|The Bahamas Investor Magazine
December 8, 2010
December 8, 2010
The Deloitte 2008 A Landscape for Change report coincided with an intense period of consultation and discussion on the future direction of international financial services and business in The Bahamas. That report provided an important framework for assessing the dimensions to the competitive capacity of The Bahamas, and other jurisdictions for that matter.
According to the report, for financial institutions there are fundamental attributes of a jurisdiction which are difficult to change. These include:
• political stability
• location and proximity to markets
• legal environment
• fiscal burden and the environment
• primary regulation and regulators.
Further conditions that are of great impact in the minds of decision makers and are susceptible to change revolve around:
• skilled labour
• revenue generating potential
• product specific regulation
• product specific taxation
• availability of professional services
• pro-business approach
• cost of doing business
What is clear in the report, and other similar studies, is that international financial centres (IFCs) must provide a sufficiently attractive and user-friendly platform to ensure that institutions that dominate in an increasingly onshore world, choose to tap into their benefits.
In addition, while much of the business in an IFC depends on the success of the institutions, the IFC should set priorities for itself. This provides for clarity of brand, legislative and regulatory policy, and development and promotion.
The way forward for The Bahamas
The Bahamas continues to focus on being a high quality destination for owners of capital–whether it is the Latin American (LATAM), Asian, European or any other market that is identified as a priority. This focus is captured in the shared vision of the government and private sector for the way forward: “To be a globally competitive international business centre for wealth management, capital investment in the Americas and emerging markets, and residency.”
This vision brings to bear the unique strengths of The Bahamas:
• Our history as a trusted partner for the international business community and families worldwide, due in large part to the outstanding record of political stability, progress and stewardship, our status as an independent territory providing an efficient basis of common law, and the longstanding commitment and continuity of our people and government to the industry and its clients.
• Our ideal location at the cross roads of the Americas in a time zone that is convenient for most of the major centres in the Americas.
• Our physical resources of land, premises and fit-for-purpose infrastructure, all located in one of the most idyllic settings in the world.
Essentially, the strategy statement, as with many vision statements adopted by the private sector, states the obvious. It speaks to The Bahamas being an IFC that focuses on:
• being globally competitive
• wealth management
• capital investment–international business platform
Specific reference is made to the Americas–in so doing, there is a recognition that competition and positioning must take place in a regional context. It is not possible for The Bahamas to position itself in a direct way vis-à-vis European or Asian centres. Our proposition has to be different.
We have defined our comparative advantage, or “Why The Bahamas,” and again it is defined from a regional perspective. It takes into consideration all of the strengths and unique propositions of The Bahamas. When these strengths are taken together, it produces a result that is impossible for any other regional competitor to copy with any degree of credibility.
360º focus on owners of capital
The strength of The Bahamas rests with its multiple touch points with owners of capital: wealth management, a platform for capital investment/international business into the Americas, and residency.
The task ahead is focusing our efforts to ensure these multiple touch point opportunities are not only known to owners of capital, but that such, with increasing numbers, are convinced to make their address The Bahamas for the management of their wealth, their business investments and the place they call home. In essence, it provides focus on the full circle of needs: personal, corporate and lifestyle.
In this regard, The Bahamas is ideally positioned to meet the needs of business persons from the LATAM market, as well as other areas from the Americas. Latin America’s export economy dominated by commodities would find a welcome home at the Freeport Container Port and Freeport’s transshipment and logistic facilities. One only has to look at Statoil Hydro’s acquisition of the South Riding Point crude oil storage and transshipment terminal located on Grand Bahama to understand its potential attraction to LATAM companies and investors.
There are other comparative regional advantages to serving the LATAM market, and positioning The Bahamas as a natural launching pad for such businesses, particularly family-owned operations engaged in global trade.
Our history offers:
• a trusted store of skills and expertise
• a brand position as a committed partner
• a sovereign territory with a sound constitution
• an efficient basis of common law
• an outstanding record of political stability, progress and stewardship
• English speaking.
Our location provides ideal proximity to North, Central and South America with ease of access and superior air links. And The Bahamas’ physical resources feature: the availability of land, office space and support facilities as well as a fit-for-purpose infrastructure and communications network. Furthermore it has the world’s third largest maritime registry, which is the number one cruise ship registry.
The presence of many of the world’s top private banks is also hard to overlook for wealth planning needs of LATAM clients. This, combined with the fact that The Bahamas is among the top tourism destination brands on the planet and is often noted by leading lifestyle publications as one of best places in the world to retire, creates an attractive environment.
Changing demands and priorities
A recent report by management consulting firm Booz & Company titled Private Banking: The Perfect Storm, stated: “Apart from tax optimization, considerations regarding security of funds, diversification, and privacy protection play vital roles in investment decisions. As political and financial instability persists in large parts of the world, local investors will need private banking value propositions that offer confidentiality and discreet services for declared funds. In particular, they need to become declared offshore players ensuring full cross-border compliance while preparing for a time when offshore players are able to offer onshore services in target markets.”
Change is the new normal for business and it demands that we stay focused on market development, while moving through the change process that is not only taking place globally, but within our jurisdiction as well. The latter is not only mandatory to keep pace with international developments, but equally important to build relationships and create positive momentum for the vision that is now driving business development.
This has caused a change in thinking and priorities for the jurisdiction. Regional positioning–with the LATAM market for example–is now a priority. While we must continue to be aware of competitors such as Singapore, advancing our position in the Americas has become a priority. Our goal is to be recognized in the top three in the region for any business area, but with substantive focus on client management, asset management and fund administration.
Facilitating interactions through quick work permit and business licence approvals and a streamlined economic permanent residency process will play an important role in enhancing our regional competitive advantage as well.
Wendy Warren is the chief executive officer and executive director of the Bahamas Financial Services Board (BFSB), an organization that represents and promotes the development of all sectors of the financial services industry. She is a chartered accountant and holds a Bachelor’s degree in accounting from Canada’s University of Waterloo.