The
Development Planning Unit
Government of the British Virgin Islands

DISTRIBUTIVE TRADES

Distribution Sector

1.10 INTRODUCTION


The development of a country is looked at as the sustained elevation of an entire society and its social system towards a better more humane life. One object of development is to increase the availability and widen the distribution of goods and services (basic, life-sustaining and other) (Todaro 87). To this end, The Distribution Sector has a profound impact on the development of the British Virgin Islands (BVI). The distribution sector involves the sale, maintenance, and repair of motor vehicles, motorcycles, personal and household goods at both the wholesale and retail levels. Thus, this sector is influential in making good and services available to the masses.

The importance of the BVI’s business sector namely the distribution sector is well documented. The government has recognized this, and has created a Trade and Investment Promotion Department that governs and regulates firms in this sector and others. A number of measures are also being undertaken to improve the distribution sector. One example is the “ Virgin Islands Consumer Protection Act 1996” which is presently in the draft stage.


1.11 STRUCTURE OF THE DISTRIBUTION SECTOR

The distribution sector or wholesale and retail by definition involve the sale, maintenance, and repair of motor vehicles, motorcycles, and personal and household goods. Table 12, shows that the majority of businesses in the BVI’s distribution sector are retail stores, selling food, beverages, tobacco, textile and clothing, hardware, and household items. In fact, 341 businesses or 85.9% of the businesses in wholesale and retail trade were retail oriented. Maintenance and repair of motor vehicle was the second largest sub-group within the distribution sector with 34 businesses or 8.6% of the aggregate. The third sub-group was wholesale, which includes the wholesale of food, beverage, tobacco, and on a free or contract basis, with 22 businesses or 5.5% of the businesses in wholesale and retail trade. As stated above, the Trade and Investment Promotion Department governs and regulates businesses in the distribution sector or wholesale and retail trade.


1.20 CONTRIBUTION TO THE ECONOMY

Tourism and financial services are credited as being the twin pillars of the BVI’s economy. A breakdown of the tourism sector shows that wholesale and retail trade is one of the main components of the tourism sector. Wholesale and retail trade is also the largest contributor to gross domestic product (GDP). In fact, little mention is made of the distribution sector or wholesale retail trade sector due to its categorization in the tourism sector. Wholesale and retail trade or the distribution sector, however, covers a broad spectrum and is not confined to the tourism sector.

The distribution sector covers supermarkets, clothing stores, manufacturers, department stores, and crafts. Virtually none of the goods sold in these establishments are produced locally since the BVI is not a good producing economy. As a result, most of the goods that are funneled through the distribution sector are imported. Of the total imports of $128,344,000 in 1994, $48,509,000 (37.8%) were consumer goods, $25,876,000 (20.2%) raw materials, and $53,959,000 (42%) were capital goods. In addition to consumer goods that are directly linked to the distribution sector; the majority of imported raw materials namely fuel, accounting for $22,902,000 or 88.5% of the total raw material import figure, and the majority of capital goods namely construction material and transport equipment, totaling $44,645,000 or 82.8% of the capital goods aggregate figure, were also linked to the distribution sector. Thus, a very high percentage of BVI imports are linked to the distribution sector.

Table 1 shows that total import for the three-year period, 1991 to 1994, grew by 22.2%. Both consumer goods and capital goods imports increased from 1991 to 1993, 16.7% and 16.3% respectively, while decreasing from 1993 to 1994, 0.9% and 15.5% respectively. This resulted in an average growth rate for consumer goods and capital goods, for the period 1991 to 1994, of 5.2% and –0.5% respectively. The average growth rate for raw materials for the same period was 71.0%.

In 1994, the largest category of consumer goods was food which accounted- for $33,502,000 or 69.1% of the aggregate. Similarly, fuel imports of $22,902,000 accounted for 88.5% of the raw material aggregate, $25,876,000. Capital goods, the largest category of goods imports, had two notable categories, construction material and transportation equipment that accounted for 82.8% of total capital imports, 38% and 44.8% respectively. See Table 1.

The spectacular growth of the BVI’s imports in the 1990’s was a result of the BVI continued economic growth in the 1990’s. There was one area, however, where there was a significant drop in imports, construction material. From 1993 to 1994, construction material imports declined by 28.2%, causing construction material imports to decline by an average rate of 5.4% for the period 1991 to 1994. This was a result of 1994 being a relatively low construction activity year. Low activity in the construction sector trickles over into the distribution sector. The reduction in demand for construction goods negatively affected the sales of hardware stores; and as shown in table 1, has a positive correlation with imports causing it to decline.

