Update Country Report Curaçao 27 Sep 2017

Event

In early September the government launched the Fair Trade Authority Curaçao (FTAC), a new independent competition body. The FTAC is designed to encourage free competition in the jurisdiction and prevent the establishment of monopolies.

Analysis

The launch of the FTAC is a positive signal regarding the administration's commitment to introducing market-friendly reforms. Once fully up and running, the FTAC should help to stimulate increased competition and encourage greater investment by regional and international firms in Curaçao's markets. This will be important given the island's weak levels of competitiveness, as noted in the IMF's 2016 Article IV consultation with the island and a report published by the Centrale Bank van Curaçao en Sint Maarten (the central bank) in July, which found persistently low labour productivity contribution to GDP since 2000.

The FTAC will operate together with legislation approved in early 2017 and brings the jurisdiction in line with international norms regarding the management of competition. Since March-before going live-the FTAC has been engaging with stakeholders and conducting training about the new regulations in order to identify existing competition concerns. The authority has already established transitional mechanisms that allow some firms to continue with their current arrangements beyond October, for a limited period of time that will be tailored to the specific case requirements. Companies need to apply for an exemption before October 1st; it they do not they will be in violation of the new anti-monopoly code.

The FTAC is now focusing on setting its agenda for 2018 and will be looking into areas of existing competition concerns as well as scrutinising new and upcoming deals and tenders. New mergers and acquisitions must now be reported to the FTAC, and infringements of the regulations carry a penalty of up to 10% of a company's turnover. The FTAC will also provide an advisory service to companies in order to ensure that they comply with the regulations.

Impact on the forecast

In the long term, if the FTAC proves successful in increasing competitiveness it will assist in boosting economic activity, although this will not have an impact on our 2017-18 growth forecasts.