Good Morning,
My name is Eduardo Silva and I am Chairman of the Cayman Islands Financial Services Association, or CIFSA.
I want to thank IFCCT for inviting me here to speak today, and thank all of you for attending this important conference.
In our relatively short history as a global financial centre the Cayman Islands has come under attack from a number of sources. But never before have so many forces been aligned against us as they seem to be today. So several of the topics being presented in this conference – enhancing competitiveness, preparing for imminent legislative changes, and developing practical strategies and plans to mitigate risks – are extremely timely and valuable.
While I speak today about the Cayman Islands specifically, I believe you will find that my comments are easily transferable to other offshore centres.
The Cayman Islands has been able to build itself into a global offshore financial centre in part due to the strong partnership existent between private sector and Government. This allowed for a very responsive business environment that could quickly capitalize on opportunities and stay ahead of the curve in adopting new products and services. Because the lines of communication are more open between the public and private sector here, and everyone is working in the best interests of building and maintaining the jurisdiction’s reputation for integrity and compliance, Cayman has been able to establish new legislation in a timely manner while maintaining high standards of compliance.
Maintaining this relationship is a vital part of CIFSA’s role. While many residents just assume that Cayman will always remain a major player in global financial services, CIFSA and the Government are both well aware of the potential challenges facing the industry. These include the development of other offshore financial centers and the threat of legislation from on-shore jurisdictions like the US, France, and Germany that could severely impact the ability of businesses in those countries to work with the Cayman Islands.
And the reality is that these businesses are portable. In fact they first came to Cayman in the 1960’s because of policy mistakes made elsewhere in the Caribbean. That opened the door for Cayman to begin building our financial centre and to attract top industry people who participated in our growth. So we know how fast these things can change and turn on us if we are not vigilant in our defense of the industry.
So how do we improve our competitive position and develop our unique selling points as a jurisdiction.
From my perspective I would say there are six key areas that we must pay close attention to and factor into our planning:
1. Government Relations – Foreign & Domestic
2. Defining the Business Case for Offshore Centres
3. Effective Oversight by Private Sector
4. Full Suite of Product Offerings and Support Services
5. Infrastructure and Quality of Life for Industry Workers
6. Effective Marketing and Public Relations
Government Relations – Foreign & Domestic
I have talked a bit about domestic relations already but developing relationships with foreign governments has become an essential part of our business.
Looking beyond our borders CIFSA must constantly monitor the international political and financial landscapes to stay on top of emerging trends and assess the potential opportunities and threats that lie ahead.
Our greatest threat remains the misinformation being spread about the Cayman Islands Financial Services industry, exacerbated today by the desire for politicians to identify a villain, preferably a foreign one, for the recent crash in global financial markets.
If we are going to fight against the perceptions of secrecy and unethical business practices we must become more open and proactive with our communications. CIFSA has made great strides recently in developing positive relationships with the foreign press and we have had several positive results from independent reports on our adherence to international standards, including a very positive report from the Government Accounting Office of the US Government. These efforts protect and build our reputation for professionalism and integrity across the globe.
Defining the Business Case for Offshore Centres
In order to counteract the negative arguments being put forth about the Cayman Islands we need to put forth a strong business case that educates people about the benefits offshore centres provide to employers, pension funds, unions, shippers, airlines, and other organizations.
We must stand up and say ‘This is who we are, this is why you need us, and this is how we benefit the global economy’. We have to explain our function as an integral part of the global financial system. In doing so we sometimes have to make strong statements denouncing the false, misleading, and harmful comments that some politicians, competitors and uninformed media make about our industry and our country. We are proactive in our efforts, but they are done in the spirit of cooperation and partnership. We are looking for friends, not enemies.
Effective Oversight by Private Sector
There is much more emphasis being placed on Oversight these days with the current global financial crisis. Jurisdictions that are perceived to have stronger controls and oversight will benefit going forward. This is one area that being a first mover can build a competitive advantage for a jurisdiction.
The most recent edition of the Global Financial Centres Index, or GFCI, revealed that the Regulatory Environment has now become the most important factor in assessing the competitiveness of financial centres, taking over from availability of skilled professionals. The Cayman Islands has always been seen as a safe and well regulated jurisdiction due to its UK ties. This is something we need to continue to stress in our messaging.
We believe that self-regulation is the most effective and efficient means of oversight.
Due to the current global financial crisis there is a real risk that reactionary legislation is passed that could have the affect of stifling the flow of capital and decreasing efficiencies in the global financial system. This would work against the very goals of recent government efforts to inject liquidity and prop up the banking sectors worldwide.
By proactively taking steps to strengthen oversight within the private sector Cayman’s financial services sector can potentially move ahead of other jurisdictions that are slower to develop such standards or who are faced with overly burdensome government regulation.
Full Suite of Product Offerings and Support Services
Being a tax efficient jurisdiction is obviously a major advantage that the Cayman Islands has over other financial centres. Another competitive advantage that Cayman has enjoyed is the large, experienced base of support services. These include accounting, legal, banking, insurance, and investment services firms. This makes business processes quicker and more efficient than many competing jurisdictions. Especially for complex, multi-national transactions.
But these advantages mean little unless we are able to translate them into a line-up of products and services that add value to the customer´s experience doing business in Cayman. Creativity, innovation and excellence of service will always be the drivers of our success and we can never take our position for granted. We need to stay alert to inefficiencies in the markets, and take the lead in developing solutions that open new markets to us by creating positive outcomes for our clients.
Infrastructure and Quality of Life for Industry Workers
In order to attract and retain top industry people it is necessary to either pay them more than other jurisdictions can pay or make your jurisdiction as appealing as possible to them and their families through softer services and quality of living.
Businesses want to see reliable infrastructure in the areas of power, water, telecom, and transportation. And they need available office space at reasonable prices before they consider opening a Cayman branch.
The skilled individuals our businesses require are concerned about housing, personal safety, transportation, quality schools, friendliness of the society toward ex-pat workers, and a vibrant social scene.
Until recently quality of workforce has been the top factor in assessing global competitiveness for financial centres. As a result we cannot overlook the many factors that determine the willingness of top industry minds to come and work in Cayman. Our weather is a great advantage but we cannot count on that alone.
Effective Marketing and Public Relations
Having obtained a critical mass in its membership over the past year or so CIFSA is now an international voice that demands recognition, and our input is being sought more and more regularly by international news agencies and competitive jurisdictions in dealing with global financial issues.
Creating a ‘brand’ for Cayman as a financial centre is something that CIFSA and the Government must address going forward. Other centres are promoting themselves aggressively in New York and London and other major markets. We need to compete on the marketing and promotional front to ensure that new centres do not pass us by.
Challenges will always present themselves to our financial centre, this tiny country that had the nerve, foresight and keen instincts to build a globally respected financial center where only a single bank stood before. But CIFSA remains confident that the current storms will pass if the industry and government continue to do their part in working with international regulators, facilitating the flow of accurate information, and meeting the needs of their various clients through continued innovation and flexibility.