Barbados Beyond Tourism

Red sky at morning…

The greatest danger in times of turbulence is not turbulence itself, but to act with yesterday’s logic.

—Peter Drucker

The COVID-19 pandemic is the worst economic turbulence that Barbados has encountered since forever, but we have become so economically reliant on our tourist industry that many people find it difficult to imagine something that can replace it. Yet replace it we must. The current pandemic may last for months, or it may last for years. Whatever its duration, it has had, and will have further devastating effects on our tourist industry. 

The most optimistic estimates predict a fall of tourism earnings by 25%… more realistic projections envision that tourism earnings will fall by 75%. It does not matter which of these predictions turns out to be closer to the truth, the unavoidable insight is that we must start to build a Barbados beyond tourism.

The Barbados Tourism Marketing Inc. (BTMI) is thinking about a “master plan” to ratchet up marketing of the island so there is a ‘seamless’ transition after the pandemic. Their self deception is almost comical. This is a textbook example of acting with yesterday’s logic. Ratcheting up marketing will do nothing except waste money while:

  • All of our key source markets will be in a deep economic depression;
  • Some of our key providers of past airlift will have gone bankrupt;
  • Airline ticket prices will be significantly more expensive because of reduced passenger volume;
  • It is unlikely that there will be COVID-19 vaccine within 18 months;
  • COVID-19 will be inevitably imported to Barbados again as soon as visitors arrive.

Please stop letting your optimism turn into such self delusion. Tourism is a dead horse. More carrots or bigger sticks will not work. We need to think beyond tourism.

To build a successful economy in Barbados post COVID-19 we will need first to build a social consensus about what defines success. The definition that appeals to me is an economy in which everyone has adequate food, water, and shelter… but also in which we are able to conserve the natural environment and an ecology of biodiversity. In order to provide adequate food for the entire population we must have local food security: the capacity to produce and distribute enough food locally to meet the nutritional needs of everyone. In order to provide adequate water we must rebuild our water distribution infrastructure and conservation culture. In order to preserve biodiversity and the environment, we must rebuild our waste management infrastructure and culture. But in order to make the required investments in water and waste management infrastructure (and for a myriad other reasons) we require an export sector which earns foreign currency.

For a small island developing state such as our own, a strategic approach to export sector development needs to exploit whatever natural competitive advantages that we have. For the sugar industry the competitive advantages were our climate and the Spanish Inquisition which drove Jews with sugar cane technology to settle here. For our tourism industry our competitive advantages were our delightful climate and our cultural history which made us hospitable and accustomed us to serving other people. You might have noticed a common element; our primary competitive advantage since 1627 has always been our climatic environment.

Our new export sectors should continue to leverage our climatic environment as a competitive advantage. This means that our investments in better waste management, environmental protection, and ecological sustainability are the most critically important. Then in those parts of our public infrastructure which preserve and protect our main competitive advantage on the global stage: our enviable social and climatic environment. This means much improved waste management culture and infrastructure:

  • a national composting program to support agriculture and reduce pressure on our landfill;
  • rebuilt sewage systems that use tertiary treatment technologies so that the effluent is potable water;
  • a national tree planting initiative that reforests significant areas of Barbados;
  • complete conversion of the national electricity grid to solar, wind, and batteries by 2030;
  • a 300% duty on ALL internal combustion engine vehicles and a 0% duty on electric vehicles (the cheapest Mercedes should cost Bd$500,000 and a Tesla Bd$120,000);
  • a national network of bicycle paths with walking paths beside them and lots of trees alongside for shade.

Let us take a look at existing examples of leveraging our climate in more productive ways than mass market tourism. Lenstec is a high tech manufacturing company making intraocular lenses for cataract and refractive surgery that has operated in Barbados for 25 years and employs 200 Bajans in jobs that are far more meaningful than making beds or waitressing. The company is headquartered in Florida and has sales offices in Europe, but their manufacturing is located here. Why? Barbados has a reasonably educated and trainable workforce, but so do dozens of other countries. Barbados has good communications linkages with the rest of the world, but so do dozens of other countries. Lenstec chose Barbados because of our climatic environment… both the physical climate and the social climate.

Gildan is a global clothing manufacturer headquartered in Canada with revenue in the billions. The company operates manufacturing facilities in Bangladesh, Haiti, Honduras and elsewhere with more than 50,000 employees— however the corporate structure and administrative hub for their printwear and branded apparel business is based in Barbados and employs hundreds of Bajans. Most of us would not envy the low wage Gildan employees in Haiti or Bangladesh, but the jobs in Barbados are in high tech administration and marketing. Why did Gildan choose Barbados? Because of our climatic environment… both the physical climate and the social climate.

Barbados definitely needs to recruit more companies like Lenstec and Gildan, but we must go further.

