Business BVI 2011 by Anne Reil

DEPARTMENTS

British Virgin Islands

GAMECHANGE Are We Aware and Are We Motivated? colin oâ&#x20AC;&#x2122;neal

p50

In relation to the British Virgin Islands, the issue is whether we are sufficiently aware of the game change and motivated to formulate social and economic policy to position the British Virgin Islands to compete in the new dispensation.

Features

p106

OPEN FOR BUSINESS paul e. kandarian

THE BVIâ&#x20AC;&#x2122;s LINK TO THE WORLD how financial

p36

services supPort the world economy jason smith

p82 GOVERNOR

Mc Cleary the online governor russell harrigan and freeman rogers

Glass TAKES ON NEW

making

think tankS A Strategic Asset in Our Development benito wheatley

AND HELPS THE ENVIRONMENT kaletha henry

p124 p78 to

Pho

: Je

dit

Cre wn

Bro t ch

per

, Su ia

d me

BVI PREPARES FOR TH E I NAUGUR AL

p94

mason marcus

DEPARTMENTS

International business 20 w hy bvi

A Global Product for International Finance by s imon schilder and zac lucas, partners ogier gareth thomas, managing director, ogier fiduciary services (bvi) limited

22 Hand le with care An Uncertain Recovery by kpmg

24 manag ing director’s risk by lee osborne 26 tHow he obama effect? the US President

promised to shut down the offshore world (and how he has failed) thus far... by mason marcus

32 oand ffshore hedge funds the BVI by robert briant

36 tHow he bvi’s link to the world Financial Services Support the World Economy by jason smith

40 MInvestment anaging The Securities and Business Act, 2010 a statute for the future

by simon schilder, partner, ogier

42 lProfound eading the way Implications of US Regulatory Reform by kpmg

44 the insolvency business Bucking the Trend in the BVI

by kenneth m. krys founder & ceo charlotte caulfield manager, krys & associates (bvi) ltd.

BVI business & LIFESTYLES British Virgin Islands: game change Are We Aware and Are We Motivated?

by colin o’neal

computing in the clouds by steve goodman

Sunny Caribbee: It Started With

One spice

by kaletha henry

Dr. J.S. Archibald, QC

50 years of law

by russell harrigan and freeman rogers

Clarence Thomas Ltd.

56 58 60

Beyond a generation

helping a neighbour in need: haiti

by kaletha henry

In an Unprecedented Effort BVI Community Comes Together to Help Haiti After Earthquake by jason smith

bvi students and internships

Internships Must Become Par for the Course for All BVI Students Studying Abroad

by justin blyden

Positioning category one

For Future Growth in Ship Registration

by laura arthur

making think tanks

A Strategic Asset in Our Development

by benito wheatley

Governor mCCleary The Online Governor

by russell harrigan and freeman rogers

facetime

Profiles of Personalities in the BVI Business Community Delma Maduro, Michael Fay and Sherri Ortiz by kaletha henry

DEPARTMENTS

REAL ESTATE & TOURISM 94 BVI Prepares for the Inaugural caribbean superyacht regatta & rendezvous by mason marcus

98 Wby inning WIth Sports Tourism todd vansickle 106 sOpen crubforisland Business

by paul kandarian

108 T& heSailing BVI Spring Regatta Festival 40 years later

by the bvi spring regatta committee

112 T he outlook for

real estate 2011

by edward childs

GREEN OPPORTUNITIES cottage green

120

glass takes on new form

124

Colour Choice 2011:

by annie westcott-macphail

And Helps the Environment by kaletha henry

Tourism Leads the Way with

Green Projects

by mason marcus

AROUND THE REGION 132 pMoves uertoFurther Rico Up Market with St. Regis

by mason marcus

137 S ir John Urges Young Professionals to Take Charge of Bermudaâ&#x20AC;&#x2122;s Future

by alex wright, the royal gazette, bermuda

138 so l The Changing Face of the Oil Business by the sol group

142 iof n The memoriam Late Prime Minister of Barbados, Honourable David Thompson

Business BVI Guides

128

16 bookshelf 76 moving to the bvi 144 fast facts 148 Contributors

opening remarks

The New Normal

Welcome to the 5th edition of Business BVI.

Five years

is a long time and a critical mile stone for any new business and even more so for a print publishing venture in this epoch of instant everything. The road to this edition has been long and challenging, but above all exciting. When we started the magazine in 2006, we were told by many that there was insufficient material for an annual business magazine in the British Virgin Islands, and that such a magazine would not survive. But having learnt early in life the importance of hitching your wagon to trends in their early stages, we had no such fear. I must admit however, that the economic downturn which really started in 2007 has presented a very real test of our determination and fortitude. Business BVI has evolved and grown, while staying true to our core mission of providing a publication that is informative, a source of new ideas and a high quality medium to showcase the local business community locally and overseas. Believe it or not, today we have a global audience and readership via the print and our online - flip book editions. www.businessbvi.com For our 2011 issue, we took some time to dispassionately stand back and review the magazine and as a result we have tweaked our design and content in a number of areas – see BOOKSHELF on page 76 all intended to enhance its readability. We trust that you will like the subtle changes we have made. This an exciting issue. It is our largest ever with a range of varied articles, business personalities; interviews – see GOVERNOR Mc CLEARY page 82 and other information reflecting the dynamics of the local business community and our economy – see 50 YEARS OF LAW – an interview with Dr. J.S. Archibald, QC page 60. As usual, our international business section is strong. Every article is worth reading to understand how the BVI helps to oil the global economy. see THE BVI’s LINK TO THE WORLD page 36 and WHY BVI page 20. This section also helps to demystify the financial services sector. As we go to press in mid November, the global economy is beginning to show a few ‘green shoots’ (cover graphic) of a recovery that is uneven at best and far from secure. Manifestations of this uncertainty – see HANDLE WITH CARE – an uncertain recovery page 22 and the frustration attendant thereto, are bubbling to the surface in many places and in several ways. In the Unites States, our primary tourism market, where a robust recovery remains stubbornly elusive, with unemployment remaining high notwithstanding the nominal gains registered in October, the Republican Party has regained the House of Representatives while the Federal Reserve Bank has embarked on new unconventional steps to increase the money supply in a desperate effort to maintain the uncertain growth of the past year. Also in the US, there is the looming battle in the lame duck Congress on whether or not to extend the Bush-era tax cuts which are set to expire at year end. The wrong choice could drive up the deficit disastrously or stall the recovery. Meanwhile in Europe, the French unions have taken to the streets to protest pension reform measures advanced by the President Sarkozy. Across the English Channel the Conservative led coalition in London has tabled what has been billed as the most drastic budget

cuts in living memory, far outstripping similar measures taken by other advanced economies. These were preceded earlier in the year by the near collapse of the Greek economy, saved by a lifeline extended by the European Union and severe austerity measures. This is not to say that there are no bright spots of economic activity globally. China continues to grow at warp-speed breeding domestic concerns about an overheating economy. The Australian economy continues to experience growth led by mineral and other exports to China while India and Brazil surge ahead. African economies are also showing considerable resilience. Here on the home front, the overall economy continues to face significant challenges and has little immediate hope for a return to real growth in the near term. While financial services are trending upwards, the other key sectors of the economy such as tourism and construction are still in the doldrums. What is required to return to a growth path is a bold economic recovery initiative led by the government in close partnership with the private sector. see BVI GAME CHANGE - are we aware and are motivated? Page 50. Such an initiative was not included in the recent 2011 budget address. What the local economic environment requires is confidence in the future. Such an initiative would go a long way in re-building this critical ingredient in the local economic psyche. Fiscal 2011 will be no less challenging than the last three years, as the territory returns to the polls to decide who will govern for the next four years. Beyond a shadow of a doubt the economy will take centre stage after three years of hard economic times. Welcome to the ‘New Normal’ where strong competition, more regulation, high unemployment, uncertain and uneven anemic economic growth is the order of the day for the near to medium term. This is an environment where the quality of our human resources – see INTERNSHIPS - must become par for the course for all BVI students studying abroad. page 72 will determine our success. On January 19, 2011 Business BVI will convene our 1st Annual Business Outlook Conference at Scrub Island with the theme: Embracing the New Normal - Rising to the challenges of a more competitive and regulated global economy. Our Keynote Speaker will be Sir John Swan, the former premier of Bermuda. www.bvibusinessoutlook.com The conference is designed to look at the year ahead and the outlook for business in the BVI examining the primary sectors of the local economy. It is also intended to speak to the new economy which has emerged after the global meltdown and severe recession of the last two years. As I assume the position of Managing Editor, I must express my sincere gratitude to Portia Davis-Harrigan – undoubtedly my better half, for having filled this role over the last four years. Without her perseverance, Business BVI would still be a dream. Enjoy and please let us have your feedback and comments info@oysterglobalmarketing.com

Russell Harrigan Managing Editor

editorial board

russell harrigan ceo, oyster global marketing group lorna smith ceo, lgs associates elihu rhymer ceo, bvi development consultants ayana hull-brathwaite associate lawyer, maples

& calder

martein van wagenberg managing director, little dix bay resort managing editor publisher project co-ordinator design photography editorial assistant businessbvi.com

russell harrigan oyster publications portia harrigan anne ferrier reil, alexander sergunin john black, richard georges jim scheiner, todd vansickle rahel worede rahel worede

The cover depicts the green shoots of recovery which are very slowly beginning to appear in the global economy. Business British Virgin Islands is an annual magazine published by Oyster Publications Inc., P.O. Box 3369, Road Town, Tortola, British Virgin Islands Tel: 284-494-8011 Fax: 284-494-3066 Email: info@oysterglobalmarketing.com. Please send comments and address changes to this address. BusinessBVI and Oyster Publications are divisions of Oyster Global Marketing Group. www.businessbvi.com All information in this publication has been carefully collected and prepared, but it still remains subject to change and correction. Use these contents for general guidance only and seek extra assistance from a professional adviser with regard to any specific matters. Copyright reserved. None of the contents in this publication may be reproduced or copied in any form without permission in writing from the publisher. These articles do not constitute tax or legal advice, and no action should be taken based on the information in these documents without first consulting suitable tax or legal advisers. No liability for actions taken, or in action, based on the information in these articles, will be accepted.

CONTRIBUTORS LAURA S. ARTHUR is a 1990 graduate of the British Virgin Islands High School. She obtained a Bachelor of Arts degree from DePauw University in Greencastle, Indiana in May 1994. Laura then attended Temple University School of Law in Philadelphia, Pennsylvania where she achieved the degree of Juris Doctor in May 1997 and was the recipient of the John and Frieda Golden Prize for Legal Writing. She also obtained a Certificate of Legal Education in March 2001 from the University of the West Indies, Eugene Dupuch Law School, in Nassau, Bahamas. She is admitted to practice in New Jersey, the British Virgin Islands and Barbados. Laura is a Partner at Hunte & Co. Law Chambers in Road Town, Tortola. Her primary areas of practice include Corporate and Commercial law and Conveyancing. JOHN BLACK Describes himself as a “Master of Light and Shadows”, He makes record of the world we live in and how we live in it. John F. Black is a photographer. For more of his work visit www.johnfblackphotography.com or join him on Facebook (johnblack) for a comprehensive portfolio spanning over 38 albums. JUSTIN J. BLYDEN is a Tax Associate at PricewaterhouseCoopers, LLP in NY, NY. Justin serves Fortune 500 companies in the Consumer and Industrial Product/Services, Technology, Information, Communications, Entertainment and Media industries. A native British Virgin Islander, Justin graduated from the H. Lavity Stoutt Community College in 2005 and continued his education at Morehouse College where he graduated Phi Beta Kappa, earning a bachelor’s degree in Business Administration-Accounting in 2008. While at Morehouse, Justin was also able to complete extensive coursework in Economics and Leadership Studies, inclusive of study aboard programs that further explored these disciplines. Currently, Justin is pursuing CPA licensure in the state of New York. Justin lives with purpose, intent and impact, continually striving for excellence, keenly aware that excellence is not merely an act, but a habit. ROBERT BRIANT is Partner and Head of the British Virgin Islands office of Conyers Dill & Pearman. Robert joined Conyers in 1994. Robert advises on all aspects of corporate and commercial law and provides specialist advice to hedge funds. He also specializes in structuring British Virgin Islands joint venture companies, as well as advising on a broad range of financing transactions for off-balance sheet vehicles and finance subsidiaries.

CHARLOTTE CAULFIELD Manager, Krys & Associates (BVI) LTD. Charlotte is a Manager of Krys & Associates with 12 years corporate insolvency experience gained in the UK. Charlotte has a wide-ranging experience, having managed Administrations, Solvent and Insolvent Voluntary Liquidations, Compulsory Liquidations, Receiverships as well as undertaking Independent Business Reviews and advising debtors and stake-holders on insolvency and turnaround strategies. Charlotte holds both the Joint Insolvency Examination qualification and the Certificate of Proficiency in Insolvency. She is a member of the Insolvency Practitioners Association (UK) and is a Licensed Insolvency Practitioner in the British Virgin Islands. EDWARD CHILDS is qualified as a Chartered Surveyor. He joined the British Virgin Islands office of Smiths Gore Overseas Limited in 1990 following training as a commercial surveyor with Savills in London. At Smiths Gore he has expanded the commercial sector of the firm, undertaking a range of instructions on hotel, marina and development properties throughout the Caribbean. Recently, he has been involved with development projects in the British Virgin Islands, Anguilla and Barbados. FREEMAN ROGERS, the editor of The BVI Beacon, has lived in the territory for about three years. His writing has appeared in various local and international publications, including Caribbean Travel & Life and Slate.com. He is from Travelers Rest, South Carolina. RICHARD GEORGES is an illustrator, designer, and writer who teaches literature and composition at the H. Lavity Stoutt Community College. Most of his time outside the classroom is consumed by art, prose and photography. Read more about him on his website www.richardgeorges.com. KALETHA HENRY is an internationally recognized journalist with over 15 years of experience as a writer and reporter covering an array of topics in the realm of news, entertainment, culture, human interest and business. She has written feature articles, public outreach materials and copy for newspapers, magazines and corporate collateral. Kaletha obtained her Bachelor’s degree in Advertising and her Master’s degree in Communications from New York Institute of Technology and studied photography through the Maryland Institute College of Art.

KENNETH M. KRYS Founder & CEO, Krys & Associates (BVI) LTD. Kenneth Krys is a qualified and licensed insolvency practitioner for both the Cayman Islands and the British Virgin Islands. He is a liquidator of a number of high profile and complex cross-border engagements, including Sphinx and Fairfield, with 20 years experience in a diverse range of corporate recovery, forensic accounting and regulatory compliance assignments. Ken is a Chartered Accountant, Chartered Financial Analyst, Certified Fraud Examiner, Certified Anti-Money Laundering Specialist and Chartered Business Valuator. He sits on the Board of the Cayman Islands Society of Professional Accountants (CISPA). He also serves as Vice-President of the Cayman Islands Compliance Association (CICA) and is acting President of local chapter #123 of the Association of Certified Fraud Examiners (ACFE). Further he is a member of the American Bankruptcy Institute (ABI) and sits on its Caribbean Insolvency Symposium Board of Advisors. ZAC LUCAS, Partner Ogier, Zac joined Ogier in 2010 from Harney Westwood & Riegels in the British Virgin Islands where he was a Partner and Head of the Trust team. Prior to moving offshore in 2005, Zac practised at Russell – Cooke Solicitors in London, focusing mainly on tax and estate planning involving high net worth families and individuals. Zac specializes in all areas of international trust and estate planning with a particular focus on business and succession planning involving emerging market clients. He has created a number of innovative BVI trust solutions that involve and take advantage of the provisions of the Virgin Islands Special Trusts Act, 2003. Zac is a member of STEP. MASON MARCUS hails from the windy city of Chicago, and has lived and worked in the British Virgin Islands for three years as a reporter, cartoonist and Business Editor for the BVI Beacon. Since returning to the United States, he has been employed as the Media Director for a U.S. Congressional Campaign and continued to write as a freelance journalist. PAUL E. KANDARIAN is a freelance writer in Massachusetts who writes regularly for the Boston Globe, Rhode Island Monthly, Upscale Living Magazine and has written for a variety of other magazines and newspapers, including Yankee, Playboy, Banker and Tradesman, American History Magazine and others.

COLIN O’NEAL is a graduate of Boston University and the University of the West Indies and practiced in the firm of O’Neal Webster for nearly twenty years before becoming Chief Executive Officer of JOMA (Properties) Ltd., a real estate development company in the British Virgin Islands. Besides his legal and business careers, he has a long standing and continuing involvement in public service including appointments as a Magistrate, President of the BVI Bar Association, Chairman of the Public Service Commission, the Judicial and Legal Services Commission, Chairman of the Recreation Trust, and Deputy Chairman of the Financial Services Commission among several other appointments. LEE OSBORNE moved to the BVI in August 2008 to join the corporate and commercial department of Harneys. Prior to Harneys, Lee worked in the corporate department of Shoosmiths, where he specialized in mergers and acquisitions with a particular emphasis on private equity backed transactions, public and private fund raising and demergers. As in-house corporate counsel at Equity Trust, Lee continues to specialize in all aspects of corporate and transactional law. JIM SCHEINER has lived in the BVI for over 30 years. A well known photojournalist, his photographs and articles have appeared worldwide. His company, Rainbow Visions Photography, provides lifestyle, underwater, aerial and marine-related photography services to a wide range of discerning customers. SIMON SCHILDER, Partner Ogier , Simon is a partner and Head of the Investment Funds practice at the BVI office whose practice covers cross border and multi jurisdictional mergers & acquisitions, corporate finance and investment funds. Prior to joining Ogier, Simon practiced at Lovells in London. Simon attended the University of Southampton and graduated with a BSc in Economics and Politics in 1994. Simon then went on to take the CPE in 1995 and LPC in 1996 at the College of Law, London. Simon is a member of the Securities, Investment Business and Mutual Funds Advisory Committee, established by the Financial Services Commission to advise it on the maintenance and development of the BVI’s securities, investment business and funds industry. JASON SMITH is a journalist from Burlington, Vermont who has lived and worked in the British Virgin Islands for nearly a year. He edits the business section for the BVI Beacon and writes frequently on topics including crime, development and government. He has previously worked at newspapers in California and Mexico. When not writing, he enjoys hiking, reading and traveling.

GARETH THOMAS, Managing Director, Ogier Fiduciary Services (BVI) Limited, Prior to joining Ogier Fiduciary Services (BVI) as the Managing Director, Gareth was the General Manager of Codan Trust Company (B.V.I.) Ltd. Gareth started his career in London with PricewaterhouseCoopers in their corporate secretarial department and left there 4 years later to join Schroders plc as Manager in their Investment Trusts department. Gareth then moved from the UK to pursue a career offshore, starting in Bermuda before making the British Virgin Islands his permanent home in 2002. Gareth obtained an LLB Law Degree (Hons) from Liverpool JM University in 1995 and is a Fellow of the British Institute of Chartered Secretaries and Administrators (“ICSA”). Gareth is the Founding Chairman of the ICSA branch in the BVI and is a committee member of the BVI Financial Services Institute Advisory Council dedicated to providing professional education in the BVI. TODD VANSICKLE – Todd VanSickle is a journalist with more than 13 years of experience. When he is not working he enjoys helicopter rides and long strolls in a park. If he could be anything else in the world he would be a bird. ANNIE WESTCOTT-MACPHAIL originally from New England, has lived and worked in the Caribbean for over 18 years. Having studied marketing and design, she developed further skills in multi media and software development. In 2003 she started CaribAtlantic, a small St. Maarten-based company specializing in marketing small businesses. In 2009 she opened Nutmeg Designs “Shop for a Prettier Planet” in the British Virgin Islands. Also in 2009 she launched annie macphail™ bags and continues to do international trade shows with her product lines. BENITO WHEATLEY is CEO of The Wheatley Consulting Group LLC, a consulting firm providing strategic analysis of international developments in financial regulation, political economy, and geopolitics. He has a decade of experience in International Affairs and has held positions in the Financial Industry Regulatory Authority, Winrock International, and Southern Center for International Studies. He has also worked on a number of projects for the World Bank, Institute for Caribbean Studies and Foundation for Sustainable Development. Mr. Wheatley is a Researcher for the Center for International Relations (Arlington, Virginia) and a member of the Baltimore Council on Foreign Relations.

International Business

INTERNATIONAL BUSINESS

why bvi

A GLOBAL PRODUCT FOR INTERNATIONAL FINANCE

simon schilder and zac lucas, partners ogier gareth thomas, managing director, ogier Fiduciary Services (BVI) Limited

With 468,306 companies and 647 limited partnerships active and registered with the BVI’s Registry of Corporate Affairs, the number of active BVI vehicles exponentially exceeds the population of the BVI. Why BVI?

