United World meets with Eric Smeulders and Fiorina Hernandez, CEO and Investment Promoter at Curinde NV, respectively, who discuss Curaçao’s competitive advantages and Curinde’s role in attracting businesses to the island
I think that branding a country is key to conveying an image and instilling trust. How would you define the Curaçao country brand and what would you say are the country’s key defining factors?
MR. ERIC SMEULDERS: I think that when you mention Curaçao, it is a combination of a small island with enormous potential. Most of the islands in the region are focused on tourism – Curaçao is different. We have tourism, which is very important, but we also have other economic pillars. We have refineries, the largest commercial dry dock, the free zone, the financial sector – you name it. There are things that you would not expect on an island the size of Curaçao, both in terms of the land area and the number of inhabitants.
In terms of international trade distribution, you mentioned a while ago that Curaçao is a new country. That is correct – we became an autonomous country within the Kingdom of the Netherlands. However, the fields we are working in are not new, and the people involved have a lot of experience. The businessmen in our free zone have been dealing with the Far East and the Middle East for generations. So it is a new country, but with a wealth of experience for those who would like to come in and make use of the potential that Curaçao offers the business sector.
What do you think needs to be done in order for Curaçao to grow and prosper in the future?
MR. ERIC SMEULDERS: There has definitely been progress in terms of going from red tape to red carpet, and I think we should go even further. Our economy is based on rendering services – tourism and trade are services for instance. One of the most important aspects of the service industry is the quality of service (i.e. the speed of service, quality) and cost. We have to compete globally and we are continuing to focus on service delivery.
Curinde has been here for a while. Curaçao’s first free zone was built in the 1950s.
MR. ERIC SMEULDERS: The original free zone goes back to the 1950s. The Curaçao Industrial & International Trade Development Company (Curinde) was established in 1980 from being a government department before. But when you deal with the private sector and businessmen, you have to be able to act the way they are acting, i.e. quickly. We all know that the government has an important role to play, but government is not there for business – government is there to facilitate. That was one of the main reasons why it was decided to separate the investment promotion and management of the free zone from government activities and restructure it into a private company. That is what we have been doing since. We have two shareholders – the Curaçao government has 85% and a local bank has 15% of the shares.
How does that give you a competitive edge? Normally the organization that manages investments is a government agency, not a company.
MR. ERIC SMEULDERS: You are right that there are different structures. Financially, we are independent from the government, so we have to make sure that we earn our money to be able to cover our costs and do what we have to do. We manage two free zones and one industrial park, and being a sole entity, the financial structure is very transparent. Being financially independent from government also puts you in a stronger position to be able to do what you have to do. You prepare a budget; then the Board of Directors reviews the budget for approval. Once approved, it is just a matter of implementing the plans you have to guarantee a flow of establishments within the parks. At the end of the year, you go to the shareholders and show them what you have done and accomplished.
Speed and execution is very important in today’s world. How has Curinde evolved over the past 30 years? What have you been focusing on? Where does the quality come from?
MR. ERIC SMEULDERS: As an organization, there are some very basic standards that we adhere to. We ensure that we treat all clients the same; there are certain laws that regulate this and we adhere to them. We make sure that whatever happens in the free zone is as it should be, according to the law. Our efforts are geared towards ensuring that the free zone continues to have a very good image. We constantly focus on that.
The business is constantly adapting to the possibilities in the future. We have to look at how competitive we are internationally, to be able to keep on growing. It is a tough job, but so far we have been rather successful. When you talk about international trade, distribution and business, you cannot just focus on the free zone – you have to make sure that your connections are there by sea and by air, as well as telecoms and banking institutions. That is one of Curaçao’s strong points, because we have these infrastructures in place in Curaçao for generations. There is a lot of experience in different sectors, which are required for businessmen to be able to do business they want to.
Regarding Curinde’s performance in 2010 and 2011, you said that “the worldwide economic climate has certainly affected companies in the free zone, the harbor and the airport, but Curinde has done well again in 2010”. You have been at the helm of this company for a while, and you have seen major successes. What are the main success stories about Curinde and how does it distinguish itself from the free zones in Colombia and Panama for example?
MR. ERIC SMEULDERS: Panama is huge compared to us – it is almost no comparison. But we do not need to have a free zone the size of Panama, because the country is much smaller than Panama. We have had several successes. We started off with one building in the free zone at the harbor, and about 10 years ago we expanded with a second free zone adjacent to the airport. Investors who are considering investing in Curaçao can decide between the harbor or the airport free zone. We try to keep things simple. You can look at the free zone business from Curaçao’s perspective but it is more relevant to look at it from the perspective of the potential investor. It offers the potential investor the possibility to do more business in the Caribbean and or South America, because you will be closer to your market, with all the benefits that this brings with it. Being closer means having shorter delivery times from the free zone to your clients. If your clients want to visit you, it is easier as well, compared to flying up north. Those are specific areas that could be of interest.
