Dec. 10, 2002 – It is time for the V.I. government and Virgin Islanders to step up to the plate and do what it is going to take to support the Economic Development Authority in its efforts to bring investors to the territory, Frank Schulterbrandt, chief executive officer of the EDA, said on Tuesday.
Speaking at a luncheon meeting of the Advertising Club of the Virgin Islands on St. Thomas, Schulterbrandt said it is imperative that the private and public sectors cooperate to make the territory a place where investors would want to live. That, he said, is because residency is a requirement for acceptance into the Economic Development Commission's tax-benefits program.
"We are not a tax haven," he said. And if the Virgin Islands comes to be thought of in such terms, he said, "the IRS is going to show up."
The territory also must meet the challenges of offering investors a good quality of life — which includes safety, a good education system, reasonable real estate prices and good "connectivity," Schulterbrandt said. "If you make the people of the V.I. safe, then everyone will be safe," he added.
Schulterbrandt's address was part of the Ad Club's Professional Series of luncheon programs. He was asked to speak about what the Virgin Islands needs to do and is doing to market itself to business investors.
He said the biggest marketing job is internal. "It is difficult to market the V.I.," he said. "You have to deal with the internal problems." These, he said, include crime, a reputation for not being business friendly and challenges in education, among other things.
He also said the perception that the Virgin Islands is only a tourist destination must be changed.
But even where being a tourist destination is an investor attraction, he said, the lack of a comprehensive land and water use plan is driving potential resort developers away from the territory.
"I am very sensitive to the environment, " he said. "The V.I. has one of the most undeveloped shorelines in the world. I am proud of that."
But he said the territory has to find a balance between conservation and progress. When roadblocks to development in the form of rancorous public hearings appear, "they just leave," he said of would-be resort investors.
Another hindrance, he said, is the territory's notorious bureaucratic red tape. He said a task force made up of Licensing and Consumer Affairs, Internal Revenue Bureau, and Planning and Natural Resources representatives has been formed to find ways speed up the licensing and permitting processes.
Competition for new investors is fierce, Schulterbrandt said.
Many of the 51 new applications for EDC benefits reviewed this year were for financial services companies, he said. The Bahamas and Bermuda have lured many of those types of companies to their shores, he said, and others have chosen other international destinations.
"We don't need any competition," Schulterbrandt said. "We implode on ourselves."
Financial services and light manufacturing enterprises top the list of desirable investors, he said.
EDC beneficiaries can receive up to a 90 percent break on income taxes and a 100 percent break on commercial property, excise and gross receipts taxes; and a reduction from 6 percent ro 1 percent on import duty.
Schulterbrandt said a careful cost-benefit analysis is done on each beneficiary. "We're not giving away the house for a tree in the yard," he said.
To qualify for tax breaks, a company must invest at least $100,000, hire at least 10 employees — 80 percent of whom must be V.I. residents, and make agreed-upon contributions to not-for-profit groups. "Some are giving up to $250,000 a year," Schulterbrandt said.
Armed with a new advertising and marketing program with "Can you imagine?" as its theme, Schulterbrandt said he has been meeting with potential investors in the States as well as throughout the Caribbean, touting the advantages of setting up business in the USVI.
Some of the advantages being promoted, he said, are that the Virgin Islands:
– is under the American flag.
– uses U.S. currency.
– is English speaking.
– has good connectivity, especially with Global Crossing on St. Croix.
With all of that, Schulterbrandt said, some investors are simply looking for beautiful surroundings, of which the Virgin Islands has plenty. With the Anti-litter and Beautification Commission doing a good job of "at least keeping the islands clean," the territory can be an attractive place for investors, he said.
The Ad Club's Professional Series was established to provide educational, informative and entertaining programs pertinent to the interests of its members and those of the wider business community of the Virgin Islands. The series is sponsored by Sapphire Beach Resort.
Tuesday's luncheon was held at The Pointe at Villa Olga in Frenchtown.
Schulterbrandt was to make a similar presentation on Wednesday at a St. Croix Ad Club luncheon at the Caravelle Hotel in Christiansted.
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