Invest TCI is facilitating the development of the Financial services sector to build a diversified economy and ensure longevity for the next generation. It is crucial Turks and Caicos Islanders understand and embrace this emerging landscape and begin to take steps to ensure their inclusion. The first step is access to information and providing a better understanding of the sector. Invest TCI will be publishing a series of ten articles on the potential for financial services in the TCI to bring more light on this sector so that as we embark on this ambitious program to develop this industry and in turn the country, Turks & Caicos Islanders will be part of this.
First things first: The development of our financial services sector must be in the best interest of Turks and Caicos Islanders
Turks and Caicos is one of the youngest countries in the western hemisphere and has the potential to be a top 25 nation worldwide in terms of GDP, lifestyle and standard of living. This goal is not only attainable but can be implemented in one generation. It was Turks and Caicos Islanders of the 60s and 70s who were the first to be formally educated, be exposed to the wider world and who then returned to TCI to shape the bedrock of what is now our nearly US$1 billion GDP economy. It was also during this time that, TCI became a recognized financial services jurisdiction. Nearly 5 decades later, there are opportunities and challenges that need to be addressed as a developing nation. What is crucial is not just identifying these challenges and opportunities but also identifying how we as a nation and a community can best solve these issues. Developing tourism was the obvious choice for jump starting our economic revolution many years ago, enabling us to upgrade from the salt and fishing industry. Fast forward today, we have solidified ourselves as a five-star destination on the world stage through tourism. Invest TCI is a firm and enthusiastic supporter of the TCI tourism industry, and this industry, and its offshoot in the shape of real estate development, will continue to be the major driver of our economy. But Invest TCI must also look to the future to ensure a diversified and inclusive economy to ensure economic survival and sustainability.
This pandemic (and, arguably, the 2008/9 North American recession) has demonstrated our vulnerability as a single focus economy, with 85% of our GDP coming from the tourism and real estate sectors. Through remaining relevant in a changing world that is rapidly becoming smaller, interconnected and more competitive through the rise of globalization, we can ensure our prosperity for future generations. So, Invest TCI has been working with a small steering group appointed by the Premier to look at how we can diversify our economy by developing the financial services sector.
As tourism was a relatively untapped industry to TCI 50 years ago, so is financial services in the present day. It is only through a clear understanding of the sector and its benefits that we can ensure that we generate national buy in to the proposal that the growth of the sector is in the best interest of our country. We must implement it effectively to catapult TCI to the next stage of the country’s life cycle.
What does financial services look like?
The financial services sector emcompasses many different segments such as banking, investment houses, trust companies, fund management, family offices and insurance. From a general standpoint, the sector manages money and provides the free flow of capital and liquidity in the marketplace. Through comparing side by side with the tourism sector we can get a clearer picture of what it will look like to us as a country. As the TCI was able to enter the tourism sector and successfully compete globally due to our natural and pristine beaches, we also have a unique factor that can allow us to drive growth in our financial services sector. This is our status as a tax neutral jurisdiction or what’s more commonly referred to as an international financial center (IFC). There are roughly about 40 countries worldwide that hold this status, and we are one of them. The revenue generated from businesses operating here can be used by the government for direct infrastructure development. The sector will offer services to persons all across the world who want to benefit from a tax neutral jurisdiction in addition to serving TCI residents with expanded financial products. As tourism was able to increase our wealth and provide an economic boost to our economy, the financial services sector can do the exact same.
What are the direct and indirect benefits of a strong financial services sector?
- Government revenue: Revenue generated from business licenses, financial contributions and fees will provide the ability to improve public service infrastructure and increase spending on vital projects, and in time allow Government to reduce consumption taxes such as duties. Take the BVI as an example, which has an annual budget of $200 million, equivalent to that of TCI. However, the revenue generated from FS alone is $240 million covering the entire annual Government budget, along with a surplus.
- Improved employment opportunities: Cayman, BVI, Bermuda and the Bahamas are all countries with strong financial services sectors, and these industries create highly paid jobs in those countries with opportunities for global mobility and work experience. A strong financial services sector help retain youth who might otherwise leave the TCI to work overseas, and these opportunities can also attract those who have left our shores due to a lack of opportunity to use their skills and experience at home.
- Low impact: growing the financial services sector does not leave a heavy footprint environmentally.
Invest TCI is confident that our financial services sector can be developed; TCI has a real opportunity to carve its individual niche in the global financial space as a responsible, high quality IFC, and in turn the revenue generated can be used to develop our country and its people. It’s been done in other countries before; however, the transformative results are attainable only through having a clear vision, tenacious execution, accountability of all involved and a definitive plan of action and transparency for TC islanders. This is the way we will be successful in molding this industry. After all, the development of this sector is a means to an end. The goal is to grow our national revenues, to create opportunities for our future professional workforce, to offer a global service and most importantly improve our country’s living standards and the lives of all TC Islanders.
Business Analyst, Invest Turks and Caicos Agency
Benjamin is a Turks & Caicos Islander who has recently returned home after studying and working in London for the past 11 years. He holds an undergraduate degree in Economics and an LLM in financial law. He is currently employed by Invest TCI to promote and market TCI financial services.