The British Virgin Islands’ (BVI) journey to the top in financial services was not just happenstance: we combined our creativity, our human capital, and collective strength to become a jurisdiction that is globally respected and admired.
Earlier this year, we celebrated the results of our hard work and effective engagement with the European Union (EU) when we were deemed to be ‘whitelisted’. However, we had hardly begun to savour this accomplishment when we had to immediately rush our business continuity plans to completion, in the face of the unexpected COVID-19 pandemic. This meant not only making sure that staff could work remotely, but equally that our clients were comfortable with these unexpected arrangements.
So, What’s Next?
Can this jurisdiction afford to rest on its laurels? Most definitely not! The published statistics for the first quarter of 2020 do not paint a pretty picture. Government revenues from financial services are down by US$20 million which means that our incorporation numbers have dropped significantly. What is our game plan to stay ahead of the curve? New business will not just fall into our laps. Every jurisdiction regardless of their offerings has become more competitive – whether it’s utilising technology or rightsizing for better results. An interesting statistic during this pandemic is that the BVI productivity in financial services went up by more than 40 per cent as a result of working remotely, according to our industry experts. A cautionary tale perhaps, but also an indication that the time is right for some degree of upskilling. Critically, our leaders including the Regulator must remain nimble and innovative in supporting industry’s efforts to stay competitive.
The BVI, as always, has a great story to tell. Aside from being whitelisted, thanks to vigilance and good management of this Government, we are virtually COVID-19 free. Let us capitalise on these elements to continue to grow our industry and, indeed, our economy, starting with the quick and easy things that the BVI can do to attract new business. The BVI is a jurisdiction with which everyone wants to be associated. Potential clients with significant portfolios would love to relocate to the BVI. Although the BVI will never get into a race to the bottom, offering cost-effective arrangements where a significant book of business wants to relocate might be worth considering. In all likelihood this could require an amendment to our legislation but this is equally a timing issue. We must not be just creative, we must be nimble.
Then there is the vexing problem of protracted delays in non – BVIslanders getting approvals for applications for trade licences. This jurisdiction is keen to take advantage of the EU’s Economic Substance rules that require a trade licence once relevant activities are being undertaken in the BVI. There are myriad benefits that could accrue to the BVI including investment in new properties, rental of BVI owned office buildings, employment of staff, and significant revenues. Investors, whether foreign or local, crave certainty; they will invest in property for accommodation of other investors and they will prepare themselves to take advantage of new opportunities once the rules are clear. Delaying approval of licences in the hope that applicants contribute in some way to the community makes us uncompetitive, in my view. Why not increase the cost of the trade licence instead? The end result is the same.
I participated in a webinar a few weeks ago hosted by the Caribbean Chamber of Commerce with the Prime Minister of St. Lucia as the keynote speaker. That island has been designated the top Caribbean jurisdiction for ease of doing business. Prime Minister Chastenet, of course, used the opportunity to encourage investors to make St. Lucia the jurisdiction of choice for investment. Bureaucracy is minimal and licensing processes are swift.
In similar vein, we are all aware of the Prime Minster of Barbados Mia Mottley’s recent announcement of a 12-month ‘Welcome Stamp’ for remote working visitors. In short, wherever you are from and have a desire to work remotely, whether as an investment banker, an accountant or you name it, you can do so from Barbados for a period of 12-months. The Prime Minister is thinking outside the box as usual but, more importantly, is promoting the relatively low incidence of COVID-19 in Barbados which makes it one of the more attractive places to reside right now.
The BVI, for its part, has an even better story to tell – eight positive COVID-19 cases and one death! We accept that even one death is too many but compared to most places, we are one of the best places on earth to be right now. Let’s use this to our advantage by also thinking outside the box.
Another opportunity not to be missed by this jurisdiction lies in the crypto space. For the last two years, the BVI has been the second largest crypto jurisdiction, according to CoinShare’s H1 Crypto Report. For several reasons, including our ease of company incorporations and the fact that we are one of the largest corporate domiciles in the world, investors in the crypto space want to be based in the BVI. The long-awaited Sandbox Regulations were passed in June of this year, thereby unlocking countless opportunities for new businesses to now operate with the permission of the Financial Services Commission. The last thing this jurisdiction needs is a case of fraud or money laundering but there are enough experts in the territory capable of advising on the merits of these many applications. The ‘depth of our bench’ combined with the recent passage of these regulations gives us a great opportunity to continue to be ahead of the curve in crypto assets.
Finally, we must keep an eye on globalisation, or rather the move away from globalisation towards a ‘nationalist creep’ in international business. It is more urgent than ever that offshore jurisdictions get together to preserve and defend the contribution that they make to international business through making costs much more competitive and overall, through making business less complicated because of our legal systems which are, for the most part, based on English common law and also the depth of our human capital. We did it before and we must do it again!
It is to be expected in these times for consumer/client appetite to be muted, but as a jurisdiction, let us be always ahead of the curve, ready to ride the next wave.
Lorna Smith OBE
Chief Executive Officer and Founder at LGS and Associates, formerly Interim Executive Director, BVI Finance, British Virgin Islands. Lorna Smith has more than three decades of experience at the highest levels of the public service in the British Virgin Islands. Over the course of her senior-level service, Ms Smith has developed extensive relationships with leaders from the business community, international NGO’s and government leaders from around the world. She is well published, a popular speaker and consults on BVI financial services. For more, visit her website at LGSASSOCIATES.COM