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The Decider

On the future of BVI financial services sector...


ground and the constant threat to blacklist the jurisdiction, which is now, after much effort and work, on the grey list. The requirement for companies to have economic substance will soon be a requirement of not only the EU but other international organisations. So the question is, are we ready for this challenge and is there opportunity in it? Increasing economic substance is a multi-party endeavour with significant hurdles. Simple issues like office space; because of the events of the last two years we do not have enough office space for current business then how do we create space for new businesses? Do we have the infrastructure to support more on-the-ground enterprises? We know we don’t have adequate hotels, housing, transportation, or communications infrastructure and that access is an issue. I had a client who wasn’t investing in a significant project in the BVI because his jet can’t land here. He said it’s not convenient for him. He’s not going to land in St. Thomas and come across. Seems extreme but it’s real. Perhaps a bigger question is how will government facilitate the growth and development that is needed; are they prepared to make the necessary improvements? It has to be government led because it requires decisions and actions that are beyond the purview of the private sector.


JULY 2019

Do you find that there is a strategy on the government’s part in terms of where the substance will come from? Will they bring in a leading consultancy firm as a strategic partner like they did with McKinsey? I believe the substance will come over time once we open our doors and properly provide avenues for the efficient set up of new investments. The key is creating the environment to allow for substance to be on the ground. The McKinsey report gave us a roadmap and a plan for many of the issues that are currently great concerns for inward investment. Kedrick Malone and his team at the Financial Services Implementation Unit did a lot of work in moving the plan forward. You don’t have to start from scratch, improvements have been identified, a plan is there, it just needs to be implemented. When I speak with my colleagues at different firms, we acknowledge that we all have clients who are willing to comply with economic substance, who are willing to come in on the ground, but they just don’t know what to do with things being what they are. As a service provider, it’s difficult to offer reliable counsel because there is no certainty and a lot has to be improved for us to become more business friendly. So, it’s a holistic picture that needs to be addressed, which is challenging, but we need to increase the urgency or the consequences will be serious.

Does the absence of such a holistic approach create the possibility of missing this opportunity? Definitely. Again, I was speaking to someone this past weekend who said they wanted to set up here, but because of the uncertainty that surrounds our infrastructure, immigration, and labour policies they have decided to set up in Jersey. Jersey has been working on economic substance for years. They have substance on the ground. We have fallen behind.

You’re right, even prior to McKinsey there was a live discussion that Substance was the next level of involvement for the financial services sector, and then the McKinsey study came along and confirmed it. But it only got going once the EU did what they did. That’s right, if we had taken a proactive path when the issue first surfaced, we would be so far along the road. Now, we are forced to take steps that may seem severe and even impossible, but critical, because we are way behind the curve.

If you could wave a magic wand, what would be the evolution path of BVI financial services sector in the next 3-5 years to ensure the sector would still be vibrant a decade from now? Diversification. Diversification in its true sense. There is so much more to the business of financial services than what we are currently doing and can do in the BVI. For example, offering clients a wide spectrum of services that would then spin off additional and varied legal work and the need for more substantial accounting services. You wonder why services such as corporate director services are not more significant in our offerings as it is in other jurisdictions. We have done exceptionally well at our core business which is the incorporating business, and that’s no small feat, but perhaps it also resulted in us becoming satisfied, content, and a bit complacent, which unfortunately is not fertile ground for growth. It’s a different world now and in order to not just survive but to thrive we need to diversify and not just go for the low hanging fruit. But again in order to really bring our game to the next level, we need supporting systems – good infrastructure and immigration and labour policies that are business and investor friendly and reliable, world class internet services. The fact is that meetings nowadays don’t take place in one

Profile for Business BVI

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...