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Excerpt: How to improve our business climate? The Aruban business community on good economic policies

ProfdeVries

Governmental policy to stimulate business and economic growth is crucial to any country, including Aruba. Whether such policy is effective, depends on how this is measured. According to the International Monetary Fund (IMF), Aruba is not doing very well economically; at least not as far as its real GDP is concerned. The problem is not a lack of competitiveness in the tourism sector but a decrease in total production and a decrease in labor force holds a challenge when attempting to maintain a reasonable economic growth.

According to these international organisations, Aruba is in dire need of an effective economic and financial policy. Which is the direct motive leading to this survey, requested by the Aruba Chamber to Prof. dr. Michiel de Vries of Radboud University Nijmegen and the University of Aruba, to do a survey on the opinion of Aruban entrepreneurs on economic policies in Aruba.

The survey
• Survey among Aruban entrepreneurs in April, 2014
• 220 entrepreneurs filled out the questionnaire
• Their businesses established in all of Aruba; 40% in Oranjestad
• Sole proprietorships are 34%
• 28.5% has a business with 1-5 employees
• 19.2% has a business with 5-15 employees
• 18.3% has a business with more than 15 employees
• 52% of businesses participating exist less than 10 years
• 21% has a business in Aruba, for between one and two decades
• 27% exist longer than 20 years

The questionnaire consisted of three parts.
1. A number of closed-ended questions were posed, respondents gave their opinions, based on a 1-10 scale.
    • On 7 policy measures by previous cabinet (2009-2013)
    • On 7 proposed policies by current cabinet (2013-2014)
    • On innovations in economic policies abroad
2. Two open-ended questions.
    • On possible improvements in acquiring a business establishment license
3. A couple of questions on the nature of businesses.

Results
Entrepreneurs are not dissatisfied, but neither enthusiastic about economic policy in Aruba
– They consider measures taken by the previous cabinet (2009-2013) rather poor
– They evaluate propsed measures by current cabinet rather fair
– They favor more, economic policies as implemented abroad

Opinions on measures already implemented
Table 1 shows the respondents are not enthusiastic about the measures taken, but neither are they very negative. With average marks between 5.0 and 6.1, the entrepreneurs do not tell about an excellent, but neither about an abominable policy.

table 1

The most effective measure in the respondents’ view is “2% import duties on “green products”, with an average of 6.14. The promotion of Aruba as a gateway is seen as a policy with little effectiveness (scoring a 5.06).

Opinions on proposed policy measures
Here the respondents have a more favorable opinion, table 2. Specifically the development of a multi-cargo terminal, the belt road through Oranjestad, and the modernization of the Freezone may count on their support. A “Green zone at Eagle” (near TNO) did not score as positive.

table 2

Opinion on economic policy implemented abroad
Table 3 shows the opinion of the respondents on innovations taking place abroad.

table 3

It shows the Aruban entrepreneurs to be very much in favor of the innovative ideas being implemented abroad, with regard to economic policies. Practically all measures mentioned in table 3 find support among the respondents.

Remarkably, the most preferred policy measure is based on procedures. They prefer to have a better relationship with the government, and expressed this in their scoring of economic policies. Their highest score was to have an “ombudsman”, a government official appointed to receive and investigate complaints made by individuals against public officials, and to help settle them.

The second policy instrument, of which the respondents were in favor, is the granting of tax incentives to businesses that apply innovations. Both the OECD and the World Bank see this as very effective for stimulation of economic growth.

Mutatis mutandis -changing (only) those things which need to be changed- third policy in favor of the respondents is the granting of tax incentives for Corporate Social Responsibility. And the next item which was in favor of the majority is the promotion of e-government. Make public administration simple and transparent. Apply ICT to enable businesses to ask questions simply and fast, easily accessible through websites, and case-tracking information on processes related to a petition or request. Important is that it is available at all times, and personal assistance, through interviews and telephones plays a complementary role.

Policy proposals regarding business license
• 38% of respondents would like to see the speed at which the business license petitions are handled, increased.
• 38% are in favor of transparency of process.
• 21% considers in first place, fewer rules, and if rules need to be, enforced and with proper supervision.

Proposed improvements on existing measures
• Choose between either submittal petition by the Chamber of Commerce, or abolishing advisor role of the Chamber and only notifying Chamber on issued business licenses. Currently entrepreneurs feel thrown back and forth between the Chamber and the Department of Economic Affairs, which according to the entrepreneur takes too long and offers little transparency regarding the status of the process.

• Drastic automation of the process of granting business license, with one point of contact, a one-stop-shop. This too, would enhance transparency, as well as speed in handling the process. An online case-tracking would be much appreciated here.

• Change the criteria of assessment for granting business license. They want more consideration of the nature of the business and competitiveness, rather than focusing on who the petitioner is, as a person.
Also, the respondants favor the abolishment of the obligation to publish a request, and abolish the request for a business license for sole proprietorships, or at least drastically simplify this last process.

• Entrepreneurs would like to see public officers who assess the business license petitions to think more along with petitioners, instead of just focusing on the formality of the criteria. A more business oriented way of rendering service, less obstacles and, as many entrepreneurs say, less political involvement.

Analysis and conclusions
This study illustrates the way the Aruban business sector judges the economic policies of the Aruban government, and their suggestions on improvements hereof.
• Entrepreneurs are not really negative about economic policies, neither are they enthusiastic about it.

• Same goes for proposed measures of current cabinet, eventhough that they are somewhat more positive about these.

• They are clearly less enthusiastic on the promotion of Aruba as a ‘Gateway’ between Latin America and Europe, the introduction of an economic zone in San Nicolas with fiscal incentives, the proposed package of fiscal incentives, a.o. expat arrangement and the establishment of a Green Zone at Eagle.

• Many entrepreneurs state “it could be a lot better’. The adoption of ‘best practices’ from abroad is an example, and would be appreciated by entrepreneurs.

• They consider even more desirable: a structural change in relationship between government and entrepreneur. Crucial is the promotion of e-government, the introduction of an Ombudsman, striving toward a more ‘entrepreneurial’ public officer, government stimulating innovation and sustainability, and government that makes the process of handling, and of simplifying the process of granting licenses, quicker.

 

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