Warren: GB gives financial services sector an advantage
The financial services sector in The Bahamas has unique competitive advantages due to Grand Bahama’s location and shipping infrastructure.
The Bahamas Financial Services Board’s(BFSB)vision for the besieged industry integrates’brick and mortar’activities with business and trade flows between countries, Wendy Warren, the board’s CEO and executive director, said yesterday at the 20th Bahamas Business Outlook.
“The linkages and ability to leverage the transshipment, logistics and commercial activities that are on tap in Grand Bahama could seal the deal for The Bahamas being the regional winner in international business and finance,”Warren said.
The BFSB with the support of the government undertook a project to determine where the best opportunities were in the industry for increased revenue and employment.
“In our view, this review confirmed the vision and game plan for The Bahamas to become the preeminent center for structured capital flows between companies seeking to do business with the major economies in this region,”said Warren. She said The Bahamas would seek a leadership position in the Americas as the’go-to’jurisdiction for transactions between the countries of the region.
Four of the world’s richest countries are in the Americas, according to Warren, who said the economies of the United States, Canada, Brazil and Mexico were ranked 1, 8, 10 and 15, respectively. These countries are generally rich in resources, which create capital flow opportunities from the growing Chinese economy, which needs their resources to fuel its growth.
“We sit in an area that is just steeped with opportunity,”Warren said.”The opportunity for The Bahamas is to capitalize on its geographic location, and market timing.”The Bahamas lies in shipping lanes between the Americas and Asia bridging east and west, and between Brazil and the United States bridging north and south. Warren added it is projected that the top five”economic powerhouses”of the first half of this century will include China, the United States and Brazil.
Many of the businesses that are behind such cross-border commerce are owned by wealthy families. Warren said that this creates wealth management opportunities for Bahamians.
Ultimately the government must take the lead in changing the industry, according to Warren, though the private sector must take the risk and invest in the industry.
Illustrating how government can direct the future of the industry, Warren cited the case of Brazil. The country has been identified as a source of assets for Bahamian fund managers, but Brazil has not approved The Bahamas as an acceptable jurisdiction and levies a 25 percent withholding tax on payments to The Bahamas. If the Securities Industry Act, now tabled in Parliament, is passed, it will pave the way for Brazilian regulators to approve The Bahamas, and hence for money to flow into the jurisdiction from Brazil without the heavy penalty.
Warren also said that in the case of Mexico, many barriers to Mexicans doing business in The Bahamas have been removed with the government’s signing of a Tax Information Exchange Agreement(TIEA)with that country, according to Warren. The TIEA with Mexico was signed on February 23, 2010.
“These are not theoretical points,”Warren said,”because I can say to you the quotes that we are receiving from businesses–global banks saying this is going to unleash the opportunities for planning, that this will significantly allow us to grow. Lawyers from Mexico are saying we are so glad The Bahamas has resolved this because we prefer to do business with you than some of your competitors,”she said.