Last weekend the Government of Anguilla and Anguilla Finance, the promotion agency of the Financial Services Industry, hosted a very significant seminar at the Paradise Cove Conference Center to “explore the avenues available and actions necessary to enable Anguilla to benefit from the Financial Services Industry”. It was called “VISION DAY 2013: 2020 VISION”, and began with a presentation of the findings of a jurisdiction assessment that was conducted among the practitioners in the industry over the preceding months. The importance of the event was accentuated by the presence of the Governor and the Chief Minister who both gave addresses. And although the attendance was less than may have been expected — the level of participation and quality of the presentations were high. We are therefore encouraged that there will be positive actions coming out of the two-day (18 & 19, 0ctober)deliberations.
The fact came up in the deliberations that, unlike tourism, most people in Anguilla “do not have a clue” about what practitioners in the Financial Services Industry do. As a consequence there is a great deal of skepticism about what goes on in the industry. Terms like money-laundering; drug trafficking; terrorism financing; tax evasion; and illegal arms trading are just a few of the labels that are loosely bandied about regarding the industry. Obviously, such labels are not helpful to the cause of optimizing the benefits to be derived from the Financial Services Sector. It was therefore timely that these discussions should take place while Government is strategizing about how to meet its budgetary requirements for the upcoming year. There is a real need for revenue inflows from this sector either through better marketing of existing products or the development “new and enhanced products.”
There were a number of “new and enhanced products” in the sector that were discussed at the Seminar, many of which are too technical for a brief explanation – given the legal and financial concepts involved. However, there is one product, namely, “permanent (economic) residency by investment” that I believe should be given top consideration. Over twenty years ago the concept of granting freedom from immigration restrictions, as an incentive to attract investors to Anguilla, was discussed around the island. At the time, several persons crudely described the idea as “selling passports”. And, as a consequence, very few persons gave it any positive consideration. In fact, as an Elected Member in Opposition at the time, I also was extremely critical of it in the manner it was presented. Today, twenty years later, the concept “has come of age” – has been “fine tuned” – and is now widely used (in one form or the other) as a means of attracting foreign investment and generating economic growth in both developed and developing countries. There are still some countries that grant citizenship as an incentive to invest, but for the most part, “permanent residence” is the first step in the process.
I believe that the time has come for Anguilla to make itself more attractive for “high network individuals” (i.e. “rich rich people”) to invest in our country in the same way that they come to enjoy our tourism resources and facilities. The competition for such individuals is worldwide — they are just as “sought after” in the OECS as they are in the EU and the USA. The incentives used to attract them are also similar — either permanent residence or citizenship in exchange for large investments in their economies. These investments are typically placed in private sector enterprises but can also be placed in public sector funds for capital projects. The good news for Anguilla, should it decide to get in the race, is that the UK Government has already approved such programs in two of its Overseas Territories, namely, Montserrat and the Turks & Caicos Islands. The Chief Minister will therefore have no need for a contentious debate on the issue with the Governor or the FCO. Even more good news for Anguilla is the fact that the UK itself has an incentive program using the same “carrot” of permanent residency. It therefore simply remains for Anguilla to decide the scope of the program and what terms and conditions it will be minded to introduce.
Another important fact is that we are already granting permanent residency to persons who build homes in Anguilla after a given qualifying period. In this enhanced arrangement, they will receive the permanent residency certificate as soon as they invest. The investor will be happy for having received his status and the Government of Anguilla will be happy for the revenue; jobs; and economic growth generated. By enacting the appropriate legislation, to ensure that the process is both efficient and transparent, investors will have a clear knowledge of what to expect for their investment without any concern about arbitrary or discretionary decision-making. Anguillians will also be assured where the revenue from the program will be utilized.
It should also be noted that these high net worth individuals are making these investments for tax planning services. For those persons seeking to avoid the high tax jurisdictions, for one reason or the other, they will be using a facility that is used in their countries of origin as well. For example, were they US citizens, the US Government could not justly object to such arrangements because it also has similar programs for inward investment. It is therefore a program that can stand up to the scrutiny of the G8 and OECD agencies — because similar programs exist among their member states.
At this juncture, the details of such a program operating in Anguilla will require further discussion. It is my view, however, that the concept is one that must be rapidly pursued in order to meet critical needs in the economy. On the one hand Anguilla needs more revenue that is less burdensome on its citizens – and on the other there are “high net worth individuals” anxious to invest in a jurisdiction that can meet their tax planning needs. We must be careful to balance these two objectives without losing any competitive advantage we may have.
However, such technical details are not for this short article. My intention here is merely to inform my readers that the ongoing threats to the survival of the Financial Services Industry, in small jurisdictions, demand that we live by our wits. More and more the agencies associated with developed countries are putting in place regulatory measures that prevent us from optimizing our benefits from the sector. VISION DAY 2013 has helped us to highlight a number of products that we can develop to take advantage of some of the opportunities that have evolved over time. Permanent (Economic) Residency by Investment is one such product that needs to be adapted to fit our circumstances quickly. There is no time to saunter while the train is leaving the station! Get on board!!
