[xml][/xml]
The Bahamas Weekly Facebook The Bahamas Weekly Twitter
News : Bahamas Information Services Updates Last Updated: Feb 13, 2017 - 1:45:37 AM


PM Christie: The Making of a Great Financial Centre‏
Apr 3, 2014 - 12:57:19 PM

Email this article
 Mobile friendly page


DSC_0865_1.JPG
Prime Minister, the Rt. Hon. Perry G. Christie addresses delegates during the opening ceremony of the 3rd Caribbean Conference on The International Financial Services Sector. The three-day conference is currently being held at the British Colonial Hilton from March 31 – April 2. (BIS Photo/Peter Ramsay).

Presentation by


The Rt. Hon. Perry G. Christie,

Prime Minister of the Commonwealth of The Bahamas

and Minister of Finance

On the Occasion of the Opening Ceremony of

The 3rd Caribbean Financial Services Conference

“The Making of a Great International Financial Centre”

31st March, 2014

British Colonial Hilton Hotel

Nassau, The Bahamas


[Salutation]

The Rt. Honorable Balwin Spencer, Prime Minister of Antigua and Barbuda, Honourable Ministers from the Caribbean Region, Ambassadors and High Commissions, Distinguished Guests, Good Morning.

Ladies and Gentlemen,

I bring greetings to you on behalf of the people of the Commonwealth of The Bahamas. I welcome you to this 3rd Caribbean Conference on the Financial Services Sector and trust that you will have a productive three days of dialogue between the countries of the region and with participants of other regions, particularly the standard setters and representatives of the international organizations on the issue of the future growth and development of international financial services centres in the Caribbean region.

On the 28th September, 2013, I used the platform of my country’s annual address to the General Assembly of the United Nations to launch a defense of International Financial Centres in the region. As part of my presentation, and forgive me for quoting from it at some lengths, I said:

“We see this [same] dynamic at work in the ongoing economic aggression of many of the more developed countries against small offshore financial service-based economies, especially in the Caribbean region of which The Bahamas is a part. Some have used their power either unilaterally or in small groups of high-powered nations to impose their will, arguing that there is something fundamentally immoral, something intrinsically sinister, about the accumulation of wealth in offshore jurisdictions. We reject that premise and we criticize in the strongest possible terms the efforts of some to maim and cripple, if not destroy, the offshore economies within our region. Ironically, the anti-money-laundering, anti-terrorism funding, and anti-criminal regulatory regimes of many of our countries are far more robust and demonstrably far more effective than the corresponding regulatory regimes in many of the same countries that are leading the fight against us.

We firmly believe that offshore financial services can be responsibly operated and regulated. We believe that the sector represents true tax competition and, in the great majority of cases, it affords an honest opportunity for families and individuals alike to protect their privacy while accumulating lawfully earned capital for themselves and future generations. Moreover, the evidence is overwhelming that most of the investment of this offshore wealth takes place in, and generally benefits, the developed world.

Unilateralism and diplomacy-by-coercion are not the way the world should be dealing with this issue. Instead we need to challenge the U.N to take the lead in developing and refining multilateral global mechanisms for the governance of the offshore financial services sector; mechanisms that will meet the legitimate demands of the developed world for the protection of their fiscal systems and their need for greater security while at the same time allowing offshore financial service economies to continue to grow in an orderly and properly regulated way.

And let us not forget that the destruction of these offshore financial service economies will destabilize the countries that depend upon them for their livelihood. To destroy this sector in the Caribbean would effectively cause tens of thousands of newly empowered middle class citizens to slip back into poverty or to migrate to the developed world. The middle class of which I speak constitutes the anchor of social stability for the countries in our region. Take that away and social destabilization emerges as a risk of the most ominous kind. And should that risk materialize, the developed world may well end up finding that it has only solved one problem by creating an infinitely bigger one for itself.”


The Making of A Great Financial Centre

Ladies and Gentlemen,

I now wish to turn to the issue, not of the defense of International Financial Centres, but to the reality that for the continued growth and development of this region – International Financial Centres, that is the free trade of international financial services, must continue and must continue to grow and to flourish. I believe that we can do this responsibly, adhering to international best practices and in harmony with the economic and fiscal policies of the wider world.