An obvious question to ask is of course why is it that a jurisdiction whose tourist industry brands itself as being “Natures Little Secrets” has proven itself to be so popular in the global financial services industry? The answer to this question is fairly complex, but broadly speaking, it is fair to say that the use of BVI vehicles has become the accepted common currency for the structuring of many global transactions. To begin to understand the reason for this, it is necessary to consider both historic events and current economics. The historic origins of the use of BVI vehicles in the global financial landscape lie predominantly in two events which took place in very different global locations. Firstly, following the United States of America’s capture of General Manuel Antonio Noriega in 1989, the use of Panamanian vehicles in structures emanating from the Americas in particular fell very much out of favour, the principal beneficiary of this being the BVI, which increased its share of this market dramatically as a consequence. Secondly, in the run-up to the United Kingdom’s hand over of Hong Kong to China in 1997, the popularity of BVI vehicles amongst the Hong Kong Chinese increased dramatically as they sought to structure their private wealth and holdings prior to the hand over of Hong Kong to China. With China in mind, a fascinating statistic is that after Hong Kong vehicles, BVI vehicles are the second most popular vehicles for inward investment into China. In addition to this, whilst the world of international finance is a global industry, the structuring of corporate or financing transactions has historically been led from two financial centres - New York and London. For advisers in

New York and London, their laws share common Anglo-Saxon origins. BVI, as a UK dependent territory, similarly shares its origins in English law, with one interesting distinction in that elements of BVI company and partnership law also encapsulate concepts of Delaware law, with the result that the structuring concepts available under BVI law through its principal statutes, BVI Business Companies Act, 2004 and the Partnership Act, 1996, are well understood and popular with both advisers and financial institutions in both the United States of America and the United Kingdom. In addition to this, the BVI’s insolvency statute, the Insolvency Act, 2003, is also both modern and user friendly, containing broadly similar principles as are contained with English insolvency law; such that the key principle is “pari passu”. But given that deals are typically driven out of New York and London, why are BVI vehicles used at all? In contrast to the previous question, the answer to this is simple. With the growing globalisation of international corporate and finance transactions, often, the assets or parties to such transactions are such that there is no nexus with the economies of the United States of America or United Kingdom to the transactions themselves, save for the governing law of the transaction and/or the location of the advisers and financial institutions involved in the transactions and/or in the case of BVI entities with publicly listed shares, that the stock exchanges of these jurisdictions (typically the New York Stock Exchange, NASDAQ or the London Stock Exchange) playing host to these entities. This is particularly true with the increasing deal flow in emerging markets transactions involving, for instance, the BRIC economies (Brazil, Russia, India and China), all of whom are popular users of BVI entities within their structures. Consequently, financial centres such as Sao Paulo and Moscow are increasingly becoming important centres for the use of BVI vehicles. A common thread in such deals, whether emanating from the traditional financial centres or from emerging financial centres is that the advisers and financial institutions participating in these deals by and large continue to be the local offices of New York or London firms, such that conceptually, BVI vehicles continue to offer a \pa-ri-pa-(.)sü\ equal without preference conceptually understood and accepted platform.

key principal

pari passu

Hard evidence of the growing sophistication of the BVI as a global financial services centre has been no more clearly demonstrated than by the opening of a dedicated commercial court, the Commercial Division of the Eastern Caribbean Supreme Court, with the appointment of Justice Edward Bannister, QC as its resident Commercial Court Judge. The Commercial Court began sitting in April 2009 and has already heard some significant applications, including a number of matters arising out of the Madoff fraud, of which the most high profile case involved the Fairfield funds.

Private Wealth The private wealth valued added industry in the BVI has experienced significant recent growth, particularly with the introduction of legislation to allow private trust companies to be incorporated in the BVI. BVI trust law has been amended on a number of occasions, the most recent of which was in 2003, when the Trustee Act was amended to include a number of modernizing features including provisions dealing with non-charitable purpose trusts, anti forced heirship and conflict of law rules, and the introduction new provisions relating to dealings Virgin Islands Special Trusts Act, 2003 between trustees and third parties. The 2003 amendments also saw enactment of the Virgin Islands Special Trusts Act, 2003 (“VISTA”). VISTA trusts have proved immensely popular, particular in Asia. VISTA’s popularity can be attributed to a number of key features and benefits, in that VISTA allows a trust of BVI company’s shares to be created under which the trustee is prohibited from interfering in the management and control of the company placed in trust. VISTA also permits the trust deed to contain detailed “corporate governance rules” setting out the circumstances in which directors of the company may be appointed and removed and the regulating the business activities of the company. For wealthy private clients and families that have traditionally held their international wealth through one or more BVI companies, VISTA provides an easy option to structure ownership and control of their BVI companies, whether for enhanced confidentiality or succession planning purposes, without risk of losing control day to day management and control of their companies, it this last key feature that has made VISTA such a success. The Financial Services (Exemptions) Regulations, 2007 (the “Regulations”) allow unlicensed private trust companies to be incorporated in the BVI. As a result of these Regulations the BVI has rapidly become a leading jurisdiction for the use of private trust companies by wealthy private clients that wish to administer their own family wealth, where the private trust company plays an integral role in consolidating ownership and succession to assets that may be spread across a number of jurisdictions and different legal systems. The BVI private trust company has become successful in part because wealthy private clients, particularly in emerging markets, are comfortable with and prefer BVI companies, but also because the Regulations do not contain onerous set up requirements, such as the need to have resident directors or onerous ongoing obligations, such as the need to maintain specified capital reserves. The Regulations introduce a form of “self-exempting” regime where provided that conditions are satisfied the private trust company is automatically exempt from any requirement to obtain a formal trust license.

amendments enacted

VISTA

The BVI therefore continues to enjoy and experience growth in its private wealth value added industry and with demographic changes, particularly in Asia, there will be continued demand from the owners of BVI companies for ever more sophisticated solutions to holding and controlling their private wealth.

But What of the Current Political Environment? In the current economic and political environment, financial centres such as the BVI and the role that they play in the international financial community have been subject to increasing levels of scrutiny by onshore governments and regulators, particularly those in the United States of America and in Europe. The reasons for this increased level of scrutiny are as much political as they are economic, with concerns about tax leakage high on the political agenda. As a consequence, jurisdictions such as the BVI have had to respond and demonstrate their commitment to evolving international regulatory standards in order to continue to be able to sit at the high table of international finance. In the aftermath of the financial crisis in 2009, various reports were commissioned in relation to the role of financial centres such as the BVI in the financial crisis. A common theme of these reports was that the role of financial centres such as the BVI was determined to be very much of a net contributor to domestic economies such as the United States of America and the United Kingdom, than a source of leakage for their tax revenues. In response to the evolving economic and political environment which has ensured since the financial crisis amongst the initiatives that the BVI has been active in concerns the entry into the Organisation for Economic Co-Operation and Development’s (“OECD”) tax information exchange agreements (“TIEAs”). The BVI has continued to be committed to providing tax transparency and co-operating with international initiatives in this regard. Currently the BVI has 17 TIEAs in place, enabling it to attain “white list” status as having substantially implemented the OECD’s internationally agreed tax standards. The BVI remains committed to agreeing and putting in place further TIEAs and has approached all OECD member states with a view to negotiating TIEAs with them. Points of note in this regard are that amongst recent TIEAs agreed has been a TIEA with China, the first such TIEA entered into by China. Additionally, and a point which is often forgotten, is that the BVI signed its first TIEA (with the 21 United States of America) in 2002, with a TIEA with the United Kingdom following shortly thereafter, such that it has had TIEAs in place with both the United States of America and the United Kingdom for a number of years. With the recent enactment of the Securities and Investment Business Act, 2010 (“SIBA”) and its accompanying regulations, together with the introduction of the Regulatory Code, 2009 (the “Regulatory Code”), which has the status as law in the BVI, the BVI has recently introduced a new modern statutory regime for the regulation of its financial services industry, which captures and regulates both activities undertaken domestically within the BVI as well as activities undertaken by BVI vehicles elsewhere. SIBA will ensure that the regulation of financial services remains in tune to both the wider legal and regulatory environment, as well as the new requirements, checks and balances demanded by financial institutions, investors and onshore regulators.

INTERNATIONAL BUSINESS

An Uncertain Recovery

The following article from KPMGâ&#x20AC;&#x2122;s September 2010 frontiers in finance shows that we may not be set for sustained recovery

conomists, treasury officials and politicians across the developed world have quite divergent views on the course of the recovery. Some emphasize signs of growth and strengthening fundamentals. Others point pessimistically to continued weakness in real economies and rising unemployment. From KPMGâ&#x20AC;&#x2122;s perspective, the signals are very mixed and the near term outlook is very unclear. One of the main pillars of the British Virgin Islands economy is financial services. BVI business company incorporations statistics published by the British Virgin Islands Financial Services Commission for the first half of the year to June 2010 illustrate improvements over the same period in 2009. Optimistically, this is a sign of growth and strengthening fundamentals. Pessimistically, the reality is that we are still some way off the results of both 2008 and 2007. Over the last few months, KPMG in the US has spent a lot of time talking in depth with clients in the financial services industry, gauging their assessment of how far the recovery has progressed and how solid it is. In turn, these clients are in daily contact with the wider market, dealing with commercial and industrial concerns, such as restructuring their business plans, seeking financing or on occasion

sliding into insolvency. Their consensus is that we have a long way to go before we can confidently forecast a sustained recovery. There is a lot of uncertainty; the economy is still very fragile. Since the US economy is such a significant influence on the global economy as a whole, this sobering perspective is important for everyone. As is widely recognized, many of the primary causes of the global financial crisis had their roots in the US domestic real estate market. Lowered home mortgage underwriting standards resulted in loans to borrowers who could not afford their repayments, creating serious risks, very often unrecognized and under-priced. When those loans were packaged and sold throughout global financial markets the risks, far from being diluted, became at the same time magnified and extremely difficult to track. The crisis spread from domestic real estate into commercial real estate, financial services and subsequently into the real economies of the US and more developed economies. We are all living with the aftermath. The US housing market remains the best leading indicator of economic stability and consumer confidence in the US. Hence sustained recovery can only follow a stabilized domestic residential sector. However the indicators so far, are still patchy. We have a very nervous and volatile housing market. Signs of stability returning to pricing and volumes flicker for a month or two and then subside. And while consumer confidence more generally remains fragile, the prospects of a sound and stable market in the near term look slight, especially coupled with the continued high levels of unemployment and underemployment. The overhang of defaults, repossessions and excess supply will eventually clear. The construction sector is severely depressed but the number of buyers is slowly increasing. Underlying demographic factors, such as population growth and family formation, do place a floor under demand, although its level fluctuates according to other factors such as unemployment, interest rates and underwriting standards. Eventually demand will match or outpace supply. Until then, the market will remain weak. While a reasonable case might be made that the residential market is bumping along the bottom, the position of commercial real estate is less clear, and perhaps represents the greater uncertainty souring the market. The cycle through recession to recovery seems to have further to go. Until the wider economy stabilizes, the demand for office, warehouse and industrial space will continue to be weak and volatile. Everyone in business faces challenges. Most companies nevertheless get on with the process of providing customers with goods and services, controlling costs and investing for the future. But when meeting the challenges become all-absorbing, companies shut down on hiring, investment and expansion. It will take some time before business confidence returns to a level where the commercial real estate sector stabilizes. While banks continue to de-leverage and restrict lending activity, companies will be constrained in growing their way out of the crisis. The strength of the financial services sector is clearly heavily influenced by individual and commercial demand for finance. As long as that remains patchy, banks in the US will struggle. Beyond this, they are also facing major uncertainties on a number of other fronts. The recent US financial regulation and reform legislation contains a host of new provisions. While much of the detail remains to be written in the form of regulation, the impact to revenue and cost of compliance is likely to be significant. The Basel III capital process is due to conclude at the G20 summit in November 2010, but beyond the fact that most banks will almost certainly have to hold more capital, it is unclear what the precise implications will be. The securitization market, which remains depressed, limits the availability of stable, secure funding sources. The faltering convergence of accounting standards between IASB and FASB perpetuates doubt over key issues, such as how financial instruments should be accounted for. There is no doubt that the US banking sector is much better capitalized than it was a year ago, and more stable, largely thanks to government intervention but also to the beginnings of normalized markets and an

advantageous yield curve environment. But the banks are trapped in a cycle where they can’t and won’t lend to any but the most bankable prospects. They are still extremely risk averse. This means that companies and consumers who before the crisis qualified as middle-of-the-road acceptable prospects are being starved of finance. Until broad based lending returns, we are likely to see continued high unemployment and patchy recovery. These are some of the challenges which face the developed world. No one country can afford to step too far out of line in taking fiscal action to boost confidence in the real economy. It is to be hoped that coordinated international action, which we are to some extent already seeing through the G20, will eventually underpin a sustainable recovery. But in the meantime, the economy should be handled with care. As an offshore jurisdiction, the British Virgin Islands helps international businesses effectively and efficiently invest capital. If these international businesses can’t access that capital through banks, they have no reason to exist. The strength of our financial sector, is and will continue to be heavily influenced by the ability of international businesses to access capital. Keep up to date with KPMG’s insights through www kpmg.com and frontiers in finance. For information on how KPMG in the BVI can help you, please contact Tanis McDonald at +1 284 494 1134.

The views and opinions are those of the author and do not necessarily represent the views and opinions of KPMG. All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. © 2010 KPMG (BVI) Limited, a British Virgin Islands limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved

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INTERNATIONAL BUSINESS

director is required by law to exercise his powers for a proper purpose...

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the context of the recent global financial crisis, the n directors of British Virgin Islands (“BVI” companies should be more alert than ever to their exposure to financial risk. Directors of BVI companies have duties imposed upon them by law to act honestly, in good faith, and in what the director believes to be the best interests of the company. Usefully, under BVI law and if permitted by the memorandum and articles of association of the company, in certain circumstances this duty may be varied. For example, a director of a company that is a wholly-owned subsidiary may act in a manner which he believes is in the best interests of that company’s holding company, even if it may not be in the best interests of the company itself.

A director is required by law to exercise his powers for a proper purpose and he should not act, or agree to the company acting, in a manner that contravenes BVI legislation or the memorandum or articles of the company. The standard of care that a director must meet when exercising his powers or performing his duties as a director is the standard that a reasonable director would exercise in the same circumstances taking into account the nature of the company, the nature of the decision, the position of the director and the nature of the responsibilities undertaken by him. In circumstances where a director becomes aware that he is interested in a transaction entered into or to be entered into by the company, he is under a positive obligation to disclose this to his fellow directors. If he fails to do so, he commits an offence and may be liable to a fine of $10,000. The duties set out above will apply equally to a so-called “de facto director”. This is the name given to a director who acts as a director and carries out the functions of a director, but who is not formally appointed. Similarly, the duties will apply to individuals and companies appointed by a person to act on their

behalf (often referred to as “nominee directors”). BVI law does not recognise nominee directors. If a person is appointed as a director, he will have all the duties and responsibilities imposed on a director by BVI law, despite the nominee tag. The legislation omits to specify the consequences of breaches of directors’ duties in almost all cases and therefore the position at common law must be considered. For breaches of the equitable duties, a director may be held accountable for profits he makes as a result of the breach. For breaches of common law duties, a director will be liable to compensate the company for the loss it suffers as a result of the breach.

Directors’ Potential Liabilities Whilst the legislation is generally silent on the consequences of breaches of directors’ duties, it does place liability squarely on directors in certain scenarios. One such scenario is in relation to liability for debts of a company. The general rule is that a director is not liable for any debts of the company which arise by the conduct of the director. However, there are two exceptions to this. If at any time a company has no members, any person that does business

MANAGING

DIRECTOR’S RISK

lee osborne

in its name or on its behalf (i.e. potentially a director) may be personally liable for the payment of all debts of the company contracted during that time. The second exception is where fraud has been committed by the director. A further scenario where directors risk personal liability is in relation to distributions. Prior to any distribution being made by a company, by way of dividend or otherwise, the directors must be satisfied that the company will satisfy a prescribed solvency test immediately after the distribution. Except in certain circumstances, any distribution made at a time when the

company did not satisfy the prescribed test immediately after the distribution may be clawed back from the members. In this situation, if before the distribution the director ceased to be satisfied that the company would satisfy the test, but failed to take reasonable steps to prevent the distribution being made, the director is personally liable to repay to the company so much of the distribution as is not able to be recovered by the members . In situations of insolvency, the beneficiaries of directors’ duties shift. If a BVI company is insolvent, the persons to whom the directors owe their duties shifts from the members as a whole, to the company’s creditors. Under BVI law, a company is insolvent if, either: • The company’s liabilities exceeds its assets; or • The company is unable to pay its debts as they fall due; or • The company fails to comply with the requirements of a statutory demand that has not been set aside; or • Execution or other process issued on a judgment, decree or order of a court in favour of a creditor is returned wholly or partly satisfied. In light of this, a director should, at all times, be fully aware of the company’s financial position so as to avoid him taking any action which could expose him to personal liability. The Insolvency Act, 2003 prescribes certain circumstances where a director may be liable to a company and these circumstances are summarised at right. If a director is found guilty of fraudulent or insolvent trading or any fraud or misfeasance then the court may make a disqualification order against

“... a director should be especially alert to the financial position of the company so as to avoid the company engaging in insolvent trading.” • Insolvent trading – if a director or former director continued to trade when he knew or ought to have concluded that there was no reasonable prospect that the company would avoid liquidation, he may be ordered by the court to contribute to the assets of the company. A defence would be that the director took every step with a view to minimising the potential loss to the company’s creditors. • Voidable transactions – certain types of transactions entered into are liable to be set aside in liquidation if they were entered into by a company during a ‘vulnerability period’ prior to it going into liquidation and they were ‘insolvency transactions’ (i.e. if the company was insolvent at the time of the transaction or it was rendered insolvent by the transaction). These types of transaction are (i) unfair preferences, (ii) undervalue transactions, (iii) voidable floating charges, and (iv) extortionate credit transactions. If the transaction is found to be voidable, the court has extremely wide powers and may set aside the transaction or make such order as it thinks fit to restore the position to what it would have been had the company not entered into the transaction and this could include ordering a director to make a contribution to the assets of the company. • Fraudulent trading – if the business of a company has been carried on with the intent to defraud creditors or for any other fraudulent purpose in the context of a liquidation, a director who was knowingly party to the fraudulent trading may be ordered by the court to contribute to the assets of the company.

him prohibiting him from acting as a director of a company or from being directly or indirectly involved in the management of a company.

Steps to Mitigate Liability

The first and perhaps most obvious way in which a director of a BVI company can mitigate liability is to ensure that he is fully aware of and has a sound understanding of the duties imposed on him by BVI law. This is an obvious pre-requisite to enabling him to discharge his duties and avoid potential personal liability. Where a company is in financial difficulty and perhaps of questionable solvency, this is even more pertinent. In these circumstances, any transaction should be carefully scrutinised prior to the determination to enter into it. Hopefully, this will prevent voidable transactions and will protect a director

• Misfeasance – where the court is satisfied that a director has misapplied or retained any money or assets of the company or has been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company, the director may be ordered by the court to contribute to the assets of the company. from being liable to contribute to the assets of the company if the company is subsequently liquidated. In addition, in such financial circumstances, a director should be especially alert to the financial position of the company so as to avoid the company engaging in insolvent trading. Whilst Director & Officer insurance is available to BVI companies, the terms of cover of any such policy should be checked carefully. A director of a BVI company should not consider this as an alternative to being conscious of and discharging his duties as a director in accordance with BVI law. Whenever a director is unsure of his position regarding the duties imposed on him under BVI law, he should take advice at the earliest opportunity. He may also wish to consider the appointment of a professional corporate or personal director to the company’s board. Equity Trust provides professional corporate and personal directors to numerous BVI companies and such directors have extensive experience of managing BVI companies. We would be delighted to discuss our director services with you in more detail. This article is general in scope and is not intended to be comprehensive. It is not a substitute for legal advice.

INTERNATIONAL BUSINESS

How the US President promised to shutdown the offshore world (and how he has failed) thus far...

THE OBAMA EFFECT? mason marcus

hortly after 9 p.m., on November 4th, 2008, caravans of cars with flashing headlights and blasting horns began snaking their way through the streets of Road Town to celebrate the election of Barack Obama to the US presidency.

