Local Business
Cayman faces inflation despite economic slump
(CNS): Although most business are still feeling the pinch of the economic recession, Cayman has also been hit with a surge in prices and the highest inflation rate since 2008. According to the Economics and Statistics Office (ESO), the increase in the cost of fuel has pushed up the Consumer Price Index (CPI) by 1.0% in June 2011 when compared to June 2010. “The inflation in the second quarter is traced primarily to the higher cost of petrol, which pulled up the average spending for transportation by 13.3 percent,” the premier and minister of finance acknowledged this week. McKeeva Bush added that the increase of almost 24% in the cost of electricity, gas and other household fuels also added to the problem.
The sharp increases in energy prices were tempered by continuing declines in housing rentals during the period as compared to a year ago, which meant overall inflation was not as high as it could have been .
However, consumers still faced increased food prices of more than 1.6%, with some categories of food experiencing must higher levels, such meats and meat products at 6.2%, fish and seafood at 5.7% and other food products rising by 4%. A decline in the cost of fruit and veg balanced out the average prices at the supermarket. Transport costs increased by more than 5%, and a 3.1% increase in communications also influenced the inflation rate.
See the report below or visit www.eso.ky
Cayman cuts electricity consumption
(CNS): Grand Cayman’s power company saw a five percent cut in profits for the second quarter of this year compared to last as a result of customers conserving energy and cutting consumption. CUC incurred the fall despite having an increase in the number of customers during the quarter because high fuel costs saw people reduce the use of air conditions the firm said. Sales were also negatively impacted by low residential rental property occupancy and cooler weather. CUC’s President and CEO Richard Hew also said the economic down turn and the high cost of fuel was making people conserve power a move that was encouraged by the firm. (Full report now linked)
“The economic downturn in the Cayman Islands has negatively impacted energy usage and electricity sales,” he said. “The impact of recent high diesel fuel prices on electricity rates has exacerbated the situation and remains of concern for CUC. We continue to actively seek viable alternative energy sources to reduce the Island’s dependency on diesel fuel for electricity generation. In the short term we are advising customers to conserve energy and are providing assistance through energy conservation education.”
The fall in consumption was even more apparent as the number of customers at the end of June had gone up by 126 customers compared to June 2010. Despite the increases in overall customer numbers the average monthly kWh customer consumption for the residential and commercial categories combined declined from 1,744 kWh for the first half of 2010 to 1,687 kWh for the first half of 2011.
CUC announced that its net earnings for the quarter were $5.9 million – a decrease of $0.3 million. The firm also stated that it had received approval from the Electricity Regulatory Authority (ERA) in March 2011 to hedge against further increases in the price of fuel and the Company has initiated a hedging program for 40% of its annual fuel requirements.
See full report here
Cayman rum rolls into US market
(CNS): Local rum makers Seven Fathoms have revealed that the product is heading northbound with the first ever shipment of the locally distilled run overseas. Seven fathoms is now being exported to the US via Luxe Vintages, the exclusive US importer for the Cayman Rum. Following an agreement signed earlier this year by the local distillery, several pallets have landed in America. The process for US import is not easy, according to distillery co-founder Nelson Dilbert who said the firm had been working on the export process for a long time.
“We have been working on our US import approvals for the last year which includes product testing, label approvals and working with a wide number of US agencies, including the ATF, TTB, US Customs and the FDA. The demand is there so hopefully it will be worth it in the end,” he said.
The three tier system for liquor distribution in the US means the rum will travel through the hands of the importer to the distributor and then to the retailer. From there, the retailers are able to sell to the general public through their physical stores and also online. One large Chicago based retailer that has listed the Cayman made rum in their stores is Binny’s Liquors.
“We are excited about the potential for growth from the US Export market. People that come and visit us here in Cayman want to be able to find the rum at home, as they email and tell us frequently." said Walker Romanica, distillery co-founder. “The rum proudly displays its Caymanian origin on the label, which may serve to remind some of their time spent as a visitor here. We hope it takes them back to a time when they were sipping on a rum cocktail watching a Cayman sunset on Seven Mile Beach.”
