Montserrat
Background
Montserrat is a mountainous island of approximately 102 square kilometers.
Montserrat is a British Overseas Territory located in the Caribbean Sea and
forming part of the Eastern Caribbean volcanic chain. Prior to the onset of
volcanic activity on 18 July 1995, the population was approximately 12,000.
Ongoing volcanic activity since 1995 has caused the migration of at one time
approximately 10,000 persons. However, the present population of
Montserrat is approximately 4992 as per census 2010.
Montserrat’s per capita GDP is approximately US$5,000. This Emerald Isle in
the Caribbean Sea is a member of the Caribbean Community and Common
Market (CARICOM) and the Organization of Eastern Caribbean States
(OECS). Montserrat has embraced a monetary union through its
membership with the OECS and has adopted the East Caribbean dollars
(EC$), which is fixed to the US dollar.
Institutional Arrangements
The Revised Treaty, establishing CARICOM
and its Single Market and Economy outlines
the Community Competition Policy and
mandates a CARICOM Community
Competition Commission to implement this
policy. The Policy objective is to ensure that
the benefits expected from the
establishment of CARICOM Single Market
and Economy are not frustrated by anticompetitive business conduct.
The Community Commission was established
in January 2008 with the principal function to
apply the rules of competition, promote
competition and assist Member States to
protect consumers. The Community
Commission comprises seven members
appointed by the Regional Judicial and Legal
Services Commission.
The Organization of the Eastern Caribbean
States, the OECS sub-regional grouping of
eight small island states, within CARICOM, is
in the process of establishing a single
Competition Regulatory Authority, the
Eastern Caribbean Competition Commission,
(ECCC) which will act as a national Authority
for each member of OECS. There is a draft
Uniformed OECS Competition Bill which is to
be enacted in each jurisdiction of the OECS.
The OECS Competition Commission allows
these small islands to share the expense,
professional resources and to benefit from
scale given the small size of the individual
islands states.
Case Study - Country Level characteristics,
structures, constraints and opportunities
The combination of a small population and vulnerabilities associated with
natural disasters makes Montserrat’s economy fragile. There is a heavy
reliant on international inward trade for most needs. The Public sector is
the main source of economic activities, employing approximately twothirds of the labor force.
Montserrat is a micro-economy compared to other CARICOM countries.
There are extreme limitations on geographic size, population, natural and
human resources. Being an island, increases the per capita costs of
infrastructure, production and distribution costs because of high freight
charges. Export earners are tourism and mining materials. The private
sector consists of small family owned firms that are commerce oriented
(i.e. import, distribution and retail) and operate at low technological
levels. There is no research and development and no innovation.
Montserrat implements special and differential provision under the Treaty
of Chaguaramas, i.e. CARICOM Treaty for import restrictions on
agricultural provisions where items can be adequately supplied locally
Major Sectors
Banking Sector
The banking sector comprises two banks, i.e.
a national bank and a branch of
Multinational Corporation; one building
society, one credit union and two money
transfer companies. Low levels of
competition exist between the banks, credit
union and building society in the mortgage
portfolio. The Banks and the building
society compete on interest rate while the
Credit Union competes on process, ease of
doing business.
Electricity and Water
The services of Electricity and Water are
provided by one company, the Montserrat
Utilities Services. This company is a
hundred percent owned by the Government.
MUL is a natural monopoly because of the
micro size of the market and the
infrastructure costs of operation. There is
no competition in this sector. However, this
company operates as a public good and is
only marginally profitable.
Major Sectors Continued.
Telecommunication
In the telecommunication industry, Montserrat is supplied fixed and mobile telephone and
internet services by a single telecommunications company, C&W Montserrat. Cable and
Wireless no longer has a natural monopoly, Montserrat recently liberalized the telecoms
sector leading to a number of companies indicating interest in providing telephone and
internet services.
There is also a single major cable television company, carrying cable television services.
However, a new company arrived on our shores offering cable television services on a
small scale.
In the near future this industry will become very competitive with new firms emerging
creating competition in this industry which was once dominated by a sole providers.
SWOT ANALYSIS
Strengths
Political Stability.
Revised Tariff and Income Tax systems
Establishment of Montserrat
Development Corporation
Modernized infrastructure in place on
Island
Business Friendly Legislations enacted
Weaknesses
Government implementing price control
on several goods does not allow for
competition and competitive pricing.
Micro economy, high degree of
vulnerability, high costs of doing
business, high infrastructural costs, high
transportation costs
The need to achieve minimum efficient
scale imposes some constraints on
competition in Montserrat
SWOT ANALYSIS CNTD
Opportunities
Development of a New
Town Center.
Development of a New
Modern Port and Yacht
Mariner that can
Facilitate Cruise Ships.
Threats
There is no foreseeable
threat in the practice of
competition in
Montserrat.
Competition brings the be
service and prices to
consumers.
Implications for future policies and
strategies
In order to obtain Market efficiency it is essential to
create a competitive environment. However, it is
imperative to have the necessary regulatory bodies
such as the Caricom Competition Commissions and the
Eastern Caribbean Competition Commissions to
monitor and control the behavior of firms.
It is also necessary to have harmonized competition
policy and law through out the single market and
economy.
How to Improve Competitiveness on
Island
Improving labour productivity
Labour productivity can be improved by increasing spending on education and training to help
develop skills and close any skills gap. Government may also promote a more flexible labour
market, such as reducing trade union power, encouraging part-time work, and encouraging
new business start-ups..
Improving competition in product markets
The level of competition in product markets can also be improved by deregulation to reduce
barriers to entry, though this has its limits as some regulation is needed to protect consumers
and employees from unfair practices. In addition, privatisation of industry is also likely to
improve competitiveness.
Improving the level of investment
Competition may be increased by investment grants and subsidies, and by tax incentives to
encourage new product and service development. Keeping interest rates low is also a strategy
that would encourage investment. In addition, keeping them as stable as possible would
increase certainty and reduce risk
The End