But amidst the celebrations—there was also cause for concern. As a Junior US senator, Mr. Obama co-sponsored the Stop Tax Haven Abuse Act, a bill targeting American clients of offshore finance centres. On his presidential campaign trail, he called the Cayman-based Ugland House “either the biggest building or the biggest tax scam on record.” Yet, nearly two years after being elected into the White House, Mr. Obama has yet to ostensibly make any serious headway in his war against offshore. So, what happened? In part, efforts to clamp down on offshore finance were hampered by a more pressing domestic agenda: The battle to pass health care reform, beef up regulation of the financial markets, rescue the country from an economic depression, cap a national disaster in the Gulf of Mexico and manage ongoing wars in Iraq and Afghanistan left previous little time for the US president to, “close corporate loopholes, shut offshore tax havens, and restore fairness and balance,” to the American tax system.

ut amongst the territory’s financial services professionals, few are convinced that the attack against offshore is over. “He’s always been very consistent. Since day one, he’s always been very strong against offshore… but in a way, I think many of us thought that it was campaign rhetoric,” Lorna Smith, Chief Executive Officer of LGS & Associates, said recently. A past-director of the BVI International Finance Centre, which markets the territory’s financial products, Ms. Smith has helped combat anti-offshore sentiment since the early 2000’s when the Organization for Economic Co-Operation and Development and the International Monetary Fund began to closely scrutinize the industry. After the first wave of regulatory reforms, Ms. Smith travelled to Washington D.C., with Virgin Islands representatives, in 2007, for a series of meetings with lobbyists and ranking US senators, including Michigan Democrat Carl Levin, who authored the Stop Tax Haven Abuse Act. The bill, which never made it past the US Senate floor, was potent but not lethal. Among the many initiatives of Mr. Levin’s proposed legislation was language that, broadly, would have forced increased disclosure for US citizens using “Offshore Secrecy Jurisdictions,” and empowered US Courts and tax agencies to implement stiffer fines and penalties. The law also included a set of rebuttable presumptions that would have allowed US tax and securities law enforcement to presume that non-publicly traded, offshore corporations and trusts were controlled by the US taxpayers who formed them or sent them assets, in essence, placing the burden upon the US citizen to prove the financial product was being used for a bone fide purpose. Among the representatives in Washington were Robert Mathavious, who has served as Managing Director and CEO of the Financial Services Commission since its establishment in 2002, Cherno Jallow, a former Virgin Islands attorney general and now director of policy, research and statistics at the FSC, and Lester Hyman, a lawyer who has acted as the territory’s US legal counsel. At the most basic level, the purpose of the visit was to “explain how the BVI worked.” But of the senators, Ms. Smith recalled, “I think they [were] amenable to meeting directly with you, but they tend not to listen.” And while Mr. Obama ultimately left the bill behind him, the hallmarks of the legislation, increased reporting requirements, anti-evasion provisions, have reemerged in everything from the HIRE (Hiring Incentives to Restore Employment) Act, enacted in March, 2010, and the American Jobs and Closing Loopholes Act, passed by the House of Assembly in May 2010. To Ms. Smith, this indicates a pervasive misunderstanding of offshore financial centres. “Obama obviously was very suspicious of offshore, and was under the impression that offshore was impacting the US economy and that people in the

“Few are convinced that the attack against the offshore is over.”

US were hiding their money offshore. And, his view has not changed any,” she said. Michael Burns, who grew up in the offshore world of Bermuda and relocated to the BVI in 2008 to assume leadership of Appleby’s local office, agreed that certain onshore politicians have mischaracterized offshore finance, for a political purpose. “It panders to a certain political constituency in the US, that doesn’t really understand global economics much less globalism and globalization. So, there’s no doubt it was playing for a purpose” he said. Still, the managing partner said it was unlikely that legislation would greatly impact financial service centres like the BVI. “The reality is that it is very hard to move against the offshore world. Why, because the offshore world exists for a perfectly legitimate purpose and responds to a demand that is a legitimate demand, and is truly out there,” he said, adding, “It’s not something untoward that people are doing in the offshore world, rather, it is the outward manifestation of the needs of people onshore to have the freedom to conduct their commerce wheresoever and howsoever they like, subject to the usual panoply of customer due diligence and anti-money laundering and associated checks.“ Like others in the offshore world, Mr. Burns believes the rhetoric against the industry will die down as the economies of the G8 begin to fare better.

hortly after the 2008 global economic crisis, revenue-starved governments were eager to supplement their tax dollars with funds perceived to be flowing into offshore accounts. The US and other G8 countries bandied around colossal figures of tax gaps in the hundreds of billions, and targeted offshore secrecy jurisdictions. HM Revenue & Customs estimated the total UK tax gap to be around £40 billion around 8% of total tax liability, in a 2009 report. Across the ocean, Mr. Obama promised to “help close the $350 billion tax gap between taxes owed and taxes paid,” in the lead up to the US elections. Since the near collapse of the world economy two years ago, both the US and Germany have aggressively pursued Swiss and Liechtenstein Banks for customer information on suspected tax dodgers, often treading into murky areas between national and international jurisdiction.

n 2008 Germany’s foreign intelligence service bought files stolen from a former LGT Treuhand AG bank employee for about €4 million. The records revealed information on 600 German account holders and lead to the arrest of Klaus Zumwinkel, then-chief executive of Deutsche Post AG. The following year, the US Department of Justice filed a civil case to gain access to UBS’ American client list. The Bank initially refused to comply, arguing that it would violate Swiss law by disclosing the information. But months later backtracked and agreed to release information on around 5,000 US clients. Industry members say the territory has been far from harmed from such investigations, which typically target only “secrecy jurisdictions,” with active offshore banking industries. Despite playing a minor role in the news-grabbing headlines, BVI products remain valuable in the international

marketplace, they say. “We are innovative; we are often first to the market across a range of different fields. We have a smaller distance between the regulator and regulated, and that allows us to get things done and respond to opportunities faster, create new products, all of the innovations that the offshore world is quite famous for,” Mr. Burns explained. Policy decisions on an international level also may also have played a role in subduing Mr. Obama’s anti-offshore agenda, as few G8 countries seem prepared to unilaterally target non-compliant jurisdictions. Instead, backed by G20 the OECD released its white-, gray- and black- lists in April 2009, setting the international standard at 12 tax information exchange agreements. By December of the same year, the BVI signed its 17th TIEA with China, far surpassing the requisite number of treaties. “There is no doubt that 2009 was a year of transition for the global financial services industry,” said Sherri Ortiz, who was appointed executive director of the IFC in July 2009. Ms. Ortiz said that the unprecedented shock to the financial system caused governments and regulators to put an increasing amount of pressure on the doorstep of smaller financial centres, like the BVI. The IFC director and her predecessor, Ms. Smith, both agree that the TIEA process is far from over. Starting in 2011, the OECD will implement an aggressive peer

“… the BVI has some first class product, and, certainly when times have been a little more difficult, the control that is offered by a BVI wealth planning product… [has] become more attractive”

INTERNATIONAL BUSINESS

review process in the Caribbean to judge the merits of tax treaties, based on: the availability of information, appropriate access to information, and existence of exchange of information mechanisms. “For all the 62 countries on the white list, implementation is now what counts,” FSC CEO Mr. Mathavious cautioned, at an industry forum in February 2010. Already, there are early indications that the TIEA also may fall by the wayside as an international benchmark. According to Mr. Mathavious, claims by anti-offshore NGOs that TIEAs are “ineffective and that automatic exchange of information is needed,” are now being heeded. The same NGOs are building support in France, Britain and the OECD for country-by-country reporting, which would require multinationals to break down their financial statements by individual country, the director said. For Ray Wearmouth, a partner at Ogier’s BVI office, the OECD white list was a sign to many that pressure could soon ease from offshore jurisdictions. “I think as soon as that list came out, there was a view that might now be the standard that the OFCs were going to be judged by, that everyone was fairly comfortable,” he said, adding “I think there was a feeling that…you don’t have too many other things to worry about, or at least, you’ve ticked a very big box.’” Like others in the territory’s finance industry, Mr. Wearmouth believes that Obama’s offshore agenda was derailed by the collapse of the US housing market in 2008. “I think the events of the global economy, the economy situation snowballed so quickly, and the magnitude could never really be foreseen, that the focus came away from the OFCs at that stage,” he said. When presented with the criticisms levied by the onshore world, proponents of the offshore industry frequently make the same claim: That OFC’s have stricter anti-money laundering and terrorist financing legislation and are better regulated than many of their onshore counterparts. Recent global events may convince some clients to switch from pure zero tax to low tax centers, but overall, onshore business will still use the leading offshore centres, Mr. Wearmouth explained. “The economic focus on tax will always remain, but the focus on, ‘Are these places where you shouldn’t do business because they are non-compliant, or they are not well regulated,’ I think that has changed,” he said. As G20 countries look to update and tighten their regulatory regimes, jurisdictions like the BVI will be forced to adapt to a changing marketplace. Mr. Wearmouth said that US legislation, like the recently passed The Dodd–Frank Wall Street Reform and Consumer Protection Act, was more favourable to OFCs than prior legislation because its focus is primarily on activities undertaken by US financial institutions rather than external, exterritorial issues and countries. Still, a new provision on private advisor exemptions that formerly allowed non-American fund and managers to be exempt from

“From an investment point of view, it is certainly just the path of least resistance that the money will follow.”

Securities and Exchange Committee regulations may present a hurdle for the BVI’s fund industry. Europe also has been considering more closely regulating funds managed from outside the EU. The proposed Alternative Investment Fund Managers directive, an early attempt to harmonize EU rules governing the industry, would prohibit fund mangers based outside the EU bloc from marketing their funds in the EU unless they met fiscal and regulatory requirements. Managers based in the EU running funds established outside the EU, would also be restrictively regulated.

pen Europe, a UK-based think-tank, said the directive could affect offshore finance centres. The report estimated that 84 percent of all hedge funds managed by EU and UK-based managers are domiciled outside the EU. Speaking in July just weeks after the passage of the Dodd-Frank Act, Mr. Wearmouth said it was too early to speculate on the AIFM directive or US provision, but that, financial professionals in the OFCs and globally were weighing investment opportunities against the challenges of doing business. “Before they could happily rely on this [US] exemption, now they are going to have to spend money to fall within it or to find a way to be exempt,” he said.

Mark Chapman, managing partner at Deloitte’s BVI office, agreed that the provision would make reporting for hedge funds and alternative investments “more onerous” but said the legislation “only really just touches on the surface of the whole [BVI] industry.” Mr. Chapman believes that the new legislation could mean a redux of the 2002 Sarbanes-Oxley Corporate and Auditing Accountability and Responsibility Act. Published under former US President George W. Bush in the wake of the Enron scandal, the legislation created a complex regulatory environment in U.S. financial markets that, its opponents say, drove business overseas. “What they are doing is burdening themselves with a phenomenal amount of reporting and paperwork,” said Mr. Chapman, “I would like to think that this would be a watershed.” Ultimately, increased regulation still means work for the BVI’s financial sector, but the type of products created and services marketed have begun to shift. Ms. Smith, the former head of the IFC, now works with Caribbean countries including the Turks and Caicos Islands and Anguilla to help them draft tax treaties and remain compliant.

“I think that is because the BVI has some first class product, and, certainly when times have been a little more difficult, the control that is offered by a BVI wealth planning product… [has] become more attractive,” said Mr. Lane. Asked why, he explained that BVI VISTA trusts in particular allow an element of control that isn’t really permitted by other trust types. “It’s a mind set that you are faced with,” said Mr. Lane. “We’ve been watching investment banks collapse like ninepins so I think this actually provides a real appeal as VISTA gives control over the assets back to the client.” Messrs. Lane and Koster argued that recent regulations coming from the US and EU likely will not change whether offshore financial products are used, but how they are used. “The purpose, generally, is to reach the capital markets, be it London or New York… One of the ways of doing that is by going through an offshore financial centre which depending on the circumstances, may provide certain advantages. But immediately, you add an administrative burden on that particular route, capital is just going to find another way, another conduit to reach that capital market,” Mr. Lane explained. “From an investment point of view, it is certainly just the path of least resistance that the money will follow,” Mr. Koster added. Both men agreed that the BVI Company, in isolation, has reached maturity. “Tax neutral BVI Companies, whilst they will always have a place, are unlikely to regain the preeminence that they enjoyed three years ago,” said Mr. Lane. Where once the entities were used for taxation purposes, they now are more typically part of more complex structures used for confidentiality, or wealth planning. Messrs. Lane and Koster said they foresee that new attention will be paid to opportunities on the product side for emerging markets, including the BRIC (Brazil, Russia, India and China) countries, Asia and Latin America. “I do think there will always be a market for an offshore corporate entity to hold investments or make investments into another country, although there will be increased global competition for such products and services,” said Mr. Koster. So, what about the Obama Effect? Messrs. Koster and Lane say that as long as countries like the US struggle against budgetary deficit, anti-offshore legislation is likely to remain on the table. “There’s a country mile between political rhetoric and what is actually imposed, and yes, there is still a big gap there,” said Mr. Lane. “That said, the HIRE act is likely to cause us problems, it’s a likely sign of things to come.”

“… capital is just going to find another way, another conduit to reach that capital market.”

s the global economy strengthens, Appleby Managing Partner Michael Burns predicted a “pent up demand for BVI products in particular.” Still, he recognized a weakness in the local market: “Large ticket transactions aren’t out there in the numbers that they were, so there are more and more players out there scouring the landscape for less and less transactions,” he said, adding “Anyone who thinks the pricing is going to be roaring back any time soon to the levels we were operating at before would be sorely mistaken, I’m afraid.” For Equity Trust (BVI) Director Nicholas Lane and Business Development Manager Sjoerd W. Koster, the effect of the global economic turndown and greater regulation has meant a “marked decrease in the incorporation business” in the BVI. But according to Messrs. Lane and Koster, while the territory’s incorporation figures have “reduced significantly,” the business on the private client side has “been more robust.”

INTERNATIONAL BUSINESS

offshore hedge funds and the BVI

robert briant

here is a lot of talk in the BVI about offshore hedge funds. There are several hedge fund administrators in the BVI, and all of the large BVI law firms have significant hedge fund practices. Further, an entire division of the BVI Financial Services Commission is dedicated to regulating BVI hedge funds. So what are hedge funds and why are they relevant to the BVI? This article looks at the question of what is a hedge fund and considers the size of the global hedge fund industry. The article then considers why investment managers set up their hedge funds offshore, looks at the most popular jurisdictions to incorporate an offshore hedge fund, and considers the infrastructure necessary to support an offshore hedge fund industry. Throughout the article, we look at the role of the BVI in the hedge fund industry, and the impact of the hedge fund industry on the BVI. The BVI is the number one offshore incorporation jurisdiction, and is the second most popular offshore hedge fund jurisdiction. The question this article poses is whether the BVI should endeavour to be the number one hedge fund jurisdiction.

What is a hedge fund? Before getting too far into the role of hedge funds in the BVI, it may be appropriate to cover some basics, particularly the question as to what is a hedge fund. The term originated in the middle of the twentieth century in the US as meaning an investment vehicle which was able to hedge its investments through various techniques unavailable to retail mutual funds. The term quickly spread to cover any investment vehicle with an alternative investment strategy and now generally refers to any investment vehicle which pools investor funds, allows regular redemptions and is not a retail mutual fund. Certain hall mark features of a hedge fund include a broad discretionary investment strategy and shares being offered only to sophisticated investors.

An alternative to a hedge fund is often a managed account. There is no reason you cannot open an account at a brokerage house and have an investment manager manage that account for you. However, there are significant costs associated with trading with one account. Further, the investment manager is unlikely to be able to fully pursue his investment strategy with a limited pool of assets. By commingling the assets into one vehicle, there can be significant cost savings and other synergies. Hedge funds exist both onshore and offshore. Offshore hedge funds are typically structured as companies. Investors will subscribe for shares of the hedge fund thereby allowing its funds to be pooled for the purposes of a collective investment strategy. The issue price of the shares is the net asset value per share, which is basically the value of the net assets of the company divided by the number of shares in issue. When an investor wants to get out of the investment, the investor redeems his shares. Subscriptions and redemptions are available on a periodic basis, generally monthly, at a price equal to the then current net asset value per share. The result is that the investor receives the benefit of any increase in net asset value over the time of his investment, but similarly, suffers the loss from any decrease in net asset value.

What must be remembered about a hedge fund is that it has no employees. Rather, a hedge fund is a corporate vehicle with several directors. The directors approve agreements with the service providers who in effect carry out the business of the hedge fund. These agreements include an investment management agreement with the investment manager to the hedge fund, who provides the investment advice to the hedge fund and makes the investment decisions. There is also a custodian or prime broker agreement between the hedge fund and the custodian or prime broker. The custodian or prime broker holds the assets of the hedge fund and trades those assets on the instructions of the investment manager. Finally, there is an agreement with the administrator. The administrator calculates the net asset value per share of the hedge fund and keeps track of its shareholders and the number of shares in issue. There are also lawyers and accountants for the hedge fund. While these lawyers and accountants will act directly for the hedge fund and they generally take their instructions from the investment manager. As a result of this delegation, there is very little day-to-day activity carried out by the hedge fund itself. Rather, all the day-to-day activity is undertaken by t h e investment manager, custodian and administrator, with advice from the lawyers and a c c o u n tan ts . A s for the directors, their responsibilities are to attend to and oversee this delegation, usually by having periodic board meetings to review the performance of the hedge fund and its service providers. Of course, each of the manager, custodian and administrator, as well as the lawyers and accountants, receive fees for their services. In the case of the manager, these fees are based on the value of the assets under management in the hedge fund. Typically, the manager will receive a management fee of 2% per annum of the assets under management, and a performance fee equal to 20% of any increase in the value of those assets

(other than an increase arising from new subscriptions or any decrease arising from redemptions). In a performing economy, it is the performance fee which can make the hedge fund industry a very lucrative industry for the investment manager. The custodian and administrator also charge fees, as do the lawyers and accountant, but to a lesser degree, and not based on performance.

Size of Industry It is important not to underestimate the size of the hedge fund industry. The size of the industry in terms of assets under management is generally estimated at between two and three trillion dollars. It is estimated that over 50% of hedge funds are incorporated offshore. It is estimated that the industry employs several hundred thousand people globally. It is an enormous industry which is here to stay, and it is an industry which contributes to international business in the BVI. As at June 30, 2010, 2,956 hedge funds were recognised in the BVI. While this is a small fraction of the 468,953 active business entities registered in the BVI, these hedge funds contribute significantly to the economy of the BVI.

Why Offshore? However, why do investment managers set up funds offshore? An example is probably the best way to explain this process. A majority (67%) of hedge fund managers are based in the US (New York City (47%), Boston (7%), Greenwich (Connecticut) (6%), Westport (Connecticut) (4%) and San Francisco (3%) An individual working for one of the large investment banks as an investment manager may decide to establish his own hedge fund. At first, he will form what is called a domestic Delaware fund. This fund offers units to investors who are US taxpayers. The US obviously has a large pool of assets, so the investment manager can tap into this pool of assets with established contacts. However, if the investment manager is successful, he will start having non-US taxpayer investors asking if they can place money with him. However, these non-US taxpayer investors cannot place funds in the domestic 33 Delaware fund as a result of both US tax and regulatory concerns. As a result, the investment manager will set up another vehicle in a neutral jurisdiction to attract the non-US taxpayer investors. Any jurisdiction in the world will suffice, provided it has good laws, a sound court system, decent infrastructure, including local lawyers knowledgeable about the laws governing hedge funds, and good regulation, and, most importantly, it has to be tax neutral. The offshore jurisdictions become the obvious choice. In particular, the two leading jurisdictions, the Cayman Islands and the British Virgin Islands, fit the bill perfectly. It is for this reason that the majority of the offshore hedge funds are incorporated in these two jurisdictions. The BVI is particularly well suited for offshore hedge funds, with its BVI Business Companies Act, 2004. Uniquely among the offshore jurisdictions, this statute was modeled on that of Delaware which is one of the reasons

â&#x20AC;&#x153;...an investment vehicle which (is) able to hedge (protect)

its investments through various techniques unavailable to retail mutual funds...â&#x20AC;?

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why the BVI is the leading offshore incorporation jurisdiction. The bespoke commercial court in the BVI, with ultimate appeal to the Privy Council in London, ensures quality judgments. The regulatory structure in the BVI is particularly impressive in balancing the need to regulate with an appropriately light touch for high quality hedge funds which are offered to sophisticated investors while also meeting international standards. As well, of course, the BVI is tax neutral in that no tax is imposed at the BVI level of the structure, although the hedge fund will pay the taxes required to be paid in any jurisdiction where it is trading and the investors pay tax as required by their local law.

Who Does What for a Fund? What does this mean for the BVI?

The hedge fund vehicle will be incorporated in the BVI, which, like any BVI company, ensures the payment of government fees on an annual basis. However, hedge funds have a lot more to offer than a typical incorporation. We mentioned above the persons who provide services to hedge funds, being the directors, the investment managers, the custodians or prime brokers, the administrators, the lawyers and the accountants. The investment managers are located in the large financial centres. While a manager may chose to live in the BVI, this would be a lifestyle choice, and there is unlikely to be any significant movement in this direction. The custodians and prime brokers are the worldâ&#x20AC;&#x2122;s largest banks and investment banks, and will always be based in New York or London. However, the administration of hedge funds is often carried out offshore. There are historical reasons for this in that it used to be a requirement of US law that administration could not be in the US without exposing the offshore fund to US tax and regulatory issues. The law in the US has now changed, but many offshore hedge funds still prefer to use offshore administrators. While the investment manager may be based in the US, the non-US investors do not necessarily want to invest in vehicles which are too connected to the 34

US. One way to distance the fund from the US (aside from its jurisdiction of incorporation) is to ensure that the administration is carried out offshore. In this regard, Citco Fund Services is the worldâ&#x20AC;&#x2122;s largest hedge fund administrator. As a result, offshore administrators have thrived notwithstanding the change in US law thereby creating an industry in the offshore jurisdictions. In a similar vein, the directors of offshore funds are often located offshore to help distance the fund from the US. This can lead to a robust director services industry. Offshore funds also require legal advice and accounting services. The result is that lawyers and accountants will be required in the offshore jurisdiction to support the offshore funds. Finally, we must not forget the liquidators. Licenced insolvency practitioners are required to step in when funds get into serious trouble. Under BVI law, these insolvency practitioners must be in the BVI ensuring a thriving liquidation industry in the jurisdiction. As such, offshore hedge funds have the ability to not only offer government fees to the offshore jurisdictions, but also to create employment to support the offshore infrastructure. The BVI has managed to become the second most popular jurisdiction for offshore hedge funds as a result of its superior laws and regulation. However, if the BVI wishes to rival the Cayman Islands as the most popular offshore hedge fund jurisdiction, then developing the infrastructure is the next step for the jurisdiction. Conclusions The hedge fund industry in the BVI may be on the cusp of change. As at the time of the writing of this article, there were signs of our coming out of the global economic downturn. Once the economy rebounds, will the BVI continue to be the second most popular jurisdiction to incorporate an offshore fund? Will the BVI slip to third or fourth, or will BVI rebound and move up to challenge the Cayman Islands as the number one jurisdiction? Most of the building blocks are in place. Infrastructure can and will develop over time. Together, we can ensure that the BVI remains the jurisdiction of choice for offshore hedge funds.

