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EDITORIAL: Jumpstarting the economy

rhondathompson, [email protected]

EDITORIAL: Jumpstarting the economy

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Last Tuesday, former Prime Minister Owen Arthur addressed the monthly luncheon of the Barbados International Business Association at the Savannah Hotel, and spoke on some issues which he thought needed to be addressed quickly if this island was to retain its competitive edge.
 Mr Arthur is of the view that the “full and fastest growth of our international business and financial industry represents Barbados’ most feasible option by which to put our economy back on a path of growth and development”.
If this is so, then we urge that the mistakes of history must not be repeated. In 1965, the year preceding our Independence, we enacted the International Business Companies Act which provided for no taxation in respect of such companies incorporated here. The Cayman Islands did the same thing, and business flourished there, but scarcely did we attract any such companies.
No pruning or other husbandry of the act was undertaken and there the matter rested until 1979 when the Tom Adams’ administration passed the Offshore Banking Act and the Exempt Insurance Act and refashioned the International Business Companies Act.
By then, The Bahamas, Bermuda, the Cayman Islands and the British Virgin Islands had all left us at the starting blocks! We have since developed this sector which is now a major plank in the foreign exchange earnings aspect of our economy. But the financial service sector is dynamic, and the industry responds to shifts and movements in the international economy.
It therefore requires constant attention. It is like a tender plant which requires acute husbandry to ensure its growth, and without such frequent pruning and watering the sector will stand still and our competitors will overtake us because business in that sector is frequently mobile. It goes to the jurisdiction which best caters to its needs.
Jurisdictions such as Barbados must also respond and, indeed anticipate, such shifts and movements in order to make available those legal vehicles used by large multinational companies and high net worth individuals who are always looking to protect and maximise their wealth.
We already have a major competitive advantage in our insistence from the start of the industry here on a network of double taxation treaties. Subsequent events have shown that this is the way to go and our compliance with international regulation in this area has helped us to maintain an image and a reality of a clean “white list” place to do international business.
It is Mr Arthur’s thesis that we must exploit such competitive advantage and use the sector as part of the bridgehead to help correct our economy. We agree with this view, for this sector has shown that it can quickly earn us foreign exchange, provide jobs, increase our tourist arrivals and stimulate the market for high class rental property.
But as the former prime minister conceded, additional corrective work has to be done. Inefficient bureaucracy must not stand in the way of progress, nor must backward attitudes to service and an improper work ethic stifle the development of the sector towards world class status. Above all our human capital must always remain at the cutting edge of knowledge relevant to the sector. Mr Arthur has given us his views. Are there any others?