Aruba, Hub To The Caribbean

Aruba, Caribbean knowledge HUB

Diversification the Singapore way

Implementation of the Singapore Master Plan on the Island of Aruba

A viable Market Development solution?

Remo Kock

MBA Masterclass

International Marketing and Business

Caribbean University, Aruba

Preface

Because of my own interest in the Information & Communication Technology sector developments and the Aruban economy, I started thinking of the successful

Singapore Master Plan where, in Singapore, the economy has grown with an annual rate of 8.5% from 1960. Except for the years 1964, 1975, 1985 and 1986 the economy has recorded a growth of more than 5% annually. Singapore's growth has been accompanied by a change of the economic structure with a shift from local (agriculture, quarring) to global services. Now there is a focus on high value added industries such as financial and business services and technology manufacturing .

I wondered if a similar setup would be beneficial for Aruba with know-how and geographic location being important factors to take into account. As with Singapore being a hub to Azia, Aruba could be a hub to the Americas, especially for the whole of Latin America and the Caribbean Nations. Maybe Aruba would have to focus on other aspects of the economy, or maybe the conclusion will be that it is not viable to implement.

This topic is not a new one. I found several articles in the Amigoe di Aruba containing references to a knowledge economy and Singapore as an example for implementing new services for the Caribbean Area. In the article of january 6th 2003 named "Aruba, Singapore van het Caribisch Gebied" it is mentioned that Aruba should be developed into a financial service center, with other words a Singapore of the Caribbean region. However, in the same article it is mentioned that Aruba lacks the infrastructure to develop into the desired service center. In an article of the Amigoe di Aruba of June 22nd 2003 called " Economisch beleid voor de komende jaren: Meer hotelkamers, maar vooral diversificatie van de economie" the government mentions a knowledge economy - part of the policy plan "Vision, curashi y disciplina" of 2002 with the goal of growth of the economy of 2% annually.

The Aruba government policy is focused on long term economic growth, with more rooms available for tourists and diversification of tourism - such as ecotourism, golftourism and culture tourism. Besides tourism, also logistics and transportation are mentioned, financial services and knowledge economy. With logistics is meant development of the Free Zone, Captive insurance as a niche for the financial sector and a high education level for local workers as building stone for the knowledge economy .

In this paper I would like to discuss the possibilities of turning Aruba into a hub for several sectors in the Caribbean area and latin America. Two factors are important in implementing the concept. First, the know-how necessary to function as a hub on ICT and financial services, serving as a knowledge economy. Secondly, the available infrastructure to serve the diversified Freezone services. The goal is to diversify the economy of Aruba with the goal to lessen the impact of a backfall of the current economy system where there is only one major pillar standing, namely the existing tourist economy, which is very vulnerable, as seen after September 11th.

Topic, focus and discussion

Topic

Information and Communication Technology

Singapore is often promoted by herself and others as an intelligent island. What is meant by this is that Singapore has one of the highest internet penetration rate and it created world's 1st broadband network (Singapore ONE). The aim of Singapore is to make Singapore into a global player offering services to the region and multinational companies, expanding the focus of products offered and diversify the economy. Singapore uses its broadband network for its domestic users, both home users and companies, and uses it for international business, namely for banking and other financial services. Singapore has both a regional marketing focus and a global focus. Regional focus is on the surrounding countries, including China, Thailand and Malaysia. The global focus is mainly on MNC's (Multi National Corporations), with or without a branch on Singapore main Island.

Trade and transport

At the moment the government is marketing Aruba as a hub for goods and services from Brazil for the US and European market . I think this is the way to market Aruba, but not only for Brazil. The focus should be on the whole of the Latin American market. Because of the ties Aruba as historically, and still today, with Europe it is easier to access this market, than it is for Latin American countries. This is a niche that can be exploited next to the good geographical location Aruba has, being a natural stepping stone for transport to and from the US and Europe. In comparison, Singapore's economy is primarily based on trade, shipbuilding and repairing, oil refining, electronics, information technology, banking and finance.

Some of Singapore's economic indicators :

2002 2003

Gross domestic product ($ billion) 158.1 159.1

Per Capita Gross national Income6 37,834 37,555

Real Economic Growth Rate (%) 2.2 1.1

Productivity Growth (%) 3.6 2.3

Sea Cargo handled (million tons) 335 348

Due to its location on the major sea route between India and China and superb natural harbour, trade has been especially crucial to Singapore's ecnomic success and re-export trade accounts for almost half of all trade. However, Singapore's export oriented economy has caused problems in recent years and in 2001 the economy shrank by just over 2% as a result of the global recession. In response to this, and also as a result of stiffer competition from lower cost countries for exports and investment, the government is endeavouring to build on Singapore's