Conference participants:

The more relevant discourse on our economies and within our region, therefore, should focus on what must be done to stabilize our growth paths. We must focus on what should be done, or continue to be done, to ensure that the countries of the region which have chosen to engage in the trade of financial services are able to continue to build their centres into world class international financial services centres - An ideal to which all serious IFCs ascribe.

I once thought about what makes London and New York “Great” as financial services centres? What makes their existence unquestionably accepted as legitimate? Of course, they have benefited from an incredible first mover advantage commencing in the business at a very different time in history; but what else is there?

The leading index of financial centres, “The Global Financial Centres Index” published by Z/Yen and Long Finance uses five (5) factors to rank the competitiveness of financial centres: (a) Business Environment, (b) Financial Sector Development, (c) Infrastructure, (d) Human Capital and (d) Reputational and General Factors. The study draws from the widest possible range of other studies and indices to derive its rankings. While some, perhaps even some in this room, may challenge or question the statistical methodology behind the study (for example, how much weighting a particular factor has or does not bear on the results); I think that it is fair to say that the factors which are identified by the study appear to be very reasonable and should be instructive for this region’s policy makers. Indeed, the results are also instructive for regional international financial services centres and the release of the report certainly garners much attention by all regional IFCs.

For my analysis, this morning on the making of a Great International Financial Centre, I will draw on an alternative but related framework. It is my belief that the countries which will continue to do well in financial services are those which fosters “creativity and innovation” while allowing them to flourish in an environment of economic, political and social stability. Professor Richard Florida, the Director of the Martin Prosperity Institute at the University of Toronto’s Rotman’s School of Management and other urban economists have spent the last 10 years or so discussing this idea of the need for creativity in the growth of cities and economies. Creative or Innovative places grow and develop. Places that stifle creativity do not.

Indeed, in The Bahamas – we are of the firm belief that the future of financial services is not just in the efficient and effective provision of services such as ensuring that we have fast turn around times or that we are cost efficient, etc. No, the future of the financial services sector also relies on creativity and innovation.

Therefore my thesis, Ladies and Gentlemen, is that the making of a Great Financial Services Centre involves the process of ensuring that your services-based economy works well, while also ensuring that your economy supports creativity and innovation.

So what do we need to do, or in most cases continue to do to ensure that financial centres in the region continue to emerge as great centres?

Labour Markets: Quantity, Depth and Breadth

Our discussion, therefore, must include our labour markets because the future of our centres relies on having a sufficient number of high quality financial services professionals with the depth and breadth of skills needed for a modern, innovative financial services industry.

The Caribbean, consisting of mostly middle income and some high income countries, has a strong history of well-developed educational systems which are open to all. Education spending is a leading budget item for many countries, if not all, in our region – I know this is certainly the case for The Bahamas.

However, rather than measuring inputs, the modern world requires that we measure output. In 2010, Dr. Didacus Jules, Registrar and CEO of the Caribbean Examinations Councils, writing on the topic “Rethinking Education in The Caribbean”, a paper appearing on the CXE’s website, stated that although we spend as much or more on education than many of the developed countries, “performance is not commensurate to that investment”.[1] The recent publications on our educational systems, both by the World Bank[2] and the Jules study appear to show that there is a need to improve the polar ends of our educational system so that we can continue to grow: that is, we must bolster early childhood education so that our children are better prepared for the learning experiences of primary and secondary education. Secondly, then, we must also improve at the tertiary and professional levels to ensure that a sufficient number of our citizens have the necessary skills for perform well and to think critically on the job.

Financial Services Training and Research: A Mechanism to Address Quantity, Depth and Breadth

According to various experts, where firms locate are a result of a complex interplay of factors; including (i) “luck factors” like the geographic proximity to clients and important markets; (ii) policy factors such as how easy it is to do business in a country and the quality of your infrastructure – an area which I will address later; and most importantly (iii) the availability of skilled local talent.

And so Ladies and Gentlemen, one of the themes that I wish to leave you with today – is the need for continued action by our respective Governments towards a Strategic Human Development Policy within our various countries and regionally. Countries in this hemisphere (and I am talking about both the Caribbean and Latin America) must address this phenomenon known as the ‘skills gap’ because these gaps directly constrain what we can do, generally, and how we compete for mobile capital.

