SURINAME ILL-PREPARED ON EVE OF CSME

UNCLAS SECTION 01 OF 02 PARAMARIBO 000843

SIPDIS

SIPDIS

DEPT FOR WHA/CAR: LLUFTIG

E.O. 12958: N/A
TAGS: ELAB PBTS PGOV PREL SCUL SMIG TBIO SENV NS
SUBJECT: SURINAME ILL-PREPARED ON EVE OF CSME

PARAMARIBO 00000843 001.2 OF 002


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Summary
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1. In a special meeting on Saturday December 17,
Suriname's Council of Ministers voted to remove all
remaining legal restrictions to Suriname joining the
CARICOM Single Market and Economy (CSME). This came
exactly two weeks before the December 31 deadline set by
CARICOM members five years ago to become CSME ready. While
the Council's action is an encouraging sign, it has little
immediate practical meaning given the need to make a
variety of regulatory and even legislative changes, the
scope of which are still being investigated, to remove all
restrictions on the movement of goods, capital and people
required by the CSME. Business organizations indicate
skepticism that Suriname will actually meet the year-end
deadline, noting not only government, but also businesses
have work left to do to comply with the CSME. Both
procedurally and in terms of a competitive business and
investment mindset, Suriname is not CSME ready. The
Council of Minister's grand gesture, unsupported by
required associated procedures, is not unusual in Suriname,
and undermines perceptions of regulatory transparency and
effectiveness. End Summary.

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The Politics
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2. In a radio interview, Wanya Illes, head of the Caricom
Bureau at the Ministry of Trade and Industry, told a
reporter that Suriname has "only" 11 restrictions to
remove. These relate to a variety of areas including
professional licensing, transport and insurance
regulations, and banking and foreign exchange laws, handled
by no fewer than five action ministries and other official
entities. Illes told the Embassy that not all restrictions
require legislative action to be removed; some can be
removed through presidential decrees that amend their
manner of implementation. The remainder, though, will have
to go through a State Council and National Assembly
approval process, which is problematic for the government,
not least because the State Council has yet to have all
members appointed in wake of the inauguration of a new
government in September. The National Assembly is already
on holiday leave until next year and Paul Somohardjo,
Speaker of the National Assembly, said that the Assembly
can not be called back at this time for a special session.
Somohardjo added that he would place the restrictions on
the agenda early next year.


3. To further complicate the equation, not all of the
possible conflicts between CSME requirements and Surinamese
law/regulation have even yet been identified. The CARICOM
Bureau is currently going through the laws governing each
ministry to identify other possible incompatibilities. An
early overview of Suriname's Mining Law has already brought
five potential problem issues to light, and as the process
continues the Bureau expects to come across more. When
asked what the consequences will be for Suriname if it does
not meet the December deadline, one official stated that
the only requirement will be that Suriname notifies CARICOM
it will be late, and will deal with issues related to the
movement of goods, services, and people "as they arise."

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Business Perspective
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4. Business organizations unanimously agree that Suriname
is far from ready. Not only does the government have a lot
of work to do, but so do Surinamese businesses, in
particular manufacturers, only a few of whom have adapted
production to international standards. Most, however, are
confident that Surinamese businesses will eventually profit
from the CSME, since they believe manufacturers here have
demonstrated their ability to adapt to changing conditions
over the last 20 to 30 years. Rahied Doekhi, member of the
Manufacturers Association, told the media manufacturers are
currently keeping afloat in a production unfriendly climate
of uncertainty and excessive regulation, and will continue
to deal well with the challenges thrown at them by the
upcoming CSME. He compares the current situation with the
situation manufacturers faced when Suriname joined CARICOM.
The most important restriction his organization seeks is an
elimination of a series of approval and statistical fees
levied on all exports. These fees work against Surinamese
manufacturers since they make export costs significantly
higher compared to Trinidad and Guyana.

PARAMARIBO 00000843 002.2 OF 002




5. Although generally positive on the eventual impact of
the CSME, Robert Ameerali, chairman of the Chamber of
Commerce, is more subdued about the impending CSME
deadline. Ameerali states that a member nation does not
prepare for a challenge like the CSME by simply
synchronizing laws. According to Ameerali, one of the most
important issues will be to improve companies' ability to
compete. Ameerali reckons that some businesses will be
unable to survive the increased competition. Survival will
not only depend on policy support from the government, but
on the flexibility of the business community. Ameerali
believes it is unclear what will happen after the debut of
the CSME on January 1, but it is certain that if Suriname
does not improve its business climate, foreign businesses
will not come and local businesses will leave.


6. Reshma Radjie, policy coordinator of the Suriname Trade
and Industry Association (STIA),shares Ameerali's view.
Radjie states that her organization has called repeatedly
for the establishment of a Standards Bureau, an improved
Investment Law, greater flexibility in firing employees,
and accreditation of Surinamese education. Only when these
issues have been dealt with will Suriname be ready for
CSME. (Note: The standards law was passed in 2004, but no
action was taken concerning the establishment of the
Bureau. The investment law is currently under review
before a commission made up of business and public
officials. Terms for terminating employees, which are
quite rigid under Surinamese law, have been raised in
discussing the Government's minimum wage proposal. The
Ministry of Education has been tasked with the
establishment of an accreditation bureau, but no real
progress has been made so far. End note.) Radjie also
states that producers have not yet changed their frame of
mind to produce for the CARICOM region. In preparation for
the CSME, the STIA brought its members in contact with
CARICOM partners. STIA has also laid the groundwork for
its members to receive both technological and financial
assistance from Dutch companies to be better prepared to
face regional competition. The sectors eligible to receive
this support are the manufacturing companies, tourism
related businesses, and wood and agriculture businesses.

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Comment
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7. Suriname is not ready for the CSME, notwithstanding the
Council's December 17 decision. Based on recent comments
by CARICOM Secretary General Edwin Carrington, Suriname is
not alone among CARICOM members in its scrambling to
reconcile laws. Suriname shares concern with other CARICOM
members that the non-discrimination provision in Article 7
would override restrictions on foreign landholding, which
is codified in Suriname's Constitution. Suriname has had
at least five years to prepare for the CSME and hasn't done
so, reflecting a distressing tendency to focus on deadlines
shortly before they occur.

BARNES