advocate for the creation of “growth clusters” around Haiti, a proposal that fits closely with the Haitian government’s desire for decentralisation, economic diversification and the “decongestion” of the Port-au-Prince metropolitan area, rather than rebuilding as before.

Such measures might well provide a possible future at home for the Haitians currently living in the Dominican Republic and spell a less fractious new era for two nations whose economic destinies, despite frequent tensions, remain inextricably linked.

From rubble to recovery

From rubble to recovery

Published: February 13, 2010

Foreign Direct Investment

(Read the original article here)

A huge recovery challenge lies ahead for Haiti after its devastating earthquake, but could the rebuilding programmes bring about an essential economic restructuring? Michael Deibert reports from Port-au-Prince.

The incremental economic progress that Haiti, an impoverished Caribbean nation of 9 million people, had been experiencing over the past several years was brought to a cataclysmic halt late on the afternoon of January 12, when a 7.0 earthquake centred just south of the capital city sent the pillars of state and industry crashing to the ground in a heap of dust.

In a matter of seconds, Haiti’s Palais National, Palais de Justice, Parliament and many government ministries were either totally or partially destroyed. The top command of the UN mission, whose troops had been supporting the government of president René Préval since his 2006 election, lost their lives, along with an estimated 200,000 Haitians. Factories collapsed onto their owners and workers alike, and entire neighbourhoods tumbled down the brooding mountains that surround the capital city’s bay.

Further devastation

Haiti, already desperately poor but having experienced its first sustained period of political calm and stirrings of foreign investment interest in many decades, seemed as if it would be reduced to an even graver level than it had been before: mortally wounded, traumatised, ungovernable. In addition to the buildings destroyed, Haiti had also lost some of those best placed to aid its tenuous economic recovery, among them one of the country’s most respected economists, Philippe Rouzier, as well as Jean Frantz Richard and Murray Lustin Junior, the director-general and director of operations, respectively, at the Direction Générale des Impôts, the country’s main tax office in the capital.

According to the International Organisation for Migration, as of early February at least 460,000 people were still living in 315 spontaneous settlements throughout Port-au-Prince, while the World Food Programme said that more than 1.6 million people had received ­supplies since the start of the earthquake response.

Economic focus

But Haiti’s industrious population knows a little something about struggle and perseverance, even in the face of such a devastating tragedy. Within days of the earthquake, the country’s market women, taxi drivers and other labourers had returned to the streets, resuming commerce among the hundreds of thousands camped out between the shells of ruined buildings. Capital residents began to flow back into Haiti’s countryside, seeking family solace among the loss.

From a terrible misfortune, some hoped that Haiti might still have set in motion the seeds for a new beginning. Despite the ousting of a popular prime minister last autumn, Haiti’s modest economic engine, buoyed by an extended period of relative political tranquillity and an improved security situation, continued chugging along under a new prime minister, Jean-Max Bellerive, seemingly bearing out a December 2008 UN report asserting that it was striking “how modest are the impediments to competitiveness relative to the huge opportunities offered by the fundamentals” in the country.

Last year, billionaire George Soros’s Economic Development Fund announced plans to create a $45m industrial park in Cité Soleil, one of the capital’s poorest neighbourhoods, while two new hotels were set to open along the country’s lush south coast.

At the same time, the OTF Group, a competitiveness consulting firm credited with breathing new life into Rwanda’s tourism, coffee and agro-industry sectors following the country’s 1994 genocide, praised the business opportunities in Haiti. Focusing on several key “growth clusters” to drive economic development, it hoped to help create 500,000 jobs in Haiti within three years.

Following the earthquake, though reassessed, the group said its conclusions did not necessarily need to be shelved, just pushed back for six months to a year.

“The outmigration from [Port-au-Prince] is a huge opportunity to reverse the migration trends of the past two decades,” says OTF director Robert Henning. “If reconstruction can create opportunities and jobs outside of the capital, this will achieve an important goal of redistributing the influence and economic weight of Haiti.”

Trade possibilities

Though the country’s interior has been severely deforested over the past few decades, local groups, such as the Mouvman Peyizan Nasyonal Kongrè Papay, have worked for years on reforestation and irrigation projects and some areas, such as the Artibonite Valley, remain relatively fertile. With Port-au-Prince’s harbour severely damaged and the likelihood of recurrent large-scale earthquakes extremely high, according to the US Geological Survey, international attention has for the first time begun to look seriously at developing Haiti’s long-neglected interior with manufacturing and agricultural initiatives.

A long border with neighbouring Dominican Republic, which lends itself to the possibility of free-trade zones, and possible ports that might conceivably be expanded around the country – including Miragoâne (in the country’s west), Saint-Marc (in the middle region) and Cap-Haïtien (in the north) – would seem to support this possibility for future investment.

Following a decision last year by the World Bank, the International Monetary Fund and the Inter-American Development Bank to cancel $1.2bn of Haiti’s debt – with the latter institution approving an additional $120m in grants for investments in key sectors such as infrastructure, basic services and disaster prevention, the G-7 countries told Haiti after a post-earthquake meeting in Canada in February that the country’s debts to the body did not need to be repaid.

