The Chamber of Commerce brings forward a series of analysis performed on the information obtained during Q3 of 2019 regarding registrations and cancellations of entities. The purpose of the information is to contribute to the overview of the economic developments of Aruba and investigate the trends of the business community. Figures of registrations and cancellations give an indication whether the entrepreneur finds the timing and circumstances adequate to start a business and we can get an idea of the confidence level in the business opportunities that may present for Aruba.
During Q3 there have been developments that impacted the business community in Aruba. There are impactful implications from the Government that is affecting the existing businesses and also influences new entrants. A continuous battle regarding the inclusion of BBO in the price and on the receipt or not, and what the best tax solution and implementation should be that fits with the requirements for the tax reform which the government has to comply with. The Chamber held a Town Hall Meeting in order to get feedback from the private sector and formulate a standpoint based on the input of the entrepreneurs.
The entrepreneurs are concerned with the recent developments and are trying to find a middle ground on which the public and private sector can see each other eye to eye and alleviate the setbacks that present a peril to the economy of Aruba. Large projects are still on-going and making progress. Projects such as the Gateway 2030, upgrading of WEB plant and construction of a new Cinema complex are a few large engagements which provide the contribution to the local economy. Ongoing engagements such as the Green Corridor are making progress and according to plan will be completed before the end of 2019. The main concern for the entrepreneurs is the new taxes that are considered to be implemented, such as the Sugar Tax, that are going to press against the budget of businesses, complicate the way of doing business and increase the costs involved in doing business.
During Q3 of 2019 the total registration at the ACOC recorded summed up to 322, which counts for 15 fewer registered entities compared to Q3 of 2018. On the side of cancellations there were also fewer cancellations compared to same period of the previous year (20).
As indicated there were a total of 322 new businesses registered during Q3 of 2019 of which none offshore. Most registrations recorded are for sole proprietorship (180) or VBA (109). There were no registrations for AVV recorded. The legal form type sole proprietorship and VBA remain the most popular types to register a new business covering about 90% of all registrations.
August is indicated as the peak during the quarter but it is also the peak throughout 2019 so far with 124 registrations. The new digital registration option online that the Chamber has introduced has been received as a positive upgrade in the process of registering new entities. The online registration makes it possible to register and view information 24/7 and without having to leave home: entrepreneurs do not have to come to the Chamber’s office but can register their company online. The Chamber will conduct further investigation to have insight in how the business community has experienced this digital transition and how to maintain a good level of service. The Chamber hopes that the clients can have a better experience and embrace the new possibilities offered through the use of their My Chamber account.
The largest group participating in the economy of Aruba is the sole proprietorship entities. During Q3 there were 180 new sole proprietorship registrations which accounts for 56% of all new registrations during this period. VBA (LLC) follows the list with 109 registrations; NV (Inc.) has 28; VOF 3, and “other type” has 2 registrations during the third quarter of 2019. Sole proprietorship type stands out with most registrations which has been the case for Q3 of previous year with 5 more registrations compared with same period of 2018. VBA has dropped with 15 registrations compared to Q3 of 2018 and NV has maintained its numbers. The entity types VBA, NV and Sole Proprietorship form collectively the vast majority (98.4%) of entities registered during Q3 and represent the most active entities that participate in the economy of Aruba.
In a comparison with previous year we can see a trend where Q3 of 2019 is presenting fewer registrations and also fewer cancellations. There are fewer registrations and also a drop in cancellations as depicted in the comparison chart with previous years. However this is not the lowest amount recorded compared to the last 5 years. The outlier during the month of August is responsible for the steady increase in registrations compared to previous quarters of 2019. Q1 registered 283 and Q2 on its part 307 new businesses. We see a significant drop in total cancellations during Q3 2019 compared to Q3 of 2018 where there were 21 fewer cancellations during the third period.
During Q3 we see that the sector “services in general” remains the most prominent sector among the sectors in Aruba to start a business. The “Hospitality industry, F&B” trails as second in the list of highest ranking category. The two most popular and common districts to establish a business in Aruba are Noord and Oranjestad. These areas are known for having more hotels and higher tourist presence and accommodate more economic activities and possibilities. We notice that the category ‘retail stores’ has been dropping and during Q3 of 2019 it is positioned as the fourth most prominent sector. The concern of the number of active businesses in the Main Street remains alarming as we notice that more businesses are establishing outside the downtown area. For San Nicolas we see some activities however still not up to a level which could be considered as satisfactory. We notice that not many construction related entities have been established either which could be translated in a low interest or possibly stagnated construction sector. With the upcoming projects we might see a turnaround in the coming quarters.
Reviewing the results of the total registration during Q3 it shows that the Oranjestad area expanded with 114 new registrations. Noord follows with 90 registrations of new companies for Q3 of 2019. Paradera has 31, San Nicolas 31, Santa Cruz 27 and Savaneta has 19 new registered companies. The focus area where new businesses are established as mentioned before are still the Oranjestad and Noord areas.
An analysis per entity type shows that most cancellations were for the Sole Proprietorship legal form. Although this is a lower number of cancellations compared to Q3 of 2018, this result also shows 11 more cancellations registered compared to Q2 of 2019. It is remarkable that there were less sole proprietorship cancelled but we see an increase in cancelled AVVs and to some extend VBA as well.
The Chamber is collecting information on the reasons behind cancellations
of businesses. A clear understanding of the situation can help identify possible solutions to help keep our local entrepreneurs afloat and target the shortcomings and obstacles that most of the cancelled companies have faced.