Peter Staley, Managing Director of Luxe Vintages said he liked the rum from the moment he tasted it. “With the increased demand in the US market for small-batch spirits – combined with the huge pent-up demand for Seven Fathoms from the large number of Cayman visitors from the U.S. – we knew we had a winning combination.”
Artisanal spirits taps into the current global trend of eating and drinking small, local and artisanal foods and beverages. It's also being driven by "mixologists," a growing class of high-profile bartenders who craft drinks with specialty liquors and ingredients.
Seven Fathoms is made entirely in the Cayman Islands by hand in a small craft distillery located on George Town Harbor. The rum is aged in barrels under the sea as the ocean provides the humidity and temperature which can’t be found on land along with the constant push and pull of the waves which mimics the touch of a distiller rotating their barrels in a cellar. Despite the diligence of even the most committed distiller, the waves are able to massage the rum with a far more consistent and steady precision, the makers say.
Dart holds ‘do’ for final beam in new office block
(CNS): Despite not having put the roof on, officials at Camana Bay held a ‘topping out’ event at the town last week as the developers laid the final beam in the framework of the Dart Group's latest building. Government officials as well representatives from Dart Realty and DECCO the developer’s construction firm held a ceremony for 94 Solaris Avenue, Camana Bay’s latest commercial building. Key stakeholders including local contractors and subcontractors, construction workers and future office tenants were also present when Jackie Doak, Chief Operating Officer of Dart Realty, praised the spending work of the construction teams and spoke about the project and the firm’s commitment to the development of Camana Bay.
“A topping out ceremony is usually held to commemorate the completion of the building’s structure. Today, as we lay the final beam in place to complete this building’s framework, I would like to thank our local construction partners and recognise the many men whose hard work has taken this project from ground-breaking to topping out in just six months,” she said
Doak said that this was the latest milestone in a long-term development plan that has had and will continue to have a significant impact on Cayman’s economy. She also announced plans to construct a sister building to the north of 94 Solaris Avenue, providing more office space in the nearly fully occupied Town Centre.
Since construction began on the Camana Bay Town Centre in May 2005, Dart Realty says that it has contracted over 200 local companies and provided jobs for over 4000 local workers resulting in a total economic impact of US$826 million to date.
Premier McKeeva Bush who was also present thanked Dart for what he said was the developer’s “continued confidence in the Cayman Islands” and said that, “the 20-30 year build out of Camana Bay and the proposed projects associated with the FORCAYMAN Investment Alliance will ensure further growth and a positive future for the country,” he added, speaking about the recent deal government has signed with the developer to swap crown land in exchange for more inward investment from the Dart group.
This latest commercial block under construction in Camana Bay was designed by Washington D.C.-based Torti Gallas and Partners and supported by local architects, the Burns Conolly Group. Scheduled for completion by July 2012, the 68,000 square foot, five storey building will house Class A office tenants and offer restaurant and retail on the ground floor.
Anchor tenants tenant Mourant Ozannes will be taking the top two floors and AON, a Cayman based risk management and insurance firm has now signed a lease to take the second floor of the building. Dart said that Mourant and AON join a long list of ‘best in class’ businesses that “see the Camana Bay Town Centre asthe perfect place from which to grow their operations.”
CITN to launch weather channel and introduce HDTV
(CNS): Before the end of this year’s hurricane season the local television company CITN says it will be introducing a 24/7 local weather cable channel which will be broadcast on channel 24. The station said the channel will be automatically updated with the latest local, regional, and international weather news including hourly local forecasts, and storm alerts. CITN has also announced plans to broadcast Cayman 27 in high definition which will include programmes from Island 24 which is now going off air, officials said.