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THE BVI’s LINK TO THE WORLD how financial services supPort the world economy jason smith

In the late 1990s the buzzword to beat all buzzwords was globalisation.

he term’s biggest cheerleader, Thomas Friedman, writing in The Lexus and the Olive Tree, described a world governed by “super-markets” in which billions of dollars could be moved at the click of a mouse. He wrote that book eleven years and two economic crises ago but the interconnectedness of the financial markets has only grown. Because the British Virgin Islands is the global leader in international business companies formations – 456,226 as of March 31– and a growing provider of other financial services, it plays an important role in supporting the global financial markets.

“...the BVI is a tiny little island in the Caribbean and London is on a tiny little island north of France... the similarities are actually quite striking and quite alarming...”

“The BVI benefits both onshore and offshore financial centres simply because its companies efficiently facilitate transactions and recycle capital used all over the world.” The BVI benefits both onshore and offshore financial centres simply because its companies efficiently facilitate transactions and recycle capital used all over the world. In general, the contribution of OFC’s in supporting the global economy is overlooked, but the arguments of its defenders are growing louder. James R. Hines, a professor of economics at the University of Michigan, outlined their benefit in a 2009 report of the Society of Trust and Estate Practitioners. He found that among other benefits OFC’s stimulate foreign direct investment in high-tax countries, promote tax competition globally and contribute to economic growth. “Offshore Financial Centres play a key role in the international financial system, improving the availability of credit and encouraging competition in domestic banking systems. The result is a boost in investment in the major economies, which ultimately supports job creation and growth,” the report stated. Or ask Michael Foot. The author of the 2009 review of British offshore financial centres stated that 60 percent of the world’s total finance flows through six British Overseas Territories and three Crown Dependencies, though much of that was short-term dollar flows through the Cayman Islands. The jurisdictions bring in hundreds of billions into the United Kingdom and produce “sizeable net fees” from UK-based legal, accounting and other professional firms, according to the report. That London-BVI connection and link between global markets are evident to Michael Fay, a partner at the BVI office of the Ogier firm.

“Most of our work comes through a law firm or an intermediary in an onshore jurisdiction and particularly in the world’s financial markets; London, probably being the biggest one, New York and Hong Kong. The big Wall Street Firms and the big City firms are people we regularly take work from,” he said. “We also take work from the big accounting firms and some of the world’s big banks will use offshore structures in their businesses.” The firm specializes in providing legal support to the financial services industry and particularly hedge funds. BVI companies are often used as investment vehicles for hedge funds, primarily Mr. Fay said because the 37 territory offers “soft touch” regulation, tax benefits and flexibility. Offshore finance is both complicated and a bit abstract but its key role is to circulate money through the world’s financial system. “What the offshore companies are doing is making capital available. Because the fund collects the money it’s got to be invested somewhere,” Mr. Fay said. “With a real estate fund, it’s making money available for people who want to develop real estate elsewhere. At the end of every securitization transaction there’s a person producing a receivable, whether it’s a bank producing a mortgage or whether it’s – one of our big clients is a Mexican cement company that finances all of its receivables and exports cement. The money’s going back into the economy somewhere because if you just keep it in the BVI company and leave it in the bank it’s not going to make you any money.”

The BVI’s Link

“...capital is being raised h ere in the British Virgin Islands to do projects which in turn make money elsewhere...”

William Tacon, a partner in the insolvency firm Zolfo Cooper, sees the “recycling” role of offshore finance as a very global business. As a liquidator, he is often appointed by a court or creditor in insolvency cases to act as an independent and neutral third party. “As liquidator, my role is to see what’s there in those funds, to investigate whether there is any legal actions I can bring against people who have behaved inappropriately or negligently or what have you and then to recycle that money to people who are supposed to have it... The whole insolvency process is part of recycling capital around the place.” For example, Mr. Tacon is joint liquidator for Kingate Euro Funds and Kingate Global funds, both BVI-registered companies that were set up as a “tax-efficient” way for investors to pool money for a New York firm, Bernard L. Madoff Investment Securities, LLC. The feeder funds had stated values of $3 to $4 million, fictitious values, which only held a “trivial amount,” in a Bermuda bank account, money that now belongs to victims of the fraud. “The funds (they’ve stopped trading.) They’re not taking new money from investors, there’s a sum of money in the pot which will be returned in due course to the parties entitled to receive that money,” he said. Insolvency practitioners of which there are 17 in the BVI, allow investors to recoup

some of their losses from bad investments. “If you think about liquidity, it’s about recycling liquidity back where it came from, and it enables them to lend to wherever,” he said. Wherever, is just about everywhere, but in many cases that capital is recycled back to the world’s second largest financial centre – London, which exports nearly $25 billion in financial services annually. Kay Reddy, a managing director at Blenheim Trust, sees that as “a huge positive dent on the balance of trade.” “So the city of London is’ extremely important to the UK,” she said. The UK expatriate, who now resides in the BVI, said she sees a strong connection between her former home and her current one. “If you forget the fact that the BVI is a tiny little island in the Caribbean and that London is the capital of a tiny little island north of France, then the similarities are actually quite striking and quite alarming,” Ms. Reddy said. So basically, we’re following very closely to our parent in the provision of financial services. Globally it’s huge.” BVI companies are used extensively in cross-border transactions as the common vehicle to facilitate mergers and acquisitions of foreign companies, popular because they are backed by a recognized legal system. “If you’ve got cross-border transactions, where there’s more than one law or rule of law, obviously having an

English law vehicle makes a lot of sense,” she said. BVI vehicles are also used to buy properties in England where the companies don’t pay capital gains tax. That doesn’t mean they don’t pay tax, according to Ms. Reddy’s coworker Helen James, another managing director at Blenheim. “They can’t avoid paying tax. A UK resident has to pay tax on their worldwide income; they ought to declare it and very well should declare it,” she said. Ms. Reddy said she wholeheartedly agrees with that assessment. “I don’t think companies are formed for tax purposes. They are tax neutral. Even if the BVI company is not taxed, at some point when the dividends are paid out to the shareholder or the shareholder liquidates the company or it makes a loan or commission, at some point that shareholder in his home territory is going to declare the tax so there may be a bit of deferral but there is really no tax mitigation.” Instead, Ms. Reddy said, the BVI has other features that make it attractive, especially for the firm’s clients who want to register funds in the territory. “The main reason clients come to the BVI is because they need an investment vehicle and they need something that’s robust, that has a good legal system, that’s secure. You need to be comfortable with the managers and the advisers but, the BVI excels in smaller funds outside the midrange $10 to $50 million fund where costs are important, speed, ease, flexibility and the BVI offers all of that.” Many of those clients, not just for fund registration, but for all of the territory’s financial services come from Asia and emerging markets, according to Sherri Ortiz, director of the BVI government’s International Finance Centre. “Due to BVI vehicles being used worldwide our business originates from financial centres around the world, with emerging markets a particular growth area for us. We work with professional intermediaries based in Hong Kong, Singapore, the UK, Europe, US, India, Brazil and other centres worldwide,” she said.

And OFC’s can provide benefits even to developing economies, according to Mark Field. The Conservative Member of the UK Parliament for the cities of London and Westminster said during a July 2010 Parliamentary Debate that OFC’s allow developing countries “to rent financial expertise from other countries while they develop their own financial centres.” “It is no exaggeration to say that without smaller offshore financial centres many developing countries would not secure key funding for project finance, which makes a substantial improvement to the lives of some of the most vulnerable global citizens.” Despite their benefits, OFC’s are often singled out for criticism as a drain on the world economy. This occurred in the run up to the 2008 presidential election where Barack Obama criticized offshore finance and promised to shut down “tax havens.” Mr. Fay, the attorney with Ogier, said that was one of the “strange and uncomfortable things” coming out of the economic crisis. “There he was knocking the offshore world and there he was dependent in the crisis on offshore structures coming in and buying all the toxic debt, because that’s where the money was being raised” Mr. Fay said. But he added that despite rhetoric, most world leaders see the benefit of OFC’s whether they say it publicly or not. “Most politicians are sensible enough to know that the offshore sector – it has things that are good with it and things that are bad with it, but on the whole it is good for the world economy rather than bad for the world economy because it makes capital available,” he said. The attorney said that the benefit of financial services is seen both locally in the territory and farther afield. “My wage bill here for the 55 staff I have here is enormous and the vast majority of the money gets spent here. The benefit for the world economy is that capital is being raised here in the British Virgin Islands to do projects which in turn make money elsewhere and provide employment.”

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THE SECURITIES AND INVESTMENT BUSINESS ACT, 2010

A STATUTE FOR THE FUTURE

simon schilder partner, ogier

fter much anticipation, the Securities and Investment Business Act, 2010 (“SIBA”) came into force in the British Virgin Islands (“BVI”) on 17 May 2010. The enactment of SIBA represents an important step for the continued development and growing sophistication of the financial services sector within the BVI and this new statute will represent the cornerstone for the regulation of much of the BVI’s financial services industry for a number of years to come.

Importantly on a global stage, SIBA should ensure that the Financial Services Commission’s regulation of the BVI’s financial services industry remains in tune with the evolving global regulatory standards, demonstrating the jurisdiction’s continued commitment to implement international best practice for financial services regulation. In addition, with SIBA, the BVI has a further modern and user friendly statute to complement the universally popular BVI Business Companies Act, 2004 and the Insolvency Act, 2003. Objectives of SIBA SIBA has four principal objectives, being to: • Introduce an investment business licensing regime to regulate entities conducting “investment business” in or from within the BVI; • Adopt restrictions on and regulations for the making of “public issues of securities” into the BVI; • Update and modernise the regulation of the BVI investment funds industry, by repealing the Mutual Funds Act, 1996 (which is the statute that has regulated the BVI’s investment funds industry for more than a decade) and replacing it by SIBA, the Mutual Funds Regulations and the Public Funds Code; and • Introduce a market abuse regime. Dealing with each of these objectives in turn, the key features are as follows: Investment Business Any person carrying on activities constituting “investment business” in or from within the BVI involving “investments” will, under SIBA, be required to hold an investment business license specifically authorising that kind of investment business. For these purposes, “investments” are as follows: • Shares, interests in a partnership or fund interests; • Other debenture or loan stock, bonds, certificates of deposit and other instruments acknowledging indebtedness; • Instruments giving entitlements to shares, interests or debentures; • Certificates representing investments; • Options;

• Futures; • Contracts for differences; • Long-term insurance contracts; • Rights and interests in investments; • Such other things as maybe specified as investments in the Investment Business Regulations.

Activities constituting “investment business” are as follows: • Dealing in investments; • Arranging deals in investments; • Managing investments;

• Providing investment advice; • Providing custodial services with respect to investments; • Providing administrative services with respect to investments; • Operating an investment exchange.

The investment business provisions within SIBA are not intended to capture all BVI entities used for investment purposes, rather to regulate those entities whose activities fall within the definition of “investment business”. Broadly speaking the intention is that entities whose business purposes effectively make them the “shopkeepers of investments” are caught by these new regulations and so required to be licensed under SIBA. Certain investment activities are expressly excluded from constituting investment business (“excluded activities”) and certain types of persons conducting investment business are expressly excluded from the requirement to hold an investment business license under SIBA (“excluded persons”). Significantly, the scope of SIBA will cover any BVI company carrying on investment business anywhere in the world and any person soliciting a person (including a BVI entity) in the BVI in order to offer a service constituting investment business. Therefore, the investment business provisions under SIBA will have application to both (i) BVI entities conducting investment business outside the BVI; and also (ii) BVI and non-BVI entities conducting investment business within the BVI (unless those activities constitute an “excluded activity” or the entity conducting the investment business qualifies as an “excluded person”). Once licensed to conduct investment business, SIBA makes provision for various systems and controls for the operation of a licensee’s business, covering corporate governance, advertisements and other administrative functions, these provisions, when taken with the amendments made to the BVI’s Regulatory Code for SIBA, therefore now provide the platform for the regulation of investment business licensees within the BVI. For current BVI entities currently conducting business activities which are now caught by the investment business regime under SIBA, transitional provisions exist during which such entities are required to come into compliance with and be licensed by the Financial Services Commission under SIBA.

Public Issues of Securities

SIBA introduces provisions regulating the offering of securities into the BVI. Under the public issues provisions, subject to limited exceptions, no security may be offered to the “public” in the BVI unless (i) the offer is contained within a “registered prospectus”; and (ii) the offer complies with the Public Issuers Code. For these purposes, an offer of securities to any person in the BVI or an offer received by a person in the BVI is an offer of securities to the public. Importantly, the mere receipt by a BVI company at its registered office of an offer of securities will not, in itself, be sufficient to make that offer constitute a public offer. Where an offer is deemed to be a public offer and so requiring the prospectus to be registered with the FSC, SIBA and the Public Issuers Code provide for prospectus content requirements, in order to safeguard the interests of investors. In addition, for public issues by BVI companies, certain provisions of the BVI Business Companies Act, 2004 are disapplied by Schedule 6 of SIBA. As an ongoing obligation for public issuers, any amendments or supplements to a registered prospectus are also required to be registered with the FSC and a copy of all such amendments or supplements made available to every person who received a copy of the original prospectus. In addition to the normal common law remedies available, SIBA also gives the Courts the powers to grant a compensation order in favour of subscribers who purchased securities offered pursuant to a public offer in reliance of a prospectus and suffered loss or damages as a consequence of any untrue or misleading statement contained within that prospectus or omission from that prospectus. Such orders may be made against the issuer; its directors; any guarantor of the issue; any person accepting responsibility for the prospectus; any promoter of the offer (including directors of the promoter); and any other person authorising the contents of the prospectus. However, it should be noted that the provisions in SIBA relating to public issues for securities are not, at the time of going to print, in force.

Mutual Funds SIBA repeals the Mutual Funds Act, 1996 and introduces an updated and modernised statutory regime for the regulation of the BVI funds industry, through SIBA and its secondary legislation, the Mutual Funds Regulations and the Public Funds Code. The framework for the regulation of BVI funds is not materially altered by SIBA and most of the popular concepts remain. Significantly, the regulatory regime applicable to private and professional funds (the two categories of BVI regulated funds applicable to approximately 2,700 of the 3,000 licensed BVI funds, particularly hedge funds) is not substantially changed as a consequence of SIBA, with many of the “changes” merely representing the codification of existing regulatory policies operated by the Financial Services Commission, which have evolved over time in line with international standards. The regulatory regime applicable to public funds, which is a category of fund utilised for retail offerings by BVI funds (the category of fund applicable to approximately 300 of the 3,000 licensed BVI funds) is however changed under SIBA through the introduction of the Public Funds Code, which brings the regulation of retail funds in line with IOSCO Principles. In addition to the above, SIBA codifies the current FSC policies in relation to ongoing reporting obligations for funds recognised as either private or professional funds or registered as public funds and introduces certain content requirements for fund’s offering memorandum, subscription documents and constitutional documents. As with the enactment of the investment business provisions noted above, the driver for many of these new regulatory changes is to facilitate the effective supervision of BVI funds by the Financial Services Commission and therefore the effective management of systemic risk. To facilitate the smooth transitioning of existing BVI funds into the new regulatory regime, transitional provisions exist under SIBA during which various of the changes brought about by these new regulations are required to have been implemented. Market Abuse SIBA provides for a market abuse regime which introduces prohibitions against insider dealing in the BVI. The market abuse regime introduced under SIBA is very much in line with and similar to accepted international standards and is therefore not worthy of further comment in this respect. But why is it important for the BVI to regulate its financial services industry? As the world’s most popular jurisdiction for the domicile of companies (as at 31 December 2009, there were 410,293 companies and 629 limited partnerships active and registered in the BVI), the BVI punches significantly above its weight within the global financial community. As such, it is critical that those companies domiciled in the BVI which are active within the global financial services industry are properly regulated, so as to ensure the effective management of systemic risk within the global financial system. In addition to this, amongst the other international financial centres with whom the BVI competes for financial services business (such as the Cayman Islands, Jersey and Guernsey), the having of such legislation in place on the statute book has very much become the pre-condition for the acceptance onto the top table of international finance. Consequently, similar legislation to SIBA for the regulation of investment business, public issuers of securities and market abuse can also be found in such jurisdictions. As a consequence, these legislative changes are very much welcomed by politicians, regulators and members of the financial services industry within the BVI and elsewhere. In addition to this, the amendments made to the BVI’s funds regime by SIBA have also be welcomed by the BVI funds industry in particular, as they have whilst maintaining the popular concepts which have underpinned the historic success of BVI’s fund industry over the last decade, also facilitated the provision of greater transparency now demanded by investors and financial institutions investing into or lending to such funds. Therefore, with the further strengthening of the BVI’s financial services platform, this should ensure the continued competitiveness of the BVI as an international financial centre for the years to come.

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lobal regulatory change is leaving most financial institutions with significant uncertainty about the future. The following article from KPMG’s September 2010 frontiers in finance discusses the new ‘Dodd-Frank Act’ enacted in July 2010 which represents arguably the most dramatic change in financial reform and consumer protection since the Glass-Steagall Act of 1933. An enormous amount of work is still required to translate the new legislation into practical application. Given the paramount influence of the US financial sector on the global economy, and the likelihood of the new law influencing the development of regulatory themes in other jurisdictions including the British Virgin Islands, we discuss how critically important the implementation of this new framework will be for financial institutions – and their customers – everywhere.

Leading

The Way

Profound implications of US regulatory reform

Following de-regulation of the US financial markets in 1999 and the subsequent liberalization, the Dodd-Frank Act represents a dramatic, shift back towards an earlier era of regulation whose signatures included the rules of Glass-Steagall Act implemented almost 80 years ago. In the attempt to address what are believed to be the underlying causes of the global financial crisis, and to help ensure that they cannot occur again, the Dodd-Frank Act sets a framework for more regulation and attempts to bring unregulated pockets of the market into the regulatory regime, which will ultimately control much more tightly how financial services firms carry out their business. In June 2009, the US Administration released recommendations for reform in its White Paper, Financial Regulatory Reform – A new Foundation: Rebuilding Financial Supervision and Regulation. Those recommendations were designed to meet five key objectives: • Promote robust supervision and regulation of financial firms; • Establish comprehensive supervision of financial markets; • Protect consumers and investors from financial abuse; • Provide the federal government with tools to manage a financial crisis; and • Raise international regulatory standards and improve international cooperation. The Dodd-Frank Act incorporated many of these recommendations, with the implications having not only short and long-term effects, but also global ramifications. In more than 2,000 pages of detailed text, the key provisions include:

• Creating a new Financial Services Oversight Council (FSOC) to identify and address emerging systemic risks, including identifying those financial companies that are systemically risky and subjecting them to consolidated oversight and heightened standards for risk-based capital requirements, leverage limits, credit exposures and the development of resolution plans (ie. Living Wills), among other things; • I ncreasing the supervisory role of the Federal Reserve Board (Fed) to include all companies that are deemed systemically risky by the FSOC, placing limitations on the Fed’s authority to support large individual firms in distress, and creating new process, shared by the Fed, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and the Department of the Treasury, to liquidate failed financial firms other than insured depository institutions in an orderly manner; •C reating an independent Bureau of Consumer Financial Protection (CFPB) to oversee consumer financial regulations for all providers of financial services products, as well as to enforce compliance with those rules by large insured depository institutions and all non-bank providers; •S treamlining federal bank supervision; • I mplementing comprehensive regulation of all over-thecounter derivatives; •H armonizing the supervision and regulation authorities of the Securities and Exchange Commission and the Commodities Futures Trading Commission; •R equiring the registration of advisers to private pools of capital and the reporting of certain information on those funds; •P roviding shareholders with a say on pay and corporate affairs; • I ncreasing transparency and accountability for credit rating agencies; and • Establishing a Federal Insurance Office within Treasury.

