The Collapse of the Corozal Commercial Free Zone

The Corozal Commercial Free Zone is one of the many successes of the previous PUP government. In 1998, when the PUP took office, the Free Zone was just a handful of businesses struggling to get off the ground. A quick development plan was put in place and after a great deal of attention was given to its development, commercial activity in the Corozal Free Zone grew to some unprecedented highs.

By 2003 over 400 businesses were operating in the Free Zone. There was as much as $274 million in economic activity annually, generating employment for over 2,500 people.

Unfortunately, last October the Prime Minster announced that all was not well in the Free Zone. He announced that imports into the Free Zone fell by 38.9 percent to a new low of $114.5 million. Blaming the losses on global economy, the Prime Minister accepted defeat and said he was simply unable to do anything about it.

The news of the decline in the free zone surprised no one; as early as February 2009, businesses in the Free Zone were complaining that commercial activity had fallen and that the 2008 Christmas sales were approximately 50 percent lower than 200.

Currently, with less economic activity in the Zone, huge investments are becoming questionable.  Investors who built large shopping plazas valued in the millions of dollars are now unable to meet financial commitments with half of their facilities now vacant.

So what went wrong?  The UDP administration’s failure to stimulate the Belizean economy;  their inability to understand what makes the economy work and the rash and brash decisions by the government, have all but destroyed investor confidence in Belize, including the Free Zone.

Currently, there are several problems that face the Free Zone and only the active intervention of the government can rescue the situation.

First there is the problem at the border. The Chetumal Chamber of Commerce is a powerful lobby and they constantly pressure the Mexican Federal government to harass Mexicans buying at the zone.

This can be addressed by having our Minister of Foreign Trade meet with his counterpart in Mexico to address this matter. During the last administration, whenever the border crossing became a problem, government officials, even the Prime Minister would meet with their Mexican counterparts and negotiate for an “ease” on the restrictions by the Mexican customs department.

Secondly, there is the current problem with Mexican banks refusing to accept pesos deposited at the Free Zone. For several years, the Belize Bank and Atlantic Bank have been depositing pesos from the Free Zone in banks in Chetumal. Currently these Mexican banks are refusing to accept pesos coming out of the Zone, citing concerns over money laundering.

With the Belizean banks unable to deposit pesos in the Mexican Banks, other problems are occurring. First there is the issue of security. Businesses in the Free Zone are now required to keep large sums of pesos in house. This in itself poses a risk. Then there is the issue of excess pesos flooding the market, forcing establishments to sell their excess pesos to local currency dealers at a loss.

All these issues can be resolved with intervention by government. GOB needs to dispatch the Governor of the Belize Central Bank to meet with these Mexician Banks and convince them that the necessary precautions have been taken to prevent money laundering in the Free Zone, giving assurances that greater vigilance by the bank will be put in place if necessary.

Next there is the case of weak leadership at the Free Zone. Mr. David Ackierman, who is said to be a personal friend of the Prime Minister, seems unable to convince him of the crises in the Free Zone.  In addition, Mr. Ackierman has been unable to command the respect of the investors, therefore has been incapable of convincing them to raise monies to promote the Free Zone in Mexico.

The investors in the Free Zone are looking for leadership and direction from the government of Belize. They have met privately with several Ministers, including the Prime Minster, who said he could do nothing for them.  Clearly no one in the Barrow Administration seems to understand the severity of the problem. And while business after business is closing their shutters permanently, thousands of Belizeans are losing jobs while the Belizean economy continues its free fall.

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