In a release the television company stated that the equipment has been ordered and plans are underway for the major upgrade. WestStar customers will be able to watch the local channel in standard definition on channel 27, and subscribers to WestStar’s HD service can watch in high definition on channel 327. Viewers that receive the signal free over-the-air may need a converter box if their TV cannot receive digital signal.
General Manager and Director of WestStar, Mike Martin said it was an exciting time for the station. “Last year we launched new local programming and now that we are upgrading to HD everyone will be able to experience better picture quality.”
Officials said the upgrade to HD will be a major investment for CITN, so executives have decided to focus all resources on making Cayman 27 the best local channel possible. As CITN focuses all efforts on Cayman 27, Island 24 will be taken off the air, and many of the most popular programmes from Island 24 will be merged onto Cayman 27.
“In the next few weeks, we will have a better idea of what the new line-up will look like and we will make sure that the public are aware of changes well in advance,” said Programming Director, Anita Smith.
An exact date for the changes to programming and the launch of HD and the local weather cable channel has not been set yet, but officials said they are looking toward 1 October and updates will be posted on www.cayman27.com.ky
Chamber asks government to pull equality bill
(CNS): The gender equality law which is due to come to the Legislative Assembly in the next few months is too onerous for business, the Chamber of Commerce has claimed. The Chamber, which represents local business, as well as the Cayman Islands Law Society are calling on government to withdraw the bill so that amendments can be made to it before it becomes law. The proposed bill was gazetted last month and deals with a variety of issues relating to equality, discrimination and the rights of employees. It also includes protections regarding sexual harassment in the work place.
The long awaited law has been in discussion for many years, and although many elements of it have been contained in other pieces of legislation, the bill provides for tribunals to hear cases of discrimination on a variety of issues that are not just gender related. However, the Chamber has said it wants to see the law revised to make it more practical, easier and less costly for employers to implement.
“The Chamber supports anti-discrimination legislation but the bill as drafted will increase the cost of doing business and adds more red tape at a time when businesses are struggling to keep their costs under control,” said Chamber President James O’Neill. “We strongly recommend that government withdraw the bill in its current form so that additional time can be given to consider the changes proposed by industry associations. Adding more bureaucracy and costs for employers at this time should be avoided at all costs,” he stated in a release from the Chamber.
The business representative body is not the only group that appears to be concerned about the bill, which essentially offers greater rights to workers in general and not just women.
The Cayman Islands Law Society has drafted a letter listing nine areas of concern, and aside from being supported by the Chamber of Commerce, the Caymanian Bar Association, the Insurance Managers Association of Cayman and the Compliance Association have all offered their support to the society’s correspondence. Meanwhile, the Cayman Islands Real Estate Brokers Association has also submitted a separate letter expressing similar concerns over the law.
“The business community as a whole is largely ignorant of this law and its effect. We do hope that the opportunity for wider consultation is given to the private sector to enable it to be able to air its concerns about the legislation, and for those concerns to be given due consideration and acted upon,” wrote Charles Jennings, President of the Cayman Islands Law Society has said in his letter to government.
“While in principle we wholeheartedly support anti-discrimination legislation such as this, we fear that it may hinder employment and add to employers’ costs as they endeavour to implement it – at the very time of high unemployment, when every effort should be made to encourage hiring,” he adds.
Jennings and others are questioning how the new legislation will work alongside the Labour Law for maternity leave and discrimination, as well as the definition of remuneration, indirect discrimination, vicarious liability, paternity leave, harassment, and composition of the tribunal, forms and agreements.
However, local legal firm Walkers said responsible employers have nothing to fear from the bill but firms will have to ensure they are compliant. Nicholas Dunne, an associate with Walkers dispute resolution department, speaking on the new CML-TV said that the law offers more protections to employees by enabling them to take discrimination issues to a tribunal rather than having to pursue their cases through the courts.
He said it would affect all employers who need to familiarize themselves with this law which is expected to come to the Legislative Assembly during the next meeting.
See law here and see CILS letter below.