New capital standards will have implications for global competitiveness and costs. In addition, the final law incorporates other provisions that will alter the industry landscape significantly. These include, among others, limitations on bank proprietary trading and investments in hedge funds and private equity funds (commonly referred to as the ‘Volcker Rule’), limitations on bank swaps activities (known as the ‘Lincoln Amendment’ or ‘push out’ provision) and a stricter application of risk-based capital requirements for bank holding companies (the ‘Collins Amendment’). The rulemaking process is expected to be lengthy and complex. For instance, with respect to capital requirements, the Dodd-Frank Act seeks to apply higher capital requirements to insured depository institutions, bank and thrift holding companies and systemically important non-bank financial companies. Specific regulations will have to address a variety of provisions, including the Collins amendment, capital requirements to address systemic risk, countercyclicality, and capital requirements to support separate subsidiaries conducting derivatives activities. Eventually the capital requirements will also have to be consistent with the evolving Basel III capital standards expected to be established by November 2010, when the G20 meets in Seoul. New capital standards in the US are likely to impact all types of financial institutions, from the largest financial conglomerates to community banks, and will have implications for global competitiveness and costs as other nations deal with their own capital requirements. Financial institutions and non-bank financial companies considered to be systemically important will be subject to tighter supervision and potentially subject to higher capital and other requirements. They will also be subject to annual stress-testing by the Fed to measure the strength of their capital. ‘Systemically risky’ is not specifically defined in the Dodd-Frank Act but rather would be determined based on a variety of factors including the nature, size, scope, scale, concentration, interconnectedness or mix of a company’s activities, or because material financial distress in the company could pose a threat to the financial stability of the US. The challenge for

regulatory agencies and financial institutions will be to establish parameters and mechanisms to consistently measure these attributes. One of the guiding principles that drove financial reform is the expectation of stronger risk management by financial institutions, which entails more regulation for currently regulated institutions (e.g. bank and thrift holding companies) and transformation for those that historically have not experienced the same level of regulatory supervision. Entities that have not previously had to comply with consolidated supervision may be considerably affected and may be placed at a disadvantage because of the new regulatory supervisory requirements. A significant portion of the new law is aimed at protecting consumers and investors. The establishment of the CFPB consolidates rulemaking authority and most of the enforcement within this Bureau for consumer protection rules and regulations. In addition, the Dodd-Frank Act attempts to regulate financial products by many non-banking entities, many of which were historically unregulated. The implications for existing consumer protection regulations and the impact on current products, features and pricing are far-reaching. Implications for existing customer protection regulations and the impact on current products and pricing are far-reaching. Changes to consumer regulations made expressly by the Dodd-Frank Act could entail significant modifications to policies, procedures, operations and systems. Amongst other implications, business strategies will need to be re-evaluated to capitalize on revenue streams with the greatest potential and to compensate for the expected decrease in fee revenue from both deposit and lending products; technology and systems will need to be reassessed and enhanced to comply with revisions to data capture/reporting and disclosure changes; credit policies and underwriting standards and processes will need to be reassessed; fraud detection and prevention capabilities will need enhancements; and the burden on current resources will be multiplied. Much of the details of how the Dodd-Frank will be implemented are left to federal regulators to develop over the coming months – and it will be the details which will be important. Many aspects of the law were highly contentious and fiercely debated in the House of Representatives and the Senate. Over the months ahead, there will doubtless be intense debate, advocacy and reaction throughout the promulgation of the several hundred rules and regulations necessary to implement the new laws, and the uncertainty around this will inevitably continue for some time. The rest of the financial services world should pay close attention to this process. The underlying themes of the Dodd-Frank Act closely parallel the thinking of governments and regulators in other major financial centers such as the UK and European Union. In a globalized financial world, how implementation pans out in the US will have a much wider impact globally. While the US is leading the way, regulators and financial institutions throughout the world will have to respond. The broad principles of the proposed regulatory change are widely known, but the implications and implementation of these remain a moving target. To get a grasp on the future, many of our clients are already taking steps to position themselves to comply with new regulations. Being able to demonstrate to the regulators and other key stakeholders that your business has the ability to address the major issues will put your business a step ahead of the competition. Over the coming months as regulatory developments continue to take shape around the world, keep up to date with KPMG’s insights through www.kpmg.com and frontiers in finance. For information on how KPMG in the BVI can help you, please contact Tanis McDonald at +1 284 494 1134. The views and opinions are those of the author and do not necessarily represent the views and opinions of KPMG. All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. © 2010 KPMG (BVI) Limited, a British Virgin Islands limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved

INTERNATIONAL BUSINESS

The Insolvency business Bucking the trend in the BVI

kenneth m. krys Founder & CEO Charlotte Caulfield Manager Krys & Associates (BVI) LTD.

he far reach of the current worldwide economic downturn has affected every business and company to a greater or lesser extent. Our Islands have also felt the pinch, with a significant downturn in the key tourism and financial services sectors in the past couple years. Some of the territory’s largest employers have been forced to make cut backs, staff have been laid off and new hiring’s have been put on hold. For an insolvency professional, however, an economic downturn means opportunity -- opportunity to show the world the expertise and dedication of local insolvency practitioners to find creative and innovative solutions to complex problems. Thankfully, BVIslanders will be relieved to know that domestic or “home-grown” insolvency appointments make up only a small proportion of the work undertaken by insolvency practitioners in the territory. Although there have been a few notable exception in recent years, for example Lambert Beach Resort and Tortola Concrete, the majority of matters dealt with by BVI Insolvency Practitioners are companies incorporated in the BVI but which traded and operated elsewhere. Introduction of the Insolvency Act & Adoption of UNCITRAL The BVI insolvency industry has been in development for many years, but it was not until the introduction of a prescribed insolvency regime in 2005 with the bringing into force of the Insolvency Act 2003 that the industry really began to thrive. Now, some 20 individuals, all residents of BVI, are licensed by the Official Receiver (part of the Financial Services Commission) as Insolvency Practitioners, and it is estimated there may be as many as 100 people working in the industry as a whole in BVI, both in practice and as attorneys, and for the Official Receiver. The industry is regulated: all Licensed Insolvency Practitioners are subject to inspections by the Official Receiver. Whilst there is no set professional qualifications for persons to be licensed, individuals must demonstrate considerable insolvency experience, law or accountancy qualifications and substantial professional indemnity insurance.

The development of the BVI as a significant insolvency centre was also aided by the adoption of the UNCITRAL (United Nations Commission for International Trade Legislation)

model law in 2003.

As with a large proportion of countries and jurisdictions throughout the world, prior to the introduction of a proper insolvency framework into BVI law, corporate bankruptcy procedures were a matter of common law and case precedents. This led to uncertainty in commencing insolvency proceedings in the territory, particularly for unfortunate (foreign) creditors who found themselves in a position where they had limited legal options and an apparently perplexing route to protecting their interests. Foreign countries’ legislation often enabled a BVI-registered company to be more easily (or cheaply) put into liquidation or an equivalent process in that foreign jurisdiction rather than in BVI. As a result, creditors, and indeed the debtor companies themselves acting through their directors or shareholders, frequently went “forum shopping” to commence the insolvency proceedings in the most advantageous jurisdiction, which often meant the place of the company’s operation or debts rather than its incorporation. Therefore, prior to the introduction of the Insolvency Act, insolvent BVI-incorporated companies would be more likely to have been dealt with in foreign jurisdictions than in the BVI. The Insolvency Act 2003 has to a certain extent changed that mind-set. The BVI legislation is largely derived from equivalent English legislation, which is highly developed and widely understood. Now the territory finds itself to be at the forefront of the industry worldwide, outpacing many of its off-shore neighbours. The development of the BVI as a significant insolvency centre was also aided by the adoption of the UNCITRAL (United Nations Commission for International Trade Legislation) model law in 2003. The model law is an attempt to harmonise and address more effectively cases involving cross-border insolvency. While the law is not in force, it sends a strong signal of the BVI’s acknowledgement of its role in the global community and the need to more effectively deal with cross-border liquidations.

Development of the New Commercial Court August 2009 heralded the opening of the new, state-of-the-art Eastern Caribbean Commercial High Court in Road Town. The Court deals with large commercial litigation, including insolvency matters. The Court is more than simply a new building; it brings with it the expertise and knowledge of its principal judge, Justice Edward Bannister, QC. This in itself sends a message to those outside the territory that the BVI is the place where the rule of law and justice are adhered to and where complex litigation may be properly argued and understood, to the same extent as if the matter had been determined in New York, London or Frankfurt.

Establishment of RISA For a number of years, within the nascent BVI insolvency industry there had been discussions about the establishment of a professional organization to represent the industry. During 2010, these plans were realised with the founding of RISA (Restructuring and Insolvency Specialists Association). The purpose of RISA is to represent the industry and improve industry standards. Presently there are some 40 plus members, including representatives from practice, the judiciary and the regulatory body. RISA is the first and only member of INSOL in the Caribbean area; INSOL is an international organization representing the insolvency industry. The establishment of RISA is a further example of the development of the industry in the territory and the desire to strive for ever-improving standards and practices.

This is further reflected in the decision of the Commercial Bar Association, which brings together self-employed barristers who practice in the field of international and commercial law, to hold its North American Group’s annual seminar in BVI in 2011.

The Current Marketplace Madoff: Kingate and Fairfield Nature’s Little Secrets are perhaps as far removed from the frenetic trading and dealing of Wall Street as is possible, yet within the territory, people are busy working on the aftermath of Wall Street’s biggest fraud. On 10 December 2008, previously venerated by the financial industry as a genius and industry leader, confessed to his sons that his entire investment management business was “one big lie”, triggering his arrest and imprisonment and the collapse of his firm, Bernard L Madoff Investment Securities Corporation LLC. Madoff had for over 20 years operated the largest Ponzi scheme in history; in essence, a huge pyramid selling scheme, where new investors’ monies were used to pay the existing investors’ “profits”. Word of Madoff’s apparent genius investment strategies spread, and soon everybody wanted to invest. Madoff, ever the entrepreneur, sought to satisfy the demand by establishing a number of 45 so-called “feeder funds” or “funds of funds”. A feeder fund will tend to invest all, or the majority of, its assets through the main hedge fund.

Thus, Fairfield Sentry Ltd. and Kingate Global Fund Ltd., both BVI-registered feeder funds, were established, each holding billions of dollars of investments, together with numerous other funds, to satisfy the investment demand. The demise of Fairfield and Kingate was inevitable when the Madoff Ponzi scheme became public knowledge; and in 2009, both funds were wound up by the BVI Commercial Court. Fairfield is by far the biggest loser in the Madoff fraud, having had account balances with Madoff of $6.2 billion when the Ponzi scheme was revealed; Kingate is also owed billions of dollars. The Liquidators of the two funds anticipate that both of the liquidations are likely to take several years to bring to their conclusion. Internationally, both liquidations are hugely significant and have a high profile, as the Liquidators are faced with ground-breaking legal issues to overcome, and the worldwide industry is keeping close watch of their developments. Liquidations of the size and complexity of Fairfield and Kingate keep not just the Liquidators and their own staff busy, but spin-off work also keeps the lawyers in BVI occupied, not just acting on behalf of the Liquidators but also the other parties involved such as creditors, investors and other stake-holders. This is important for law firms in the territory who might otherwise be experiencing slim pickings in terms of work; when their bread and butter work in key sectors like trusts is in shorter supply. The Insolvency Practitioners of BVI are well served by the legal firms on island; indeed BVI and the Cayman Islands are the only two off-shore territories where all of the six largest off-shore law firms have offices, and there are a number of smaller local practices who rank highly.

The Future The BVI is the third largest jurisdiction for the incorporation of hedge funds; 7% of all funds are registered here with combined managed assets of $119 billion. Whilst the green shoots of economic recovery are beginning to sprout around most parts of the world, further financial collapse and a ‘double dip’ recession remain a distinct possibility. The hedge fund market looks to be a continuing source of new work for the insolvency industry in BVI. However, while BVI as an international financial centre continues to expand and diversify, so too must its insolvency industry continue to develop. A significant and growing proportion of the 500,000 or so companies registered in the BVI are controlled and owned by Chinese entities or individuals. These companies usually form part of a complex corporate group structure with numerous layers of subsidiaries; however, the underlying assets typically consist of large manufacturing corporations or heavy industry firms, such as mining or power plants in China. The Insolvency Act permits the joint appointment of a local (in this scenario) Chinese, insolvency specialist to assist the BVI Insolvency Practitioners. For example, it is not generally practical for geographical, bureaucratic or language issues; for a Liquidator living in the territory (as all Licensed Insolvency Practitioners are required to be) to sell an iron ore plant in Guangzhou from Tortola! Prior notice of such appointments must be given to the Official Receiver, who may object if he deems appropriate, and the foreign insolvency specialist must demonstrate evidence of their relevant experience and qualifications to act. All BVI insolvency appointments require the appointment of at least one BVI Licensed Insolvency Practitioner.

The Peoples Republic of China (PRC) has appeared to weather the current financial crisis somewhat better than its competitors in Europe and North America. However, Insolvency Practitioners have noted an upturn in the numbers of insolvencies emanating from the PRC. Time will tell whether China’s financial health is in as good shape as its government statistics currently suggest. Recent PRC associated cases in the BVI have provided plenty of experience in the jurisdiction on how to handle a case with PRC assets, including local appointments and enforcement and recognition of receiverships and insolvency appointments. As such, the PRC provides a growing marketplace for insolvency practitioners, supplementing the more traditional sources of work from the UK and US.

Further Development of the Industry Whilst the introduction of the Insolvency Act was a significant development in the territory’s laws, there is still room for improvement. One crucial part of the Act has not yet been brought into force, the introduction of Administrations, a completely new style of insolvency procedure for the territory. If the liquidation of a company is akin to the funeral of a person, then the administration procedure is rather more like an attempt at life saving emergency surgery. The commencement of an Administration can be achieved speedily through the Court; an Administrator is appointed and a moratorium is placed over the company’s affairs. This means no party can take or continue legal actions or processes against it. This “breathing space” allows the company to continue trading under the control of the Administrator whilst a buyer is sought or re-structuring of the company takes place. Administrations are already a common process in England; in the US, Chapter 11 shares many of the key features; this may be one area of the BVI insolvency regime which could be improved. However, the moratorium also has potential downsides, as it would also bind secured creditors from enforcing their security during the Administration process. Commonly, BVI-registered companies have their shares pledged in security. There is a potential that if Administrations were brought into force, lenders may no longer be willing to accept this type of collateral, and

“

...the BVI is the place where the rule of law and justice are adhered to and where complex litigation may be properly argued and understood, to the same extent as if the matter had been determined in New York, London or Frankfurt.

”

therefore, obtaining funding for BVI-companies may be more difficult. It is principally for this reason that this part of the Act has not yet been brought into force. In the BVI, standards of compliance by Registered Agents in terms of their obligations under the territory’s laws need to be improved. There are too many instances when a liquidator is stymied in his investigations into the debtor company’s affairs due to a lack of compliance by the Registered Agents. Even basic information such as the identity of the company’s directors may not be held. Whilst these occurrences are uncommon, the role of the Registered Agent is important in the offshore environment, and deficiencies in this area do not bode well for the jurisdiction. The Insolvency Act includes provisions for the punishment (by financial penalty and in very extreme circumstances, imprisonment) of such breaches; however, no prosecution has to-date occurred. Currently, the onus is on each company to holds its own records, 47 rather than the Registered Agent. If the legislation were to be changed, then it would be beneficial if more of the responsibility could be assigned to the Registered Agent. As the industry grows it is important that local educators work with the industry to equip the territory’s human resources with the necessary skills to ensure that the industry’s growing recruitment needs are met. While many students already study for a career in the trust industry or as an attorney, not many have considered or even know about the opportunities in the insolvency industry. A legal or accountancy background is the usual route into the insolvency industry but specialist qualifications are also available. Experienced insolvency professionals are in high demand, particularly in times of an economic recession but also when there is growth.

BVI Business & Lifestyles

BVI BUSINESS & LIFESTYLES

British Virgin Islands

GAME CHANGE ar e we aware an d are we m otivated? colin o’neal

T 50

here is a recurring dream that I have heard of. It is a student’s worst nightmare. In the dream the student has spent the night studying for an exam, say a Spanish exam. He has learned all the grammar and vocabulary to master the exam. He shows up for the exam the next morning and finds that the day’s exam is in physics. His problem is that no mastery of Spanish is going to help him in the least. Despite not being particularly inclined to ascribing meaning to dreams and being well past twenty years beyond my last exam, it is hard not to make some connection to real life.

The lesson of the nightmare is that despite how well we have prepared ourselves, if there is a c o m p l e t e l y u n f a m i l i a r s e t o f circumstances, no amount of preparation for the old reality is going to help. What we must deal with is game change. The lesson of the dream holds just as true for nations as it does for individuals. There have been changes in the wider global economy and the relative places of the various players as the nature of economic and political relationships have changed as a result of the Global economic recession and the rise of new global powers.

n relation to the British Virgin Islands, the issue is whether we are sufficiently aware of the game change and motivated to formulate social and economic policy to position the British Virgin Islands to compete in the new dispensation.

Global changes affecting the British Virgin Islands did not begin with the recession in 2008. Changes to the tourism and financial services industries and markets have been ongoing, but the impact had not been acute until the global economic downturn. The envied position in Caribbean tourism enjoyed by the British Virgin Islands for many years can no longer be taken for granted particularly as internal sectoral policies continue to be worked out. Likewise in financial services, new players in the Far East and “onshore” in Europe, together with an increasingly restrictive regulatory environment make for major challenges to hold place much less advance. What is certain is that new challenges will have to be met with fewer resources. Warnings about the delicate state of the several British Overseas Territories’ economies were sounded early in 2010. When Colin Roberts, the Foreign and Commonwealth Office´s (FCO) Director for Overseas Territories visited the British Virgin Islands in January 2010 he warned of “flashing red lights” in the British Virgin Islands economy and warned of structural adjustments which needed to be made – limiting borrowing, reducing expenditure and raising revenue. The Roberts warning followed the widely anticipated report by Michael Foot of the Independent Review of British Offshore Financial Centres (the “Foot Report”) published in October 2009 which found, amongst other things: 1. One way of reducing risks is to ensure that action is taken to improve the resilience of each jurisdiction’s economy during periods of economic stress. 2. The negative impact on public revenues has so far been greatest in those jurisdictions where tourism and construction (which is often closely related to tourism) represent a significant proportion of the economy. In some cases, this has combined with a downturn in a jurisdiction’s respective financial sector niche. 3. Decisions taken by some of the Overseas Territories to use increased revenues to raise current and capital public spending, sometimes combined with insufficient attention to data quality and the absence of robust medium-term planning, has left local governments facing difficult short-term choices to restore the public finances. This is clearly illustrated by recent events in the Cayman Islands.1

INTERNATIONAL BUSINESS

Are We Out of the Woods

Yet?

It is suggested that prudent observers of the economic and political scene would interpret the Foot Report and the Roberts statement as a call for a new approach to policy for times of economic uncertainty. However, some have taken comfort in Mr. Roberts’ suggestion that there are other Overseas Territories in worse economic shape than we are, and while this is undoubtedly true and much credit must be given to the local leadership for their response to the challenges faced by the Overseas Territories, complacency is our major enemy.

Even if a double-dip or

Are we out of the woods yet?

second recession strictly

The Wall Street Journal’s MarketWatch website on September 22, 2010 ran a story indicating that “the U.S. recession that began in December 2007 ended in June 2009, making the 18-month slump the longest since the Great Depression, according to the National Bureau of Economic Research (NBER).” It further stated that “the NBER also cautioned that its findings bear no relation to the current state of the economy and do not represent a forecast about the future. If another downturn occurs anytime soon, the NBER said, it would constitute a separate recession.”

defined is averted, there is 52

The Foot Report also indicated the possibility that the recovery may include a paradigm shift in financial services as “many large financial services firms have yet to implement the results of strategic reviews of their future geographical ‘footprint’ and product ranges”. The Report also stated that the global downturn has provided a sharp reminder of the need for some of the jurisdictions to take urgent measures to ensure that robust economic planning and fiscal control measures are in place and observed.2

real evidence that a new reality is emerging, and this new reality is characterized by a jobless recovery in the United States caused by increased use of technology and the loss of manufacturing jobs to emerging economies. This means that the American consumer will not be the same driver for growth in the United States and most important for countries such as the British Virgin Islands – the US consumer may travel less or may spend less for their travel in the Caribbean.

The issue of whether the economy is in recession is both academic and real. The traditional definition of a recession is two consecutive quarters of a shrinking gross domestic product (GDP). The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” While real-time economic statistics are hard to come by in the British Virgin Islands, it is widely accepted by both policy-makers and the man in the street that the economy of the British Virgin Islands has contracted and continues to be sluggish. This assessment applies to financial services and to tourism, the twin pillars of the British Virgin Islands economy. Even without current statistics at hand, it is safe to state that the British Virgin Islands continues to face financial challenges as it has been reported by official channels that declining tourism arrivals and decreased revenue growth in financial services have given rise to severe revenue shortfalls which have affected the ability of the British Virgin Islands government to undertake and complete capital projects such as the new Peebles Hospital, sewerage schemes, road works, ports development, not to mention routine maintenance on existing infrastructure. 1 Foot Report p. 8 2 Foot Report p. 8 3 International Monetary Fund World Economic Outlook p. xii 4 Economic Survey of Latin America and the Caribbean 2009-2010 5 KPMG – Island economies and their infrastructure: An outlook 2010 and beyond 6 McKinsey Quarterly December 2009: The right way to invest in infrastructure.

Predictions for a global recovery have been mixed. For example, the World Economic Outlook of the International Monetary Fund published in April 2009 predicted3 that global output would reemerge in 2010 but qualified it by stating that the current outlook was exceptionally uncertain, with risks weighted to the downside. In the Caribbean, the latest Economic Survey of Latin America and the Caribbean (“ECLAC”) forecasts a slight recovery in 2010 of 0.9% overall growth, this rate is one third of that expected for Central America and one sixth of that expected for South America. According to this survey, Eastern Caribbean and the Bahamas are forecast to experience further economic contraction in 2010.4 At the more extreme end of the prediction spectrum, there are increasing numbers of economists, including Nouriel Roubini who predicted the subprime mortgage crisis in the United States, who warn of the possibility of a double-dip recession. Even if a double-dip or second recession strictly defined is averted, there is real evidence that a new reality is emerging, and this new reality is characterized by a jobless recovery in the United States caused by increased use of technology and the loss of manufacturing jobs to emerging economies. This means that the American consumer will not be the same driver for growth in the United States and most important for countries such as the British Virgin Islands – the US consumer may travel less or may spend less for their travel in the Caribbean.

