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Economic Development Head Suggests Strategies for Retaining Investors

July 24, 2007 — It's easy enough to attract potential investors to the territory, but keeping them here is a different story, representatives from the Economic Development Authority (EDA) told senators during the second round of budget hearings Tuesday.
For years, the territory has been caught up in a battle with the federal government. The V.I. government has sought clarification on and relief from new limitations placed on source income and residency requirements related to the authority's tax incentive benefits program. While these issues have still had a somewhat negative impact on investors coming into the territory, EDA officials said Tuesday that other factors — such as developing the territory's infrastructure — are key to making the local economy more attractive.
In particular, the territory has to spend more time on areas such as education and health care, explained EDA Chief Executive Officer Frank Schulterbrandt. In keeping with changes in the global economy, for example, residents from the territory need to keep up to date and be trained to handle advancements in the technology, e-commerce and financial-services sectors, he said.
"We find that increased education is driving those economies that are successful, with students also making strides in areas such as science, math, reading and writing," Schulterbrandt added. "But we continue to be struggling. This is critical, because our education system still has its challenges and it's really going to impact our workforce."
Improving health-care services, keeping the territory clean and streamlining permitting processes should also be pegged as top priorities, he said.
"There has to a collective effort from the community in addressing these things," Schulterbrandt said, adding that keeping investors in the territory also hinges on such things as making sure the community has reliable power and telephone service. "We're competing with the world, here — even the behavior of the Legislature plays a part in the decision-making process."
In the meantime, the EDA has doubled its marketing and promotion efforts, Schulterbrandt said, shifting the focus placed on tourism and manufacturing industries to the development of local telecommunications, e-commerce and money-management sectors. More forays have been made overseas, he added, with presentations about the territory's marine, aquaculture, retirement and hotel industries being pitched to a range of international investors.
Later during the meeting, Schulterbrandt explained that the authority's proposed General Fund budget for fiscal year 2008 — which totals almost $4.1 million — would help augment promotional efforts and assist with the launching of a new e-commerce program for the territory.
While most senators praised the authority for their efforts, others, such as Sen. Basil Ottley Jr., mentioned that a lack of resources has kept the EDA from fully accomplishing its goals. In addition to overseeing the territory's tax- incentive program, EDA also acts as an umbrella agency for four other entities — the Government Development Bank, Small Business Development Agency, Industrial Park Development Corporation and Enterprise Zone Program.
Ottley, followed later in the hearing by Sen. Terrence "Positive" Nelson, offered suggestions on how the authority could streamline its operations. Highlighting the fact that EDA currently does not have a planning or research division, Ottley said that the creation of a territory-wide development plan would assist the authority in determining what investors could be a good fit for the local markets.
Nelson also suggested the authority seek new ways of investing its money so that more funds can be used to subsidize loans granted through agencies such as the Government Development Bank.
While Schulterbrandt said the authority is looking into its financing methods, he also continued to emphasize the need to educate and grow the local workforce, which would help to eliminate the challenge of keeping outside businesses within the territory year after year.
"We should not only be focused on attracting new businesses, but cultivating what we already have here," he said. "And we can do that through education, community awareness and all those other factors that will also ultimately contribute to our overall quality of life."
For FY 2007, EDA has approved eight new applications for its tax-incentives program. Between October and June, 20 applications were filed for tax benefits — a 10- percent decrease over FY 2006.
Present during Tuesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Neville James, Nelson, Ottley and James Weber III.
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