Margarita Island lies about 14 miles off the Venezuelan coast and is 150 miles due west of the more well-know Trinidad/Tobago islands in the south Caribbean. (about 7.5 hours in my sport fishing boat).

It is owned by the country of Venezuela and the island is also the state of Nueva Esparta. Just as Hawaii is very different than the U.S. mainland, is Margarita Island is unique as compared to the mainland of Venezuela. Hawaii also has industry, agriculture, ranching and fishing in addition to the tourist industry. Margarita Island relies primarily on tourism with some fishing, and very little agriculture and ranching as the only other industries. As a result, much of the food and other goods have to be imported to Margarita Island from the mainland or from other countries such as Colombia, Argentina, and Nicaragua.

There are 20 & 40 ft. containers arriving almost daily, and trucks arrive by ferry laden with everything from televisions to Scotch. Margarita Island does not have the 15% IVA tax charged in the rest of Venezuela, and many Venezuelans come here to take advantage of the cheaper prices, primarily on liquor, electronics and other luxury goods. Here you can actually buy a quart of Cuervo Gold Tequila for less than you would pay in Mexico! Even Europeans who vacation here buy liquor and cheese because these items are cheaper here than in most European countries.

There is a joke here…all Venezuela produces is oil and beautiful women.

If you’ve kept up with the news about President Hugo Chavez you’ll know that he is a controversial figure, to say the least. He has tried to take the country down the road toward his own brand of Socialism, even though in his broadcasts when he ran for office he denounced Socialism. Most people in Venezuela and in America actually don’t know what “Socialism” is as they have always lived under the Capitalist system.

It seems that the only thing about the socialist form of government many Venezuelans understood is that they would be getting a “free lunch” so to speak. We should all know by now that there is no such thing, and this country is discovering that not only is lunch not free, it’s getting difficult to find the ingredients for lunch at all! Due to government price controls, there have been shortages of rice, flour, cooking oil, sugar, cornmeal, chicken, eggs and milk…just about all the staples of the average Venezuelan’s diet. Price controls were put in place by the government to assure that the poor were able to afford a healthy diet.

One example is the effect of price controls on milk. The dairies could not sell milk at the government prices and make a reasonable profit, so they just quit selling it and sold their product to companies who produced cheese, milk-type drinks and dried or boxed milk. At this time there is no fresh milk available here, only Soy Milk powder and very rarely “boxed’ milk (irradiated for longer shelf life.) I’m a milk drinker, so this has been annoying to me for the last year or so.

Strangely enough you can easily find imported items. Cheese from Europe, butter from France, Holland, Ireland and Denmark, Caviar, Pate de Foi Gras, Spanish Olives, Deli Meats, and imported liquors, and hundreds of other ‘luxury’ items.

It’s been alleged that there is some hoarding, which further decreases the availability of the staples. As always when anything is in short supply a “Black Market” emerges with higher prices. Yes, it’s illegal, but those who want and can afford the products don’t complain. However, I have not seen food products sold on the black market. When a store does have a shipment of rice, sugar, milk, etc., the local grapevine drums sound and there is a rush to the store to buy the product. Even without the price controls prices are still cheap…However, if you can’t get a certain product, it makes no difference what the asking price is. While this situation doesn’t affect the wealthy or most ex-pats who can afford to stock up when various items become available, this is particularly hard on the poor, who live from day to day or payday to payday.

Even cars are in short supply. As an example, banks now make loans for new cars at a reasonable (for Venezuela) interest rate of about 12%. President Chavez has greatly reduced the importation of autos not made in Venezuela so there is a shortage of new cars on the market. I needed a newer car and ordered one last October. Finally, in February of this year, I bought a 2 year old Toyota because new cars were just not available. It’s possible that I could have moved my name to the top of the waiting list if I’d paid a healthy bribe, but found a clean used car instead. The ban on imported cars might have been lifted recently, but there is still a long waiting list. I know a businessman here who waited a year for a new Mitsubishi Montero. Some people are making a nice profit when they are finally able to buy a car, then immediately selling it for more than they paid for it.

Where are the opportunities for you to make money on Margarita Island?

I’ve interviewed many working class people here, from taxi drivers & maids to businessmen. They all agree that this present government situation has to change. Many believe the situation will get worse before it improves. If things get worse, there will be more “bargains”, i.e., the “panic selling” that I saw 5 years ago following the attempted ousting of Chavez.

The Bolivarian currency in the past was pegged at 2.150 to $1 U.S. On January 1 of this year the government issued new money called the Bolivar Fuerte (Strong Bolivar in English) and simply dropped 3 zeros from the old currency. Now the official rate is 2.15 Bolivars Fuerte to the $1 U.S. 1,000 Bolivars now equals 1 Bolivar Fuerte.