Ladies and Gentlemen,

The Government of The Bahamas is not prepared to sit idly by with respect to addressing any real or perceived skills-gaps in The Bahamas. Therefore, I have directed the Minister of Financial Services to work with all relevant institutions within the Bahamian Government and outside of the Government to ensure that Bahamians are ready for the changing realities in the financial services sector.

The Ministry of Financial Services, in concert with various public and private sector institutions, has been mandated to devise policy on the issue of ensuring that deep and wide skills exist in The Bahamas’ financial sector labour market.

One of the Ministry’s programmes is the formation, within The Bahamas, of a Centre of Excellence for Financial Services Training and Research. I have directed Minister Pinder to make achieving this distinction a priority for his Ministry. The Bahamas has had for over 30 years, through a public private partnership, a high quality professional financial services training institute – the Bahamas Institute of Financial Services, and formerly the Bahamas Banking Institute.

This institute has established a dense network of relationships with the major international professional accrediting bodies for all areas of financial services and has been playing a key role in the professional development of a major share of financial services professionals in the country. I now understand that the Institute has expanded its reach to the Turks and Caicos also. This Institute, combined with the work of the Business School of the College of The Bahamas, which is soon to be the University of The Bahamas, continues to ensure that The Bahamas can supply a high number of skilled professionals to our sector.

Our singular goal, Ladies and Gentlemen, is to ensure that our region continues to develop and has the ability to develop from within the sufficient quantity and quality of financial services professionals to ensure that our economies remain attractive for international financial intermediaries to locate here and for local, indigenous intermediaries to grow effectively.

Public Policy for Creativity in Financial Services

It is often said that we are in the “Ideas Economy” – a stage evolved from the Information Economy or the Services Economy. In the early 1990s economists discussed the notion of the “Ideas Gap” and its role in economic development.[3] Economists studying entrepreneurship have focused on the need for policies for innovation and creativity.

Ladies and Gentlemen,

I hold the considered view that hand in hand with Government policy focused on ensuring the adequacy and sufficiency of trained people for our financial services sectors, policy must also focus on ensuring that the sector continues to innovate and create. We must ensure that we continue to not only provide service, but also generate new ideas in financial services.

As policy makers we do this in a number of ways. The Bahamas has taken the approach that the Ministry of Financial Services works closely with the private sector to ensure that creativity is supported. Evidence of this is the creation of the Smart Fund, The Bahamas Executive Entity and other industry driven products. We take the approach that the private sector must be provided with a space within government to have their ideas heard. We then work with the regulators to see how the ideas can be turned into tangible, appropriately regulated products which we can stake our reputation on and offer to the world.

The creativity of our centres, Ladies and Gentlemen, is only limited by the extent to which our professionals are highly qualified, trained and exposed to an international environment. Indeed, we have seen that the generation of new ideas within financial services, requires global thinking and global interaction.

As such, the Ministry of Financial Services has taken on as a priority the development of international internships and visitor programmes for persons at all levels of the financial services industry. The Ministry is also in the process of creating an incentives programme to reward those firms operating in our jurisdiction which have ensured global training for its local staff. Indeed, we should seek to cooperate on some of these initiatives regionally.

Another mechanism for ensuring continued creativity and dynamism in our international financial services industries is the continued refinement of a strategic, development-focused immigration policy.

I was happy to see that issues related to immigration in IFC development will be addressed during the course of this meeting. From The Bahamas’ perspective, we view that the ability of a country to attract talented persons who wish to invest in innovative industries in our economies will be an important driver in the future of IFCs in the region. The transfer of knowledge to domestic professionals can result from a dynamic immigration policy. Often results in the generation of new ideas,can be realized through a relevant policy. Instead, immigration can and must complement national development as it has in some of the greatest Financial Centres in the World.

I speak of course of the strong tradition of immigration in both London and New York. Indeed, many of our citizens have, for decades, through immigration, contributed to the greatness of these places. We must seek to tap back into them also as part of our IFC development plan.

