The first annual Chamber of Commerce Economic Forum took place on Friday, 28th September 2001 at the Grand Pavilion Conference Centre. Sixty business leaders from more than 40 industry sectors and representatives from the Financial Secretary’s office and the Economic and Statistics office attended. Attendance was by invitation only and closed to the public and media in order to ensure a frank exchange of ideas and proposals. Chaired by Chamber President Mr. W. Burns Conolly, AIA, the forum was moderated by Chamber CEO Mr. Wil Pineau. Dozens of proposed solutions were shared during the five hours of open discussion.

The Chamber Council decided to organize the forum at its regular monthly afternoon meeting on 11th September. For several months, Chamber members had reported a decline in business, in some cases dating back to 1999. Membership of the Cayman Islands Chamber of Commerce, as of today (2nd October 2001), stands at 568 businesses representing all industry sectors, collectively employing 14,264 persons. There are 22 associate members (non-for-profit business, trade and civic associations), covering 1,332 employees and 38 individual members.

Six main objectives were identified and approved by the Council and are as follows:

1. To gather leaders of all industry sectors annually to discuss the state of the economy and to identify trends that could impact business in the country.
2. To share economic data and statistics.
3. To produce a statistical report that could be shared with the membership generally.
4. To educate industry sector leaders about the macro-economic environment.
5. To propose short, medium and long-term solutions to address micro and macro-economic concerns.
6. To prepare an annual report to be presented to Government to use when developing its micro and macro-economic policy proposals.

The Survey

The survey was distributed to more than 60 businesses. Each company also was invited to attend in the forum. Industry sectors surveyed included: hotels, condominiums, guest houses, car rental companies, construction firms, financial services providers, law firms, merchants, restaurants, marketing companies, retail outlets, architectural firms, supermarkets, wholesalers, communication and utilities providers etc. In total, 58 companies submitted statistical data. A series of specific questions relating to the current state of the economy were asked. These included:

• Will your business meet its 2001 projections?
• If not, what percentage decline are you estimating?
• What actions will the business take to minimize losses? I.e. reduce staff, spending, or hours etc.
• How many staff is employed?
• Has the company lain off any workers?
• Businesses were also asked to provide annual growth percentages for the past three years and to list three internal and external forces that are impacting the particular industry sector.
• And, finally, what suggestions, if any, would the company offer to improve the Cayman Islands’ economy?

The main findings were as follows:

• 58 companies completed the survey, representing a total staff of 3,089;
• 39 of the 58 companies will NOT meet 2001 projections;
• 26 of the 58 companies forecasted negative annual growth for the year-to-date and 13 companies reported negative annual growth for the year 2000;
• Of the eight construction firms reporting data, 29 Caymanians and 43 expatriates have been laid off.
• Based on the negative forecasts companies plan to take the following actions:
  -  20 companies have reduced staff
  -  46 companies have reduced spending
  -  14 companies have reduced hours for staff
• Companies are also implementing several other measures including hiring freezes, early retirement for employees over 65 years of age, outsourcing of staff and services and temporary closings.

Survey Conclusions

Overall, across most industries, the survey reflected what many business leaders have known for several months: the Cayman Islands’ economy is in the midst of a recession. It is well known by everyone that our economy depends on a steady flow of inward foreign investment from tourists, international investors and/or expatriates who move here to live or conduct business. Survey results indicate that investor confidence is at an all-time low, causing several sectors to reduce original projections and, in some cases, reduce staff and spending. In turn, Government duties and fees in several essential areas including import and stamp duties, companies’ registration, tourism accommodation and trade and business license fees are down, draining the Government coffers. Respondents believe the slowdown is linked to several macro-economic factors:

• Unrestrained Government spending has caused Government to impose higher fees on the private sector over the past five years;
• A significant reduction in private client business as a result of the OECD/FATF decisions and a drop in consumer confidence from long term expatriate residents (more than 10 years) whose immigration status remains unclear;
• A continuing decline in the number of overnight visitors since 1998;
• Failure to implement a long-term economic development strategy (ie. failure to implement Strategy #13 of Vision 2008 and to update to the Tourism Management Policy which expired in 1999.)
• Poor investor confidence mainly caused by:
  1. lack of clear investment guidelines towards foreign nationals and
  2. lack of reasonable immigration policies.
• A high cost of doing business locally, which has forced businesses to increase prices to near record levels just to survive.

Summary of the Forum Recommendations