Chetumal as a Free Zone to have limited impact on Belize says PM Print
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Friday, 02 November 2018 00:00

With the Christmas season soon approaching, Belizeans will more than likely traverse to the Corozal Free Zone, and possibly even Chetumal, to purchase clothes, gifts, and, of course, alcohol; it is what they have been known to do over the years. But “Chetumal” does not necessary ring well in the ears of Belizeans businesses this year since president-elect of Mexico, Andrés Manuel Lopez Obrador, announced that it will become a free zone. Business owners in the north of Belize, have since shown a great deal of concern- they are fearful that the Mexican border developments will pose a threat to Belize’s economy, especially that of Corozal.

At his press conference on Monday, October 29, 2018, Prime Minister Dean Barrow, clarified several misconceptions. “The kerfuffle the announcement has created in our country centers on fears for the Corozal free zone, for the Corozal District generally, and indeed for the wider Belizean economy.  The alarm is that Chetumal will become even more of a magnet for Belizeans, we will hemorrhage Belize dollars and our local merchants will be mightily squeezed.  It is a development that government takes seriously, but our analysis convinces us that there are implements aplenty in our toolkit, sufficient to counter the danger and that in any event we should be careful not to overstate that danger and go into panic mode.  As I understand it, and as confirmed by Belize’s ambassador to Mexico, His Excellency Oliver del Cid, the Mexican president-elect is certainly not looking to harm Belize.  His program is to stimulate activity and fight poverty, and is to be implemented first in the border areas with the US.  It is only after that has been done and assessed, that there would be the possibility of rolling out the initiative to Chetumal.  And of what, really, is the program made up?  The VAT will not be eliminated but cut in half to 8%.  Thus, there will be no tax-free shopping to convert Chetumal into a Free Zone. Indeed, at the same time as the VAT would be halved, the minimum wage would be doubled. This is a pro-poor proposal that will likely boost consumption. But it will also inevitably have an inflationary effect, push process upwards and perhaps cancel out whatever cost reduction the halving of the VAT would notionally bring. For sure this could not make Chetumal than our Corozal Free Zone, where the social fee for consumables, with the exception of cigarettes, it only 3%.”

But the PM did not only make that clarification, he reassured that there are steps being made to ensure that we are economically sound in a worst-case scenario and told us about the development in the CFZ project. “A master plan for the repurposing of the Corozal Free Zone is already in preparation via a consultancy from the IDB. And in fact, the Technical Assistance project we signed with the IDB is actually titled “Support for Export-Led Development in the Corozal Free Zone”. The London company, Vivid Economics- with long experience around the world in assisting Free Zones and special economic areas to take advantage of trade realities and opportunities- is heading the project.”

The Prime Minister went on to detail some of the practical ideas, which include using BPOs and tourism to boost economy in Corozal. “And some of the ideas already mooted include attracting BPOs to the Zone and to Corozal Town and District generally, by giving special exemptions to those willing to locate in Corozal. These exemptions could include special rebates for land purchase and offsets for development costs. Another plan is to launch a digital skills development training program in the District to use the Zone as a services center of employment for tourism in Corozal… But talking about that last idea bring me to the massive tourism expansion we are in any event planning for Corozal. Over 50% of Mexico from Tulum down to Chetumal (4 municipalities, 1.5 million residents) do not have a passport. The travel option out of Mexico for them is therefore only Belize. We will take advantage of this by extending the life of our current border crossing cards to Mexicans from 3 days to 7 days. The BTB is upgrading tourism facilities in Santa Rita and Cerros, and a tourism welcome center in Corozal is to commence under our Sustainable Tourism Project 2. And Corozal Bay is fast becoming a dining and entertainment zone that can be packaged as a tour and marketed by the BTB… Also, please remember the infrastructure improvement projects for the District that the Taiwanese are to do and for which they have already sent their advance team.”

Belize is already in its finalization process of its draft partial scope agreement (PSA) with Mexico and, according to PM Barrow, that “should further offset apprehension” about the Andrés Manuel Lopez Obrador initiative. PM Barrow reminded that it was an initiative started from the time of President Calderon and was done because of the North American Free Trade Agreement (NAFTA) renegotiations. “But those are now done and Belize will accordingly push for early conclusions of our PSA. In that regard, I have already invited the Mexican President-elect to come to Belize in mid-December for the SICA summit and I would be sure to press delivery for this long overdue PSA.”

“Finally, for the Corozal/Chetumal dilemma, Ambassador in Cuba, HE Lou Anne Burns, is working on direct flights between Havana and Belize to be provided by Bahamas Air. And if that materializes, Anne has already agreed with a Havana tour company that a bus trip to the CFZ for shopping will be a travel package for the Cuban tourists coming to Belize.”

With that then, PM Barrow says that we have nothing to worry about. “As far as humanly possible, therefore, we’ve got this apprehended new threat from Chetumal fully covered. So we will be doing all sorts of things to advance the economy in Corozal, and all of Belize.”