COVID-19 is a global crisis, and Barbados must not let this crisis go to waste. One of the profound social changes that it has catalysed is the normalisation of working from home for many technical and managerial professionals in Europe and North America. So why should these recently untethered employees continue to suffer the climate of Montreal or Chicago or Manchester when they can relocate to Barbados and continue to work from home?… just that their home is now a much nicer place to live. Come to think of it, why should the Black diaspora in the USA continue to put up with the racism of Trump and the police when they can move to Barbados and continue to work from home?

Let us build a globally competitive industry around this need. Let us build an International Resident economic sector.  Let us change hotel suites into condominium residences that we sell to programmers From Canada, the UK, Finland, USA, Estonia and elsewhere so that they can come live full time in Barbados and work remotely from here (we structure their residence visa so that their salary goes into a foreign currency account right here in Barbados).

The future of foreign exchange earnings in Barbados is not fly by night visitors, but a smaller number of people who come and make their homes here, bringing their foreign exchange incomes with them. Whether it is retired people or tech professionals who work at their metropolitan jobs from their new home. What I am proposing is to institute a brain drain.. just in the opposite direction from what we have suffered in the past. We want to poach from other countries those brains most adept at the 21st centuries most pivotal technologies.

We still want to appeal to the top end of this market… those looking for a budget experience can try Thailand or Vietnam where the cost of living is much lower. We want to have 10,000 households of working tech professionals, or recently retired ones, each bringing on average their US$150,000 incomes to Barbados. That is a 1.5 billion USD per year in foreign exchange. That is more than enough to replace our entire tourism industry.

To use our main competitive advantage— our enviable social and climatic environment— simply to host  tourists, is to act with yesterday’s logic. We should not be recruiting tourists, we should be recruiting neighbours. Tourists simply come and spend a portion of their disposable income. Neighbours bring the totality of their income. They become part of our communities, not just a sometime, fly by night thing. Neighbours bring more value than visitors… both in the narrow financial sense and because they do not distort the social fabric as much.

We will aim at upper middle class tech professionals who can either work from home, or who have just retired and want to LIVE in paradise, not just visit. We want in particular to appeal to relatively young people— those in their thirties or forties— simply because their domicile in Barbados will be potentially much longer. It’s basic business… if it costs you $x to recruit a customer, then you want to focus that $x on the customer who will be your customer for longest to maximise the return on your investment.

We want Daniel, a 33 year old computer programmer earning US$150k per year who is spending US$4k per month on a high rise apartment in Brooklyn and cannot even afford a decent condo because that costs US$1 million and it will take forever to save up the downpayment (when you are a millennial 5 years is the working definition of forever). He lives with his girlfriend Emily, 29, who is a freelance graphic artist making US$60k in a good year, less when the economy tanks. Since COVID-19 Daniel works from home completely and his employer loves it that way because they stand to be able to downsize their overpriced commercial office space overhead. So they even pay a small premium to those employees who agree to work from home. The weather sucks for almost all of the year, the bars and concerts and nightlife have all petered out with the pandemic restrictions which by this time are a year old with no clear date for a return of the city life that New York used to be famous for.

We want Daniel and Emily to come to Barbados as permanent residents and bring their US$200,000k annual income with them. They can get one of those nice condos that Tony Hoyos is building near St. Lawrence Gap for only US$500k, half the price it would cost in Brooklyn and the one here is nicer. They join a credit union and have no problem getting a mortgage because they have the proof of income. Tony introduces them to a young lawyer who helps them incorporate a Barbadian company that benefits fro the double taxation agreement that the USA has with Barbados so they now pay taxes in Barbados on their US income. And those taxes amount to only 5.5% of their income, because that income is under US$500,000. They buy health insurance from Sagicor who have configured new types of packages to cater to this market, and it costs less than what they paid for health insurance back in the USA. They are walking distance from the beach. So their standard of living goes up in every conceivable way.

Can’t you imagine the advertisements in Toronto and New York?

Young IT professional couple both working from home with their back to each other in a cramped overpriced city apartment with the snow blowing and wind raging outside all shot in grey muted colours. They are clearly getting on each others nerves. His fingers are hitting the keyboard loudly and aggressively and he’s muttering under his breath… she is rolling her eyes, adjusting her headset and shifting her laptop so that he doesn’t appear in the background on the screen of her Zoom meeting. Voiceover (sarcastically) “isn’t working from home fun?” Cut to the same couple sitting at a picnic table facing each other and smiling and flirting on a deck near the the beach in Barbados working on their laptops but now in vibrant colour… he is in board shorts but wearing a shirt and tie so he looks good in his online meetings, she is a bikini bottom but with a lovely blouse to give the same impression. Voiceover (with enthusiasm) “well it is here in Barbados.” Then comparisons or sunshine hours, ambient temperatures, tax rates and other criteria which make it sound crazy not to choose Barbados.

This is the face of Barbados’s new US$1.5 billion International Resident economic sector.

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