Table 1: Imports by End Use Classification, 1990-1994

Source: Development Planning Unit (DPU)



The BVI’s proximity to the United States of America (USA) and its territories, Puerto Rico and the United Sates Virgin Islands (USVI) has resulted in the BVI’s distribution sector importing the majority of its goods from the USA, Puerto Rico and the USVI. The figures given below in table 2 show the majority of BVI’s imports come from the USA, Puerto Rico and the USVI, $107,758,285 or 84.0% of the total imports of $128,344,530. As stated above, the majority of the BVI’s imports are linked to the distribution sector. One can therefore conclude that a large percentage of imports from the USA, Puerto Rico, and the USVI were destined for the distribution sector.

Table2: Imports by Trading Blocks, 1991-1994

  Source: DPU

BVI exports’ importance to the distribution sector is of a much lesser degree than imports since the distribution sector, and the BVI on the whole, is not a good producing economy. Exports, however, do have some significance to the distribution sector. Like imports, the majority of the BVI’s exports are linked to the distribution sector. In 1995, exports totaled $5,197,000. Beverage and tobacco was the largest category of exports with $3,638,000 or 70% of the aggregate. The BVI’s export of rum was mainly responsible for this figure. The second largest category was crude materials, the export of sand and gravel, which accounted for $1,002,0000 or 19.3% of the aggregate figure. Food and live animals chiefly for food namely the export of fish, sheep, goat, and cow attributed $368,000 to total exports. Manufactured goods, mainly exports of clothing, attributed $100,000 to exports while miscellaneous manufacturers namely spices accounted for $9,000. Re-export of machinery and transport equipment amounted to $80,000.

The average growth rate for export over the two-year period, 1992 to 1994, was 6.8%. Imports, on the other hand, grew by an average rate of 9.9% for the same period; thus increasing the BVI’s balance of trade deficit, which stood at $123,147,530 in 1994. In fact, the distribution sector, which is import dependent, contributes negatively to the BVI’s balance of payments (BOP) for which the balance of trade is a component. The BOP is an annual accounting statement that summarizes all the transactions, which take place between a nation’s residents (including individuals, government units, businesses and non-profit organizations) and the residents for all foreign nations. Since businesses buy the majority of their goods from overseas; the BVI makes significant payments to foreigners. In fact, the BVI’s balance of trade deficit means that the receipts from the trade in goods are less than payments abroad for these items. This is expected because the BVI is not a goods producing economy. The issue of how to reduce the widening gap between exports and imports, however, should be studied.

Table3: Exports by SITC Section, 1992-1995

Source: DPU

1.21 THE DISTRIBUTION SECTOR’S CONTRIBUTION TO THE GROSS DOMESTIC PRODUCT

The 1992 National Accounts figures, shown below in table 4, show that the distribution or wholesale and retail trade sector contributed $113,494,717 to the gross domestic product (GDP), or 32.9% of the total GDP of $344,612,096. The distribution sector had the largest contribution, of any sector, to the BVI’s GDP. Looking at the period 1990 to 1992, the distribution sector’s contribution to GDP rose 6.8% from 1990 to 1991, from $93,908,578 to $100,254,828, and 13.2% from 1991 to 1992, from $100,254,828 to $113,494,717. This resulted in an average growth rate of 10.4% for the period. The distribution sector’s growth rate for the period was one of the highest.

A further analysis of the distribution sector’s GDP contribution shows that wholesale of food, beverage and tobacco was the largest contributor to its GDP contribution in 1992. From 1990 to 1992, wholesale of food, beverage and tobacco contributed $34,574,790(36.8%), $38,989,088 (38.9%) and $49,213,109 (43.4%) respectively to the distribution sector’s GDP. Retail sale of automotive fuel was the second largest contributor to the distribution sector’s 1992 GDP with $14,377,986 or 12.7% of the aggregate. In 1990 and 1991, however, it was only the fifth largest contributor to the distribution sector’s GDP with $10,983,633 (11.7%) and $11,446,414 (11.4%) respectively. Retail sale of hardware, paint and glass was the third largest contributor to the distribution sector’s GDP in 1992 with $13,842,362 or 12.2% of the aggregate. Retail sale of hardware, paint and glass, however, was the fourth largest and second largest contributors respectively to the distribution sector’s GDPs in 1990 and 1991. Other notable contributions to the distribution sector’s GDP in 1992 were retail sale of food, beverage and tobacco with $12,387,297 (10.9%), maintenance and repair of motor vehicle with 12,266,960 (10.8%), retail sale of textile and clothing with $4,145,035 (3.7%), and other retail sale in specialized stores with $3,336,002 (2.9%). See Table 5.

