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History of E-commerce & E-zone Business on the island of Cura ç ao

History of E-commerce & E-zone Business on the island of Cura ç ao. Dr. Miguel Goede University of the Netherlands Antilles. Today’s objectives. Cura ç ao at a glance Why Cura ç ao? What is e-Zone legislation? How does e-Zone legislation work in practice?. Today’s objectives.

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History of E-commerce & E-zone Business on the island of Cura ç ao

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  1. History of E-commerce & E-zone Business on the island of Curaçao Dr. Miguel Goede University of the Netherlands Antilles

  2. Today’s objectives • Curaçao at a glance • Why Curaçao? • What is e-Zone legislation? • How does e-Zone legislation work in practice?

  3. Today’s objectives • Curaçao at a glance • Why Curaçao? • What is e-Zone legislation? • How does e-Zone legislation work in practice?

  4. Curaçao at a glance

  5. Curaçao at a glance • Partner in the Kingdom of the Netherlands • Main economic sectors include Tourism, Oil refinery, International Financial Services, Logistics • One levels of government after 2010 • Stable political climate • Court in the Hague is last resort • Unique history • 140.000 population • Strategic location: Southern Caribbean in front of the coast of Venezuela

  6. Curaçao at a glance • 444 km2 /182 square miles • Dutch is the official language, Papiamentu is the native language, English and Spanish are widely spoken • More than 50 nationalities • Currency is the Antillean Guilder and is pegged to the US Dollar. Exchange rate is 1 US$ = NAF. 1,82

  7. Real GDP 2.1% Inflation 2.0% Population 1.9% Unemployment 9.7% Youth unemployment 24.7% Economy in 2009

  8. Expected developments in 2010 Economic growth will pick up to 1.6%, reflecting improved domestic and foreign demand. Increased domestic demand will reflect gains in both private and public demand. A cash surplus expected on the general government’s budget due to the debt relief. Worsening of the current account of the balance of payments as imports of goods and services are expected to rise, partly offset by increased exports and net current transfers from abroad. The latter reflects the inflow of debt relief funds. Inflation is expected to rise moderately to 2.3%. 8

  9. Today’s objectives • Curaçao at a glance • Why Curaçao? • What is e-Zone legislation? • How does e-Zone legislation work in practice?

  10. Why Curaçao? • World Class Financial Services • Attractive investment incentives • Well equipped infrastructure

  11. Comparative advantages • Deep sea water ports • Culture and sophistication • Business Center • Dutch based legal system • Internationally oriented Education • Sophisticated Tourism • Cultural advantages • Access to the EU market • Multilingual workforce • Sophisticated financial services sector • Friendly environment and high quality of life • Brand new airport • Close to South America

  12. Infrastructure • Educational institutions • Medical care • Refinery • New and modern airport • Power and Water • Telecommunication • Ports • Road • Postal services

  13. http://nwncable.com/flash/english/map3.swf

  14. Investment climate • Open to investment • Modernization of legislation • Privatization process • Strategic alliances

  15. Sector Opportunities • Business Services • Education • IT/E-commerce • Telecommunications • Call centers • Residential and Commercial buildings • Tourism • Arts & Culture • Entertainment • Transshipment & logistics • Refinery • Medical • Recreation

  16. Today’s objectives • Curaçao at a glance • Why Curaçao? • What is e-Zone legislation? • How does e-Zone legislation work in practice?

  17. General Definition of an Economic Zone Economic zones refer to special zones where normal trade barriers such as import or export tariffs do not apply. Bureaucracy is typically minimized by outsourcing it to the Free Economic Zone operator and corporations setting up in the zone may be given tax breaks as an additional incentive. These zones will attract employers and thus reduce unemployment and stimulate the area's economy. Free zones promote economic well-being not only of the beneficiaries but of the whole economy of the host country in terms of job creation, attraction of FDI (Foreign Direct Investment), boosting of export, transfer of technology and management knowhow, regional development and industrialization.

  18. History of Economic Zone Economic Zone = e-Zone • 1975 Curaçao Free Zone Legislation à 2001 Economic Zone Legislation • Two types of e-Zones: • For moving Physical Goods • For providing Virtual Goods/ Services; Via electronic communications and information technology Curaçao has 11 Economic Zones, 2 for Physical Goods and 9 for Virtual Goods and Services Today we focus on the e-Zone of Virtual Goods/ Services!

