Margarita as the El Dorado of golden years of tourism

In tourism, as in so many other activities, the correct identification of a market segment and the true specialization in attending to this market is of utmost importance. One prime example of this is Playa El Yaque in Margarita. With the help of Mother Nature, this site was identified as a prime spot to develop one particular market, windsurfing. While the rest of the island’s generic tourism sector, which only with a few exceptions lacks any character at all, is suffering through a severe recession, entrepreneurs and hotel operators in Playa El Yaque have found the going much smoother.

I am convinced that one of the principle challenges of our society today is that of creating new and productive jobs for our younger generations, by choosing the right productive sector and designing strategies that will allow us to develop and take advantage of our competitive advantages. 

For Margarita, the industry of rendering services for the elderly presents an interesting option. Whether in tourism, recreation or general care, those living through their "golden years" demand so many services that they represent a real El Dorado, in terms of job creation.

What can Margarita do to explore and capitalize on this opportunity in the name of Venezuela? A lot, I think. Margarita has the people, has good communications and has the perfect natural setting, with calm beaches, absence of hurricanes and a minimum of 280 days of sun per year. Additionally it has the Centro Medico Nueva Esparta (CMNE) and that in my opinion is the ideal place to use as a flagship for the promotion of this new sector.

The CMNE is a hospital with modern and impressive installations located on a hill in La Asuncion, near the Castillo of Santa Rosa. The property currently belongs to Fogade who must soon define what the infrastructure will be used for and who will ultimately own it.

Should CMNE with the help of specialized firms and universities, both foreign and local, be able to truly specialize in the care of the elderly, including medical services, equipment, development of post-graduate courses, nursing schools, recreation and other activities and necessities, I suspect that local authorities will have a very powerful tool with which to attract the required international investment, technology and know-how.

In this respect the value of CMNE would also increase if an annex originally designed to be a Spa was to be finished, thereby making more specialized rooms available. For this purpose perhaps one could use financing packages put together by multilateral agencies and that I believe are already earmarked for tourism infrastructure. 

Nothing I have proposed in this article has been said with the intention of suggesting that the other hospitals and clinics on the island of Margarita are not capable of offering similar or better service than the CMNE. Also none of the above implies that CMNE, "photographed" from another angle, cannot continue to provide valuable support, as an excellent general hospital, to local and international tourists and, of course, to the local population as a whole.

Although CMNE could signify in itself a powerful tool in developing the sector, it is no less true that other institutional efforts are required. One of the peculiarities of tourism for the elderly is that it should not be adventure tourism and requires above average confidence in the quality of the services rendered. One should therefore contemplate the creation of a Regulatory Board with sufficient authority to oversee and intervene in matters of tariffs and quality of the services offered.

If Margarita were to have a CMNE specialized in tending to the elderly as well as a dedicated and qualified Regulatory Board, there would be many opportunities for projects that today are outright impossible without a minimum of institutional support. In my particular case, for example, due to my close connections with Nordic countries, I could very well be interested in developing a small resort designed to cater to the elderly of this particular market, including specialized baths, few stair cases or physical obstacles, nearby flowered areas, etc. 

The island’s Governor, Irene Saez, is without discussion a person with many of the qualifications necessary to take over the vital role of Ambassador of the Island of Margarita to the world. It would be a great shame to miss this opportunity simply because we have not provided the necessary tools that would enable us to be truly competitive in an increasingly complicated market.

How I would like to see IRENE take a flashy promotional video on her next trip abroad, packed with images that show how we have successfully joined forces to make Margarita the world’s foremost place to spend some of those golden years... [and among these, some images of the renamed Hospital SANTA ROSA.]

http://alborotandoturismo.blogspot.com/1999/05/margarita-el-dorador-del-turismo-de-los.html

Forget the market for a while

The financial markets are continually boasting about having the best information available. They are right, but this continuous improvement in their capability to disseminate information comes at the cost of too much data too quickly. This results in an increased sense of the short term and no long-term vision.

It is only this that could possibly explain why today’s financial markets would impose interest rates on a country’s foreign debt that are so high that they can only be justified by the premise that the corresponding debt is to be repaid immediately and all at once. This is the case of Venezuela, a country with relatively little external debt.

This particular problem of dis-information in an era of information has resulted in an increasing volatility of the short-term capital market. This in turn has caused financial crises in many of the emerging markets and is being closely studied by many of the world’s monetary authorities.

In an article titled The Reform of International Financial Architecture published in Madrid’s newspaper ABC, Robert Rubin, former Secretary of the Treasury of the United States, recognizes the market’s basic responsibility, declaring that he is convinced about the need for government intervention in order to insure a better-market performance.

