Doing business in the United States doesn’t necessarily mean doing so on the mainland. A highly competitive business climate can be found in the U.S. Virgin Islands, where much more than tourism employs the territory’s 52,000-strong workforce. Vision 2040, a comprehensive development plan unveiled in March 2021 by the Virgin Islands Economic Development Authority, explains how the USVI is targeting such industry sectors as agribusiness, renewable energy, health sciences, light manufacturing and professional services with incentives and resources that can’t be matched in the region.
“Vision 2040 is derived directly from input we got from residents and the business community and Virgin Islanders living around the world,” says Wayne Biggs, Jr., CEO of the Virgin Islands Economic Development Authority. “We figured if the community wanted it, the plan would be supported, and it is now being used by planning agencies and other stakeholders.”
One highlight of Vision 2040 is a set of aspirational goals that will help drive recruitment of the targeted industries and transform the Islands into a regional center of economic prosperity. These include increasing agriculture-related industrial production, becoming a Blue Economy research center of excellence, increasing health sciences from 7% to 15% of GDP, increasing renewable energy consumption significantly and having the highest quality education system in the Caribbean, among other goals.
A Workforce Ready to Go
Workforce is among the topics on the minds of potential investors in the U.S. Virgin Islands, says Biggs. “There is access to many different training programs from the Department of Labor, and we have one fully accredited university with two campuses and encourage people to work with them, because they offer many workforce development resources.”
One resource is a branch of the University of the Virgin Islands called the Community Engagement and Lifelong Learning Center, or UVICELL. Its website says the Center “focuses on providing quality training opportunities designed to contribute to organizational and individual achievement. Through collaborative partnerships, the UVICELL Center serves as a catalyst by providing training and on-going educational opportunities using responsive approaches to reach learners in the U.S. Virgin Islands and surrounding Caribbean.”
An attribute of the local workforce of great interest to employers, says Biggs, is employees’ loyalty. “They tend not to job shop or go from one job to another. They have a lot of longevity in their positions.”
Meanwhile, the bean counters at companies considering a U.S. Virgin Islands location will find the territory’s tax incentive program to be of particular interest. Administered by the Economic Development Commission and fully supported by the U.S. government, the program offers qualifying companies these benefits:
- 90% reduction in corporate income tax
- 90% reduction in personal income tax
- 100% exemption on gross receipt tax
- 100% exemption on business property tax
- 100% exemption on excise tax payments
- Reduction in the customs duty from the standard 6% to 1%
- Tax reduction on royalty income from software developed in the USVI and sold to non-U.S. customers
- Availability of rental space at below market rates in the St. Croix and St. Thomas Industrial Parks
Incentives a ‘Badge of Recognition’
Newly formed Universal Concrete LLC (UCC) is taking advantage of these incentives as it finishes work on its new facility and prepares to commence operations. It will be the third concrete plant on St. Thomas. “I’m confident that the St. Thomas market will embrace the competition we offer and the nimbleness that UCC will provide in meeting customers’ needs,” says Eric Castro, owner and president of Universal Concrete. “UCC may be a new operation, but I have over 35 years in the heavy equipment and construction industry in the U.S. Virgin Islands. I founded Grade-All Heavy Equipment 20 years ago with just me and a single backhoe. We now have 13 employees and 15 pieces of heavy equipment performing jobs on both private and government projects.”
How does the company benefit from the Islands’ tax incentive program?
“UCC’s application and the granting of EDC benefits provides a credible badge of recognition to prospective commercial customers,” explains Castro. “Most importantly, the USVIEDA’s benefits allow us flexibility in our pricing to our customers. This is highly desirable in a small community with limited options. This is especially critical for a startup operation which requires equity to turn a good idea into reality and access the bank financing required for capital expansion and to sustain operations. Additionally, USVIEDA provides access to a host of supporting products in the financial area which will aid in the later expansion of our business. USVIEDA’s partnership with other government agencies will provide us with access to programs that can assist us in building the skill levels of our employees.”
Competing on a level playing field is important to any company, but especially to one beginning operations, Castro relates. “For a startup like UCC, the financial benefits are essential as they ensure we are able to create a cost structure that allows us to be competitive,” he says. “The first two to three years of a business’s life cycle is the make-or-break period. You have to develop the idea and make it a reality with a location, funding, equipment, licensing, employees and then customers. The USVIEDA program ensures that we have that level playing field on certain costs to attract customers. Success is not ensured, but you’re at least a couple of steps up the ladder.”
Everyone Benefits
Castro says an intangible benefit of participating in the program involves a requirement to hire and train local workers. “I don’t see this as an enforced obligation, but rather the opportunity to train a new generation on heavy equipment that broadens their opportunities,” he relates. “Thirty-five years ago, someone provided similar training to me, and I’ve been fortunate to have developed those skills and founded two businesses with employees, supporting their families and being active in our community. I view the employment requirement through the lens of a small business owner who understands that a good staff is the key to your business. I’m hoping that as we grow and provide training that my staff will seize the same opportunity and embrace it also for their professional and personal growth.”
This Investment Profile was prepared under the auspices of the Virgin Islands Economic Development Authority. For more information, visit www.usvieda.org.