Table 4: GDP Contribution by Industry 1990 to 1992

Source: National Accounts Statistics 1992

Table 5: GDP Contribution by Distribution Sub-groups, 1990 – 1992

 Source: National Accounts Statistics 1992

1.22 EMPLOYMENT

Of the 10,869 employees in the labour force in 1994, 1,469 employees or 13.5% of the work force were employed in the distribution sector or wholesale and retail trade. This sector employed the third largest number of workers after hotel and restaurants, and public administration and social security which employed 2,539 employees (23.4%) and 2,318 employees (21.3%) respectively. Table 6 shows that the number of distribution workers employed between 1992 and 1994 increase 15.4% from 1,273 employees to 1,469 employees. The average growth rate for the period 1990 to 1994 was 6.5%.

The wage bill of the BVI’s workforce in 1994 stood at US$ 118,638,953, with the distribution sector contributing $12,056,102 or 10.2%. See Table 6. In fact, the distribution sector was the third largest contributor to the wage bill behind public administration and social security’s contribution of $30,793,469 or 25% and hotel and restaurants’ contribution of $24,278,811 or 20.5%.


In 1994, the average annual earnings per employee in the distribution sector was $8,207. The distribution sector’s average annual income was twelfth among the seventeen classified industrial sectors in the economy. Financial intermediation had the highest average annual earnings per employee at $20,946 followed by electricity, gas and water with an average of $16,241 and mining and quarrying with an average of $15,310. The average annual earnings per employee in the distribution sector were also below the economy’s average of $10,915. See Table 7.

A further analysis of the distribution sector or wholesale and retail trade shows that, in 1994, 772 workers (52.6%) were employed in elementary occupations earning $6,602 annually; 243 workers (16.5%) were shop and market sales workers earning $6,080 annually; and 7 workers (0.5%) were skilled agricultural and fishery workers earning $5,685 annually. Thus, 69.6% of the distribution sector’s workers worked in low-income jobs earnings less that $7,000 annually in 1994. Bringing up the average were managers, professionals, technician and associate professional, plant machine operators and assemblers, clerks, and craft and related trade workers with annual incomes of $14,891, $16,618, $15,458,$12,124,$8,988, and $9,632 respectively. See Table 8.

Table 6: Number of employee by industry, 1992-1994

 Source: BVI Employment and Earnings Statistics 1994

Table 7: Average earnings per employee by industry, 1992-1994

 Source: BVI Employment and Earnings Statistics 1994

Table 8: Employment and earnings by and occupation in the distribution sector in 1994

Source: BVI Employment and Earnings Statistics 1994

Table 9 gives a breakdown of distribution workers by sub-groups. It shows that 454 workers, or 30.9% of the aggregate, were employed in retail sale of textile and clothing and hardware. Workers in this sub-group also contributed significantly to the total distribution sector wages, $3,684,683 or 30.6% of the aggregate. The second largest sub-group of distribution workers was retail sale of food, beverage, and tobacco with 354 employees, or 24.1% of the aggregate, contributed $2,314,969 in wages or 19.2% of the total distribution sector wages. Wholesale of food, beverage and tobacco was third with 322 workers (21.9%) contributing $3,121,013 or 25.9% of the distribution sector wages. The maintenance and repair of motor vehicle sub-group employed 169 workers (11.5%) with wages of $1,506,950 or 12.5% of the aggregate.

Table 9: Breakdown of Distribution Workers Employment by Sub-groups in 1994

Source: BVI Employment and Earnings Statistics

A large proportion of the distribution sector’s workers are foreign born. According to information from the BVI 1991 Population and Housing Census, the distribution sector or the wholesale and retail sector had the forth largest category of foreign born, 843 or 10.5%, after not applicable, which was made of children under 15, with 1,934 persons or 24.1%, the hotel and restaurant sector with 1,403 workers or 17.5% and the construction sector with 1008 worker or 12.5%. The majority of these foreign workers employed the distribution sector were employed in elementary occupations and other low paying jobs.

