Occasional Essays
August 25, 2006
Sale of land to foreigners

The other day two friends, both economists for whom I have some respect, rounded on me and said that the ULP Government is not doing enough to facilitate the purchase of land by foreigners in SVG. Europeans are purchasing real estate overseas and the boom this is creating is bypassing SVG. The money from these transactions is percolating through the economies of other islands and helping to boost the level of economic activity there.

I was dumbfounded for I had been anticipating the very opposite criticism. If you believe some people in SVG, we are selling too much land to foreigners. When I had had time to recover from this totally unexpected barrage, I asked my economist friends what the Government has been doing wrong. They said we had this Aliens Landholding Act which regulated the sale of land to foreigners. Many of the other islands did not have this law and in those islands the land was being sold without the public even knowing whether it was foreigners or locals who had bought it.{{more}}

As if this assault had not been enough, the next day a respected lawyer asked if I had not heard of the case of Bess versus Bess. He went on to explain that this was a Vincentian case that had gone all the way to the Privy Council. The woman Bess was shown to be an alien but held land without an aliens’ landholding licence. The Privy Council had however allowed her to continue to hold it on the basis of some technicality. It was not the decision so much as some remarks made during the case which aroused my attention. One of the QCs in the case had pointed out that Vincentians like to go to other peoples’ countries and buy houses yet when other people come to their country they hear all sort of rigmarole about aliens landholding licence.

The Privy Council is of course based in England and I am only too well aware that many Vincentians had gone there, bought houses and years later sold them for a handsome profit. They had then returned to St. Vincent to build their dream house. In fact, such houses are dotted all over SVG.

It is not at all surprising that the land issue should come to the forefront at this time. We are transitioning from a goods to a service economy and this has implications for the man/land relationship. With goods such as bananas we grow them on our own land, pack them in a box and send them to England to sell to foreigners.

With tourism, the main service industry, we cannot pack the sea, sunshine and what have you in a box and send it off. The tourists have to come here to enjoy them and when they come what would you say to them? You can live in a hotel but you cannot build a home or hotel here. We are not yet a big tourist destination and with such an approach we will never become one. Ironically, it is the tourist facilities established by the foreigners that are responsible for most of the tourist dollars we now earn.

I am a bit bemused by the role of the Mitchells in all this. Mrs. Mitchell, herself at one time a foreigner, is protesting at land sales in the Grenadines to foreigners. Yet it is her husband, Sir James who disposed of the largest single bit of land in the Grenadines to a foreigner. This is the 1,229 acres of Canouan which is twice the size of Park in Bequia about which his wife is making such a furore. It is pointless saying he only leased the land. For in a very unusual arrangement the lessee can give freehold titles to the purchasers of property which he holds only on a lease.

In addition to tourism, construction is the other sector which is expected to keep these islands afloat. Here too, the role of the foreigner is critical. Construction is undertaken by locals, the Government and foreigners. Locals will continue to build mainly private homes. This however is but a drop in the ocean.

Government does a lot of construction. The revenue it collects however just about covers recurrent expenditure. It therefore has to rely on grants and loans to fund new construction. Grants are getting scarcer with only Taiwan and the EU providing any. At the same time the capacity of a government to obtain loans is finite. Already it is being said that some OECS countries are too heavily indebted.

A significant amount of the construction will therefore have to be done by the foreigners. One does not have to be a rocket scientist to see that this is already happening. For years, the Mustique Company has been employing about 500 construction workers. Canouan and Palm Island have been doing their share and look at what is already happening at Buccament.

Direct Foreign Investment (DFI) is the name given by economists to the purchase of land and construction thereon by foreigners. They have pointed out that it is this DFI and export agriculture that has kept these islands afloat for many years. The bottom has fallen out of most of the export agriculture. The Banana Association is stone broke. If we now pull the plug on land sales to foreigners how are we going to get money coming into the country? Through marijuana, remittances and aid? Not only will we be much poorer then, but we will also be contemptuously dismissed as a mendicant and rogue economy.

Indulging in historical revivalism will not help matters. Like the economists I mentioned at the beginning of this article, we have to look at our problems in an analytical way.

We should not stop selling land to foreigners, but our democratically elected Government should keep the entire system under review and control through the Aliens Landholding Act despite the reservations some of my economist friends have about the Act.