However, the ‘unofficial’ rate of exchange is about 5,000 Bolivars to the dollar as of this writing. Removing 3 zeros doesn’t change the value of the currency, just makes it sound a little better. If you check the the International market, the Bolivar is worth less and it takes 5 New Bolivars to buy 1 U.S. Dollar as of this writing. This approximate figure is based on Venezuelan Bond Prices. This basically means that if you have dollars things are actually less than half the posted price.

I think by now you’re bored with your lesson in Venezuela’s economy.

So here’s more information about what it’s really like to live here….

Because of its location the weather is great on here all year, and there are no Volcanoes and no Hurricanes! The bio-diversity of the island offers cloud forests & beautiful beaches, deserts, and everything in between.

Margarita Island is too valuable a piece of real estate and too desirable a tourist destination to lie dormant for long.

A couple of examples of opportunities that will be coming up “ManaHa (which simply means ‘not today’). These potential _gold mines_ have been tied up in legal red tape for years. The first is the golf course between Pampatar and Porlamar. The story is that the builder/developer went bankrupt and the bank foreclosed. The bank did not want to maintain the course so it was given to the state. Eventually it will be sold to private investors and because there are already several very nice high-rise condominium buildings surrounding the course, it will be a great opportunity for golf-related businesses.

The next huge opportunity could be Puerta de la Mar. This is a multi-million dollar development designed to be the new cruise ship port. There is space for shops, restaurants, and other businesses catering to the cruise crowd. The problem here is that local sardine fishermen oppose the new cruise port and have been trying to block the opening for several years. It is an attractive, well-designed and very expensive project and too much money has already been invested...some other plan to use the development will surely be implemented, and the surrounding real estate value will increase dramatically. This is the older section of the city and at present property is not very valuable. That will change rapidly when Puerta de la Mar begins attracting new investors to the area. Being right on the water, this area is perfect for restaurants, up-scale homes, (some of the lots are very large) boutiques, etc. Those who own property in the surrounding area stand to make a lot of money. It's impossible to say when this will happen but those interested can do more research.

If you drive anywhere on the island you will see construction progressing in various phases. From new malls to luxury condominiums, apartments, commercial properties and new homes, there is building in progress everywhere. The primary reason for all this building is that the banks are lending with affordable down payments and longer terms than previously. The prices are still cheap, especially when compared to the prices on other Caribbean Islands. Many projects would probably be completed by now, but there is a shortage of building materials. To get materials faster the builders have to pay a higher price, sometimes double the normal rate. Naturally this has slowed the building boom somewhat, but the advantage is that the island infrastructure has been able to keep up with the increased demand of the new construction. If the building was progressing more rapidly, the current infrastructure just could not keep pace. Most of the rest of the Caribbean islands are growing and becoming more expensive (with very few exceptions) and Margarita Island is the least expensive island in the Caribbean for a comfortable lifestyle for the rest of us who aren’t “rich &/or famous”.

I recently had a guest in one of my rental apartments for 10 days. He was from Canada and had purchased a house in David Panama (one of Panama’s less expensive cities) a year ago. After looking at Margarita Island and comparing prices and value here, he said he was seriously considering selling out his investment in Panama and buying here…prices were more affordable by far and the climate was much more pleasant.

Starting a business here is quite easy. Anyone can own real estate or open a business. As I’ve written in previous articles, most businesses on the island are foreign-owned. The main thing lacking here is good service.
You might find a company that gives good service the first time, and when you call them again, the service is apathetic or just plain terrible. Any business offering consistently good, courteous service will succeed here.

I’ve found that Venezuelans in general have very poor work habits. Many don’t keep appointments and don’t call if they’re going to be late, or just don’t bother to show up at all. If you do finally reach the person and ask why they ignored the appointment, be prepared to hear some very vague and lame excuses, seldom any apologies for the inconvenience. Perhaps if you grow up without experiencing good service, you don’t know how to give it. As an example, some restaurants give adequate—not great—service, and surprisingly several of the most expensive are the worst for courteous, timely service. On several occasions I’ve just given up and walked out. So if you plan to open any sort of enterprise here, be prepared to school your employees on proper customer service. This would be a very important aspect of building a successful business.

The following was sent to my e-mail from a friend who has a condo on the mainland. He’s been trying to get a little remodeling done since before Christmas ! He's in the USA now and needs to get his apartment finished so he can move in.
“My place is still a shambles; people JUST do not want to work timely. My neighbor just e-mailed me yesterday that the ceramic/tile guy just came back again to do more work (after about a 3 week "hiatus") and now is talking about replacing some pipes (corroded) in my main bath. Fine, BUT JESUS--GET THE DAMN WORK DONE ! (sigh).”

Seriously, Life on the island is very pleasant even with the minor annoyances. It's a great place to live, work, or vacation. Beautiful beaches, balmy weather, cheap liquor, good rum, good fishing, gasoline at 15 cents a gallon...what's not to like?

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