Economy of Saint Martin : Discover

Discover Saint Martin : Economy

Economy

The island’s economy experienced two main periods: before and after 1950. Due to history and tradition, economy before this date was primarily centred on agriculture and the exploitation of salt mines, similarly to industrial activity on other islands of the region. Tobacco, indigo, cotton, sugar, coffee and cocoa all had their periods of glory followed by a respectful downfall in production. The abolishment of slavery (1848) and changes in international economic relations rang the knell of the agricultural sector, even though difficulties had already begun to set in from as early as the beginning of the century. The island’s sole salt industry proved insufficient to sustain its growing population, which resulted in the emigration of a part of its workforce towards other islands of the West Indies: Aruba, Curacao or Saint Domingue.

Saint Martin established closer and closer ties with the American market from the early 1950s in the aftermath of World War II, which also saw the emergence of a new commercial class. The island’s Dutch side made the first move to attract an American clientele, and the French followed soon after, inspired by the Pons Law, “the law of tax optimisation” , which exempted potential investors from paying income taxes for a period of 5 years. Consequences of this law constitute cause for debate well into our days, as its long term impact on the economy has been difficult to determine. Its immediate effect at the time was a rise in economic activity and an important increase in population, reaching 30,000 inhabitants in the next couple of years.

The island’s economy today is dominated by activities of the secondary (construction) and tertiary (service industry) sectors, similarly to the profiles of other French West Indian islands. Despite its relatively small size, Saint Martin attracts over one million visitors per year, and major investments seek to reinforce this tendency by improving the quality of the island’s tourism and construction facilities. Infrastructure is in constant advance, as are projects of the like of the marina of Fort Louis, inaugurated in 2002 (200 places).

Unemployment levels stand at an estimated 15%, though are in reality more likely around 20-30%. The use of undeclared workforce is booming in the construction sector, giving work especially to the immigrant population (Saint Domingue, Haiti, Dominica), which remains a problem unsolved and is likely to cause considerable challenge to the island’s future independent administration. Saint Martin is included in the fiscal system of the French Overseas Departments (DOM), with a certain number of regulations proper to the island. Sea tolls and the additional due are thus to be paid, but VAT, for example, is inexistent.

The island is member of the Caribbean Community (CARICOM) with a status of observer. Metropolitan France is not its most important supplier; economic ties are stronger with the United States and other Caribbean states. Exports are scarce and basically insignificant.