New beginning

None of this in any way minimises the grievous shock – physical, psychological and economic – that Haiti’s people and its government have suffered because of those terrible moments in January. But, day by day, it appears to be picking itself up, dusting itself off and trying to decide where it will head from here.

“The extent of this disaster is also due to the fact that this country has not been managed, or rather has been ill-managed, for the past 50 years,” says Michèle Pierre-Louis, a civil society leader and former prime minister of Haiti. “Maybe after mourning our dead and saving the lives of the survivors, we should start thinking about ways to put together our energies, our solidarity, our creativity to rebuild our capital under some kind of strong leadership… [which] could eventually lead to rebuilding the entire country. Now is the time.”

Despite Years of Crushing Poverty, Hope Grows in Haiti

Haiti Makes Real Progress

Monday, November 19, 2007

Haiti Makes Real Progress

Haiti's economy appears to be stabilizing after years of stagnation and decline.

CHRONICLE SPECIAL

FOCAL/Inter-American Dialogue

(Read the original article here.)

Haitian President René Préval says that his country no longer deserves its "failed state" stigma, and he is right. Haiti's recent progress is real and profound, but it is jeopardized by continued institutional dysfunction, including the government's inexperience in working with Parliament. There is an urgent need to create jobs, attract investment, overhaul and expand access to basic social services, and achieve tangible signs of economic recovery. Now that the United Nations has extended its peacekeeping mandate until October 2008, the international community must seek ways to expand the Haitian state's capacity to absorb development aid and improve the welfare of the population. The alternative could be dangerous backsliding.

EMERGING FROM CHAOS

Haiti is beginning to emerge from the chaos that engulfed it in recent years. This is a moment of relative stability that presents a window of opportunity for Haiti to move towards a more sustainable path of economic growth, political development, and poverty reduction. But this is also a period of fragility and continued vulnerability, and further advancement is by no means assured.

In February 2006, Haiti held its first elections in five years, which brought to power former President René Préval and restored elected rule for the first time since the ouster of Haitian President Jean-Bertrand Aristide two years earlier. Over the past eighteen months, the Haitian government, working with the United Nations and other international partners – including a core group of Latin American countries, the United States and Canada – has achieved modest but discernible progress in improving security and establishing, at least minimally, a democratic governing structure. But institutions, both public and private, are woefully weak, and there has not been significant economic advancement. Unemployment remains dangerously high and a majority of the population lives in extreme poverty. Still, Haiti should be viewed today with guarded optimism. There is a real possibility for the country to build towards a better future. (...)

EFFECTIVE LEADER

During his first year in office, President Préval, in his quiet and self-effacing way, has proven to be an effective leader. He has appointed competent ministers to critical posts, and reached across party lines to bridge Haiti's historic political polarization. Préval has forged alliances with moderate elements within Haiti's civil society, political parties, and business sectors, while holding onto support from the Haitian poor, and maintaining the backing of the international community. To date, Préval's instincts have generally been democratic and inclusive, and he has made tough choices, including the decision to confront the criminal gangs in Port-au-Prince. The government is still weak, however, and has limited capacity to set internal priorities and implement decisions and policies. The government has little evident experience in working with Parliament, and the Parliament itself remains poorly organized and under-resourced. It has not adequately contributed to the governing process. (...)

Haiti's economy appears to be stabilizing after years of stagnation and decline. Haiti achieved a GDP growth rate of more than 2 percent last year, even though per capita growth remained negative. This year the country's growth rate will be more than 4 percent – barely above the rate of population increase but a move in the right direction. The uptick has been driven by an increase in foreign aid and remittances, and new U.S. trade preferences passed last year may help to sustain it. Haiti's manufacturing sector is showing glimmers of revival. Haitian economic officials have established a favourable macroeconomic climate, cutting the inflation from above 40 percent to below 10 percent and stabilizing Haiti's currency. Despite these gains, Haiti's economy remains virtually stagnant on most fronts and plagued by widespread joblessness. Even with sustained domestic leadership, it will take many years of foreign assistance before Haiti can make its own economic way. (...)

REPUTATION LAGS PROGRESS

Haiti's substantive problems are compounded by the fact that its reputation lags behind the real progress that has been made, and discourages investment, tourism, and support for new initiatives. International rating agencies should thoroughly review and revise their data on Haiti to ensure their judgments reflect the current reality and are not grounded in information that is now outdated. (...)

Rampant unemployment is one of the 9. top challenges facing the country today. Having increased security, the government and international community must now demonstrate tangible evidence that lives are improving by focusing on jobs, investment, and infrastructure. While some job creation programs have been implemented, clearly more effort is required to generate employment that will help Haitians to take care of their basic needs and provide the basis for greater social stability. Many of Haiti's important challenges, including sanitation, waste removal, and the development of basic infrastructure, can be achieved using Haiti's vast unskilled and semi-skilled labor pool. Innovative approaches to job creation must be a top priority.