The Fundamentals Matter

Ladies and Gentlemen,

Notwithstanding the Diversity, Creativity, Quality, Breadth or Depth of our labour forces, some key fundamentals remain germane to the success of our centres. We know them well as they figure in every index and every report of the various international agencies. Indeed, just last week I gave a talk at the “Toward a Corruption Free Caribbean: Ethics, Values, Trust and Morality Conference” sponspred by RBC Royal Bank at the University College of the Cayman Islands on the importance of ensuring that the region is free of corruption, that its judiciary works well and that the rule of law is respected. Adding to that, the financial services industry requires a strong and independent regulatory environment with well-resourced and capable regulators. The industry requires that government policy and the implementation of that policy is transparent and predictable. The delivery of government services must be efficient and effective. Indeed, government should be reviewing what it does continually to make sure that it is functioning well.

In a nutshell then, the financial services sector requires what the general economy also requires-- that the government machinery works well and functions with integrity. We are keenly aware that reputational mistakes are not easily forgiven in the world of financial services.

Public Diplomacy as a Strategy for IFC Development

The final thought which I wish to share with you is that there is a need for increased public diplomacy and dialogue on what we are doing in our financial services sector. The Bahamas Government, led by the Ministry of Financial Services, has undertaken to unashamedly and forcefully champion its financial services industry. I have instructed Minister Pinder to articulate systematically, through all channels available to the Government of The Bahamas, exactly what The Bahamas and its financial services industry is about. We are seeking to ensure that international organisations continue to acknowledge that The Bahamas is a well-regulated jurisdiction and one which is known for its compliance with international best practices.

For example, in April of last year, The Bahamas, concerned about the reach of the United States Foreign Accounts Tax Compliance Act (FATCA) hosted the first regional FATCA workshop facilitated by the United States Department of Treasury and the Internal Revenue Service. At the close of this workshop, during which 10 Caribbean jurisdictions had the opportunity to hold bilateral discussions with US Treasury Department and IRS officials, The Bahamas was able to secure certain exemptions for trusts, private trusts companies and funds. This is the power of dialogue, the power of diplomacy.

The Bahamas will tell the entire world that its financial services industry is a legitimate, development model and one which has made a substantial contribution to the gross domestic product, the economic prospects and long-term development of The Bahamas.

We invite the region to join with us in this advocacy.

Conclusion

On 10 July 1973, The Bahamas became independent with many uncertainties about its future. Forty years later, The Bahamas is characterised by a stable democracy and a stable economy built on two major pillars: tourism and financial services. The path to develop our archipelagic country has not been easy.

Many forget that the breadth of The Bahamas, stretching from West Palm Beach Florida in the north to Cuba and Haiti in the South is as long as the entire Southern Caribbean. Our largest island, Andros, is larger than Trinidad. Yet our population remains small at a little over 350,000.

We are limited in natural resources. The level of development that we enjoy here now, has been achieved through hard work and determination and the ingenuity of our people working with strong governance. It is with this same determination that The Bahamas commits itself to maintaining its position as a global leader in the financial services industry.

Our challenge, like all other centres in the region, is to remain globally competitive and to not only survive this period of upheaval, but also to thrive and grow. We are committed to becoming even more engaged in the world’s economy and tobeing innovative and creative.

In The Bahamas, as I believe I have clearly indicated, we have a vision of the future. A vision in which the financial services sector of The Bahamas is agile and nimble and keeping pace with industry developments during this period of transformation. A vision in which the financial services sector significantly contributes to economic independence and prosperity so that our social and economic advancement leads to a stable and secure society characterised by hope and opportunity.

I welcome you once again to this conference. I welcome those out of town guests to The Bahamas. I wish you a productive conference and I pray that we will have those true conversations that deepen our understanding among the nations of the region and with the international community.

Thank you.


Related:

PM Christie encourages Creativity and Innovation in Financial Services Sector

Caribbean Export Hosts 3rd Caribbean Conference on the International Financial Services

Bookmark and Share




© Copyright 2014 by thebahamasweekly.com

Top of Page

Receive our Top Stories



Preview | Powered by CommandBlast

Bahamas Information Services Updates
Latest Headlines
Junkanoo Summer Festival Is Back, Bigger and Better
ZNS Celebrates 86th Anniversary with Church Service
Doctoral degree posthumously conferred to Hon. A.D. Hanna by University of The Bahamas
Select Jif Peanut Butter Products Recall - Update
Dr. Rodney Smith confers final degrees as President and CEO of UB: asks graduates to take the next step with an open mind