Table 10: Foreign born population by sector in 1991

Source: BVI 1991 Population and Housing Census

1.30 SECTORAL ANALYSIS OF THE DISTRIBUTION SECTOR

In the British Virgin Islands, the economy’s growth is highly dependent on the distribution sector. As shown above in table 4,the distribution sector or wholesale retail trade was the largest contributor to the nation’s GDP in 1992 with 32.9% with 32.9% of the aggregate. In addition, the distribution sector had one of the largest sectoral growth rates with an average growth rate of 10.4% from 1990 to 1992. The distribution sector also employed the third largest number of employees, 1469, in 1994 next to the hotel and restaurant sector’s 2,539 employees and the public administration and social security sector’s 2,318 employees. Thus, the distribution sector plays a important role in the development of the BVI’s economy.

According to the largest figure from the trade department there were, 1,817 businesses licensed in 1994 (See Table 11). The industries with the largest number of businesses were real estate, renting and other businesses with 404 businesses, 22.2%; wholesale and retail trade with 397 businesses, 21.8%; transportation, storage, and communication with 311 businesses, 17.1 %; and hotel and restaurants with 207 businesses, 11.4% respectively. The distribution sector or wholesale and retail trade, which had the second largest number of license businesses, covers the sale and maintenance of motor vehicles, personal and household goods in large quantities to be retailed by others and on a small scale respectively. The distribution sector, therefore, covers automobile dealers, garages, parts stores, gas stations, supermarkets, department stores, clothing stores, computer stores, vending machines, and various other retail outlets. The distribution sector, thus, has a significant number of businesses, offering a variety of goods and services to the BVI’s economy.

A further analysis of table 11 shows that in 1994 the majority of businesses, 1,574 or 86.6%, in the BVI were locally owned while 243 or 13.4% were foreign owned. The distribution sector or wholesale and retail trade had the largest number of locally owned businesses with 370 or 23.5%. The transportation, storage, and communication sector had the second largest number of locally owned businesses with 297 or 18.9% while real estate; renting and business activities sector was third with 286 locally owned businesses. The real estate, renting, and business activities sector had the largest number of foreign owned business with 118 or 48.6%; the hotel and restaurant sector was second with 36 foreign owned businesses or 14.8%; and the distribution sector was third with foreign owned businesses or 11.1%. It must be noted that the figures given in table 11 exclude banks, trust companies, and local fishermen that are not subject to the Business, Professions, and Trade License Act. Bank and trust companies conform to the regulations of Financial services Department.

Table 11. Businesses by Industry 1994

Source: Trade Department

1 Fishermen are exempted from trade licences.

2 Banks and trust companies are not included, for they deal directly with financial Services Department concerning their operations

A breakdown of the businesses in the distribution sector in 1994, see table 12, shows that there were 78 businesses, 19.6% of the aggregate, in the category other retail sale in non-specialized stores which represented the largest category of businesses in the distribution sector. The second largest category was retail sale of food, beverage, and tobacco with 62 businesses or 15.6% of the aggregate. Other notable categories were retail sale of textile and clothing, other retail sale in specialize stores, maintenance and repair of motor vehicle, and retail sale of hardware, paint and glass with 58,50,34, and 30 businesses respectively accounting for 14.6%, 12.6%, 8.6%, and 7.6% of the aggregate respectively.

Table 12: Breakdown of Businesses in the Distribution Sector in 1994

Source: BVI Employment and Earnings Statistics


Business, Professions and Trade License Act

In 1963, “(a)n Ordinance to govern the issue of licences to persons engaged IN TRADE AND COMMERCE, traveling agents and pedlars, and for purposes connected therewith” was enacted. This ordinance cited as the Trade Licences Ordinance, 1963, required any person carrying on a business as a merchant, storekeeper or shop keeper, traveling agent, and pedlar to first obtain a trade license from the Treasurer. The Business, Professions and Trade Licence Act, 1989 repealed the Trade Licences Ordinance, 1963. The Business, Professions and Trade Licence Act, 1989 “…govern(s) and regulate (s) the issue of issue of licences to persons engaged in businesses, professions or trade and to provide for matters connected therewith or incidental thereto.” The Act states that “no person shall engage in a business, profession or trade… without first obtaining a licence for that purpose.” The selling of any locally produced unprocessed agricultural or any marine products by a belonger are excluded from provisions just stated above. Fishermen, however, get fishing permits or licences from the Conservation and Fisheries Department and the Department of Agriculture has a registry of local farmers. There is therefore little governing and regulation of these industries.

