|The Bahamas Investor Magazine
June 23, 2009
June 23, 2009
In March 2009, the government of The Bahamas reaffirmed its commitment to the Organisation for Economic Co-operation and Development (OECD) to negotiate and conclude appropriate arrangements to accommodate the adoption of predefined and agreed protocols to address specific requests for exchange of information within a framework of internationally accepted standards that are consistently applied globally.
The Association of International Banks and Trust Companies (AIBT) is encouraged that these arrangements will be negotiated and include predefined and agreed protocols that preserve the traditional confidentiality extended to those engaged in business in The Bahamas.
Whether the mechanism of such arrangements results in tax information exchange agreements (TIEAs) or a more complex solution involving trade agreements, the future of financial services in The Bahamas is likely to be affected.
Can the jurisdiction remain competitive and relevant if a level playing field exists amongst international financial centres? The answer of course is yes; but not without important policy changes.
The need to diversify the financial services products on offer, to improve local skills such as languages, to innovate and to promote the industry are not new ideas, indeed they are ongoing. More of the same is naturally to be encouraged, but crafting a future for the jurisdiction as a whole will now take more than this. Similarly, our traditional advantages as an independent nation with political stability are well understood and are certainly worth repeating often, but alone will no longer differentiate our financial sector.
The aim now should be for the government to bring together the various stakeholders and receive commitment from both sides that the priority is the continuing viability of our financial services industry. Short-term considerations must be discarded in favour of the collective good and most importantly the government must lead.
If the traditional wealth management markets of OECD member countries are maturing and less likely to offer growth opportunities for local banks, then banks will look to develop new markets. If existing products become less attractive as a level playing field is established, then new products must be designed and marketed.
Bahamas-based institutions cannot do these things alone; they need skills and these skills can primarily come from overseas. The Bahamas, unlike most of our competitors, has developed a cadre of local professionals who make up the vast majority of employees within the financial sector. It is not possible, however, to develop international skills in financial services without international exposure, and whilst local programmes encourage secondment of individuals overseas, the numbers will never be sufficient to prevent the need for foreign specialists.
The Bahamianization policy of the government has been a huge success. Ninety five per cent of employees within the financial services sector are Bahamian and work permit holders number only about 300. It is natural that the interests of local workers should be a priority; however, it is perhaps time to formally acknowledge that the interests of The Bahamas as a whole would be advanced by the continuing viability of the international financial sector. The willingness of foreign companies to base their operations here should be recognized for what it is: an endorsement of the local business environment developed over many years. It is, however, unlikely that such a commitment to The Bahamas can be advanced in the financial services sector with an annual work permit or one issued for a limited term. These business drivers within the financial industry should be afforded residency status, which will allow them to plan strategically and to establish permanent business activities that could have the effect of attracting others to our shores.
From crisis springs opportunity and The Bahamas is now presented with that opportunity. Some pragmatic political will, coupled with a mature evaluation of the evolving global environment, should allow local stakeholders to see immigration as a tool to facilitate a climate where financial services can grow.
This article is submitted by the Association of International Banks and Trust Companies in The Bahamas. The views expressed are those of the contributor and not necessarily those of The Bahamas Investor.