Haiti, the land of opportunity - An interview with Philippe Saint-Cyr Executive Director of American Chamber of Commerce, Haiti

  • Posted by Marina Vatav
  • September 3, 2012 3:19 PM EDT

What are some of the main investments going on in Haiti right now?

A lot of investments are happening today in the North of Haiti with the upgrade of the Cap-Haitian airport. It's a 66 million dollar project that is being financed by a Venezuelan Development Bank. The runway is scheduled to be completed by October of this year, where Boeing 737s will be able to land instead of propeller planes. Although the airport already serves international flights to Turks & Caicos, Cuba, and smaller planes out of Fort Lauderdale, it will be considered an international airport when Boeing 737s can land, which will increase passenger traffic at the airport. This will be a boost to tourism and it will facilitate business travelers to conduct business in the North.

In addition, there's an upgrade to the port of Cap-Haitian of about 35 million dollars. The construction of the Port in Fort Liberté is another project that is going up for bids this year and will cost over 100 million dollars.

These two ports will play a key role in opening up trade in the North of Haiti, and facilitate investments made in the Caracol Industrial Park in the North-east of Haiti. The Caracol Park is financed by the US government and the IDB; it will be the largest industrial park in the Caribbean, which will employ 65,000 people over the next 5 years. Another significant investment in the North is the CODEVI Industrial Park built by Dominican investors 7 years ago in Ouanaminthe. The owners are looking to build additional factories for lease.

The North is going for an extension that should have significant impact on Haiti's GDP growth over the next five years. This does not take into account the construction of hotels in Port-au-Prince. A hotel under the Best Western brand name will open by the end of the year. The Royal Oasis by Occidental Hotels & Resorts is almost completed and will open by the end of the year as well. El Rancho, Kinam and Karibe Hotels are increasing their room capacity.

In addition, commercial real estate development is on the rebound in the Petion-Ville area. Some investments have been made in the Delmas area where a 10 to 12 story building will be built with financing from Sogebank. This does not take into account reconstruction of schools, low-income housing, churches, and government buildings that will be rebuilt in the downtown area.

What is the government mostly investing in when it comes to development and reconstruction?

The government has spent a lot of energy trying to come up with a free education program for low-income people, as well as a food program and healthcare program similar to Medicaid. The government initiated a healthcare program for about 2,000 people to assess the cost of providing care in Haiti before expanding the program to more people.

The airport in Port-au-Prince is in its final stages of renovation, which should be completed within the next two months. The port of Port-au-Prince will have a new dock built and the construction project will go up for bids; the project cost will exceed 40 million dollars. The Haitian Government has resettled many people that were living in tents in public parks following the earthquake. About 400,000 people still live in tents and the goal is to decrease that number by about 25% within the next couple of months. The education program for children began last year, as well as a food program. As far as infrastructure is concerned, the Haitian government, assisted by the World Bank, the IDB, USAID and the EU, is financing several projects in the South, the North, Port-au-Prince, and in the Center of Haiti.

Many people are getting impatient and think that the progress in Haiti is taking too long. What are your thoughts?

This depends on what progress is. Everyone wants to see results, but we are talking about a country that was not stable for the past two decades, going through several natural disasters, and topped by the 2010 earthquake.

The multilateral institutions work independently and are competing for projects. In addition, the Haitian government has to approve companies that win bids of projects that will be financed by the multilaterals. Such a scenario does not get projects moving quickly. There was also the issue of wasted money from donors in the past, therefore, steps were taken to eliminate aid money going to foreign bank accounts that lengthened the amount of time for funds to be approved and disbursed.

What is your perception in terms of the current business environment in Haiti?

The business environment in Haiti is improving from what it was under the previous administration, but a lot of work has to be done such as the amount of time it takes to register companies, and better transparency is required on the process. The government is working on a digital process that will link different ministries involved in the registration of companies. Several companies that waited for months to get registered finally had their files resolved. There are other companies that still have their files pending, but the process has started to improve on doing business in Haiti. The cost is still high in comparison to the percentage of GDP per capita, but the government is trying to improve on other facets of the business environment. We will see the benefits over the next couple of years, which will demonstrate to investors that they can conduct business in Haiti.

Two large mergers occurred earlier this year: 1) the acquisition of Brana by Heineken (note: Heineken, one of the biggest breweries in the world, late last year increased its stake in Brasserie Nationale d'Haiti  "Brana", the leading brewer in Haiti, from 22 per cent to 95 per cent.), and 2) Digicel took over Voila, the second largest cellular company in Haiti, to take a commanding lead in the market share of cellular subscribers at over 80%. These acquisitions demonstrate the long-term strategy of the investors (Heineken and Digicel) for Haiti. Heineken sold their holding in the Dominican Republic, and is now focusing on increasing sales of Brana’s flagship brand, “Prestige”.