Airport expansion set to start
(CNS):The premier gave very little away on Monday about the future of Owen Roberts International Airport when he made the opening remarks at the AAAE Airports Conference of the Americas. McKeeva Bush said that the long-awaited planned expansion that will triple the size of the current airport would be underway shortly but he didn’t say who would be constructing the project or how it would be financed. The premier said that the expansion plans would allow larger aircraft to come to Cayman, indicating that the proposed runway extension would be part of the redevelopment. Bush said that the conference, which Cayman was hosting for the first time, was timely as lessons learned would be put to good use as the full scale expansion would start soon.
“Refurbishment of the airport has been ongoing in a piecemeal fashion in order to tackle the most urgently required minor changes,” he said. “But I’m pleased to say that CIAA is finally poised to embark on the bulk of planned changes which have been in the pipeline since 2007. They will allow newer and bigger jets to fly into Grand Cayman, spurring air passenger growth from the current 950,000 annually to a projected 1.25 million a year.”
He said the changes would also improve passenger amenities, enhance baggage handling capabilities and increase the welcoming atmosphere for people arriving in Cayman. However, the premier gave no details about financing for the development or whether the airport would be constructed by China Harbour Engineering Company.
For several months now there has been considerable speculation in the community that as well as taking on the George Town cruise berthing facilities, a cruise pier at Cayman Turtle Farm in West Bay, and the reconstruction of the jetty at Spotts, CHEC would also be involved in the airport project. Earlier this year Bush had suggested that the Bejing based firm was interested in building the airport but so far there has been no confirmation regarding the proposed plans for Owen Roberts.
The need for new airport facilities and in particular the expansion of the runway by at least 2,000 feet to allow for intercontinental long haul flights, especially from Europe, has been a government policy of both the UDP and PPM administrations over the last decade.
However, the issue of whether or not the airport should remain in George Town or move east and how the project should be financed appear to be at the main factors in delaying the project. The previous administration had settled on keeping the airport at its current location and had drawn up plans for its redevelopment but those plans were thwarted in face of the economic downturn. The goal then was for the airport to raise the capital itself for the project.
With public finances still precarious and no money voted in the most recent budget for the project, if the redevelopment is to begin this year it must be through private investment. Although Cayman Airports Authority is one government’s unsubsidised companies and its earnings have been sufficient to deal with the piecemeal renovations, the anticipated surplus for this financial year of just over $3.5 milllion falls far short of the funds required for a complete renovation and runway extension.
During his address Bush pointed to the importance of Owen Roberts as well as the airports on the Sister Islands to Cayman’s success, as he said without these vital entry points, “we would never have grown or progressed as we have. Instead, we would have indeed remained the 'Islands that time forgot',” he said.
The premier said it was no exaggeration to say airports were imperative to tourism-reliant economies. “Today’s airports, particularly international ones, play a significantly complex role. Airport executives must therefore determine new solutions to existing problems as well as respond to new challenges that are encountered,” he added.
"With growing demands from increasingly sophisticated and tech-savvy clientele as well as better body and baggage searching techniques, the need for enhanced safety requirements while ensuring smooth passenger flows airports are akin to mini-domains,” he said. Bush added that airports such as the CIAA must maintain their economic independence, earn revenue and function as corporate entities in order to remain viable and even make a profit.
The conference, which has drawn together airport industry experts from across the Americas, is being held this week at the Grand Cayman Marriot Resort.
Mac signs deal for techy-park
(CNS): Some seven months after announcing the proposal the premier signed a deal Monday with Cayman Enterprise City Ltd (CEC) to allow the company to develop a technology centre in a special economic zone on Grand Cayman. The agreement allows the developer the exclusive right to construct, develop, operate and maintain the zone which is intended to attract global science, technology, commodities and derivatives, media and educational businesses to the Cayman Islands. Special economic zones (SEZs) are regions established in a country for which government concessions have been made in order to stimulate economic growth.
