Same Ole Same Ole

Introduction

The ownership requirements for the reserved categories should be split into two, one set of categories with 100% TCI Islander and the other set of categories with Turks and Caicos Islanders owning at least 51% or more.

In October, I argued against making all reserved categories 100% because some business sectors need significant capital, which could limit opportunities for Turks and Caicos Islanders seeking foreign partners.   In that article, I stated that although I don’t support a universal 100%, I believe sectors needing minimal investment should be considered 100%. 

The Government announced to the public that they would not only increase the number of reserved categories but also ensure 100% ownership by Turks and Caicos Islanders.   Now they are retracting that proposal saying it was an error and the ownership requirement will now move from 51% to 60%. This change is not bold at all and it will not make a difference in our business landscape for Turks and Caicos Islanders.

51% vs 60% – A difference that means nothing.

If the goal is to stop fronting or to empower Turks and Caicos Islanders, then this is the weakest possible attempt. The current reserved categories allow locals to hold 51% ownership, giving them majority control.  So, if they already had majority control at 51%, giving them another 9% would not make a difference in control.  The extra 9% may disadvantage locals, since they must contribute an additional 9% to be true 60% shareholders.   Assume the business has a capital structure of 100,000.  The local would have to put up 51,000 and his partner would have to put up 49,000. With a 60% share, the local invests 60,000 and the partner invests 40,000.  This arrangement may lead to increased fronting, as some locals cannot afford to contribute 51,000 or 60,000 for their shares.

If the Government wants to be bold and serious – Create certain industries 100% TCI

There are some industries that should be reserved exclusively for Turks and Caicos Islanders. Those industries that do not require significant cash outlay such as the following

• Small to Medium retail and wholesale
• Petty, Small and Medium Construction Companies
• Automotive
• Transportation including car rentals
• Fuel and energy
• Personal care businesses such as barber shops and beauty salons
• Landscaping
• Property Management
• Real Estate Management

Reserved categories that may need partners

There are some reserved categories that may require a significant amount of financial investment. In this situation, it is advisable to support or facilitate partnerships between Turks and Caicos Islanders and international investors.

Some of these categories can be as follows

• Large retail and wholesale
• Large Construction companies
• Apartment rentals.

In doing so too, we must make sure that local shareholders are genuinely involved and profit sharing based on ownership is real and not symbolic.

Keep the major capital-intensive sectors open to foreign investments

Turks and Caicos Islanders may not be able to build major capital projects alone right now, and so we should encourage or promote capital intensive projects.

Some of these categories can be as follows

• Major hotels
• Large homes and villas
• Property development

Also, because we are trying to expand the financial services industry, we should promote and encourage foreign investors in the financial services industry.

Conclusion

Turks & Caicos deserves better than symbolic adjustments. We deserve an economic model that is modern, strategic, and unapologetically pro-Turks and Caicos Islander. Raising ownership to 60% only is not radical. It is a missed opportunity.

If the government wants to shape the future of business in TCI, then it must stop repainting the old walls and start rebuilding the structure. This can be done by allowing certain categories to be 100%.

The thing is we don’t need cosmetic change. We need real reforms. Although cabinet members should be able to express their views freely without having to agree with everyone, it seems they back the 60/40 out of concern for being fired.  However, this is a good opportunity for the backbenchers on both the Government and Opposition sides to shine by rejecting the 60/40 only. They need to put forward a private motion to split the categories as per the aforementioned.

Lastly, all residents are asked to complete the survey.  If all residents participate in the survey, they will outnumber the Turks and Caicos Islanders and therefore will not reveal the desires of the voters.