Doing business in Aruba?
What you (really) need to know
This week, I want to share some thoughts on doing business in Aruba. There is a lot published out there by government departments and many professionals, but they all follow the same party line. Things like “we have a stable government, we speak many languages, we are a great hub for local trade, our government departments are here to support you, and so on. My approach will be different. I will share a bit about the not-so-pretty side of the story. I will leave it to others to deliver a happy sales pitch full of rainbows and sunshine. So, here it goes.
Intermezzo fair warning
Before we get into the meat and potatoes of doing business, I will give you a fair warning. Government bureaucracy, anti-money laundering-driven compliance, and opening a simple bank account will take what will feel like forever and cost you loads of energy, frustration, disappointment, and money. If you are lucky or resilient enough to make it to the other side, it will feel like you completed an Iron Man contest, but in reality, you just took the first few basic steps. You spend a junk of money, and your revenue is still at zero.
Aruba has a rather heavy payroll when it comes to staffing. This is not necessarily caused by having top-heavy executives on the payroll but by having a large population of staff, more often than not, appointed politically, i.e., in exchange for their loyalty and vote. Great guys rally at the campaign and put up posters and flags of their favorite politicians, yet are typically underqualified for a public servant position where the public has to be served and where knowledge of public and administrative affairs is lacking.
To perform many commercial activities, you will need to obtain one or more licenses from the government. You will find that applying for permits is a remarkable experience. You will fill forms in blue ink until you drop and will be required to provide copies of many other things, most of which are issued by the government in the first place. Some of the requirements are made up on the spot by the bureaucrats. A good example is that last year the Department of Labor required the applicant to sign on every page of every submitted document, even on copies of passports and extracts of the Chamber of Commerce. Why or what value that adds is still a wonder to me. But that is not all those guys will then check every signature as if they were calligraphy forensic experts working for the FBI. Should any one of your signatures deviate slightly, they will immediately return the application to you to get the same person to re-sign the same paper and come back. Why? Obviously, because they can.
Another typical sales pitch is that we have “streamlined regulations” and “a solid Dutch-based judicial system”. By law, a government department must respond to requests within 12 weeks. In practice, that virtually never happens. You are lucky to receive a communication stating that your application was received. Two months sounds like a fair period to get a permit, but in practice, a random permit can take months and even over a year to obtain.
Some permits are only available to state-owned companies, and the government will defend tooth and nail any attempt by any innovator or investor to tap into what is considered “theirs”.
- Is there a level playing field? Hell no!
- Do we adhere to the World Trade Organisation (WTO) agreements? Nopes.
- How about the General Agreement on Tariffs and Trade (GATT) for Goods and for Services (GATS)? No señor.
Our leaders are more like seasoned ad hoc rules and decision-makers. More often than not, decisions are made with a short-term vision in mind. Namely, the next election and their expected ability to retain and grow in votes. The longer-term vision is not appealing “because if I lose the election, it won’t be my problem anyway”.
Do we speak many languages?
We also boast that we can serve you in many languages. More accurate is to say that we “could.” In the public sector, the use of Dutch has diminished. Some will speak in favor of more use of our Papiamento. Still, in practice, we know it is more than the new breed of government workers – especially those political appointees – simply do not have enough schooling to communicate in Dutch, nor do they get any proper training on the rules. So, no surprise if they don’t know the laws and the rules since those are in Dutch. Then there is also the public servant that refuses to speak Dutch or Spanish to a customer because “they came to my island, and they need to learn my language”. I am not making this up.
Give us a call
Government departments all have automated telephone systems. This is an excellent tool for not having to pick up the phone. If you find the right extension, you will likely not pick up the phone or find that mailbox full. Email is a great tool, but don’t be surprised if you get no response if you can email a department.
We have some good ones
Of course, not all public servants are lazy or underqualified. I will say there are some rare exceptions. Some rare and fine gems among departments and civil servants understand their role, are trained for the position, do pick up the phone, and answer emails, and if you find them, you are lucky. However, due to their limited numbers, there is only so much help that they can provide. I thank those gems when I meet them and thank them for their service.