“CEC represents an opportunity for the Cayman Islands to diversify its economic base,” said McKeeva Bush at the signing ceremony. “It’s also worth noting that this project requires no government investment, as it will be completely privately funded; and the developer also has not requested waivers for duties on materials or stamp duties.”
Government will now begin to establish the legislative framework for CEC to operate. Speaking with CNS last week the developers said they hoped the legislation would be ready for public consultation next month before it goes to the legislative assembly.
With the signing of the agreement CEC said it can begin going through the planning process paving the way for construction to begin in early 2012.
The SEZ will be the first in the Caribbean region, said Jason Blick, CEO of CEC who lauded government for embracing the concept. “The cooperation and inward-investment friendly attitude of the Cayman Islands Government, and the civil service, has been outstanding,” he said. “They truly understand the positive effect the zone will have on Cayman, and their support has been incredible.”
Blick said all goods and materials imported in order to construct and later resource the ‘city’ will be subject to the normal duty payments but CEC will receive a reduction in work permit fees for businesses operating in the zone.
The development of CEC’s five ‘parks’ which consist of Cayman Internet Park, Cayman Media Park, Cayman Biotech Park, Cayman Commodities Park, and Cayman International Academic Park will be constructed in phases with ground breaking earmarking for the beginning of 2012. “The master plan incorporates a state-of-the-art, low-rise campus of sustainable architecture comprising 500,000 sq. ft. in three phases of Class A office space,” said Director of Design and Construction and local partner, Cindy O’Hara.
CEC have not yet stated where the CEC will be located except to say it will be East of George Town and that two sites have been short-listed. “Once a final site has been selected its location will be announced and the project team will start the Planning Department permit process,” CEC said.
There will be no manufacturing or engineering businesses permitted within the zone as it is being designed as a knowledge-based zone only and not a manufacturing one. The developers stated that there will be no laboratory testing or applied biotechnology research and with no dredging the project will have a low impact on the natural environment.
As well as creating business opportunities and up to 800 jobs in the first year, during the construction of the project, CEC has also stated that it will be taking up to 100,000 sq. ft. of existing office space in George Town in order to house international brands wishing to establish within the zone before completion.
Enterprise city close to deal
(CNS): The developers proposing to create a science and technology centre in Grand Cayman say they are on the verge of an agreement with the Cayman government and hope to sign in a matter of days. A spokesperson for Cayman Enterprise City told CNS that they expect the proposed legislation to support the special economic zone will be ready for public consultation in August and the developers now have options on land for which they are currently undertaking final negotiations with the owners. One of the least opposed development projects currently being considered by government, CEC is promising jobs and a new string to Cayman’s economic bow.
Not thought to have the negative environmental or social impacts of some of the other large scale proposals that government has considered in recent months, CEC has been met with less concern from the public. Focusing on attracting modern technologies such as bio tech firms, internet companies and multi-media, CEC says it expects to create 800 local jobs in the first year. CEC also says it will create new careers for Caymanians in the fields of IT, science, media, commodities, commerce and academia that have not previously existed.
The government signed an MOU with the developers in January and the developers say they are now about to sign a draft agreement which will pave the way for development to begin next year. “We are confident that a draft agreement will be signed with CIG this week or early next and once signed it’s a green light,” Hilary Cahill, VP of Marketing & Business Development, said explaining that the firm is working with government on the Special Economic Zone Law, which will provide the legislative framework to support and oversee CEC.
“A new Special Economic Zone Authority is being established to regulate the zone and members of civil service will work cohesively with CEC management team to ensure an efficient and seamless service at all times.”
The firm said it has also taken on the former National Trust boss, local CPA Frank Balderamos, as VP – Investor & Operations and he will be the key link in the relationship with the new Zone Authority on behalf of CEC.
Once the draft agreement for the economic zone is in place, CEC will begin operations and Cahill added that key players have already been hired for both the local and international management teams. Sixty-eight percent of the local team is Caymanian and Cahill confirmed that it is CEC’s intention to continue identifying and hiring Caymanians to fill as many key positions as possible.
