Gambling on the wrong horse?

Gambling and investing are separated by a very thin line. Some say investment is a form of gambling where you can afford to lose whilst gambling is an investment you can't afford lose and if there is something the SPPF/PL have been good at it's gambling although they prefer to define it as 'investing' and don't stop there, but go even further calling it 'investing in Seychelles'.

I myself am not a gambler as I'm too poor or rather too stingy to think about my hard earned pennies ending up in someone else's pocket as my own remains empty and I can't say that I have any visions of becoming rich although the thought does tickle my mind once in a while. In desperation however, or some cases due to greed, many go to drastic stages to earn a quick buck or two, but in most cases fail because they cannot distinguish the difference between gambling and investing. I don't have a degree in business as my field of expertise lies elsewhere, but after all, how hard is business and how hard is it to understand the difference between gambling and investing?

Investing is pretty simple as it literally means spending money to make money. The average Seychellois I'd say knows this very well and proved great entrepreneurship during the Forex restriction period that lasted until the financial JAM that James Alix Michel guided us through after being led there himself by his predecessor France Albert Rene. As forex restrictions led to the word 'napa' echoing in the emptyness of just about every stor in the country, may Seychellois stashed whatever they could find of goods by purchasing for re-sale at a later date making a great pofit as prices increased at such a rate that even re-sale a mere month later would give a minumum 30% profit. Another example were those guys with little leather pouches around their waists, caps and sunglasses trawling up and down at Beau Vallon Beach or sitting at Pirates Arms selling a sure investment: Black Market Forex! And last but not least, all those making monthly trips to Dubai and Singapore returing with all kinds of cheap Chinese junk for resale at a horrendous price, nevertheless at a price that gave back a nice profit.

Naturally there are risky investments and safe investments and the riskier the investment is, the closer one gets to gambling. For instance, buying 4 buckets of paint hoping to resell them is a safe investment as you'll most likely get back your money or use the paint yourself if the colour has gone out of fashion or you ca sell it at a price you can afford to lose if the worse comes to the worse. In that case, the investment resembles more of a gamble.

Now, a bad investment is itself more of a gamble than an investment and as said before, the government of Seychelles is an expert on bad investments. Now why is that so? Some would say that it is because the minister of finance is educated in Cuba on communistic principles, but I can't say I agree, but I do agree that it is due to pure ignorance and lack of knowledge. This is either caused by lack of intelligence or the fact that Danny Faure spent his days in La Habana chasing señoritas rather tahn attending class. Who knows? Nevertheless he is minister of finance and is therefore responsible for just that: finance!

Let's take the investment made on Eden Island for instance, another perfect example of a gamble rather than an investment. When investing, one must guard oneself by doing a risk analysis and taking measures on how to secure that the money spent will come back in surplus. The government's intention with building Eden Island and the houses/apartments there was a desperate attempt to make quick forex as all the owners are foreigners who were given residency and in some cases citizenship with diplomatic immunity. Money in, at least a sum paid and hopefully every time these new citizens visited Seychelles they'd leave a lot of forex. Unfortunately, these apartments were not all sold and those sold were not visited as frequent as predicted so apart from the lump sum paid, pretty much was no forex was coming in.

Another example are foreign owned hotels like the one at St Anne, Lemuria on Praslin and others with foreign owners like the ones being built by our new allies, the Arab Sheiks. The thought of the great economists in the SPPF/PL was that those hotels would drag enormous amounts of forex to Seychelles, but again it proves that they didn't as the PL failed to secure the country a major part of that forex. In fact the PL Central Bank itself said not so long ago that only about 30% of these hotels' revenue went through the CBS meaning that for every 100 USD spent in Seychelles, 70 USD goes straight to foreign bank accounts controlled by the owners and directed there by their own accountants, mostly paid electronically by credit card. The government, before selling land to foreign investors, should have made conditions that all revenue should pass the CBS before leaving the country. That way these hotels' taxable income would have given more earnings to Seychelles and those ventures would have been good investments and those sales of land for SR1 would have paid themselves many times already.

The perfect example of bad investments however, or should I say gambling, was the selling of the land at the ex-tracking station for SR1 to Sheik Khalifa for his private residence. The thought again was that the Sheik's investment in the country would bring jobs and not least plenty forex as such a building site itself would create quite a number of jobs. What happened instead was that every worker there was imported, every bit of construction material, equipment etc was flown in(and still is) by the Sheik himself and he even got tax exemption for his imports due to the diplomatic immunity he was given for his private estate. Now if that isn't a bad investment it certainly can be defined as gambling. Not only is it gambling, but it is gambling on the wrong horse or should I say gambling on the wrong camel? Camels do produce milk, but so far this one has only produced a few drops, but it has on the other hand produced quite a pile of dung.

So with this I strongly urge the PL governement to take the most utter precaution next time they decide to 'invest'. If in doubt about wether or not an investment is a liability or not, all Danny Faure needs to do is to consult the average Seychellois Dubai-shopper who could teach him more about economy at the airport lounge in 20 mins than he learned during his years in Cuba.

Patrick X