Identifier
Created
Classification
Origin
08PARAMARIBO305
2008-07-29 19:44:00
UNCLASSIFIED
Embassy Paramaribo
Cable title:  

SURINAME: BANANA PARASTATAL TO PRIVATIZE

Tags:  BTIO EAGR ECON EINV ETRD NS 
pdf how-to read a cable
VZCZCXRO8879
PP RUEHGR
DE RUEHPO #0305/01 2111944
ZNR UUUUU ZZH
P 291944Z JUL 08
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC PRIORITY 0280
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHAO/AMCONSUL CURACAO 1273
UNCLAS SECTION 01 OF 02 PARAMARIBO 000305 

SIPDIS

STATE FOR WHA/CAR JROSHOLT
COMMERCE FOR MARIA ELENA PORTORREAL

E.O. 12958: N/A
TAGS: BTIO EAGR ECON EINV ETRD NS

SUBJECT: SURINAME: BANANA PARASTATAL TO PRIVATIZE

PARAMARIBO 00000305 001.2 OF 002


UNCLAS SECTION 01 OF 02 PARAMARIBO 000305

SIPDIS

STATE FOR WHA/CAR JROSHOLT
COMMERCE FOR MARIA ELENA PORTORREAL

E.O. 12958: N/A
TAGS: BTIO EAGR ECON EINV ETRD NS

SUBJECT: SURINAME: BANANA PARASTATAL TO PRIVATIZE

PARAMARIBO 00000305 001.2 OF 002



1. (U) Summary. The week of July 21, the Foundation for the
Preservation of the Banana Sector in Suriname (SBBS) announced a
public call for interest in the international open tender for the
privatization of the parastatal banana company Surland N.V. SBBS
restructured Surland N.V. with the assistance of the European
Commission (EC),and it is now producing at record levels. The
continued success of the banana sector depends on the right partner
in the privatization as well as the successful implementation of the
Economic Partnership Agreement (EPA),which Suriname is expected to
sign on September 2, 2008. End Summary.

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STARTING ALL OVER AGAIN
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2. (U) In April 2002, when the Government of Suriname (GOS) was
forced to shut down its parastatal banana company, Surland N.V., due
to crippling labor disputes and a severe financial crunch, many
predicted it was the beginning of the end of Suriname's banana
sector. But, a robust restructuring plan, co-funded by the European
Commission (EC) and headed under the name Stichting Behoud Bananen
Sector (SBBS) (Foundation for the Preservation of the Banana Sector
in Suriname),revitalized the company's operations and led to the
resumption of banana exports in 2004. The EC provided Suriname with
approximately 23 million Euro (Richard van der Horst, Head of the
European Commission technical section told Econ Off that only
two-thirds of this amount has been used or obligated to date) to
upgrade the company's infrastructure, and other substantial
investments in the sector over the following three years allowed
Surland N.V. to reach new heights in production and earnings.


3. (U) In 2007, Surland N.V. produced a record 56,245 tons of
bananas, up from 47,000 tons in 2006. The income from the exports
also increased, from US$ 14.3 million in 2006 to US$ 21 million in

2007. SBBS Managing Director Philippe Dury, originally contracted
for SBBS by the EC but now contracted by SBBS partner, the
Belgian-based Univeg group of companies, told Econ Asst that export

volume is expected to reach 68,000 tons in 2008, with an estimated
US$ 34 million of earnings. SBBS Board Member Anand Ramkisoensingh
told the press that SBBS is aiming to make Surland N.V. one of the
largest banana producers in CARICOM. In 2007, SBBS increased its
workforce by 327 to 2,157 employees. Land currently under
cultivation amounts to 1550 hectares, and SBBS is considering
acquiring additional land.

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EUROPEAN COMMITMENT
--------------


4. (U) EC assistance was a key factor in the SBBS success in
restructuring Surland N.V. The EC provided part of the funding of
the restructuring program, and made other accommodations for the
sector as well. The EC lowered import licensing fees for products
entering the European market which resulted in the SBBS saving
millions of Euros a year.


5. (U) The latest trade treaty, the newly minted Economic
Partnership Agreement (EPA) between the European Union countries and
CARIFORUM countries, will allow Suriname's bananas to enter the
European market duty and quota free. Suriname is expected to sign
this agreement on September 2, 2008. It is estimated the EPA will
save SBBS 4.5 million Euros per year. Pending privatization, SBBS
plans to re-allocate these savings to increasing production and
improving cost efficiency, thereby improving the company's
competitive position in the world market. The company will have
another EPA benefit as well, as the EPA offers financial and
technical assistance for the sector.

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PRIVATIZATION
--------------


6. (U) The privatization process for Surland S.V. began the week of
July 21 with SBBS announcing a call for "expressions of interest"
from national and international companies planning on participating
in the international open tender for Surland N.V. Companies
providing an "expression of interest" will receive a note of
presentation on the operation, and then will be required to respond
with their formal "definitive interest" by Monday, August 18 at 2:00
p.m. local time.


7. (U) SBBS is in an excellent position to privatize Surland N.V.
now due to world market conditions and the company's recent growth
spurt. Unlike in 2006, when the GOS first tried to privatize the
company and failed, the prospects are high. Even before the public
call, a number of firms, both local and foreign, approached the
Ministry of Agriculture, Animal Husbandry and Fisheries to express

PARAMARIBO 00000305 002.2 OF 002


their interest. The Ministry has already held exploratory talks
with the Belgian-based Univeg group of companies and the Irish firm
Fyffes.


8. (U) A lot is at stake during the privatization process. Charge
d'Affaires of the Delegation of the European Commission Helena
Laakso told the press the EC is concerned the SBBS find the "right
partner," specifically, a company large enough to secure entry to
the European market. While Surland N.V.'s progress is impressive,
in the international scene it is still small, producing just a
fraction of the total European demand.

SCHREIBERHUGHES