Mr. Rubin states that it continues to be necessary to solve the shortfalls in the risk valuation that have contributed to the worsening of the recent crisis and suggests that intervention should be made in the form of better international directives (i.e., the Basel Committee) which would increase dependency on long term loans instead of short-term financing. This type of intervention seems to me to be rather timid.

As a citizen of a country that due to internal and external causes finds itself in a bit of a mess, I wish to take advantage of the appointment of Mr. Lawrence Summers as new Secretary of the Treasury to ask him be more proactive.

For example, we would advance in leaps and bounds towards Mr. Rubin’s objectives should the United States guarantee the underwriting of a Venezuelan debt issue for US$ 25 billion with 30 year maturities with which Venezuela would repay all current debt that carries shorter maturities, which would make Venezuela one of the most solvent debtors in the world, which would make its debt instruments among the most attractive in international markets, which would insure that these could be placed at reasonable rates, which would allow the United States to free itself of any and all obligations thus obtained in a matter of minutes or hours.

Impossible, you say? Today, a firm that sells books, with no major asset base, and without immediate prospects of turning a profit is valued by the capital markets at US$ 30 billion, based primarily on its presence on the glamorous Internet. I simply cannot believe that the United States and Venezuela together cannot jointly put together an operation and negotiate the appropriate guarantees so that all parties come out smelling like roses.

I think that the majority of the authorities, government officials, professionals and individuals like Rubin, Summers and, modestly, myself, respect the free-market forces and system but also believe that it is sometimes necessary to promote government intervention. Where we may differ is in how this intervention should be enacted and how these two agents, market and government, should interact.

For example, over the last decades, the perception has been that a country like Venezuela should be very attuned to the requirements of a sophisticated financial international market. Attaining this markets approval would theoretically ensure that this country is on the right road to development and prosperity.

I believe this has been exaggerated. A country like Venezuela, which banks basically on one exportable product, has certain internal advantages and strategic strengths. There is no reason why this country should bow to market forces. It has the right, and even the duty, to develop other options to ensure development that don’t necessarily include the markets.

Perhaps our problem today is not Venezuela’s external debt per se, perhaps our problem is the market. Faced with this reality, let us go out and negotiate options, government to government. This does not have to include subsidies or hand-outs. These options can very well be developed in an economically more reasonable atmosphere than that present in today’s market.

Not much added value to the value added tax on Margarita Island

If there is anything that has to do with economics that has been proven with absolute clarity over the last few decades is the unsurpassable capacity of the Venezuelan State to misspend its resources. In this sense, an recipe for getting ourselves out of this inherited economic disaster that begins with the transfer of additional resources to the government is utterly incomprehensible to me, and I am a fierce enemy of all new taxation, even more so when we are talking about the Value Added Tax (IVA) that does not provide even the slightest redistribution of income.

However, in the case of the Island of Margarita, I refuse to spend much of my energy in protesting the recently decreed VAT. My reasons? As the say in local argot, what’s one more stripe for a tiger?

In Venezuela today, tourism is the only sector that promises the potential of creating so many externally competitive and productive jobs. The Dominican Republic’s income from tourism during last year was in the neighborhood of US$ 2.5 billion. There is no question that today we should be rallying the entire country around a National Plan for Tourism, centered principally in Margarita.

But no! In September of last year, instead of investing in a submarine cable to Margarita from the mainland so as to be able to supply the island with cheap energy (a public service of utmost importance to tourism), the latter divested in tourism when it blithely sent the US$ 60 million obtained from the privatization of its power company to the National Treasury. Margarita’s hotels often spend more for power than they do in covering its payroll.

A real plan to promote tourism on the island would focus everyone on finding solutions for getting water to the island’s population and hotels cheaply and securely. This could, for example, be done either by installing a new pipeline under the sea from the mainland financed by multilateral entities or by offering to supply free or cheap gas which would permit the fueling of desalination plants that would not be ruinously expensive. Today, all we see are plans to install gas lines so as to be able to sell gas to the island at international prices.

Anyone that had a real interest in promoting tourism on Margarita would not allow the Bolivar to overvalue to the point that the only tourism promoted is the international tourism of Venezuelans.

Anyone that had a real interest in promoting tourism on Margarita would have offered fuel at marginal cost to all international flights that come from more that 1,000 kilometers away, that carry 100 tourists that will stay for over one week. In Europe, for every 100 units paid for gasoline by the consumer, only 10 goes to the producer of the same. I am sure that each barrel “given as a gift to tourism” would be economically more beneficial to the country than its direct sale.

More investment in Margarita would create more jobs. Instead, mediocre advisors recommend the application of the VAT for Margarita in the name of anti-national national solidarity and based on minor issues that only promote equality downwards. Even some representatives of the private sector applaud the application of another tax.

