Given the natural beauty of our islands including our Beaches, Tourism will continue to play a very integral part of our economy. However, this industry is competitive and fragile and it is important that we explore other industries to maintain our livelihood.
I must admit I was one of those persons who felt that the Financial Services Industry was dying due to my belief that the industry was over-regulated and the fact that the UK is insisting on the public beneficial registry for the overseas territories. However, this year I am now hopeful of the possibility of the expansion of Financial Services Industry after having Mr. David Stewart (a partner at Griffiths and Partners) on the Financially Speaking Show (a show hosted by E Jay Saunders and me).
The Fragility of Tourism
We are in the Hurricane Zone and the Hurricane season is from June to November. I am thankful that we have been blessed not having hurricanes annually but whenever we do, it can upset our main industry. On the other hand, a hurricane will not cause any disruption in the financial services industry.
The economy goes in cycles, sometimes up and sometimes down and so depending on the cycle, our tourism industry is subject to ups and downs. In addition, given our geographical proximity, we are particularly reliant on the North American economy, which has regular recessions which can impact our real estate development and tourist industries dramatically. However, the incorporation of companies and other financial services activities are not solely dependent on the North American economy, and may not be significantly impacted like that of tourism related services.
The crime situation is still not at the place where we would like to have it. One robbery or shooting incident can have an impact on our tourism industry. However, it will not impact our financial services unless there are major crimes.
Beaches, our largest employer plans to exit the market in 2021. We do not know at this time whether it is finalized as yet now that the amnesty for the waiver of the penalties have been approved. If Beaches decide to leave TCI, it will have a dramatic impact on our economy. Do we have an alternative plan in place in the event Beaches exit? The expansion of financial services can be our alternative especially if you see the impact it has had on islands such as BVI and Cayman.
BVI and Cayman Financial Services.
The BVI and Cayman Islands have established themselves as global leaders in the financial services industry.
In the BVI, financial services income directly contributes 56% of the economy, which is equivalent to $177 million. In addition the sector has over 5,000 employed persons directly and indirectly. It is a critical component of BVI’s economy, and is the source of more than 60% of Government revenues.
In the Cayman Islands, financial services contributes more than 35% of overall Government Revenues. The overall total income produced by the financial services industry is $1.01B, or 42% of GDP.
The Opportunity for TCI Expansion
With the contribution that BVI and Cayman receive from financial services, there is clearly an opportunity for TCI. In TCI, the total GDP contribution from financial services (including domestic financial services) is around 8.5% or $85M.
While Cayman and BVI may be far ahead of us with their niche markets, we too can develop our own niche areas and in turn provide alternative revenue, business opportunities and highly paid, rewarding professional employment opportunities for the people of TCI. TCI is in a great location from North America. It can be easily accessed and we branded ourselves as a high end destination providing the opportunity to attract major international financial services businesses to TCI.
Despite the many legislations and the public register fiasco, it is believed that Financial Services Industry will continue to grow. I know the Government has commissioned an independent report from an international consultancy, and established a committee to set an action plan in place for the expansion of the financial services sector. Hopefully, we will see some results soon given that this initiative has been around since 2014. If in Cayman and BVI, financial services can contribute millions of dollars to their economy, so can the Turks and Caicos. The opportunity is there. We need to invest heavily in marketing and run with it so we do not have to depend entirely on this fragile tourism industry.