Of course, we do not pretend to be the solution for all companies – that is not realistic. But we are for specific companies. If a company in the U.S. is considering exporting to the Caribbean region or Latin America, Curaçao could be the ideal place because we understand the Americans but also the Latinos. We speak Spanish and we understand the Latin culture, but we also understand the way business is done in the U.S. I think Curaçao can play a role in matching those two cultures and helping both sides understand each other and doing business in Curaçao.
What companies have you been targeting and whom will you be targeting over the next few years?
MR. ERIC SMEULDERS: We are targeting the higher value products and services more and more, like pharmaceuticals, electronics and medical equipment.
MRS FIORINA HERNANDEZ: Also the logistics side and providing services. For instance setting up a service center here so the equipment does not have to go all the way to India or China. The maintenance or replacement can be done here and resent to the customer.
What are the main incentives that you are offering for investors in free zones?
MRS FIORINA HERNANDEZ: Companies in the free zone by law are exempted from import duties and sales tax. In addition, on the generated profit a 2% tax is applicable. Companies in the free zone can be 100% foreign owned.
MR. ERIC SMEULDERS: Whatever profit the free zone company makes, there are no restrictions as to the destination – they can be reinvested or transferred back to the home country. The profit tax is a flat rate regardless of the revenue you earn.
We know that you have over 100 companies in one and over 40 in the other. Where are these companies coming from mainly, from Latin America?
MRS FIORINA HERNANDEZ: Not really. Here in the free zone we have a mixture of companies originating from Venezuela, Asia, the Netherlands and Canada.
How come there are mostly Indians in the harbor free zone?
MRS FIORINA HERNANDEZ: They have traveled to the island to do business and one attracted the other. This group has grown.
MR. ERIC SMEULDERS: Originally, the Jews dominated our downtown businesses more, but gradually they retired and quite often their kids were not interested in continuing with the business. On the other hand, more and more Indians started a business downtown. Once they were downtown, they looked into the export business and some of them decided to expand to the free zone.
How do you see the free zone developing further? You have a strategic plan for the future. How can Curinde help Curaçao become an international trade hub?
MR. ERIC SMEULDERS: We definitely believe there is still potential. We have to work very hard for it because competition is tough. We will continue to play a role in facilitating buyers in the region. There are shorter travel times and delivery times and the free zone provides the facility to showcase products from the U.S., China, Brazil and/or India. There will be variations of what has been done so far. We are planning on developing an exhibition center within the free zone where different countries can exhibit their products they are already exporting, or those that they are considering to export.
How do you attract investment? What are your initiatives with regard to attracting investors?
MR. ERIC SMEULDERS: We have several initiatives. We are on the Internet, and we try to be as direct as possible. We work with organizations in different countries and we join trade missions. We help to promote the island together.
Could you tell us more about yourself? Tell us about your professional background and how you became the head of Curinde, one of the most important companies.
MR. ERIC SMEULDERS: I was born and raised in Curaçao. Most of the people you will meet have been here for different generations, but they are mixtures. My ancestors are from Holland and Germany, but I was born and raised here. We work with other cultures because it is in our blood – it is not something that you have to learn. You may have an Indian neighbor, a native neighbor and a Dutch neighbor. If you go downtown and sit on a terrace and have a drink, you will hear different languages. That is a very positive aspect, because we have to distinguish ourselves from our competitors. If an American is thinking about doing business, Curaçao can make him or her feel at home. We understand the Americans. We are from the Dutch heritage, and the Dutch are very punctual. So when you have to deal with Americans, we know that time is money. If you have an appointment with Latinos they may be less punctual. Those things are important.
After high school I left, because at that time there was no university. I went to Puerto Rico to study, which is not too far away. Then I came back and started working for the island. When Curinde was established, I had the opportunity to start working with the company. We are aware that the world is changing and we regularly ask ourselves if we still have the right focus. The work constantly keeps you on your toes.
Have you seen a big change from 1980 to 2012 in terms of the way Curinde works?
MR. ERIC SMEULDERS: Yes. We went from very simple to more complex. When we started, computers did not exist. Secretaries had typewriters. That is how we started. In those days, when you sent out a letter you could sit back and relax, because a week later you might get an answer. Nowadays you send an email and five minutes later they ask why you have not answered yet. So you have to make sure that you keep up to date with those changes. Of course, you need to look at what your clients require. If I may give you a simple example, when we started, it was just warehousing in the free zone. Buyers started to visit the free zone, so our clients wanted to have facilities and showrooms. We provided showrooms. We started building without a loading ramp, but now we have loading docks. We are constantly adapting to the types of facilities and services required by the business sector, etc.