Trade and Investment Promotion Department

In 1988, the Trade and Investment Promotion Department was set up “ to govern and regulate the issue of licences to persons engaged in business, professions or trade.” Prior to 1988, the Trade and Investment Promotion Department was a division within the Chief Minister’s Office. In order to effectively meet the growing needs of the BVI’s business community the Trade and Investment Promotion Department was created. The department’s effectiveness, however, has been limited due to its size and other factors.

The Trade and Investment Promotion Department only has an office on Tortola. Thus residents from the outer islands have to travel to tortola to apply for trade licences. This is an inconvenience as well as an expense to these residents. In addition, the Trade Department lacks manpower and equipment. For instance, there is only one trade inspector for the entire BVI, to travel to all the outer islands and make enquiries at the 1,817 businesses, to ascertain whether the provisions of the acts are being complied with. This trade inspector also has to seek out businesses without licences.

According to the BVI Recurrent Budget Estimates of Revenue and Expenditure 1996, the Trade and Investment Promotion Department had the second lowest expenditure among government departments and ministries in 1995. The Trade and Investment Promotion Department’s revised 1995 expenditure estimate was only $155,364 or 0.18% of the government’s total recurrent expenditure of $83,522,421. Estimates for 1996 show that the estimated expenditure for the Trade and Investment Promotion Department in 1996 is $253,200 or 0.28% of the total expenditure of $89,324,300. Although this is a 63% increase from the previous year, the Trade and Investment Promotion Department has the second lowest estimated expenditure of all departments since other departmental expenditures grew marginally.

More attention and resources need to be given to The Trade and Investment Promotion Department which is responsible not only for regulating businesses in the BVI but assisting them in their development. As stated above, The Trade Department only has one trade inspector. Enforcement is therefore a problem since there are businesses operating without trade licences especially in the marine industry. Additional inspectors are required as well as promotional campaigns in order to increase incidents of reporting by the public. Assisting businesses’ development is critical to the continued economic growth of the BVI. Thus, the trade department has to play a major role assisting with training and other forms of development.

The Government has made significant strides over the last couple of year with respect to training by sponsoring numerous workshops, seminars, and television programs aimed at improving business’ performance. Preliminary plans for workshops and television programs for the next year have already been made. The government realizes the importance of training business personnel and bringing local businesses up to international business standards. However, they can increase the frequency of workshops and television programs with more emphasis on employee training.

Looking at table 13, one can see that 85.2% of the workers in the distribution sector had either no education, a primary education or a secondary education. Primary and secondary education levels, in fact, were the two largest education categories for workers in the distribution sector with 33.5% and 51.3% of the aggregate respectively. Thus, educating these workers would more than likely be beneficial since most of them had no formal business training. Informing them about business operations and improving their service will benefit their employers and thus the economy.

Table 13: Workers in the Distribution Sector by Education level in 1991

Source: BVI 1991 Population and housing Census

Another issue of concern is the constraint of the Trade and Investment Promotion Department. When there are blatant violators, businesses operating without licences, the Trade Investment Promotion Department’s actions are limited to sending notices. The department feels that there should be an easier way to enforce the law, such as fines. The issue of “fronting” and illegitimate businesses is also not covered in The Business, Professions, and Trade Licence Act, 1989. It is a common occurrence in the BVI for local businessmen to “front” for foreign investors. They, therefore, commit perjury when they apply for their trade licence. Although in some instances the Trade Department has an idea, they cannot intervene. Major problems arise when the partners split and there are disputes. Amendments to the act should therefore be considered and enacted.

The Trade and Investment Promotion Department and the Business, Professions and Trade Licence Act, 1989 governs, regulates, and promotes businesses in the BVI especially those in wholesale and retail trade. Thus, shortfalls in the Trade and Investment Promotion Department and the Business Professions and Trade Licence Act, 1989 negatively affect the distribution sector or wholesale and retail trade.


Market Place

With the BVI’s location and its direct access to the USA, the USVI, and Puerto Rico, the distribution sector provides virtually all goods or services demanded by consumers; however, consumers opt to shop in the United States, St. Thomas, and Puerto Rico. Main complain consumers have is the price of goods, for they claim that they can buy goods abroad and bring them to the BVI for lower prices than they would pay here. Businesses, however, feel that something should be done to encourage BVI residents to buy local. Bonded warehouses and double taxation are some of the solutions that have been suggested by the business community.

