Tuesday, September 20, 2016
Tuesday, September 20, 2016
Here follows remarks by Minister of Financial Services Hope Strachan at the Bahamas Financial Services Board’s Annual General Meeting held last week in Nassau:
It is indeed a pleasure and a privilege to have been asked to speak to you on this the occasion of your annual General meeting. This invitation is a demonstration of the partnership and the collaboration between the Government of The Bahamas, The BFSB and the private financial Services sector in this important second Pillar of our Economy.
Never before has this collaboration been more important as we face the onslaught that has been launched against The Bahamas Financial Services Industry from our detractors. Over the last few days it has become patently clear that there are many out there who simply want the Bahamas Financial Services Industry wiped off of the Map and who would do whatever it takes to accomplish that goal.
Never before has there been a more compelling reason for Government and the private sector to band together to fight for the survival of our financial Services Industry, indeed for our very way of life given the thousands of people who depend on the industry for employment. What would The Bahamas be in 2016 without the Financial Services industry? It is never redundant to remind ourselves of how important this industry is to us as a developing nation. Financial Services is the second pillar of our economy, second only to tourism and accounts for more than 15% of the GDP of The Bahamas and more than 20,000 jobs directly and indirectly.
The job opportunities in the financial services sector support the middle-class. These jobs are among the highest paid and rewarded jobs available. The industry boasts of some of the most highly educated and intensively trained employees, increasing their individual intellectual capital and indeed the human resource capital of The Bahamas. That is the principal reason why we must fight to save this industry.
All of us here in this room tonight are keenly aware of the challenges faced by International Financial Centres globally and the efforts to undermine the importance of small, successful financial centers like The Bahamas and some of our regional counterparts. Some of these challenges are blacklisting, and derisking in correspondent banking despite our individual and collective adherence to our global regulatory obligations such as complying with anti money laundering, the countering of financial terrorism and tax transparency protocols.
This is manifested in the TIEAs that we have signed and the Inter Governmental Agreement with the United States for the implementation of FATCA and our commitment to AEOI/CRS. It is a curious situation because the rules are set, we abide but despite that we can never be redeemed in the eyesight of our accusers. So the larger more powerful financial centers flex their might to dominate and to return all business to their shores and rightly so, we live in a competitive world but for those screaming integrity, transparency and accountability there should at least be an appearance of fairplay.
There is much noise in the market today as I stand before you about The Bahamas financial Services Industry. Last week The Economist Magazine launched an attack on us with an article they placed in their global publication entitled “The Holdout: Bahamas cocks a snook at the war on tax dodgers” The thrust of the article paints the Bahamas in an extremely negative light as a “tax Haven” and a safe place for “undeclared funds.”
Aside from the misrepresentations in the article about the Bahamas which are obvious, the Article purports to represent the OECD’s view that The Bahamas by choosing the bilateral approach to AEOI/CRS and the 2018 implementation date is dragging its feet to obtain some advantage and to attract unclean money to our shores. Nothing can be further from the truth. The Bahamas could only choose the bilateral approach and a 2018 implementation date because it was a genuine alternative offered by the OECD. The choice was made after careful consideration of all of the facts and circumstances relative to the jurisdiction, our economy and tax regime.
Moreover, the decision was made with a clear understanding that the bilateral approach allowed us to adhere to all of the overarching principals and objectives of the OECD relative to automatic exchange of information and the common reporting standard. It stands to reason that if there was no alternative approach to signing onto the multilatreral convention The Bahamas would not have been able to make such a choice. The discontent and outright attack on The Bahamas for having made the choice is not only disingenuous but extremely unfair. Other countries have chosen the bilateral approach but for whatever reason they are not being attacked. We now know that this attack will be sustained from other quarters.
We have made our choice. We are currently working extremely hard and strategically towards implementation in order to successfully accomplish our commitment to 2018. My understanding is that the draft legislation, and guidelines is scheduled for release. A task force has established a strategic plan for the way forward and together we are confident that we can meet the implementation date of 2018.
There is other clear rationale for The Bahamas continued commitment to the Financial Services Industry. Over the last few decades the process of globalization, a term defined in the Meriam Webster dictionary as “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets”, has been moving at an increased pace. The depth and breadth of financial globalization is unprecedented, largely due to technological advances which has allowed financial services centres to modernize interconnectivity between global economies, attract more foreign direct investment and to increase transactional activity resulting in business growth in this sector.
Ladies and gentlemen,
Our message must continue to be that we are a Trustworthy, Competent and Compliant jurisdiction. Our aim must be to become the pre-eminent international financial center in the region. This will require focus and a strategic plan involving promotional activities . We will continue our partnership with BFSB in these initiatives. This year we have once again engaged in a partnership with the Society of Trust and Estate Practitioners otherwise known as STEP to sponsor some of the conferences, particularly STEP Caribbean (St. Lucia) which was held in May, STEP Global Congress which was held in Amsterdam in July, STEP LatAm (Panama) to be held at the end of this month. We believe that substantial benefits have been derived and will continue to be derived from these efforts. We must stay ahead of the game if we are to lead.
As I have stated time and time again, the natural strengths of The Bahamas cannot be imitated or duplicated. God has truly blessed the islands of The Bahamas with unrivalled beauty and an enviable geographical location which must be highlighted at all times, and in everything we do. Our regional neighbours can boast of beautiful islands, but not 700 of them, nor can they reach mainland USA in 30 minutes non-stop. They cannot boast of nearly 100 years of financial services excellence and professional human capital resources second to none.
These attractive advantages coupled with political stability an attractive tax regime and cost structure, our common law traditions, skilled workforce and a warm and welcoming climate for investor friendly business, has held The Bahamas as one of the leading international financial and business centres in the Region and indeed the world. Natural attributes are difficult to change. The rest is up to us!
It is up to us to be competitive in this challenged environment. They say innovation distinguishes between a leader and a follower. The competitive environment regionally and globally has spawned creativity for us over the years and we aspire to continue this innovative spirit. The success of the Investment Condominium (ICON) cannot be underscored enough. The enthusiastic interest in this product increased and established it as a staple on the investment funds menu. To date, 45 ICONs have been established.
Now more than ever the government and industry must partner to ensure that while we adhere to our global regulatory obligations we do so in a manner that protects the interest and reputation of the jurisdiction. While the Bahamas is currently going through challenging times we must not be discouraged. The Bahamas has weathered similar storms in the past and we are confident that we will continue to overcome them in the future.