A chocolate teapot
This past week, the government launched a new website, www.InvestInAruba.com. A commendable initiative at first sight. I took a brief look at the content. The most striking section stated:
“CLEAR-CUT INVESTMENT PROCESSES. Thanks to streamlined regulations and political stability, Aruba has one of the best business climates in the Caribbean…”.It sounds like a nice bite, but that is all it is. A sales pitch. Our regulations are far from being “streamlined”, often outdated. The way most public departments deal with investors is by generating an impenetrable and unexplainable maze of procedures and “our rules” and “our policies” designed to make the most simple task, such as a horrendous task that drives you to give up or slash your wrists, whichever comes first. Behind the website is a government agency named ARINA. Years ago, I was part of a committee that looked at bottlenecks in various processes and came up with ways to resolve these. Our committee was called ONE-STOP SHOP. The recommendations were not followed. Many bottlenecks still exist today. What they did, was create yet another government department to grow the staff count even more became ARINA.
ARINA the facilitator?
ARINA was staffed and launched. ARINA was to be a facilitator for investors among the various government departments. Yeah, right. The various departments – and I vividly remember the Department of Economic Affairs stating that they didn’t recognize ARINA and that ARINA had no power or say in the issuance of business permits. The statement was accurate – and a show of power – but contradicted the raison d’etre of ARINA in the first place. ARINA had no authority, nor was it acknowledged by other government departments. For an investor, the agency was as helpful as a glass hammer.
I am no betting man, but certainly, I would not wager any money that the resurrected ARINA with its sexy website will be able to make any difference for investors, nor be able to show off a list of success stories anytime soon. The “success stories” that I have seen listed on the website are almost all 100% private initiatives developed before ARINA’s existence or became a success despite the role of government. This column is not about criticizing the latest government initiative, and I do hope it succeeds, but with 25-plus years in the game, I have seen a thing or two, and history does tend to repeat itself. The website contains hot air, fluff, and witty punchlines. It also includes a good serving of half-truths.
My critical review:
Take it with a grain of salt, don’t get your hopes up and realize it is a sales pitch delivered by a seasoned 2nd hand car salesman.
Every government for the past decades, at one point, pretended that Aruba would be the next hub for global trade. Products would have no choice but to fly or sail into Aruba before entering any primary market. A funny Prime Minister even boasted that Colombian exports would pass through Aruba before going to Europe. At the same time, or even before that, KLM was flying cargo straight from Bogota to Amsterdam and with the Dutch with a firm presence in Colombia and the rest of Lat-Am, making the pretended role of Aruba completely irrelevant.
If it appears too good to be true….
Amid most seemingly impossible situations, there often appears to be that one guy or gal that seems to have all the answers or knows the right person who can make things happen at the speed of light instead of the average speed of government. This person is so well-connected that he can write you an application for a particular permit, walk into the correct office and walk out with a favorable decision from the power of be de jour. He can do that because he had a hand in not only drafting the application but, at times also in replying to the application. Or he walks out with the application that now has a scribble by a minister saying “Approved as requested” or “No objection” or the best one yet “Approved if lawful”. Unique superpowers. I don’t have those superpowers, nor do I wish I did. There are other forms of corruption, favoritism, or nepotism. Some now and then end up in a criminal case against a minister or government officials, but a fair guess would be that a fair number just slides by. So if you want to get by the crooked way, be my guest, but don’t look surprised when the police knock at your door. I recommend doing it the right way, even if it takes more time, effort, and money.
I will step on the brakes on this topic for now. Otherwise, I can probably fill up the whole edition of the TREMPAN newspaper with commentary on doing business in Aruba that neither the government nor lawyers or other professionals dare say or publish as part of their marketing. I said it, there. As a dear mentor used to say: “honesty and transparency is the best policy”.
This was it for this week, and from the flight deck #YourFavoriteLawyer #BoAbogadoFaborito says see you next week