Digicel made significant investments over the past 5 years in Haiti. They dominate the cell phone market, and are now looking to diversify into providing Internet service with the acquisition of ACN, an ISP in Haiti.

Haiti is the most populous country in the CARICOM (Caribbean Community). Several companies in the Caribbean islands are looking to expand to Haiti; they see opportunity. Ten million people (Haiti’s population) with projected 10% annual GDP growth, on average, over the next 10 years is enticing to many companies in the region. The industrial parks in the North employing 20% or 30% of the population in the Northern region, will have a solid impact on job and wealth creation in the North over the next five years. This is great for Haiti, and a lot of companies will have to adjust to the “Caracol effect”. They will have to come up with more of a national or regional approach, and not just a “Port-au-Prince approach” when it comes to doing business.

What are some of the opportunities that American companies can seize in Haiti? Are they similar to the ones that the Caribbean countries are noticing, or do they have a different vision?

The opportunities are great in tourism, given the lack of investment and development over the past 30 years. Tourism in Haiti has focused solely on ownership of hotels, but the tourism sector includes shops, restaurants, bars, museums, clubs, and casinos that are nonexistent by the beach.

Agribusiness shows a lot of promise since it is more of an informal sector, except for a couple of products such as coffee and mango. Seventy five percent of Haitian export is textile, and with commodity prices increasing, Haitian companies should position themselves to benefit from the surging prices, such as in corn and chocolate.

Construction is another sector with a lot of promise given the demand for housing, infrastructure, schools, and commercial real estate. Commercial real estate is very expensive with office space in Petion-Ville ranging from $4,000 to $6,000 US a month. There aren’t any shopping malls in Haiti and no movie theaters.

What are the main objectives of AMCHAM in Haiti?

We have one objective, which is to promote US investors to come into Haiti and to help Haitian firms export and sell goods to the US. All of the AMCHAMs around the world have the same objective: Promoting the trade between the US and the local country.

With all the investments in different ports in Haiti, the country will become more attractive for manufacturing, but will also facilitate exporters to ship goods overseas.

What are some of the main challenges that companies are facing in Haiti right now?

The cost of energy, human resources, the traffic, technology, and a weak legal system are some of the main challenges, but they represent regular challenges that other companies face in other emerging market countries.

Haiti has seen an increase in energy delivery in Port-au-Prince following a new Public Private Partnership with E-Power, which is distributing energy to the Haitian Energy company: Electricite d’Etat d’Haiti (EDH). Companies here have figured out how to overcome the challenges of energy, telecommunications, land, human resources; they have adapted to doing business here that does eat away at profit margins.

You mentioned technology and traffic as some of the challenges. Can you expand on that?

Challenge in technology as far as Internet service being down because of the bad weather. Without Internet ATMs do not work, banks in provinces can’t access the main database to check funds available for customers, VoIP phones don’t work, etc. The companies have to adjust and must have backup Internet connection, similar to companies in rural America. The traffic is an issue since there are no highways in Haiti, and the amount of cars imported on the island since the 90s have made traffic an issue in Port-au-Prince.

Recently I had a conversation with businessman Jean Orelien who mentioned that aid is not a solution to poverty in Haiti, and that too much aid can even be detrimental to economic growth. What are your thoughts on this?

Aid has never developed any country, especially if we look at countries that have graduated from Emerging Market status such as Taiwan, South Korea, Singapore, and soon Brazil. Though all these countries received aid, foreign direct investment (FDI), stable government, and sound long-term policies transformed these countries and their population. The issue with Haiti is that most projects are financed 100% by multilaterals and bilateral. That is not healthy.

The Martelly/Lamothe administration has realized that and is looking to tackle this issue on several fronts with changes in the Cabinet, passing new laws, more incentives, and increasing the confidence of the private sector. As the country remains more stable, foreign companies will invest and compete with local companies, which will have to adjust on providing better products, better service, and better pricing.

Haiti will still receive “aid” from the US and the EU, but it will not be the main catalyst for growth, only FDI will. Now the country will have to abide by the rules to attract FDI, and for FDI to surpass remittances. Many NGOs are leaving the country given that the situation has shifted from Emergency to Reconstruction.

The private sector, initially, might be hesitant of foreign companies coming into Haiti, but the game has changed. And some in the private sector are keen to see investments enter the country and creating partnerships thanks to successful joint ventures in Turks & Caicos, Dominican Republic, US, and other Latin American countries.