Some businesses claim that if bonded warehouses existed the price of their goods would be lower and more competitive. A bonded warehouse would allow businesses to store goods at warehouses until the goods are needed, and it is only at that time that custom duties are paid on these goods. There is also the possibility that bonded warehouses can open new avenues of business such as export markets since goods under a bonded warehouse system can be re-exported to other countries at a lower cost or more competitive price. This is because the re-exported goods’ price will not include customs duties. It is possible that bonded warehouses can increase businesses’ competitiveness with the neighboring islands as well as provide new avenues of exports. The government should, therefore, look into this suggestion. Other suggestions include increasing or doubling taxes on goods imported by individuals that are sold locally. This solution, however, is not practical.

Duties on most consumer goods in the BVI range from 5% to 15% which is relatively low. In fact, the BVI has some of the lowest import duties in the Caribbean except for islands such as the USVI and Puerto Rico, because of their relationship to the US. The duties in the USVI and Puerto Rico, however, are not significantly lower than duties in the BVI. This, therefore, does not justify prices in the BVI being 100% higher or even 200% in some cases above the neighboring islands. This has caused the pricing practices in the BVI to come under some scrutiny since few believe that using conventional pricing policies or patterns some of these prices will be justified. The search for new suppliers should also be a consideration in lowering local prices and competing with neighboring countries.

Financing

On March 31, 1995, loans and advances outstanding by the distribution sector or wholesale and retail totaled $33,363,00, a 33.0% increase from the previous quarter’s figure of $25,085,000. Wholesale and retail trade financing for the period March 31, 1995 amounted to 12.4% of the total loans and advances outstanding.

Although the figures in table 14 look impressive, many in the businesses community complain that the banks can do more to help local businesses. They also believe that government can do more to pressure the financial institutions. The banking community, however, agree that while there is always room for improvement, there is a misconception that banks are more willing to lend money to buy an automobile than to set up a small business. Thus, it is the preferences of BVIslanders that influence the banks’ lending patterns. More BVIslanders are interested in driving fancy cars than starting their own business. In addition, banks are in the business of lending other people’s money and have minimize their risks, and not everyone can meet the requirements for loans to set up a small business. To banks credit, wholesale and retail trade had the second largest figures of loans and advances outstanding on December 31, 1994 after private household with employed persons, and the third largest figure of loans and advances outstanding on March 31, 1995 after private household with employed persons and hotel, guest house, and restaurant.

Table 14: Outstanding Loans and Advances by Economic Sector (US$ 000's)

Source: Financial Statistics



1.40 DISTRIBUTION SECTOR POLICIES AND STRATEGIES

The government’s objective with respect to the distribution sector over the last five years, 1990-1995 included

1. Assisting businesses with their development
   
2. Promoting local businesses
   
3. Creating and maintaining a stable atmosphere for investment

Policies

Over the last five years the government undertook the following policies to achieve the above stated objectives.

1. The development of educational programmes especially for the business community
   
2. Assisting small businesses financially
   
3. Giving preference to local businesses as well as providing them with incentives
   
4. Promoting economic growth to induce investment.

Strategies

The following strategies were used during the period 1990 – 1995 to implement the above stated policies.

1. To develop educational programmes for the business community

1. A number of workshops and seminars were offered
   
2. Television programs and series, directed towards the business community, were developed

2. Government assisted small businesses financially by

1. Having funds available especially for small businesses through the development bank

3. In order to give preference to local businesses and provide them with incentives

1. Certain areas of business were reserved for BVIslanders.
   
2. Local businesses received various incentives as a result of ordinances such as the pioneer services and the enterprise ordinances.

4. Finally, in order to induce investment in businesses

1. A fiscal policy that allowed the BVI’s economy to experience continual growth, which did not crowd out investment, was undertaken
   
2. A stable political environment was maintained

The government policies with respect to the distribution sector, stated above, have been fairly successful. This success can be seen through the distribution sectors 1992 GDP of $113,494,717, or 32.9% of the BVI’s GDP of $344,612,096, which grew on average by 10.4% from 1990-1992. The distribution sector’s success was also seen in the growth in the number of employees in wholesale and retail trade from 1167 workers in 1990 to 1,469 workers in 1994, an average annual growth rate of 6.5%. Loans and advances outstanding to the distribution sector was another area that showed the growth of the distribution sector. On March 31, 1995, loans and advances outstanding by the distribution sector totaled $33,363,000, a 33.0% increase from the previous quarter’s figure of $25,085,000.

