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LALIT's Open Letter to the Finance Minister in the context of 2016-1017 budget

11.06.2016

 LALIT sent an Open Letter on Thursday 9th June,  to the new Finance Minister, Pravind Jugnauth to demand that he put a stop to the Lepep Government's Smart City Strategy and replace it with an alternative economic strategy based on large-scale and modern food production. Our Open Letter (see below) was sent in the context of the budget that was to be presented in early June and has now been postponed to July 2016. This Open Letter forms part of LALIT's campaign for more democratic control over land and sea utilisation.


 


LALIT153 Main Rd, GRNW Tel: 208-2132, email: lalitmail@intnet.mu, website: www.lalitmauritius.org


Open Letter to Minister of Finance Pravind Jugnauth


 


Dear Sir,


LALIT is concerned about the economic orientation of the Lepep Government in the last year. We are in particular concerned about the negative impact of the “Smart city/IRS (now Property Development Scheme) strategy” that has been presented as one of the key pillars of the Lepep government's economic orientation towards a so-called “second economic miracle”. We point out that LALIT is not alone in expressing concern about the government's Smart City strategy. People from a broad range of standpoints are expressing concern: notable economists including Pierre Dinan and Eric Ng; urbanists and architects including Vasant Jogoo, Rambassun Sewpal, Abbas Currimjee and even representatives and ideologues of the private sector like Tim Taylor, Lindsay Riviere and Amedee Darga. Even your predecessor, Prime Minister Jugnauth stated: “L’immobilier est un développement trop facile, pour en faire que des profits. Je ne le considère pas comme du développement réel.” (21 April, 2016).


We formally demand that the Smart City strategy be dropped and that an alternative economic strategy in favour of working people, job creation, and sustainable food creation be adopted.


Our opposition to the Smart City/PDS strategy is based on the following points:


Production not land speculation


The Government's strategy is based on speculation not production. It is being touted as going hand in hand with new economic sectors but permits for Smart Cities are in no way linked to the creation of productive sectors (Investment Promotion (Smart City Scheme) Regulations 2015). In fact the Smart City strategy, just like the IRS/PDS, is continuing to artificially raise the price of both residential and agricultural land. In addition, billions of rupees will have gone to waste when resources could have been used to develop new productive sectors.


Destroying agricultural land


It was announced in last year's budget that 7,000 arpents of land would be sacrificed to 13 Smart City projects. The number of projected Smart Cities has now reached 16. Such parasitical land speculation, just like financial speculation, attacks the host that it feeds on: it destroys land that could be used for production to erect huge gated communities for the rich. Capital is being encouraged to flow into speculative real estate with a double-edged effect: destroying prime agricultural land as it gets sold off at astronomical prices as real estate on the one hand, and escalating the price of land and housing to inaccessible prices for the majority of working people on the other.


Hype about employment creation disappearing fast


In the beginning, there was a lot of hype about the thousands of jobs that Smart Cities would create. Just as there was when the IRS was presented. In the ensuing debate, it has become clear that Smart Cities/IRS/PDS will create very little employment. The “Smart City pilot” Gaetan Siew recently publicly admitted that “(...) l’IRS était conçu autour du résidentiel destiné à être vendu à des étrangers fortunés. En termes de business, on ne créait que quelques postes de jardiniers, de bonnes et de gardiens.” (16 April, 2016).


It has become quite clear that the thousands of jobs that the “second economic miracle” is supposed to bring will not come from Smart Cities/PDS apart from temporary jobs in the construction sector when the Smart Cities/PDS units are being built and a handful of colonial-type jobs in the houses, play-areas and shops of the rich.


Hidden Costs


It is also becoming clear that there are massive additional costs involved in the Smart City Scheme/PDS, for example: tax rebates, roads built from public funds to connect the Omnicane Smart City to the airport, the CEB will have to provide the extra electricity that the Bhadain Smart City will consume. Public money that working people contribute will be used to subsidise these projects.


Who gains?


The main beneficiaries of this kind of speculation are:



  1. Land owners/smart city developers who have been dished out massive tax concessions: on Land Conversion Tax, no Morcellement Tax, no Registration Duty nor Land Transfer tax for Smart City land owners, Income tax exemption for 8 years, no VAT or Customs Duty on building material and furnishing.

  2. Multinational companies like Microsoft and Airbus on the lookout for new profitable markets for themselves.

  3. Non-citizen rich millionaires who can now “buy” residence permits and even citizenship under the Smart City Scheme. 25% of residential units has had to be “reserved” for Mauritian citizens or Mauritian diaspora under the Investment Promotion Act which only goes to show that Smart Cities are primarily directed towards the non-citizen rich.


Inequality and socio-economic rift


The IRS experience is already showing us the crude feudal and sometimes colonial inequality generated: whole residential areas gated off with different entrances for workers and inhabitants and their guests, workers are searched before entering and leaving the premises by the guards, roads being re-routed off the coast, new shops and malls that are unaffordable for most Mauritians. This brings to mind a new wave of settler colonisation. Worse still, it conjures up Israeli-like guarded “colonies” of the rich and “locals” living on “reserves” on the outside.


Alternative economic strategy


It is unacceptable that this destructive Smart City/PDS strategy be allowed to continue. There must be a major shift in the government's economic orientation. Alternative economic strategy based on production should be adopted in the next budget before it is too late: before agricultural land gets destroyed and engulfed in speculation. Stop the wasteful Heritage City government project, at once.


Land must be used to develop modern large-scale food production for local consumption and for export. The budget must provide the support, subsidy and infrastructure for the growth of this sector, just as the sugar industry was and still is supported, even when it is no longer viable.


Land must be used to create secure jobs by the tens of thousand. Not only agricultural jobs, but also industrial jobs in food preservation and processing units. Jobs must also be created in research and development, marketing, insurance, storage and transportation for this new industry. Resources will also need to be directed to animal husbandry, milk and meat preservation and transformation factories.


The 2.3 million square kilometres of sea around the Republic of Mauritius should also be used to develop a proper fishing industry.


Land must also be used to build affordable housing for the people instead of whole cities for the rich.


Yours sincerely,


Rajni Lallah


for LALIT


9 June, 2016