Stepping Out

Business leaders and government officials say the pending change in Curaçao’s political status will dramatically boost the island’s stagnant economy by eliminating unnecessary layers of bureaucracy and encouraging foreign investment. “The wind is blowing the right way. Everything will change,” says Gerrit F. Schotte, Curaçao’s minister of economic affairs and tourism.

He hopes that within a few years, Curaçao’s $2 billion economy will be growing at 3-5% annually, up from the current 0.2%. “What we currently have is the central government and the Curaçao island government,” explains Schotte. “But it’s not a country, just a total of five islands that together visualize a country called the Netherlands Antilles. Three of the islands [Saba, St. Eustatius and St. Maarten] live in another world compared to the two islands [Curaçao and Bonaire] down here.”

Last April, Curaçao had a referendum in which 68% of voters elected “status aparte” – following in the footsteps of nearby Aruba, which bailed out of the Netherlands Antilles confederation in 1986 and has never looked back. Under status aparte, Curaçao’s 130,000 inhabitants will retain their Dutch citizenship but will no longer have to answer to the Netherlands Antilles central government, which happens to be headquartered in Curaçao’s capital city, Willemstad.

Neither will the other four islands remaining in the confederation – effectively spelling the end of the Netherlands Antilles after more than half a century of existence. “At the time, it made sense for the Dutch government not to deal with six islands and six prime ministers,” says Schotte, who is also chairman of the
Curaçao Development Corp. “But now, everybody’s had their referendum. Bonaire, Saba and St. Eustatius will become overseas counties of Holland, and St. Maarten will get status aparte, like us.” 

Curaçao hopes to emulate Aruba, whose tourism industry took off once that island was on its own and was able to promote itself internationally. “Unlike Aruba, you will never find Curaçao on the Internet because we are not a country. We don’t have our own identity,” Schotte complains. “We cannot affiliate ourselves with [the Caribbean Community] Caricom, for example, because we’re not a country. And if we do, it’s as the Netherlands Antilles.”

Fueling Change
One of Curaçao’s most important industries is oil refining. According to Herbert Mensche, managing director of state-owned Refineria di Korasau NV, Curaçao’s refinery has a crude distillation capacity of 320,000 barrels a day and conversion capacity of 230,000 b/d. Its refinery is among the largest in the Caribbean, contributing 5-6% of Curaçao’s $2 billion annual GDP. Curaçao currently leases the refinery to Venezuela’s state-owned PDVSA for $14 million a year under a contract that expires in 2019. Mensche says the refinery has around 1,000 full-time workers and employs another 450 to 500 contract workers.

The government is also promoting its two free zones, one located at the airport, the other at Curaçao’s harbor. Ramon Chong, a top official with the island’s ministry of economic affairs, says Curaçao recently lured a Canadian-based pharmaceutical company that fills prescriptions and ships them out same-day to its US customers. “We don’t need hundreds of millions of dollars. We are targeting medium-sized companies, getting each of them to invest $20-25 million, primarily for the airport free zone,” he explains. “We also have seven e-zones – two for goods and five for services like sports betting and reverse auctions – where at least 90% of production must be exported outside Curaçao.”

Prepare for Landing
In late July, Curaçao inaugurated a $44 million international airport that boasts, among other things, one of the longest runways in the Caribbean. The new 12,000-square-meter passenger terminal – a bright and airy structure that emulates traditional Dutch architectural styles and is painted in cheerful, pastel colors – is designed to handle 1.6 million passengers a year, up from the current 1.1 million at the existing terminal.

“We’ve designed the building to have a Caribbean and a particularly Curaçao feel to it,” says Walter Abernathy, CEO of Curaçao Airport Partners (CAP), the consortium that runs the new facility. CAP is 51% owned by the Alterra consortium, 10% by local construction firm Janssen de Jong NV and 39% by Venezuela’s Trim-Invest Ltd. Alterra – itself owned by Bechtel Holdings and Singapore Changi Airport – is also involved in managing the new international airport passenger terminal in Lima, Peru.

