Of fshore centre pitched as complement to logistics hub
Published:Wednesday | January 22, 2014 | 12:00 AM
Richard Browne, Business Reporter
Jamaica's efforts to develop an offshore financial sector, though late in the day, can go hand in hand with the push for a logistics hub, according to Eric Crawford, chairman of the Jamaica International Financial Services Authority (JIFSA).
International financial centres are used for various purposes, including asset protection, wealth management, housing of assets to remain confidential - such as shares in companies.
Such is the case in Panama, where its financial industry has driven its logistics hub to the point where it is "very hard to see one without the other", Crawford said Tuesday in a presentation at the Jamaica Logistics Hub Symposium, an event co-hosted by the Jamaican Chamber of Commerce and the Ministry of Industry, Investment and Commerce.
Studies have already been done which show how much an international financial sector could contribute to Jamaica's economy. A report from international auditing firm KPMG stated that Jamaica could earn revenue from statutory and other fees of US$30 million to US$300 million with the prospects of hiring as many as 15,000 people, Crawford said.
never too late
"One of the myths I hear is that Jamaica is too late. The world is not static - what is an advantage one day, is a disadvantage the next," he said. He cited Mauritius, Malaysia, Moscow and Dubai as examples of offshore centres that were recently established.
Jamaica has flirted with the international finances industry over time, having introduced the International Finance Companies (Income Tax Relief) Act in 1971. But "we have never taken it seriously", Crawford noted.
As a result, Barbados and Cayman, which entered the sector after Jamaica, have had "tremendous success, while we are still fledgling", said Crawford.
"We missed the boat. We didn't do nearly as well as some other financial centres."
Jamaica, he adds, has several jurisdictions in the Caribbean that it can look to as models for its financial centre.
In the Cayman Islands, the sector employs 12,600 people or 36 per cent of all employment, out of a total population of 57,000.
"Why couldn't Jamaica follow suit?" Crawford asked. "These are high-paying jobs, these are not menial jobs."
In December 2010, Barbados had 45 offshore banks, 242 captive insurance companies, 3,065 international business com-panies and 408 international societies with restricted liability. Barbados is now one of the most successful jurisdictions in this part of the world, he told the symposium.
In Bermuda, with estimated per capita GDP of US$86,000, most of the real industry is the international financial services sector, contributing 24.2 per cent of total GDP. The sector provided 3,867 direct jobs. A significant number of the companies on the NASDAQ are registered in Bermuda.
In the British Virgin Islands, the sector contributes 45 per cent of GDP. It has 750,000 offshore companies registered there, making it one of the most important offshore financial services jurisdictions.
better performance
Crawford said he knew of no international financial centre that is poor. "They all have healthy GDPs in comparison to ours," he said.
Jamaica's per-capita GDP is estimated at around US$8,900.
In identifying some global trends, the JIFSA chairman said the days of offshore secrecy is over, and countries with lingering elements of that are being sidelined. The Global Forum which was created in 2000 is growing in its importance and power, and Jamaica is a member, he said.
Jamaica has "tons of people with MBAs" and other professionals who can drive the industry. "We can outbid and outperform anybody on the basis of cost in this business," said Crawford.