“Our global marketing and business development strategies have been developed and our product offering is close to being finalized. Our director of design and construction — Caymanian Architect Cindy O’Hara — and her team are close to finalizing the details of the master plan,” Cayhill added. “After going through the permitting process we intend to begin construction of phase one.
This first phase will cover 150,000 sq ft and is expected to break ground in the first quarter of 2012, with the first tenants expected to move in to CEC during the beginning of 2013. The business development team is currently said to be reaching out to large global brands and Fortune 500 companies based in SEZs in the Emirates regarding establishing a presence in CEC.
“Those companies already understand the benefits of being based in an SEZ and for brands wishing to have easy access tothe lucrative North American and South American markets, CEC is an ideal location,” Cahill said. “It allows them to operate from a tax neutral zone, whilst enjoying CEC’s other special concessions. There are 3,000 SEZs around the globe and our team researched hundreds…. visited twelve countries and ultimately chose Cayman as the perfect strategic and geographical location in which to develop CEC,” Cahill added.
The firm had also determined that lifestyle was an important factor for corporations when choosing from zones that offered similar concessions and benefits.
“Companies can take advantage of the economic and strategic benefits of being located in CEC to expand into new international markets and their executives can enjoy acosmopolitan lifestyle on a beautiful, safe English speaking tropical island which is only a stone’s throw from the U.S. and operates on the NYC time zones,” Cahill noted.
In the first instance the draft agreement will call for the firm to rent existing space in George Town from Caymanian landlords to temporarily house tenants, where they will still enjoy the full CEC concessions, until the new city is finished, allowing them to move to Cayman and begin their operations immediately.
“This has been very well received by local commercial landlords as we understand that somewhere in the region of twenty percent of commercial office space in Cayman sits empty and is currently un-leased,” said Cahill. “As we construct each phase and our tenants move into their new buildings so future tenants of CEC will replace them in the existing George Town office space whilst phase two is constructed.”
Although CEC would not say which companies had signed on the dotted line because of continued negotiations, it did stated that it has been approached by major brands including Virgin, Baxter, Pfizer, Cisco Systems, Oracle and IBM.
Cayman débuts as host of airports conference
(CNS): Airport professionals from around the region will be converging in Grand Cayman next week when the country hosts the Airports Conference of the Americas for the first time. The annual event organized by the American Association of Airport Executives (AAAE), South Central Chapter and the International Association of Airport Executives (IAAE) is an important networking event for the industry. Jeremy Jackson, CEO, Cayman Islands Airports Authority said it was a great opportunity for Cayman and said the focus would be on the safety of the travelling public, which is of paramount importance at the CIAA.
“The airports industry is an ever evolving business and it is only through the development of meaningful working relationships with our regional counterparts that we can overcome the challenges that we consistently encounter,” he said.
“The forefront of this conference is the safety of the travelling public, which is of paramount importance at the CIAA and our representatives are eager to learn more about the issues impacting international airports and the solutions that are being implemented to address them. Three members of our management team will be speakers in the CEO forums as well as the panel discussions on safety oversight and lessons learned as well as enhancing the customer experience with existing infrastructure.”
The event is designed to provide business executives with an edge in developing meaningful working relationships in the Caribbean and Latin American airport and aviation market and provides networking opportunity for interaction with airport delegates from the Caribbean, the US and Latin America.
Officials said that airport vendors will also have table-top exhibits showcasing their latest services and equipment in the pre-conference area. This Conference will allow attendees to learn about the issues impacting international airports and the solutions being implemented to address them.
At the forefront of this event will be topics such as improving the customer experience with existing infrastructure, safety oversight and lesson learned, financing, commercial air service development, aviation safety and security and airport certification challenges.
It is being held at the Grand Cayman Marriott Beach Resort from Sunday, 17 to Tuesday, 19 July and the premier is expected to deliver opening remarks at the conference on Monday morning.
For more details go to the CIAA website