Further, the impact of global economic “flatteners” to use the phraseology of Tom Friedman in his book “The World is Flat’ are having significant impacts in changing the rules of the game for major economies and no less so for micro-economies such as the British Virgin Islands. The most important of these global flatteners include the economic threat from jobs offshoring which is the relocation of a company’s manufacturing or other processes to a foreign land to take advantage of less costly operations there – a process already underway in key financial services sector jobs in the British Virgin Islands. Another relevant flattener which Friedman called “the Steroids” is the increasing ubiquity of low cost technology such as personal computers, mobile phones, iPods, personal digital assistants, instant messaging, and Voice over Internet Protocol which enable work (e.g. architecture, accounting, word processing, medical diagnostics) to be done at high speed and low cost from anywhere in the world. In tourism, the rise of new regional players in the Caribbean tourism market pose similar challenges, particularly the emergence of Cuba as a favored destination by package tourists from Europe and North America (Canada at present, but inevitably soon to include US tourists), the further intensive development of the so-called “Mayan Riviera” in Yucatán, Mexico as a cruise and overnight destination as witnessed the development of new ports and resorts, the development of ports and cruise resorts in Jamaica, St. Lucia and Barbados.

“...global economic “flatteners”... are having significant impacts in changing the rules of the game for major economies and no less so for micro-economies such as the British Virgin Islands.”

BVI BUSINESS & LIFESTYLES

Private Sector: Participants or Observers?

This new set of circumstances may represent what has been described as the “new normal” – the rapidly changing regional and global economic environment in which the British Virgin Islands is placed and in which it must compete. The important question to be asked is whether the British Virgin Islands is better equipped to compete in a changed environment than it was in the familiar situation that has now closed.

How Does the BVI Deal With the

“NEW

NORMAL”? The local government, taking a cue from the FCO, announced several cost control measures such as tightening up on telephone use, travel limitations, and others. However, in their totality, these do not amount to very significant expenditure reducing measures, while on the other hand, in the weeks and months following this visit, several new projects and initiatives have been announced. While the merits of each individual project may be debated, it is difficult to discern the strategic planning and prioritization behind the decisions to proceed on a given project. The need for a new approach to goal setting is required in the new normal. The cost of poorly planned and executed projects are costs that developing countries can no longer afford particularly as they adjust to the new normal. A recent report by KPMG5 underscored the difficulty which small island economies have in prioritizing, planning, financing and executing major infrastructure projects, and like the Foot Report, the KPMG report recommended a strategic approach to proper policy development and planning. The new normal is not being paid sufficient attention in the British Virgin Islands, due in large part to the pervasive belief in British Virgin Islands exceptionalism; the perception that the country and society is unusual or extraordinary in some way and thus does not conform to normal rules or general principles.

Further, in the British Virgin Islands it is the general belief that the solution for our problems must come from government. Both current political parties propose manifestos that proclaim their priorities, goals and aspirations. However, political parties and government can do only so much. The engine for growth in any economy has been and should be the private sector. The activities of enterprise provide the wherewithal for the government to carry out the functions that are properly its domain – education, security, utilities and major infrastructure. In fact, I suggest that it is axiomatic that activity in private sector is the primary revenue generator in the economy. Can this stakeholder continue to thrive if its voice is not heard at the policy table? The answer is “No”. Forward-thinking governments around the world have recognized this. No government can realize its development goals without the input of the primary stakeholders in the economy. However, the private sector in the British Virgin Islands has had little input in the formulation of public policy in the British Virgin Islands, and one should hasten to add that what is being referred to here is the private sector in broad terms, as opposed to private interest. Part of the difficulty in policy making in a small polity is that national priorities are too often overshadowed by narrow private local interests. What is being advocated here is for private enterprise to be given its proper voice in the development of public policy? A couple examples might illustrate.

In Bermuda, a joint government/ opposition/private sector team called “BermudaFirst” was formed to analyze that country’s socioeconomic situation and produce a strategic plan for the continuance and improvement of Bermuda’s economic performance. What is most instructive about the success of the exercise is the depth of consultation with all sectors of business and civil society, ensuring broad consensus and buy-in to the plan.

In the European Union, access to limited EU Structural Funds requires each eligible country to formulate a National Strategic Reference Framework (NSRF) which establishes the main priorities for spending the EU Structural Funds a Member State receives within a specified period to ensure that EU funds be applied to bring lagging countries and regions to minimum development standards. As in the case of Bermuda, the NSRF requires extensive public/private consultation to ensure that the primary stakeholders in economic growth, which is to say, private enterprise and private capital, have complete buy-in to the policies formulated by government.

Where Should the Focus of Public Investment Then Lie? There are many competing priorities. The private sector is entitled to have input in these priorities and there will be no buy-in and little chance for long term economic success if the policy behind public investment fails to take into account the needs of the private sector. What the private sector needs is for the government to provide the capacity for building business. This is basic and must be general as opposed to focused on enabling one special interest economic/ political group or the other such group. What governments must focus on are those matters which build such capacity, and planners almost universally agree that investment in infrastructure is perhaps the primary means of achieving this, infrastructure investment being critical both in terms of providing stimulus to the economy moving from recession to recovery and providing the platform for long term growth. A recent article in McKinsey Quarterly 6 underscores this point that monies wisely spent today on infrastructure can be shown to support long-term economic growth.

We must also focus on the following; 1. I mprove education and skills training to address the offshoring threat. The high cost paid for low skilled labour is the main driver of offshoring. If the British Virgin Islands fails to address this deficit, quality jobs will leave the British Virgin Islands for other shores. 2. Improve basic utilities infrastructure. The reliability and stability of water and electricity supplies has a direct correlation to the cost of doing business. Time lost to power outages and the costs of backup power supplies are overheads which impact the competitiveness of business. 3. Revive tourism in the British Virgin Islands by: a. Implementing a tourism policy. This must put everything on the table with no sacred cows and each sector being given an equal voice in the debate. b. Investing in tourism amenities on Tortola, the main cruise port in the British Virgin Islands. c. Improve training to raise service standards. 4. Improve accessibility to the British Virgin Islands by: a. Improving airlift. The present capacity of the airport cannot provide the airlift that is required to support growth in tourism or business travel. b. Expanding airport on Tortola to handle larger aircraft and a greater number of passengers. 5. Strengthen the British Virgin Islandsâ&#x20AC;&#x2122; position in financial services by: a. Continuously working with the regulatory body, the Financial Services Commission to strike the right balance between prudent regulation and competitive nimbleness. b. Increase public awareness of financial services and its importance to the British Virgin Islands. The social and political environment in which financial services operates must be made more conducive to growth. c. Develop a human resources awareness in key Government departments of the importance of efficiency in importation of skilled labour where it is needed.

In the examples referred to above, the Bermuda approach and that of member countries of the EU seeking to access Structural Funds, both result in a policy consensus which places great emphasis on the function of infrastructure development as the key capacity-builder for socio-economic advancement. It is suggested that particularly in times of economic uncertainty, this, together with education must be the primary focus of public investment. And this policy must be informed by the experience, business purpose and planning of the private sector. Major infrastructure is not the only area of focus for the British Virgin Islands.

6. Provide incentives of business startups in the form of tax holidays or reduction of fees and simplification of the licensing process. 7. Establish a labour policy characterized by fairness which balances protection of British Virgin Islanders in the workforce with the need to import labour to meet current and future needs. 8. Address socioeconomic issues leading to the displacement of young persons and the growth in crime and anti-social behaviour.

The forgoing are matters that the business community confronts daily. Our voices need to be heard in the formulation of policy solutions to these matters. If the private sector is excluded from the necessary process, or if our views are not taken into account, it will be game change and â&#x20AC;&#x153;GAME OVERâ&#x20AC;?.

BVI BUSINESS & LIFESTYLES

steve goodman

However, that is exactly how businesses have had to run their applications software - internally, on their own networks, purchasing their own hardware and software, which then had to be maintained by their own costly IT departments – that is until the advent of Cloud Computing. “If a company has a need for an IT service, it would typically purchase computer equipment and software to provide that service within its own premises,” explains Kieren Williamson, Systems Architect with IT Support, LTD, based in Tortola. “Cloud computing, sometimes referred to as Software as a Service (SaaS) is having that service provided by a provider somewhere on the internet.” Cloud Computing is also sometimes referred to as Utility Computing, because it follows that model of getting electricity or phone service from the Utility Company. With a Cloud Computing solution a business does not have to invest in servers, or costly IT infrastructure, or even software licenses – you merely pay for the services you use. The term “cloud” developed because the icon of a “cloud” was traditionally used on flowcharts to indicate the Internet – and Cloud Computing services are delivered as shared data over the web. In a nutshell, there are basically three things that distinguish cloud service from traditional servers or hosting: 1. Cloud Computing is an “on-demand” service, subscribers pay for only what they use. 2. Cloud Computing is flexible - a subscriber can use as much or as little of any given service at any given time.

3. Cloud Computing is fully managed by the provider – the user needs no other infrastructure other than a PC and Internet access.

Think back for a moment to the days before software applications on computer networks were the norm for running a business. Communications were handled by telephone, and accounting, HR and other business operations required the use of any number of “business machines.” Now imagine if to do all that, each individual business needed to generate its own electricity, have its own staff of international telephone operators, and had to wire-up its own telecommunications network, instead of receiving those services from the Phone Company or public utility. That would have been horribly inefficient. In fact, it would have brought most businesses to a complete standstill.

Large-scale improvements in virtualisation technology and innovation in distributed computing, as well as increased broadband capabilities, coupled with belt-tightening due to a soft economy, have ramped-up interest in cloud computing worldwide and here in The BVI. “There are just so many advantages to businesses of all sizes,” says Williamson. As no hardware or software need to be purchased, the initial capital expenditure is almost zero. This is great for small companies and start ups in particular, where cash is always tight in the first few years. Many companies never outgrow this model because of its simplicity and cost effectiveness. Even greater savings are then realised on operating costs. There is no need to invest time in upgrades, maintenance or licensing issues. The service just works and you never need to worry about it. The service provider is hosting thousands of user accounts and you achieve great economies of scale with this type of arrangement.” In fact, a study released in April by the Brookings Intuition in the U.S. found that organisations could reduce their IT expenditures by anywhere from 25 to 50% by adopting cloud computing.

Simply A Better Way

Cloud computing is simply a better way to run any business. Rather than running your apps internally, they exist on a shared data centre, which you and authorised employees can access as needed. To use any app within the cloud, simply requires login, customisation to your business and off you go – it is just that simple Many businesses, and especially small ones, are running all of the typical business applications in the cloud, such as HR, Customer Relations Management (CRM), accounting, enterprise management, and many other custom made apps. Medical and health care facilities are even using clouds for Electronic Medical Records (EMR) and other Healthcare IT (HIT) applications. Unlike traditional licensed business software, cloud based applications can be up and accessible within a few days. Obviously, cloud computing solutions cost less money, making them particularly attractive to small businesses. And, despite what one might think, cloud apps are actually more secure and reliable then traditional software apps – and they are scalable, and real-time upgradeable, so you always know you are getting the most up to-do-date version of the application. Cloud computing permits more creative and efficient use of valuable IT resources, which in turn will allow a company to deploy innovative apps to take on new projects, and enhance customer service. Cloud computing solutions can be easily accessed remotely, with the use of secure internet access. And since cloud computing reduces the need for hardware onsite, and maximizes resource utilization, they even reduce your company’s carbon footprint – cloud computing is a green technology! Cloud computing is one of those simple ideas that can impact your business in very big ways.

These Clouds Are Welcome

One might think that the last thing a tropical paradise such as The BVI needs to improve its business climate are clouds – but local businesses are finding these “clouds” quite welcome. “Cloud computing, like most things on the Internet, levels the playing field for business,” says IT Support’s Williamson. “It means that a small on Island business can utilise the same IT tools at the same low cost as far bigger companies based elsewhere in the world which means they are less restricted by the limited resources that are on Island.”

Does Size Matter?

In the second of the biannual Evans Cloud Development Survey 2010, which was released in July, 40 % of the over 400 responding software developers named Google as the number one public cloud provider, and almost 30% pointed to IBM as the top private cloud. Some of the other names puffing up some rather large clouds, are Amazon and Yahoo, and there are a few other large aggregators you may not know, such as Salesforce.com, and Akamai Technologies, but does size really matter when it comes to selecting a cloud provider? Not necessarily. Size and name recognition may not be as important in the future of cloud computing as reliability. For example back in February 2008 Amazon S3 had an outage that left companies across the globe without access to their stored data for nearly three hours. Similarly, there is a perception that only small businesses really benefit from the advantages offered by cloud computing. This is another cloud computing size myth according to the experts.

Thomas Bittman, chief of research, infrastructure/operations, for U.S. based global IT provider Gartner, Inc, says, “While cloud computing’s cost-effective model appeals to small businesses, large enterprises with well-crafted SLAs [Service Level Agreements] and mature IT teams also stand to benefit.” According to Williamson when looking for a cloud provider, “As with any IT decision, get some good advice from a professional IT company. The most important service your IT people supply you with is good advice. Bad advice will lead you down the wrong technology path, and leave your business with a high operating cost. A good supplier will provide pre-sales advice for free, and will help to analyze the needs of your business. They should be able to explain to you what your choices are in a non-technical, business orientated way.”

Gathering Clouds

Undoubtedly the cloud computing model will continue to gather steam over the next decade. The expanding concept of virtual data centres to store information, coupled with increasing availability of multiple applications on a single platform, will continue to attract more and more organisations in The BVI and the world-over to cloud computing services. In its recently released report “Global Cloud Computing Service Market Outlook 2014”, TechSci Research foresees unprecedented growth for the global cloud computing services market. The report speculates that by 2014 the global cloud computer market will double from its estimated US$20 billion in 2009. “The trend is,” relates Williamson, “that more and more services are going that way. Email, booking systems, payroll, accounting programs, CRM, even office applications like word processors and spread sheets. 57 You name it, there is probably a cloud service provider for it.” Yet he admits that challenges remain, especially in places such as The BVI. “By far the biggest challenge for The BVI in embracing this new technology has been the Internet connections. Internet links are often slow and intermittent in the BVI. A business cannot afford to be disconnected from their IT systems. Not connected means not in business; which includes trying to provide the most reliable cloud service for the businesses on The Islands despite these challenges.”

BVI BUSINESS & LIFESTYLES

SUNNY CARIBBEE IT STARTED WITH

ONE SPICE

kaletha henry

good product is often as strong as the people backing it; a great product can sell itself. Take for instance, the most eye-popping, progressive brands lining the shelves of boutiques, supermarkets and department stores. Despite their positioning or financial backing thousands struggle to sell, while others successfully fly into consumer’s hands based on their packaging, name recognition or solid reputation. Local spice company and art gallery, Sunny Caribbee, has been effective in the areas of marketing, advertising and word of mouth; they’re equally successful at being simple. Their store occupies 12,000 square feet in an unpretentious, wooden structure centered on Main Street. During the peak tourism season, visitors on the prowl for a piece of island authenticity join local passersby in shopping the company’s large collection of spices, condiments and loose teas. Next to the alcove of herbs and seasonings lies another room filled with colorful artwork, beauty products and an assortment of knick-knacks. 58

Launching a business may be tricky, but Sunny Caribbee has grown from offering four products to selling between 300-400 items. Aside from producing ingredients for the brew or the broil, Sunny Caribbee sells commissioned Caribbean inspired artwork, sculptures, metals, cosmetics, jewelry and a small selection of children’s furniture. By staying innovative and open abreast of change, Gregg and his family have put Sunny Caribbee Spice Company and Art Gallery on the map. Their products sit on dining room tables, in the windows of storefronts, inside refrigerators, and on coffee tables at home and abroad.

Selecting a Successor The next person groomed to lead the family business is Assistant General Manager and shareholder, Dame Peters. The young BVIslander joined the company nine years ago as an office manager and steadily contributed his administrative skills. “Dame has made wonderful changes in our policies and personnel,” Mr. Gunter said. “Dame is the future of Sunny Caribbee. He has brought a real human element to the business.” Gregory Gunter, General Manager and Dame Peters, Assistant General Manager Mr. Peters is not kin to Mr. Gunter, but he’s looked upon like a son. In him, Mr. Gunter sees a bright man that is capable of taking unny Caribbee is not a major corporation, nor is it part of a the business in the direction it needs to go. “I’ve learned in so many different ways. I’ve learned quite a bit of Caribbean conglomerate; its moniker represents an establishment business management and human resources management,” Mr. Peters said. owned and operated by the Gunter family; father Robert, mother Daughter Jocelyn Gunter is also being trained to understand the business and Susan, and son Gregory. currently works in sales at the store’s West End location. The Gunter family started their company 28 years ago in the lower floor of the now defunct Cozy Inn restaurant, which was located meters from the roundabout in the capital of Road Town. Proprietor Raffy Stoutt took an Importers and Exporters interest in the Gunter’s idea to create and sell unique spices, and soon Mr. and Sunny Caribbee’s West End store was opened in middle of the recession. Mrs. Gunter opened a small business. Yes, it was a risk, but Mr. Gunter said it has a lot of potential to provide the In the beginning, the couple capitalized on their gastric knowledge. growth they seek. Fortitude is needed to transform an idea into a profitable 59 Mrs. Gunter – hailed as an exquisite chef by her son – developed the company’s business and without knowing the hurdle it could seem like a piece of cake. first spice: an herb pepper blend, which continues to be the number one seller For small businesses the hurdles can come in streams. to this day. Robert Gunter worked diligently with his wife to produce more Early in their business development the Gunter family was posed with West Indian seasonings, and eventually created three additional flavors. shipping challenges. On occasions shipments failed to arrive in tact, cargo sank “My father was a splendid businessman,” Mr. Gunter said. in transport, and delivered goods were incomplete. Goods were also stolen or Entrepreneurship runs in the Gunter family. After graduating from Florida broken due to improper handling. International University with a degree in hotel and restaurant management, The ability to source reliable suppliers was another roadblock for the Gregg paid his dues working in restaurants before opening his own in Florida. entrepreneurs. In some instances merchandise and samples would arrive, but the Years later he returned to the BVI to help his parents operate Sunny quality didn’t meet their expectations. Caribbee using an approach whereby each could lend their expertise in The one area in which they managed to be lucky was in staffing; a number of growing the business into new markets. his employees have been with the company for a long time. One employee has The eye behind the style and aesthetics of their brand belongs to worked the last 26 years. Mr. Gunter acknowledged that his current challenge is Mrs. Gunter, a graphic artist who collaborated with her husband Robert to the economy. “Lord knows where we’re headed. The last 18 months have been create a signature look and packaging. The family also ran the day-to-day very difficult,” Mr. Gunter said. Knowing how vital his staff needs to remain operations from administrative duties to accounting, design and promotions, employed, Mr. Gunter was resilient in keeping them on board through the and overall management. fragile economy, but his biggest concern over the next 12 months is sales. “Our business relies on the tourism industry. If there’s any problem we feel the force; the brunt of the impact,” Mr. Peters said. Though tourism is important, Mr. Gunter hasn’t ignored the consumer’s close by: local cooks, the charter yacht industry, and restaurateurs. He has also worked diligently to expand his wholesale and retail shops, and has tapped into offering his products online. For now, the majority of his online shoppers are Americans, but they’ve filled orders for customers living in Spain and the United Kingdom. Mr. Gunter and Mr. Peters are developing strategies to stay afloat and ahead in the market. To keep pace with the rapid advancement in technology, they’ve entered Sunny Caribbee into the hemisphere of social marketing. “It has proven to work well. The harder we work on our website, the more business we’ll do,” Mr. Gunter said. Consideration is on the table to utilize some of their older strategies as well, but the Internet marketing both locally and globally seems to be their focus. Mr. Gunter hopes to see a change in costs and import duties BVI businesses are charged--and he is on the fast track with decision makers to try and make a difference for Sunny Caribbee and other businesses to continue to succeed.

BVI BUSINESS & LIFESTYLES

What was the BVI like when you started practising here?

dr. j.s. archibald, qc

50 years of law russell harrigan and freeman rogers

r. J.S. Archibald, QC, has been practising law for 50 years. In 1968, four years after coming to the Virgin Islands to serve as a Crown attorney, he started a firm here. His wife Inez, who is now the territoryâ&#x20AC;&#x2122;s deputy governor, was his first secretary. In an interview with Business BVI, Dr. Archibald looks back over his firmâ&#x20AC;&#x2122;s humble beginnings and the dramatic changes he has seen here since then.