Curaçao’s new airport terminal gives passengers 25% more processing space than before, room for four X-ray baggage scanning units, twice as much adjacent check-in support office space, 65% more room for arriving passport control, a new area for departing passport control, four passenger loading bridges and 50% more room for parking. CAP began operations in Curaçao in August 2003 under a 30-year concession that foresees passenger traffic growing to 2.5 million a year by 2033.

The consortium employs 156 people and is already making money, but not much. “We’re not as profitable as we expected to be,” Abernathy admits. “When we took over, the locally based Dutch Caribbean Airlines had 65% of the airport’s total capacity. When that airline, which was government-owned, went into bankuptcy, we lost a tremendous part of our business.”

Before taking over the airport, CAP made a series of forecasts to project its financing needs. In its models, the consortium considered that should Dutch Caribbean Airlines go bust, it would take at least four years to recover. In reality, it only took a year and a half to get back. “We know we’ll go through some rough periods, but in the end, we’ll be better off because it won’t be a protected market,” Abernathy predicts.

Curaçao’s new airport terminal boasts more than a dozen duty-free shops, including Costa Rica’s Cafe Britt, electronics retailer Omni and Colombian Emeralds International. There’s also the 5 Star Sports Bar – the only space in the entire terminal where smoking will be allowed.

At present, the largest of the 14 carriers flying in and out of Curaçao is KLM Royal Dutch Airlines, though Abernathy says that will change once Dutch Antilles Express relocates from Bonaire to Curaçao. “We’ve also got new service planned by several airlines,” he says, noting that Martinair is starting service in October with two flights a week to Amsterdam. KLM already offers daily flights to Amsterdam, while low-cost Dutch carrier ArkeFly goes there three times a week. In addition, American Airlines offers two daily flights to Miami, and American Eagle three flights a week to San Juan.

“We work very closely with the Curaçao Tourist Board, and we have a coordinated air route marketing strategy that assumes 3,000 new hotel rooms coming on board in the next two to three years,” Abernathy says. “We are marketing specifically to the areas we think we need to serve: Europe, the Caribbean and the United States.”

One of the most ambitious tourism projects to date is the Renaissance Curaçao Resort & Casino, a 240-room property located in Willemstad’s historic Rif Fort. The $86 million hotel, which will target US tourists, features imported Egyptian palm trees, a 1,600-square-meter casino and architecture designed to blend in with the decor of colonial Willemstad.

“Curaçao is a very unique island,” says Ron Elferink, the local representative of Aruba-based MetaCorp, which will own the Renaissance. “I’ve been fortunate to travel around the world, and Curaçao has many private beach areas, natural beauty and a historic city with lots of culture. That’s very unique for such a small place.” Elferink says the hotel will employ 350 people and pump 21 million guilders ($11.8 million) a year into the local economy. “We’re not getting any subsidies from the government. This is the only project on the island that’s ever been constructed without subsidies,” he explains. “We will attempt to employ as many local people as possible. If we cannot find the right people on the island, we will have to look elsewhere.”

Chong concedes that with nearly a dozen hotel projects underway – the Hyatt, Marriott and Wyndham chains are also coming to Curaçao, in addition to Renaissance – the economy will soon be booming, and that Curaçao may not be ready for it. The prosperous island has already attracted 10,000 to 15,000 illegal workers – mainly Colombians but also immigrants from Venezuela, Jamaica, Grenada, Haiti and the Dominican Republic – to its shores. Chong says the government estimates that by 2008, it will have a labor shortage. Still, the country would rather not resort to imported labor.

In the meantime, the local government has budgeted 7.3 million guilders ($4 million) for a program to teach residents how to treat tourists. “We need to prepare the Curaçao population for an influx of tourists,” Chong says. “People need to have a positive attitude toward them. They shouldn’t see tourists as intruders. They should welcome them, and that requires a change in attitude.” LF