Haiti is open for business

Commentary: Haiti is open for business - Bahamas is first to knock at the door

Published on Tuesday, November 13, 2007

By Jean H Charles Caribbean Net News (Read the original article here.) The Republic of Haiti has been ostracised for the past fifty years (1957- 2007). In spite of its splendour it is not listed in the traditional brochures depicting the magic of the Caribbean. This ostracism is to the point of coming to an end. Haiti is now open for business and the Bahamas has been the first to knock at its door to transact business. Indeed, under the peaceful governance provided by the team Preval-Alexis, Haiti has been recognised as a legitimate trading partner. The Minister of Commerce and Industry Magui Durcé, who shines with a brilliant mind and an attractive look, has chosen Mr Guy Lamothe, an energetic young expert, to lead the office of the Centre for the Facilitations of Investments. (CFI) He has put together a team of young lions with the credential style of Silicon Valley professionals to guide the potential investors. I paid a surprise visit to the CFI office to test the welcome mat. I found a hospitable environment decorated with the touch of the Haitian artistry, inviting and attractive. I was surprised, though, to see the big sticker (gift of the USAID) on the computer of the receptionist. A nice honour roll on a golden plaque on the wall, mentioning that the funding of the office was facilitated by the USAID would have been a more elegant vista and more in tune with the décor. Indeed, the United States under the leadership of Paul Tuebner, the USAID Haiti Director, has been a moving force towards the creation of the office. It takes three days to register a corporation in the United States. It used to take 263 days in Haiti, with the guidance of the CFI; it takes now 30 days to register a new business in Haiti. The CFI is a public private entity funded to the scale of $250,000 per year. To reach its full zenith operation it needs a budget of US$2 million. There is still more room on the honour rolls for the other friends of Haiti to help this most important agency, the incubator of job creation for the million unemployed Haitians. Last October, a group of businessman from the Bahamas, led by the Chamber of Commerce and the former Bahamas Ambassador Dr Eugene Newry, were hosted by the CFI office and the Haitian Government. They came to Haiti to explore the business potential of the country. Using the terms of one of the members of the delegation: “one needs to go to Haiti and see for themselves…. they would get the rude awakening of the boundless of opportunities in Haiti.” Dr Newry commented further that Haiti is “a sleeping giant”. Like China some twenty years ago, Haiti represents for the Caribbean and for the rest of the world this huge manpower close to the largest market of the universe: the United States. A businessman with a good acumen should seek no further location to open his business: the Haitian worker is industrious, creative and not expensive. The President of the delegation, Dionisio D’Aguilar on his last day in Haiti said: “I can say without fear of exaggeration that the opportunities are boundless with the means and the imagination to make them happen…. The private sector in Haiti is ready to do business and the government has put its full weight and influence behind, the incentives are in place and its officials motivated to expedite business proposals.” There are certainly some drawbacks; the sound of alarm has been raised by the Deputy Prime Minister of Bahamas, Brent Symonette. He warned that Haiti has some structural deficits in infrastructure such as good roads, electricity, and telecommunication. But here again, these deficits constitute opportunities for the savvy businessman. Digicel has demonstrated that Haiti is a hot market for services. In less than two years, it has reached a market of 2 million customers. Haiti is one of the best examples that the country with its 8.5 million people at home and 1.5 million in the Diaspora, is hungry for the services that the people of the other Caribbean countries take for granted. Haiti's main export commodity has been its agricultural products. Its mangoes, the Francis brand, are the best that this world has to offer. According to a big produce wholesaler in the United States, there are two types of mangoes in the world, there are mangoes from Haiti and there are mangoes from the rest of the world. (India, eat your heart out!). The Haitian coffee, the St Marc brand has an historical reputation; it used to be mixed with coffee from other parts of the world to give them the exotic Haitian taste. The Haitian cotton is the second best after the Egyptian brand. The Haitian orange from Grand River (Bonamy) might be the most succulent in this world. In a universe, where organic is king, the Haitian soil is fertilizer free. The visit of the Bahamas Chamber of Commerce has resulted in a signed cooperation agreement with the Haitian Chamber of Commerce, extending commercial links to tourism, fisheries, construction, financial services, agriculture, technology, souvenir manufacturing, textiles and clothing. Bahamas is calling on the sister states of the Caribbean to follow its lead, as stated by Mr Lamothe, CFI Executive Director, “It is time to reinvent the traditional road of commerce that use to go directly from the Metropolis to the Colony, the islands of the Tropics must start to use the leverage of each other for the benefit of their people.” My first wish for CFI is to see the Institution upgraded to the level where it becomes the Haitian Business Development Corporation. Imagine that Digicel in knocking at the door in Haiti was received with the proposal that the Haitian Government through TELECO would become a partner of the company. The people of Haiti and the Haitian government would benefit part of the immense return enjoyed by Digicel in Haiti. It is a win-win proposal, used by Jamaica, China, Malaysia and several emerging countries. My second wish is to see that CFI becomes a broker, incubator and facilitator for the export of Haitian products (fruit and produce) towards Europe and the United States. It is a mighty feat for a young institution. Mr Guy Lamothe has already proven that he is up to the task. Indeed Haiti is open for business. The first investors will get the best deal.