Dr.JSA,QC First of all, you had to look at the fact that you had a small

population of under 10,000. Secondly, you had an Executive Council with a Legislative Council, and the administrator of the day, he was not called governor yet, was the person who presided over the Executive Council and also presided over the Legislative Council, because we did not yet have a speaker. He was very powerful indeed. I was a member of both the Executive Council and the Legislative Council. Unfortunately, I am the only living survivor of the Executive and Legislative councils of 1964. There was one law officer of the government, the Crown attorney, and he served as a commissioner in the absence of a judge from the island. He dealt with all the matters which a judge could deal with in chambers. He had no criminal jurisdiction, however. That person also served as the only magistrate in the country. So there was an inherent conflict. He, for example, would hear a preliminary inquiry into an indictable charge; find that the person was fit to be tried by a jury; and send him on to be tried, and then go and prosecute him. And in the event that he was convicted and the administrator wanted to exercise the power of mercy, then the Crown attorney, in the absence of a mercy committee, would be adviser to the administrator. So there was powerful conflict. That pulled out all the integrity in the person who held the job. I discovered something important: In 1964, December the first, I was appointed to deputise the administrator and wanted to give a party at Government House for members of the Executive Council and Legislative Council. I was looking around for university students of the Virgin Islands or Virgin Islands professionals. There was not a single Virgin Islander in the BVI in 1964 December who held either a university degree or a profession. Those who held such academic or professional qualifications and were Virgin Islanders lived abroad and stayed abroad. Today, the Virgin Islands have more professionals and academically qualified people per hundred than any other country in the entire archipelago, from Cuba in the west to Guyana in the south, of 45 million people. So that is a complete and absolute change. Dramatic.

What was the business environment like in 1964 when you started out?

Dr.JSA,QC

The Virgin Islander then was an entrepreneur. He worked the farm, he worked his business, he doubled up, and he was a saver. There was no bank in this country, and so he saved his money or sent it down to St. Thomas to the bank there. The Virgin Islander was always a person who was resourceful and used what he had and innovated. He sent his children abroad for education, for higher learning, but the high school here was always, even then, of a superior standard. It produced some of the brightest men the Caribbean has ever seen.

Let’s switch a little bit to the early days of the firm: If I can put it in Obama’s way, what gave you the audacity to establish a law practice?

Dr.JSA,QC I will not take all the credit. I was sitting in the kitchen of my

mother-in-law. Inez was then very young and we had at the time one child, and in that kitchen the question arose as to what I would do now that I had left the government, and in a discussion between Inez, her mother and her father, we discussed the possibility of my opening a law firm. And at the same time, I had in my hand an offer to become attorney general of St. Vincent from the chief justice. And I pondered it then with them, and they persuaded me: “Look, if you come and open up a practice here, we will support you.” And I said, “Well, everything I owned and brought from St. Kitts is yet in big boxes, not uncovered.” And we turned it around and said we’ll do two things: I’d start a law practice and Inez and I would build a house. And Mr. And Mrs. Hodge gave us a room in which to live with our baby daughter. And at the same time, Chink Evans completed a building on Main Street and gave me two rooms at the top for $150 a month. And Sir Olva Georges came over to me from across the road and said it was the largest rent payable then in the Virgin Islands and he hoped I would get business to justify it. So here was my family encouraging me, giving me support, giving me rent-free accommodations, and Inez was going to be the first secretary in the chambers. That gave me tremendous encouragement. There were at that time a number of lawyers in the Virgin Islands, not more than 12. Many of them were English, and the only local one was McWelling Todman. It was said that Harold Harney was a Virgin Islander, too, but he wasn’t treated as such; he wasn’t looked upon as such. He was looked upon as Antiguan. But Mac Todman had just recently left the Federation, which had broken up in 1962, had qualified as a lawyer in England, and had come back and set up his practice in Main Street Road Town in a small hut, I would call it. So it was good. It was good virgin territory, and I began in June and I sat in my chambers for five days and nobody came up the steps. And I kept reading books, until one day Mose Malone came in. And Mose Malone was my first client. And Mose Malone gave me a brief to do some work, and to give him some professional advice, and I did not know what to charge him. I suddenly realised I had no experience whatsoever in fees. And Mose Malone gave me a deposit of $50. When I told Mac Todman that I got a deposit of $50, he put his hands in the air and said, “Archie, you’re a very lucky, man. My deposit’s at $20 and $10.”

Tell us a little bit about how the firm has evolved.

Dr.JSA,QC The firm began by representing two distinct groups of people. The members of the Legislative and Executive councils, whom I knew, brought their private work to me, from Lavity Stoutt in the west to T.B. Lettsome in the east. Olva Georges, Jose O’Neal: They all gave me work. And then the man on the street, the woman on the street, came up my steps and gave me work. And then two events occurred which set me moving. One was a lady by the name of Francis who had a land case that we took to the High Court, and against all the odds we won. And she was given land, which she had been deprived of on Main Street.

And secondly: Our office was then very spartan, and I was next door to another building on Main Street where Peter Haycraft had set up some of his business. And Peter in his building and I in my building used to sweep out and clean up our respective offices early in the morning at seven o’clock. And one morning while I was sweeping with a cap on to keep the dust from my head, a tall American gentleman walked up my steps in slippers and long socks and short pants, and in a beaming voice said to me, “Are these the chambers of Mr. Joseph Archibald?” And with the broom in my hand I told him, “Yes, these are the chambers of Mr. Joseph Archibald.” And he said, “Well, when will he be in?” And I said, “He will be in at nine o’clock.” He said, “Can I see him at nine o’clock?” I said, “Yes, you can see him at nine o’clock.” At that stage, I got a phone call to my wife at home and said, “Do you know who’s coming to see me at nine o’clock? Percy Chubb. He said his name is Percy Chubb.” But she knew him from her banking days at Virgin Islands National Bank. And she said, “Look, you cannot allow Percy Chubb to come into our chambers and see it has no furniture. So we called Merit Herbert and Dr. Osborne, told them the story, they were friends, and they carried out almost a military operation. Both Dr. Osborne and Merritt Herbert ensured that by half past eight my chambers were fully furnished with the best furniture that they had: desks, chairs, everything, including a rack to put a jacket on, and a hat. And at nine o’clock when Percy Chubb came back he met Inez sitting in the outer room, the secretary. He brought his wife with him, and I heard his beaming voice say, “Ah, you must be the first person at work today.” And she said, “Yes, but my husband is also here.” So he introduced himself as Mr. Percy Chubb of Peter Island, and then he came to see me. He looked straight at me. This time I had no cap: I was dressed in jacket and tie. And he said, “You’ve got a very good janitor. He said you’d be here at nine o’clock, and you are here at nine o’clock.” Now, I never disabused his mind as to who was the janitor and who was the lawyer. And thirdly, in 1969, during the struggles over Wickhams Cay, there was great agitation in the country. There ensued 61 a very bitter struggle one afternoon between the police force and a group of nine young men. And the police force suffered severe injuries: head fractures, body fractures. The hospital was filled with wounded police officers. And in the trials that ensued, in the indictment, I represented all of the men. There were 21 counts in the indictment, and I achieved 21 verdicts of not guilty and they all went home. From the criminal law point of view, these chambers have never looked back. Our defence was very simple: We never denied the injuries; what we said was that in the twilight of evening the police did not properly identify who injured them.

Over the last year you’ve been doing quite a bit in terms of physical work and other changes as you prepare for the future. Tell us a little bit about those changes.

Dr.JSA,QC We are at the moment restructuring and expanding these chambers. You will notice that in this three-storey building, the first floor had for many years been the classical piano studio of my daughter, Pat. Pat is now qualified as a barrister at law: She was called to the bar of Lincoln’s Inn in England on the 27th of July this year, and will soon be admitted to practice here and she’ll be joining this firm. But she has readily and willingly, and, I would think, admirably, given up that room for the expansion of this law firm. And on the first floor there will be a new banking section by the end of October this year. It has nine rooms, and that will be purely for banking. As you know, banking is our main work. Most people who hear our reputation in criminal law think that criminal law is our main work, but only about 15 percent of our work, at best, is criminal law. We are essentially and first a commercial law firm and a constitutional law firm. We work in 12 countries in the Caribbean, and we’ll continue to do that.

BVI BUSINESS & LIFESTYLES

As you come to the end of this phase of the law firm’s history and you look at where the profession is in the BVI, are there some areas that you think demand some attention over the next five or ten years to continue to have a strong judicial foundation?

Dr.JSA,QC The environment. Let’s not give ourselves any illusions about

it. If we do not take care of the environment in the British Virgin Islands, that failure will destroy all of us and our businesses. Governor Pearey spoke about it in his parting speech. The Constitution of the Virgin Islands gives us a human right claim on the environment. It is a unique provision. And a case has just gone through the High Court where the court found that the minister of the day did not act properly in granting certain facilities. And the aim was to preserve the environment. I read an article in the press yesterday about Josiahs Bay left to suffer because the environment had not been taken care of. It is because the environment has not been properly taken care of why the floods had such a great way against us in the past week or so. It is going to cost us multi millions and grief if we do not take care of the environment. People will lose their lives in the country by floods. We’re going to lose our beaches, etcetera, unless the government takes a strong hand in enforcement of the laws that exist. It is as serious as taking care of the criminal matters. It is a very, very grave injustice to the Virgin Islands itself for us to abandon, as we are now abandoning, the environment. And therefore, to the extent that I could see that this law firm takes some part in the legal preservation of the environment of the Virgin Islands, these chambers will do so. That is not a matter of sentiment. This is a matter of reality, and it’s urgent.

So you think that Hurricane Earl and the rains of the last month or so have pushed the issue to the forefront?

Dr.JSA,QC Of course. And let’s face it: The law relating to planning is

inadequate in its enforcement. When a person gets an approval to build a house, there is no provision to supervise the cutting of the foundation. And water courses are changed. And people are putting septic tanks in areas and in ways where the effluent leaks out into the seawater and into the streets, etcetera. The enforcement of the laws needs to be revised and updated. And you need more trained people as inspectors to enforce the laws. Otherwise we all are going to come to grief. We are fortunate the rains did not continue. And it forced the governor to do the right thing and to take charge under a short state of emergency, which could be avoided if we generally begin now to take care of the environment.

“If you want to see what an international standard is like for a commercial court, you can walk into the court in New York or into the court in London or into the court in Tortola. You would meet the same standard, the same efficiency.”

If you were asked to give the new Commercial Court a grade since its inception, what would you give it?

Dr.JSA,QC I give it A-plus, and I’ll tell you why. I have been practising law for 50 years, and I have practised law in the Caribbean for those 50 years. I have practised in all of the courts in the Caribbean over those 50 years, and I have seen the efficiency of judges in courts. I have seen none better than the Commercial Court. I give great credit to the Commercial Court. It has an international standard. If you want to see what an international standard is like for a commercial court, you can walk into the court in New York or into the court in London or into the court in Tortola. You would meet the same standard, the same efficiency. We can do wondrous things in that court: We can hear evidence from a witness standing up in a room in Russia or China or Australia. We have no backlog in that court at all. That court sits every day. It opens on public holidays. When push comes to shove, it will sit on Sunday. It will deal with any international case or local case, anything that qualifies. I’m proud of it. And it has pushed the Virgin Islands at a point where it is respected. The Virgin Islands as a country is respected worldwide in the realm of its legal system and its laws and its judicial work and its courts.

BVI BUSINESS & LIFESTYLES

“...you’re not in anybody’s pocket. If he comes with an expertise from which we can learn... learn from it... we’ve got to learn fast to come into the ultra-modern world. This country should fear no foreigner.”

When we talked to you four years ago, one of the comments you made was that the BVI has never been a political country; it’s an economic country. How has the economy changed over the life of this law firm?

Dr.JSA,QC

The economy has changed radically. In the 1960s and 70s, the thrust of activity came from the foreign multimillionaire. But our Virgin Islands people have learned how to do just what they did. And today the real thrust is coming from the Virgin Islander. The local man, the local woman, the youngster, has stepped up to the plate and is batting. And in this recession, he has not gone down. He’s taken a fall, but he’s not out. He’s coming back up. Look at this recession contrasted to the one in 1970. All the local business is safe. They’ve taken a punch and they’re bobbing and weaving, but they’re surviving.

Where do you see the economy going now, particularly coming out of the last two years of downturn?

Dr.JSA,QC The strength of the economy is manifested by the fact that it did not collapse. In a global recession of the kind we have suffered, and in a banking recession, that’s what it is, really: a banking recession, this country, like so many others, faced the risk of collapse. It has not collapsed. Because there is a harmony in this country, even though we have quarrels. There is in those quarrels a dialogue. So we are publicly stating our problems and facing them. Take the issue of Ocean Conversion and Biwater, that quarrel. It is a good thing for it to be publicly laid bare so that everybody participates in finding a solution. It is not left just to politicians to find a solution. That is why I speak of this as an economic country: All of us have an economic stake in it, lawyers, businessmen, everybody. So I see the businesses in this country moving ahead, because everybody, successful people and not successful people, are joining in this public debate and discussion about the economy.

As we look forward at the economy and coming out of the recession, one of the challenges we face is how to diversify the economy so that we’ll have as soft a landing as possible in cases like this. Any thoughts?

Dr.JSA,QC First of all, you have to free up the Virgin Islands spirit and the Virgin Islands willingness to innovate. And you have to create laws which would not hamstring him or her. There are too many rules that prevent people from getting into new things in business. You have to make sure the patent laws would protect those who want to innovate. You have to make it easier for Virgin Islanders to train to begin a business without so much red tape. That is holding back enterprise. The Virgin Islands today is an educated Virgin Islands. It is also an entrepreneurial VI. Do not forget all the older people in this country who did not go to college or university but who still want to do things with their land and to do new things. You’ve got to give youngsters the opportunity to experiment and to create new businesses without having to pay a fortune in licences and taxes and so on. Secondly, we have to begin to invite the talent that is available to us. We have to begin to invite some of the great scientists and professional people from around the world to live amongst us. We have some of them living on Great Camanoe Island. Give them an opportunity to mix with our younger people. We must not be afraid of the foreign mind. We need that right now. No country in the world can advance without a mixture of the foreign element. The Virgin Islander must not be afraid to say to some scientist, “Look, we want to develop our agriculture; come in here and show us how to do it.” Invite them in; it’s only for a time. We invited in the people who created the marinas and we know how to do it now, who did hotels and we know how to do it now. Now get the agricultural people in here and set our farms working again. Our farms are lying fallow. Thirdly, I still think that we need to make the best use of our investors who come from abroad with billions. They are willing to spend their money. The budget of the Virgin Islands is less than three hundred million. A billionaire has at least three times or four times that, and if he spends 20 million in this country he hasn’t lost anything. But we have become, I think, inhibited about foreigners. We should not be afraid. What do think is the genesis of that inhibition?

Dr.JSA,QC Politics. We say, “You’re in such-and-such a man’s pocket.” But you’re not in anybody’s pocket. If he comes with an expertise from which we can learn, get him in and learn from it and tell him thank you very much. You can get him citizenship, etcetera, etcetera, etcetera. But we’ve got TO learn fast to come into the ultra-modern world. This country should fear no foreigner.

hat advice would you offer to youngsters who are W considering entering the law profession?

Dr.JSA,QC Learn the law. Don’t look at the money yet. If you are a good lawyer, the money will run after you. If you run after the money now, you run the risk that you will fail to be a good lawyer, and then the money will run from you. Interview conducted, condensed and edited by Russell Harrigan and Freeman Rogers.

BVI BUSINESS & LIFESTYLES

larence Thomas and his wife Maybel still visit the store they built 40 years ago. Each day they check the inventory and view how the operation is unfolding. They may peruse the aisles to see which products are newly stocked, or check the progress of their company. When finished, they’re free to spend the remainder of their day as they please:

Clarence Thomas Ltd.

BEYOND A

GENERATION kaletha henry

The store is now in the hands of their sons. Clarence Thomas Ltd. has been operated by Michael Thomas, General Manager and his younger brother David Thomas, Manager of IT and Marketing, since 1987. The fit was apropos for Michael Thomas who became an apprentice under his father years ago. From the onset he shadowed his father in the store, shelving goods and monitoring sales. Throughout college he continued to learn the dynamics of the business and took full charge while on summer break from school. “My father always believed in me and told me to take the lead,” Thomas said.” He’s my biggest inspiration.” In 1967, Clarence Thomas began selling plumbing supplies and tools in the basement of his apartment building in Purcell. At the time he was a certified plumber and welder working as an independent contractor in the BVI.

When the local vendor used to furnish him with plumbing supplies couldn’t fill orders, he decided to import his own and sell them along with remnants from commercial and residential projects. The business soon developed into

a family operation with Michael’s mother, Maybel handling the company’s business correspondence and administrative duties. The small mom-and-pop plumbing supplies and tool store created by Clarence Thomas in 1976 is now a multimillion-dollar operation serving the entire British Virgin Islands.

A Mega Store in the Making

At a time when many businesses are sinking due to failing economies, Clarence Thomas Ltd. has continued to climb and has outlined plans to move the business to a new facility in Fish Bay. “We’re building a new concept store that will be unlike any other store in the BVI,” Thomas said. By moving from their current space of 12,000 sq. ft. to a 50,000 sq. ft. state-of-the-art megastore based upon a popular North American concept, Clarence Thomas Ltd. will house a huge storeroom and lumberyard replete with a drive-thru extension. “It’s an easier way to store inventory and deliver the product,” Thomas said, referring to the drive through portion. Their new full-service store will consist of several departments including tools, lumber, paint, plumbing and electrical, lawn and garden, and house wares. To sustain the company’s growth and increase customer satisfaction, Michael found it necessary to expand on their existing departments and product lines. “I understand that if we do certain things like give affordable prices, quality product, and good customer service, we will profit,” he said. In his housewares division, one brand of particular interest to Michael is Mercer Cutlery, a leading supplier of knives to over 60% of all culinary schools in the USA. Aside from offering the line to consumers, he hopes with Mercer’s assistance, to be able to sponsor the BVI Culinary Team, and supply them with knives for the next up coming event.

Direction, Drive and Dividends

container surcharges, to decrease costs in the territory and foster revenue for the government. “Ultimately, consumers will drive the economy,” Thomas said. He explained that these changes would position government to increase their volume and capitalize on a return. “The government needs to have a dialogue with local companies. Our elected officials, despite the party affiliation, need to work in the best interest of people, business owners and consumers,” Thomas said.

Their Blueprint for Success At the start of the recession Clarence Thomas Ltd. began an “everyday low prices” promotion for their consumers. By reducing their profits they managed to increase their volume and build loyalty amongst new and old customers. By establishing better price points he made his selected goods more affordable to his customers. Pilferage was also reduced. At the beginning of the year, they unrolled an internal program called, “changing the culture”, a proactive approach used to train employees on customer value. “Even if the girl that works in the office sees a customer walking around, they have to make the customer the priority. They have to approach the customer and help them out,” Michael Thomas said. He’s seen a major change in the way his employees communicate with shoppers. “Customers want to feel welcomed and satisfied,” Thomas said. “We offered everyday low pricing, specials, and new products throughout our departments even when the numbers were failing.” Years ago, their business was down by 30 percent. Instead of downsizing their solution was to improve customer service. Their next plan is to reintroduce surveys to generate more feedback onto the items most desired by their customers.

Hanging on the wall across from Michael 67 Thomas’s approach in managing his Thomas’s office desk is an oil painting business is similar to his employee tactics. depicting local people gathering on the water’s Through the open door policy at work staff edge, waiting to board a sloop; their hands members are free to approach Thomas hold goods to be transported to the neighboring to give their feedback on the business. island of St. Thomas. They may offer ideas or advice on strategies Michael often studies the piece of art to as well as give input on what they believe remember the way things used to be for David Thomas, Clarence Thomas and Michael Thomas, General Manager is working or failing within the company. people living in the BVI and for inspiration His employees are loyal. Many have been on how to direct his future goals. “As a people we were some of the most with Clarence Thomas Ltd. for over seven years and a few have worked for progressive in the world,” Thomas said. more than a decade. Early in Thomas’s position as head of the family business, his father advised “Finding the right employees to give a great level of service is essential,” him to direct his goals on good intentions. “Go on the intent of providing a Thomas said. “You want to see people happy. Past the paycheck, people like good service to your people and let the service side drive and push you; to think that they matter.” not the profit,” his father told him. That advice has stayed with Thomas through the challenging times. Their business started small and evolved with the country. “We have grown with the needs of the public. As the population grew, the company grew, and we grew because of all the steps that we took,” Thomas said. Eleven years ago, they broadened the market to include a store on Virgin Gorda, which provided a great service to the people on that island. “Where Tortola has failed, Virgin Gorda has been very successful,” Thomas said. The biggest hindrance for local businesses, he believes, is the government. “Government has to play a role in the development of local businesses, especially the service businesses. We employ the majority of people in this country,” he said. “Our biggest competitors are the USVI, Puerto Rico, the mainland and the Internet. The USVI markets to the BVI and the BVI needs to break that dependency, and keep money in the territory. As a people, 50-60 million dollars a year is spent in Puerto Rico and the USVI. We need to look at how we can make the BVI more competitive.” He underscored incentives that should be examined that include changing the duty structure and eradicating taxes on freight; implementing a two-tier system whereby savings are passed onto consumers; and eliminating

The Future is in Their Hands

Michael Thomas would love to see the BVI become the shopping mecca of the Eastern Caribbean and knows using the Internet will be instrumental in broadening his customer reach. “Web site development is key for us,” he said. “We plan to have a Web site that is very interactive, where shoppers can see the inventory on site, order it and have it shipped to them directly.” While consumers have become more conservative, Thomas feels the best time to resolve problems in business is to take steps while the market is slow. “Don’t be afraid to try to see how things might work,” he advised. Along with tracking technology, Thomas also stays aware of new product developments. He often attends trade shows and meetings with key industry players outside the territory, and works diligently to maintain two steps ahead of his competition. The businessman believes that education is the key for future generations in this territory. Youngsters should be taught about their heritage and culture to preserve the country’s best interests and infrastructure. “We have to educate our people in terms of where we want to go,” Thomas said. The painted canvas on his wall may be the start they need.