But all is not lost. On this marvelous island, where the ingenuity and genes of its native and assimilated population are put to work full time to confront all this adversity with spunk and elan, new promotional strategies are being designed and produced on a daily basis.

We are all aware of the fiscal pressures imposed on the European tourist at home. A new attraction is now being developed in Margarita; a new variant of adventure tourism called Fiscal Tourism.

Today, thanks to the VAT, Margarita can offer the European Tourist the tropical and liberating experience of being able to participate in tax evasion. Very soon, merchants on Margarita will offer Evasion Receipts, which will most surely be souvenirs, competing directly with any of the dried and lacquered fish sold at any souvenir shop in the Caribbean. 

Local groups are studying the possibility of raffling a citation by the SENIAT among every 5,000 tourists. It must be exciting for any German from Stuttgart to be able to frame and hang this citation from the tax authorities. This is much better than trophies such as the head of an African antelope no matter how wide its horns may be.

For Heaven’s sake, let us create some added value on the island before we think of taxing it!

All bureaucrats should be created equal

In the second volume of his autobiography titled “The Invisible Writing”, the European intellectual Arthur Koestler (1905-1983) writes about the time during the early thirties when a primitive town, in the area of Pamir in the south of Central Asia, received the visit of a Russian patrol unit mounted on bicycles. The local folk ran away in total terror. During their lives they had seen many airplanes, but never a bicycle. The planes were seen to be simple machines and so they seemed quite normal. However, the fact that a person could glide along on two wheels without touching the ground could only be explained by the intervention of Satan himself.

Thirty years have gone by since I read about this incident which I believe illustrates in a curious way a less than harmonious development. Since then, I have been repeatedly reminded of this by living in a country such as ours, where the modern lives together with the antiquated without any complex whatsoever. Obviously, our public administration has been a fertile area in this sense.

Last year I had the opportunity to visit both the recently created Banco de Comercio Exterior (Bancoex) as well as the National Institute for Minors (INAM). Without going into which of the two entities is of more importance for the country, the differences between the two were so great that they seemed abominable to me.

I cannot faithfully express the magnitude of the surrealism, but it should be sufficient to say that Bancoex has modern offices, systems employing the latest technologies and an organization with staff selected with the assistance of an international advisory firm while the INAM, accessible only by means of a rickety elevator which takes of every half an hour towards the 42nd floor of one of the towers of Parque Central, has papered its walls with wall to wall Oslo type files labeled with things like “Invoices – Meat Purchases Month of February 1994”.

If a government determines that it must assume the direct responsibility of fulfilling two specific functions, whichever they may be, it should at least try to do both with the same enthusiasm and with the same service standards. We are constantly harping about the fact that we should fight to narrow the social gap in income distribution that creates first class and second class citizens. Likewise, it is equally as important to avoid creating first class bureaucrats and second class bureaucrats. Sometimes I believe we even have third class bureaucrats.

This does not mean I am promoting automatic and irrational equality as far as salaries of public officials is concerned. It has much more to do with the identification of the role and the social support given each public servant in order to stimulate his or her pride. He who thinks or feels that other believe his work is not important, or who is actually doing work that is indeed not important and should therefore be eliminated is as incapacitated emotionally as a baseball player who has lost his arms.

In the same way, as we head towards the Constituent Assembly which initiates the debate on the role of the State it is of utmost importance to establish the norms and regulations that require the State to comply with its current responsibilities before it is permitted to accept new ones. 

Should we not do this, we should not be surprised about the capacity of certain sectors to negotiate resources that allow them to incur in new initiatives that normally possess noteworthy or glamorous characteristics at the expense of other that, although no less important, require quiet dedication, day after day, from 9 to 5.

I now wish to share with my readers a nightmare I have over and over again. During the last decades, the Venezuelan State has frittered away an immense amount of resources. Thank God that in spite of this, most of the spending occurred in public service sectors and that therefore it did actually leave something, however small, for posterity. Does this mean that if the State actually goes full tilt into privatizing public services (at the behest of ourselves) without having previously negotiated a corresponding reduction in their income, 100% of public spending will be wasted?

The town folk in Pamir did not bat an eyelash when airplanes roared overhead. They did not know that human beings were strapped inside at the controls. Had they known this, the panic would have been absolute. I sometimes think about the high expectations we have of the privatization processes in Venezuela. Are we by chance also ignorant of the fact that there are human beings in these private companies?

Evidently, doubts about one issue are not translated in certainty about another. In this sense, I cannot resist finalizing with a quote that I underlined almost thirty years ago in the before above mentioned book by Koestler. 

“I automatically learned to classify all that is repugnant as an »inheritance from the past», and all that is attractive as the »seed of the future». With the aid of this automatic classification, it was still possible for a European in 1932 to visit Russia and continue to be a communist.”

Daily Journal, Caracas, May 7, 1999