KINGSTON, Jamaica – The critical element in establishing a successful Offshore Financial Centre (OFC) in Jamaica will be its marketing, says tax consultant Dr. Trevor Thomas.
Senator Don Wehby, Minister without Portfolio in the Ministry of Finance and the Public Service is shortly to get a report from a committee exploring the development of an OFC in Jamaica. The concept is part of a Government plan to establish a centre in downtown Kingston as a fulcrum for development in that part of the city.
“I think the creation of an Overseas Financial centre is a procedural and administrative task,” Dr. Thomas said in an interview. Decisions have to be made about the type of centre to be developed, the regulations needed to govern it and the nature of business desired.
Earl Jarrett (left), General Manager of Jamaica National Building Society (JNBS) and Sandra Glasgow, CEO of the Private Sector Organisation of Jamaica (PSOJ) discuss ideas outlined in Offshore Jamaica: The Path Ahead, with author and international tax consultant Dr. Trevor Thomas. The book was launched today (June 12) in the Melhado Room of The Devonshire, Devon House by the PSOJ in association with JNBS.
Offshore finance is simply the provision of financial services by banks and other agents to non-residents, according to one definition. Successful offshore centres combine the advantages of tax havens with a modern financial infrastructure.
Hosting such a centre could offer huge advantages to Jamaica since they hold 26 per cent of the world’s wealth, he stated in his recently published book, ‘Offshore Jamaica: The Path Ahead’, which was launched at the Devonshire on Thursday (June 12). The launch was jointly sponsored by the Private Sector Organisation of Jamaica and the Jamaica National Building Society (JNBS).
According to Thomas, Jamaica could attract the institutions required to service such funds which would provide a significant source of income and high paying jobs.
“Assuming we set up a reasonable structure I believe the key is the marketing,” the London-based consultant said. “It needs to be strongly marketed worldwide.”
The competition among such centres is global. One competitor is the British Crown dependency of Jersey, off the coast of France, while another is Labuan Island, a territory of Malaysia.
In the Caribbean are the island territories of Cayman Islands, British Virgin Islands and the Bahamas, along with Belize in Central America.
The Cayman Islands would probably be considered by some as one of the less demanding jurisdictions as names of the shareholders of their tax exempted companies do not form part of the public record, his book stated. Bermuda, on the other hand, emphasizes safeguards such as the fact that anyone can review corporate documents, including the register of directors and officers of exempt companies in the territory.
There are significant differences between the jurisdictions which can be highlighted, he stated. Jamaica has to ensure that its legislative framework is structured to give its marketing a distinctive edge.
Early and effective marketing is crucial to develop its image, he said. A unique and competitive identity must be developed to position the island as a preferred destination for investments.
“The centre does not have to be developed before it is sold,” he said. “I think the marketing process should start alongside the development of the legislation needed to give it effect.”
The focus should be on investors, banking institutions and those involved in tax minimization and asset protection.
It would be difficult for Jamaica’s new centre to change the established choices of mutual fund managers, insurance officers and advisors to the international hedge fund industry.
“Maybe we should target the sports and entertainment sector,” he said. Jamaica already has a strong reputation in entertainment and sport which could be a solid foundation for building a centre that would cater to this market segment.
Professional sport and entertainment are huge global businesses. In the United States alone entertainment is a US$480 billion industry.
To tap these sectors, Offshore Jamaica could market itself as an OFC friendly option to sports personalities and entertainers seeking to minimize the tax burden on their worldwide income, he stated. To promote this concept, internationally known Jamaicans based overseas such as Chris Blackwell and Lennox Lewis could be invited to play a role in its development.
In marketing terms, Jamaica’s old commercial capital of Port Royal might also make a better OFC than downtown Kingston as has been proposed, Dr. Trevor Thomas said.
Port Royal is a physically distinct area with its own buccaneering history and independent identity within Jamaica. It could be marketed as, “the quiet, safe, beautiful enclave at the tip of the Palisadoes.”
Port Royal would need to be regulated by its own independent council as investors require a stable environment in which they can execute long term strategies. Investors would be wary of an OFC whose existence was the subject of political debate.
“There is no doubt in my mind that this is a doable proposition,” he said. “The question is whether we have the will to carry it out.”
In launching the book on Thursday, Earl Jarrett, General Manager of the Jamaica National Building Society also said offshore banking is “doable” and supported the view that OFC can create substantial advantages for national development.
“If the Jamaican economy is to grow, to absorb and retain its population; and, if we are to achieve the goals of the national plan, Vision 2030, for Jamaica to be the place of choice to live, work, raise families and do business, then we must position our country and our people to embrace these new concepts,” Mr. Jarrett said.
“It is not acceptable for us to console ourselves that a 2-to-3 per cent growth is adequate for a dynamic country, such as Jamaica; when there are ways to add new products, such as offshore banking and its attendant financial services,” he asserted.