More can be done to develop the distribution sector because there are some major issues of concerns as shown above in section 1.30. Some problems are:

1. The Trade Department’s lack of man power, equipment and resources
   
2. The occurrence of illegal business operations
   
3. The need for additional training within sector
   
4. The shortcomings of the Business, Professions and Trade Licence Act, 1989
   
5. High prices in some areas of the distribution sector
   
6. And the lack of financing for small businesses

1.50 PROPOSED POLICIES

Wholesale and retail trade, like most of the other sectors in the BVI, has written and unwritten policies. Most of the written policies, however, are outdated. The lack of up-to-date policies have created some of the problems mentioned above. The government has realized this and have made steps to correct this situation. An example of this is the draft bill of the Virgin Islands Consumer Protection Act – 1996 which “… provide(s) for the protection of consumers and other matters connected therewith.” In addition, a number of other programmes and projects are in pipeline.

The main object and aims of the government with respect to the distribution sector for the next five years, 1996 to 2000, are:

1. The continual assistance to small businesses development
   
2. Maintaining a stable economic and political environment to attract investment
   
3. The establishment of a stronger partnership between the public and private sector
   
4. Improving the provision of services to the business community

Policies

In order for the objected, stated above, to be achieved, the following policies must be undertaken.

1. The creation of a business friendly environment to aid businesses development 
   
2. Continued emphasis on economic growth, good government, and good governance
   
3. Developing training policy and programme geared towards service related workers
   
4. Improving government’s accessibility and working relationship with private sector

Strategies

For the above policies to be realized, the following strategies must be implemented.

1. The creation of a business friendly environment to aid business development will result from the following.

1. The establishment of a special credit fund through the Development Bank to assist small struggling enterprises with limited options
   
2. The establishment of a legal measures against “bad Cheques
   
3. Enacting a Consumer Protection Bill, which has been drafted

2. In order for the BVI to promote economic growth, good government, and good governance

1. Sound physical policies must be undertaken
   
2. The development of rich consultative process with all development partners, including the private sector, non-government organizations, ordinary workers, citizens, the international donor financing community, and the United Kingdom Government.

3. The development of a training policy and programme geared towards service related workers should focus on

1. Improving the delivery mechanism of services through training programmes for immigrations, customs, police, and middle management of the public service.
   
2. Training upper level mangers at internationally respected institutions

4. Improving government’s accessibility and working relationship with the private sector will be achieved by

1. Involving the business community fully with the development of the BVI
   
2. Creating easy access for residents and businesses so that their concerns could be aired

1.60 SUMMARY AND CONCLUSION

The distribution sector has had a significant impact on the development of the BVI. It is the most unrecognized sectors in the economy although it has the largest contribution to the BVI’s GDP, 32.9% in 1992. In addition, the majority of the BVI’s imports are linked to the distribution sector. In fact, 90.4% of BVI imports in 1994 were associated with the distribution sector. The distribution sector or wholesale and retail trade also has strong linkages to the other sectors in the economy.

The distribution sector is therefore a key player in the future development of the BVI. As illustrated in this document, the distribution sector’s policies and strategies, or lack of, have created positive as well as negative results. The proposed policies and strategies stem to resolve the problems present in the distribution sectors. Thus, the development of the distribution sector and the future development of the BVI will depend on government’s distribution sector policies and strategies:

1. The creation of a business friendly environment
   
2. Continued emphasis on economic growth, good government, and good governance 
   
3. Developing training policies and programmes geared towards sales related workers
   iv. Improving government’s accessibility and working relationship with the private sector

The BVI government also needs to look at the following proposals

1. Undertaking an industry study
   
2. Developing training and educational programmes for distribution sector workers
   
3. Revising the Business, Professions and Trade Licence Act, 1989
   
4. Reviewing the Trade and Investment Promotion Department
   
5. Providing additional resources to the Trade and Investment Promotion Department
   
6. Reviewing the potential benefits of bonded warehouses
   
7. Reviewing financial institutions lending practices to businesses

The distribution sector’s importance to the development, social and economic, of the British Virgin Islands is substantial. Thus, the above stated policies and proposal are aimed at guiding the distribution sector and the country’s future development.

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