Sunday, November 14, 2010


By Ray Auxillou
This analysis is a combination opinion, of the video show in which Transformational Development Economics for small states ,GURU Professor Ricardo Hausman, of the Center for Harvard University, spoke by telephone on the Business Perspectives program held on local television. Plus the conference a couple of days later, restricted to paid members of the Chamber Business community in the port town on the Eastern coast of the country, as reported in the REPORTER newspaper article of November 14, 2010.
The ideas proposed by Professor Hausman are pivotal. As a motivational positive speaker, he was unmatched. The best advisor this country of Belize has ever had. The right man at the right moment in time. Another speaker was Mr. David Donovan an independent consultant on investment promotion for small states. His specialty is attracting foreign investment to small states like Belize, the new growing little SWITZERLAND OF THE AMERICAS. His role was more of a consultant to do with individual entrepreneurial efforts to expand the Belizean economy. Population is growing and the educational levels have expanded dramatically in the last 20 years. Belize is on the edge of turning into a very different economical country. Therein lies the CHALLENGE for future governments.
First must come Professor Hausman’s recommendations to the structural conditions of the attitude of the government political and bureaucratic machine and then would come the need for the efforts of Mr. David Donovan.
Mr. Waight senior civil service bureaucrat, on another Business Perspectives program outlined in a nutshell the problems facing the transformation of business in Belize. The attitude of the bureaucracy and the politicians currently, is colonial in nature. The idea is to MILK the cow, or tax payers for all they are worth, to the extent that they do not KILL THE GOOSE THAT LAYS THE GOLDEN EGGS. So explained Mr. Waight( senior bureaucrat ) on the show.
Professor Hausman says if the government encourages the entrepreneurial business sector right, over the next 20 years, the average per capita income would rise to $40,000 a year.
Transformational Development Economics needs a new paradigm in how the bureaucracy and political arm look to the future.
For example: David Donovan’s expertise from the changed economy of IRELAND in attracting investment, needs a STOCK EXCHANGE in Belize. There does exist numerous companies that could create a trade in stocks and open new entrepreneurial ventures by offering new stocks. To highlight the problem we can only point to the fact that the POLITICAL ARM as pushed by a single figure, the Prime Minister/Finance Minister, Dean Barrow, remains mired in colonial exploitation style politics. ( The rest of the Cabinet do not have a clue yet! ) After the Nationalization of the Belize Telecommunications Company shares from Lord Ashcroft entities, the shares of this company could have been used to start a STOCK EXCHANGE. I personally wrote both the BTL Board and the Finance Minister/Prime Minister about doing so and offered to be the market maker. They ignored the transformational development suggestion and persued the standardized colonial political game of using the BTL shares and handling thereof, in the traditional manner of political gain for NEPOTISM, hiring of relatives and family and party hacks. There was no foresight, no vision. There are other companies in Belize that could find outlet for the issue of selling shares in Belize. The water company, the Belize Electric Company, the Citrus Processing Factory, the Sugar Cane Factory and so on. With a stock exchange, comes the ability to change the paradigm of financing new entrepreneurial start up companies through the proper medium of offering to sell shares on speculation. Just like for example APPLE, or Microsoft did in recent memory. Or GOOGLE. You can start in a garage, or on a kitchen table and get started by developing a product and a market through selling shares to raise financing. Bank loans come afterward, when you actually want to expand a successful start up, that cannot satisfy the DEMAND for the product. This beats completely the ideas being promoted by DEAN BARROW as FINANCE MINISTER and the coterie of political representatives from the port town down on the coast, mired in the quagmire of financing ALL new businesses through BANK LOANS at atrocious interest rates and regular repayment schedules.
Both the lessons given by Professor Hausman and Investment consultant David Donovan at this conference need the machinery ( a stock exchange ) to funnel investment capital in the growth of the Belize economy to entrepreneur startups. Such a thing is TRANSFORMATIONAL DEVELOPMENT ECONOMICS. Belize is now ready for this paradigm shift, but the politicians and the bureaucracy are not. They are still living in the feudal dark ages.
Hausman mentioned also the need for fiscal transparency. Since the UDP have come into managing the government, transparency has gone out the window and everything is SECRET. We miss the days when the MUSA administration would let us know the status of government finances on a quarterly report, that helped the business community plan their forward looking strategies in economics.
The big thing HAUSMAN mentioned was the change in the business community when economic clusters started forming. Then you know the economics is changing. You have this in a very pioneering fashion in the metal fabrication business in the Mennonite business community. Odd jobbers independently produce to order, for example bent roofing ridging for the roofing making company. There are a lot of unmet needs in the business sector in the industrial corridor running out WEST from the coast in the central part of the country. Packaging and labeling clusters and little sectors serving chocolate producers with cardboard boxes, or food metallic type candy wrappers with printed matter are needed. Distribution and collections is a big problem for internal light manufacturing. There are a few injection molding machine operations for producing plastic containers, but making molds is still a problem. Nobody is using small portable, thermal ovens and plastic imported sheeting yet to satisfy the demand for fabricating export products and assembling them. One person having to do everything in the parts supply chain for light manufacturing is killing a lot of good entrepreneurial export ideas.
Probably the biggest problem is the cost of importing the materials to manufacture products for export. In reality one transformational development process is the fact that THINGS have to be made to EXPORT and the local market would get the overproduction, or rejects from quality control. There are some products that require the local small market to get started. The main thrust though in transformational economic development should be in solving the problem of being able to import materials to start making products designed primarily for export.
I can give as an example of an ongoing pilot project I’ve been working on for the past four months. I identified a market of 20,000 telescopes a month. The criteria are low budget, or cost and to avoid the export problems with the high cost of shipping containers out of the Belize City port, plus the requirement to start a pilot project with enormous ( for me) amounts of risk capital, I chose a product that could be shipped individually per customer, a telescope via parcel post over the internet. The problem I have run in to, is getting a set of two lenses at a suitable low price to make the project viable. So far different countries as lenses sources have been contacted. Even mainland CHINA is too expensive. At one point it seemed cheaper to buy a ready made telescope and retail it. Then the cost of shipping to Belize for drop shipping, with the consideration of the import duty costs on something you are going to re-export made that prohibitive. Last week we located a telescope completed, cheaper than we could find the two lenses we need in small start up quantities. In considering buying the telescope from mainland China, in order to cannabilize a telescope with two lenses and two prisms ( we didn’t want or need the prisms, or the telescope itself ) in order to get the cheaper two lenses out of it, to make or fabricate in Belize, a different telescope to meet the target sales price of our costing study, the import cost in Belize again shoved the cost of getting the two lenses this way to Belize also ruined the costing study for our own local market study product. We looked at a grinding machine in TAIWAN to make our own lenses. The local optometrist machines in Belize already, for making spectacle lenses apparently they tell us cannot make our specification requirements for the telescope we want to fabricate and export. As a start up enterprise, you never know what will happen on the DEMAND side and so the idea is to start off with a dozen and as the market proves out, you expand. The smallest grinding lense machine produces like a thousand lenses a day. Far too big an investment for a speculative home business startup. Then you need the glass and plastic blanks.
You get the idea! The cost of government is not yet arranged in a transformational development economic, bureaucratic format to encourage business incubators, manufacturing niche market target things for export. The place to start is with our own government. We have to change their thinking and operating paradigms to enable light manufacturing. HOW TO DO THAT IS THE FIRST OF A LONG LINE OF CHALLENGES AHEAD; so that Belizean per capita income can rise to $40,000 a year as Professor Hausman forecasts is possible over the next twenty years.

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