  19. Requirements for Success • Proper legislation • Recognition of digital signature • Superior bandwidth at affordable rates • Infrastructure • Avoid Red-Tape

  20. The e-Zone Incentive Main motive: Extend the economic base of the Netherlands Antilles. • Contribution to the Economic Development of the Netherlands Antilles • Generating Foreign Exchange • Developing e-Commerce • Converting the Island in International Distribution Center & International Service Center • Creating more Job Opportunities • Requests files with Island Council (DEZ)

  21. e-Zone Tax Aspects • Profit Tax: 2% instead of 34.5% until 2026 • Import of (Trading and Inventory) Goods are Exempt of Import Duties and Turnover Tax • Exemption of Sales Taxes on the Volume of Sales of Products and Services Rendered Overseas or to another e-Zone Company • Exemption of Land Tax • In conformity with OECD practices Note: OECD recognizes a server as (part of) Permanent Establishment

  22. E-Zone e-portunity • Legislation passed in 2001 • 2% Profit tax rate • 0% Import duties, sales tax and property tax • Excellent infrastructure • Besides Goods also Services!

  23. e-Zone Legal Aspects • Legal entity with Capital Divided in Shares • Specific Articles, in particular its Objective • Registered at Trade Registry at Curaçao Chamber of Commerce • Registered Address in an e-Zone and doing business from an e-Zone • Apply for Business License and Foreign Exchange License • Need a Local Bank Account • CRIB Number (Tax Identification Number) • Business Plan • E-Zone Status License Request by e-Zone Manager

  24. Today’s objectives • Curaçao at a glance • Why Curaçao? • What is e-Zone legislation? • How does e-Zone legislation work in practice?

  25. The e-Zone Triangle

  26. How to become an E-Zone Company • The Law says that the company needs to be established in/operating from an E-Zone

  27. Permanent Establishment How does your company take domicile in the e-zone two options: • People • Servers

  28. People vs Servers People Servers Square meters Rack units (U’s) Physical address IP-address Branches Bandwidth

  29. People Housing people • Office space, depending on amount of employees • Superior and competitive telephone rates • High availability IT-infrastructure • 24-7 Challenge (time zones) • Various providers/e-zones

  30. Servers/Equipment OECD recognizes a server as (part of) PE • Collocation of hardware in cabinets • Professional Service Providers, SLA’s • 24/7 Managed hands on-site • Relatively easy deployment

  31. Define your needs • Human Support • Network Infrastructure • Security • Your specifics

  32. Network Infrastructure • Current : • Bandwidth • Space • Connectivity • Redundancy • Uptime • Future: • More space, bandwidth, services? Bandwidth Needed: Peak Traffic – 8 Mb Average – 4 Mb Future (1yr) Avg – 10 Mb Space: 2 Web Servers – 4 U 2 Firewalls – 2 U 1 Database Server – 4 U ------- 10 U Connectivity: 2 Ports Redundancy: Failover protocol VRRP : Provider must be multi-peered with BGP Uptime: As close to 100% as possible!

  33. The E-Zones in Curaçao • E-Zone Koningsplein (goods & services) • E-Zone Hato (goods & services) • E-Commerce Park • New Haven E-Zone • E-Powerhouse • E-Zone van Engelen • E-Zone Hoogstraat • E-Trading House

  34. The application process Standard application form Regular KYC information E-Zone administrator Relatively quick turnaround (10 -15 working days)

  35. Acquiring e-Zone License • Application for the e-Zone Status License by e-Zone Manager • Provide DEZ with required corporate documents • Provide DEZ with Business Plan specifying: • Economic Contribution, • Growth in Local Employment and • Stimulus of Flow of Foreign Currency Acquiring the e-Zone Status License is subject to approval by the e-Zone Committee chaired by the DEZ. Other parties are: Inspectie der Belastingen (invoerrechten en accijnzen), DROV, Afdeling Juridische Zaken van Eiland Gebied Curaçao

  36. Examples of e-Zone Businesses • International Trade and Distribution • Entertainment • Services: Travel Agency, Reservations, Information • Logistical Services • Software Sale and Leasing Anything that can be sold and distributed through the WWW, telephone and/or fax is possible!

  37. Who’s already there (except you; here’s a shortlist) • First Caribbean International Bank • RBTT • Guardian • Sagicor • Total Bank • Marriott, Hilton, Renaissance, Hyatt, Wyndham, Best Western, Superclubs Breezes • Ansari Corporation • Productive Business Solutions • Digicel

  38. Indian companies in Curaçao • Boolchand • La Curaçao • La Palestina • Hermanos Lalo, Daryanani family • Baba’s • Omni Electronics

  39. http://www.newhaven-ezone.com • http://www.hbmgroup.com • http://www.e-commercepark.com • http://www.cifa-curacao.com • http://www.businesscuracao.com • www.miguelgoede.com

  40. Questions

  41. Thank you

  42. Sources • Eliane Behr MBA • Herman Behr MBA • Robert Vermeulen MBA • Arthur Rosaria MBA • Central Bank of the Netherlands Antilles

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