BVI BUSINESS & LIFESTYLES

haiti

helping a neighbour in need

In an Unprecedented Effort BVI Community Comes Together to Help Haiti After Earthquake jason smith

The 7.0 magnitude earthquake that struck near the heart of Haiti on Jan. 12, 2010 had the force of 160 million tonnes of TNT. It left at least 250,000 dead, made an estimated 2 million people homeless and crippled an already struggling nation where more than 80 percent of the population lived below the poverty line before the disaster. The vastness of the destruction was seen worldwide on TV news screens streaming image after depressing image of shocked Haitian men, women and children wandering through the rubble-filled remains of their country. But those images spurred the world and the community of the British Virgin Islands to action.

Within days BVI doctors packed their medical bags and pilots prepared their planes for relief flights. A young woman who’d never volunteered before found herself organizing a volleyball fundraiser; workers at Peebles Hospital gathered boxes of spare gauze and drape sheets destined for field clinics near Port-au-Prince. A veterinarian loaned her practice’s portable x-ray machine to medical workers. Business people, many of who were members of service organisations like the Lions, Red Cross and Rotary Clubs, cut their working day short to plan fundraisers just as government officials met to map out official relief efforts. A mixture of well-developed contingency plans and the impromptu grassroots undertakings of volunteers sprang up in the days after quake and contributed volunteers, supplies and funds to a hard-hit neighbour in need. By one estimate, the territory-wide efforts raised over $427,000 in monetary donations though that figure can’t cover the full scope of donations from individuals businesses, organisations, and government. And the relief effort came together fast. For example, the territory’s three Rotary clubs raised nearly $200,000 within days of the quake, Rotary District Governor Diana White said in August. Within hours of hearing the news on Jan. 12, the phones at the BVI Red Cross began to ring. Many of the calls were from community members hoping to help, offering money and donations to an organisation synonymous with disaster relief and humanitarian work. A few of the calls though that Deniese Gardner Daniels, disaster coordinator with BVI

Within hours of hearing the news on Jan. 12, the phones at the BVI Red Cross began to ring. Many of the calls were from community members hoping to help, offering money and donations to an organisation synonymous with disaster relief and humanitarian work. Red Cross, and other volunteers took that day and in the days to come were from the more than 200 Haitians living in the Virgin Islands. With telephones, fax lines and the Internet down across Haiti, those worried about the fate of their relatives had to rely on the organisation’s notification service for news. It often wasn’t good news, but it provided some measure of comfort especially for families whose relatives survived. “We were lucky so far to let people know their families are safe,” Ms. Daniels said a week after the disaster. By that time the BVI Red Cross had delivered news to three residents with relatives in Haiti, some of who lost family members. Premier Ralph T. O’Neal addressed the media five days after the quake and encouraged the public to support the Red Cross along the Rotary and Lions Clubs. “We should be encouraged to raise as much funds as we could, and we ask our people to give generously to this cause,” he said. “The Government is following the lead of the Red Cross.” The government gave $80,000 to the effort and donated another $20,000 worth of medical supplies through the government-run Peebles Hospital. As a member of the Caribbean Community’s organization CDEMA, the Caribbean Disaster Emergency Management Agency, the BVI government was obligated by treaty to help Haiti, a fellow CDEMA member. The Department of Disaster Management, which coordinates disaster response in the territory, placed more than 20 government and community officials on standby within days of the quake. Two specialists experienced in search and rescue and one disaster manager experienced with managing the logistics of relief supplies were deployed.

BVI BUSINESS & LIFESTYLES

Four local doctors also boarded planes bound for Port de Paix, Haiti after hearing the news. Dr. Klas Buring, an orthopedic surgeon at Eureka Medical Clinic, found his skills in great demand at the small hospital he volunteered in at Port de Paix, a six-hour drive from Port-au-Prince. He and other doctors put in 16-hour days to set fractures and repair torn limbs of quake victims and despite the tragic setting, he said he was impressed by the perseverance of the survivors. “I think they showed tremendous resilience,” Dr. Buring said, shortly after returning to the territory.

The same day he returned, a team of two other doctors including Opposition Leader Dr. Orlando Smith and Dr. Geronimo Jones flew off to do their part. Dr. Jones said that he was shocked that 80 percent of the buildings near the Port-au-Prince hospital he worked in were destroyed. “When you go there to see poverty mixed with natural disaster, it’s worse,” he said. “Everyone I spoke with, all of my patients, said the same thing when I asked what happened to them, ‘the bricks, the bricks fell on me,’ they said.” 70

The collaborative effort to transport the doctors was also typical of the territory’s disaster response: it came together rapidly and through the work of many. Air charter company Island Birds donated its planes and pilots volunteered their skills to ferry more than 2,600 pounds of relief supplies including 19 tents and 25 boxes of medical supplies. His company had never flown a relief flight before but Robert Lemire, Island Birds’ owner said the devastation warranted the response. “This is one of the worst disasters the world has ever faced,” he said on Jan. 18. “As human beings, I think we all have to contribute to this one.” Other larger businesses from across the region each contributed in their own way, many giving freely of their companies’ expertise and projects in addition to cash. Telecommunications providers Digicel and LIME for example, which do business across the Caribbean, sent teams to assess and repair Haiti’s communications networks. Both companies allowed cell phone users to make donation pledges via text message. The role large corporations played was echoed by the volunteer efforts of dozens of business people working though service organisations like the Lions and the Rotary Clubs. Vance Lewis, then assistant district governor for the region that included the BVI’s three Rotary Clubs, said in April that Rotary in the BVI raised about $270,000 for short and long-term relief projects in Haiti, an amount he called “unprecedented” compared to the clubs’ previous disaster efforts. The Rotary district’s monies allowed for the shipment of $50,000 of seeds to assist the agricultural industry, funds to rebuild 30 schools and assist thousands of injured survivors obtain artificial limbs. Because Rotary’s aid was distributed through the network of Rotary Clubs in Haiti, which existed before the disaster, the existing relationships ensured that the money arrived to its destination, Mr. Lewis said. And the assistance

was appreciated. “Our Haitian brothers and sisters said, ‘Merci, merci, BVI’ on behalf of all of the victims and beneficiaries of the aid received in Haiti,” Mr. Lewis said at an April press conference. While the Rotary, used its existing organization and membership roster to mobilize relief quickly, other individuals had to improvise. In the days after January 12 a loose coalition of members of the BVI Haitian Association, BVI Women of Power and volunteers from several churches came together with a desire to help but no hierarchy, no structure, to lean on. They had to learn as they went. But they learned quickly spending their Saturdays in parks and outside churches, sometimes in the rain, collecting donations of food, water and toiletries from residents. Calling themselves the Haitian Disaster Relief Effort, the group filled a 40-foot shipping container, one bucketful at a time, which was sent to Port-au-Prince in early April. The group, relying on connections made in part through the Haitian Association, decided to support several orphanages in Tabarre, a suburb of Port-au-Prince. The group sent one team of three immediately after the quake followed by an additional team of five in April. For Sarah Penney, a volunteer on the April trip, the workers at the orphanages were grateful for the donations of diapers and other supplies, but also appreciative of the break the volunteers gave them from their caretaking duties. “They were absolutely exhausted,” she said. “It’s that look in people’s eyes that you know. It’s almost like they’re on autopilot because they’re so tired.” But she said that even in April, more than 90 days later, the disaster’s toll and preexisting poverty were still apparent. “I felt like I was really aware, you know, before going. I had done my research and… I’d seen the coverage and I’d psychologically prepared myself and I still wasn’t prepared. And I think it’s really obvious how much of the poverty existed before the earthquake,” she said. It’s clear that rebuilding will take a long-term effort. As of this writing in September the United Nations Office for the Coordination of Humanitarian Affairs, which is on the ground in Haiti, announced that agencies were working towards evacuation and contingency plans for hurricane season. The agency reported that efforts are being undertaken to return students to school, improve health and communication facilities and resettle displaced persons across the country but challenges remain.

“Rubble removal, rehabilitation and construction of public structures are necessary to restore basic services such as schools, health clinics and water sources, among others,” the agency stated in a September Humanitarian bulletin.” Several groups in the BVI though have said they plan to assist Haiti for the long-term. A coalition of community groups, the Lion’s Club and the BVI Red Cross, came together in February and March to form the BVI Humanitarian Relief Consortium, which raised $5,500 in April to be used for medium and long-term rebuilding projects in Haiti. BVI Government officials too, have recognized that the process will take time. Despite the tragedy, BVI Deputy Premier Dancia Penn said in February that she sees a “bright future” for Haiti. “I believe that there will be a Haitian renaissance and I believe there will be an economic rebirth, a social rebirth and an environmental rebirth,” she said. “Now that we have turned our attention to Haiti I hope we can sustain that.”

BVI BUSINESS & LIFESTYLES

BVI STudents and

INTERNSHIPS

Internships Must Become Par for the Course for all BVI Students Studying Abroad justin blyden

The recent stumbles of the global economy have undoubtedly alerted us to the “nice to haves” and “need to haves” of our existence. Unstable governments, severe corporate failures and soaring unemployment have jolted everyone into the realization that it is no longer business as usual. These stresses have caused micro and macroeconomic units alike to re-evaluate what it takes to survive these hard times, and no one is immune. Governments are especially strained right now as they seek to remain viable in uncertain times. Worse than any individual or corporation failing to remain solvent, is an entire government falling into demise. These uncertainties in the world economy can tend to have a multiplier-type effect on smaller, more fragile economies such as that of the British Virgin Islands. The Territory has little to no control over the exogenous variables that impact our economy and if prudent, visionary care and attention is not given to the Territory’s economic position versus that of the global economy, we could find ourselves pulling the short straw.

The British Virgin Islands economy has long been dominated by two very vibrant service industries, Tourism and Financial Services/Offshore Banking. While very lucrative during the excess of the bull markets, the declines of the bear markets have once again revealed the risks inherent with the British Virgin Islands’ economic make up. A majority service-based economy coupled with prolonged periods of reservations does not allow for much bargaining power, especially when we consider that every other island in the Caribbean region offers a competing Tourism and/or Offshore Financial Services product, not to mention the several other island-nations scattered around the globe. For a mostly service oriented economy such as the British Virgin Islands, this ability to thrive is directly correlated to the common denominator… the quality of service provided. If we were exporting rare produce or minerals, we could possibly rest on the quality of our rare or plentiful export to the global market place. However, that is not the case, but in the same manner that a production-based economy seeks a quality product, so must the British Virgin Islands seek to deliver a quality service in our service-based economy. As it relates to the sustainability of the economy, it is imperative that national investment dollars are first allocated to maintaining our economic products and services and secondly, allocated to educating, training and developing a highly effective work force to deliver world-class service, fitting of the luxury industries on which we thrive. As economic demands increase and resources decrease, developing a world-class workforce in the British Virgin Islands requires a level of strategic planning that will stretch all concerned stakeholders, an exercise that will start and end with education. When I mention a “world-class” work force, the critical lens through which I peer will evaluate and extrapolate on the following: global awareness and relevance, multi-cultural dexterity, language skills, qualifications certification and practical experience. With the depressed state of the world economy and the exposure risk that the British Virgin Islands economy potentially faces, it will be a greater risk to overlook the development of the national workforce, a large part of the Territory’s success in the global marketplace. As such, it is imperative that resources from the national treasury be directed at the development of the country’s human capital if the long term health of the treasury is to be sound. Such a national effort must ensure that every developmental opportunity is afforded to and taken up by our best and brightest scholars while they are abroad at the college and university level. As the world becomes smaller, more accessible and more competitive, perceived quality of the British Virgin Island’s economy will rest on the shoulders of the preparedness of the workforce, particularly in a highly competitive service economy. For stakeholders wishing to support the enhancement of the Territory, more care and attention must be given to the previously identified qualities for deploying the desired world-class workforce. Over the years, the Government has made considerable investments to this end, of which I have been a recipient. At the same time, it is imperative for students studying abroad to capitalize on this investment, and much like a local educator would admonish, can as much as you can, while you can. Being mindful of the current economic state, it will no longer be sufficient to present a degree upon completion of tertiary education abroad. More and more, degrees only prove that you have an academic understanding of a particular discipline. BVI scholars studying abroad, particularly on the public purse should be strongly encouraged, if not mandated to complete at least one competitive internship relevant to their field of study along with pursuing necessary professional certification. It is only through these experiences that students can begin to hone the technical skills that solidify academic learning. Scholars need to return educated but also enlightened, experienced and expertly certified, ready to support and strengthen the community and the economy.

Work experience cannot be overlooked as a necessary part of matriculation at colleges and universities abroad. As an accounting major in college, something that was very important for me was securing a competitive internship experience. Coupled with the academic perspective gained in my degree program, the internship allowed for technical development that ultimately prepared me for what my desired profession required. Through the guidance of the Career Services office at my College, in the summer of 2007, I spent 10 weeks at one of the largest Investment Banks on Wall Street. In this role, I was able to work in the Corporate Finance and Asset Management divisions of the Bank and gain practical application of the academic training I was receiving in the lecture hall. Completing a degree program without completing a competitive internship program limits the effectiveness of learning. The ability to experience and develop in the technical environment associated with a given profession gives great focus to the student and begins to build the bridge, from back-pack to briefcase. With so much uncertainty still present in the global economy and job market, internships give scholars a fairly risk-free introduction to the realities of a career in their identified discipline. Internships also do a great job adding colour to the black and white fonts that fill the college textbooks. You may study Management Decision Science, but how does that make you a Corporate Trust Administrator? You study Chemistry, but how does that make you an Executive Chef? The on-the-job training afforded by an internship provides so much clarity before the ultimate commitment to a particular degree or concentration and can eliminate feelings of confusion and career uncertainty that many face after graduation. Completing an internship or two, also gives the prospective job-seeker a head start into the job market as most Companies hire from their intern pipeline. Students who complete internships also have a head start on developing their professional network as sometimes in business, it is not what you know or who you know, but who knows you. These are just a few examples, but the accrued advantages to the student and by extension the Territory are manifold and vital to the long-term success of both. Coupled with the academic training and ever important technical training in the internship/post degree employment is securing any relevant certifications associated with your given profession. This is an important and necessary compliment to any degree program being completed by BVI scholars. Professional certification signifies a level of competence that stands the world over. A highly specialized and technical economic makeup such as that of the British Virgin Islands requires a certain level of mastery to remain competitive in the global marketplace where Tourism and Financial Services/ Offshore Banking are widely available. For example, an accounting degree in the 21st century is tremendously unfulfilled if not coupled with adequate certification. After I completed a B.A. in Business Administration Accounting in 2008, I immediately began to pursue certification as a certified public accountant. In most cases, professional certification requires a specific

amount of work experience. BVI scholars do themselves and the Territory a major disservice if they by-pass the wealth of technical training and experience to be had by completing an internship while in college and/or completing relevant post-degree certification. As we strive to remain relevant in a global economy, it only enhances the service offerings if a returning engineer/ architect is skilled in designing and constructing LEED (Leadership in Energy and Environmental Design) certified buildings, a returning registered nurse has experience at a level one trauma centre or a certified public accounting professional is skilled in corporate taxation, financial planning and IFRS (International Financial Reporting Standards) for financial reporting. When we talk about the makings of a world-class workforce, it is essential to also ensure a certain level of global awareness and cultural dexterity. While navigating my college years, it was absolutely important for me to learn and gain exposure to the world beyond the very familiar Caribbean region. This started with a decision to attend a college in the USA, but even after that, I aggressively pursued further international exposure. I found time to assist in my Collegeâ&#x20AC;&#x2122;s International Affairs Office where I was able to share my own international perspective and gain new ones. In summer of 2006, I was able to study abroad in London, England and Johannesburg, South Africa. Both these experiences were particularly striking as they allowed me to capitalize on another academic interest, Macro Economics. In spring of 2008, I was able to travel to Beijing and Hong Kong where I was able to tackle key components of International Business. In the 21st century business environment, it is highly atypical not to conduct business with a diverse audience. Needless to say, language skills also enhance, the competence of the workforce. Multi-cultural awareness speaks volumes in the compressed yet competitive global 73 marketplace. We cannot be misguided into maintaining a small-island ideology while operating in a global marketplace. It will not work; in fact, it is not working. At every juncture where the Territory or a representative of the Territory is unable to demonstrate global-not merely regional awareness and cultural dexterity, we regress as a leading participant in the global marketplace. If there is one thing that the global economic turmoil of the last three years has taught us, is the grave need for greater awareness. The paradigm has shifted, and if we fail to move along with it as a Territory, we will be left behind. Being proactive should be favoured over being reactive, especially when on the defensive, it requires more resources. If the British Virgin Islands is to remain a leader in the global marketplace; as a solid investment, the Government must not only ensure a quality Tourism product and Financial Service/Offshore Banking business environment, but equal quality must be sought in the development of the human capital to manage these industries. No one loses by increasing the expectations of BVI scholars studying abroad, in fact, it is a guaranteed winâ&#x20AC;Ś investing in deserving BVI scholars and ultimately investing in the health, vitality and stainability of our cherished British Virgin Islands.

Internships give scholars a fairly risk-free introduction to the realities of a career...

Internships also do a great job adding colour to the black & white fonts that fill the college textbooks.

BVI BUSINESS & LIFESTYLES

positioning

Category one For Future Growth in Ship Registration

laura arthur

or much of the last decade, the global shipping industry enjoyed extraordinary growth and prosperity. Returns on investment in most shipping sub-sectors were significant and this trend encouraged investors and ship owners to commission and finance new vessels. By 2006, orders for almost all vessel types, including tankers, dry bulk vessels and container ships, stood at record high levels. It was against this backdrop that the Virgin Islands Shipping Registry (VISR) re-launched in 2006 as a new department resulting from the amalgamation of the once independent BVI Maritime Administration and the Shipping Registry. VISR was established as the single authority for the inspection, certification and registration of British Virgin Islands vessels as well as the regulation of the Territory’s maritime industry, setting the stage for the Territory to qualify as a Category One jurisdiction of the Red Ensign Group, one of the world’s most prestigious flags of the sea. In 2008, VISR indeed fulfilled the conditions for Category One membership, thus enabling the registration of much larger vessels. In order to achieve this, VISR implemented relevant international maritime conventions dealing with ships’ safety, the health and welfare of seafarers, environmental protection and

international and domestic maritime security. The upgrade to Category One status was heralded as an important accomplishment, expected to supplement the financial services and tourism sectors of the Territory’s economy and to lend to the international standing of VISR and the overall future and development of the British Virgins Islands. No one could have predicted the sudden and dramatic decline in world trade in the second half of 2008, marked by the collapse of financial institutions such as Lehman Brothers and other industry giants which sent shock-waves through the financial system. Although the shipping industry is known to be cyclical in nature, the volatility since 2008 has been extreme. In the considerable uncertainty and unpredictability of the current economic environment, the shipping industry appears to have been harder hit by the crisis than other industries. In its 2009 Global Shipping Benchmarking Survey, PriceWaterhouseCoopers (PWC) observed many challenges faced by shipping companies, particularly with regard to managing their cash flows, raising appropriate finance to meet long term commitments and maximising returns for shareholders. With a significant proportion of world trade being financed through letters of credit, banks responded with extreme caution in their lending activities. Even banks dedicated to shipping finance became particularly selective. This, in turn, put tremendous pressure on those companies that continued to have unfinanced commitments, particularly for new vessels being constructed at shipyards. According to the PWC report, as a result of the fall in world demand for consumer products coupled with falling values of vessels, the recovery of the shipping trade to pre-crisis levels is expected to be slow.

VISR’s Director, Captain Baboucar M. Sallah, observed that the global economic crisis, which surfaced in 2008 and progressed to a full-blown depression during 2009, greatly impacted VISR’s performance during its first year as a Red Ensign Group Category One Registry. However, VISR remains confident about its potential for positive growth. In particular, although the number of new vessel registrations in 2009 fell below the 2008 number by 18%, even in the midst of a global depression, VISR noted a modest increase in the average size of vessels registered in 2009 as its Category One status enabled it to accept large super yachts and Convention-size ships. As the world emerges from the economic downturn, VISR anticipates that the numbers and sizes of new registrations will continue to increase.

The Time Factor

Peter Gibbs, the Cayman Islands’ first Director of Shipping, now consulting in the private sector, observed that although the Cayman Islands Maritime Administration was empowered to register ships in 1988, it was not until 1996 that results really began to show. Mr. Gibbs took charge of Cayman’s Maritime Administration in 1997 and, in the subsequent six years, realised a compound annual growth rate of 26% or a doubling of registered tonnage every three years. Thus, it may be premature to assume that there has been little progress in the Territory’s shipping sector so soon after VISR’s promotion to Category One. Undeniably, after only two years, the British Virgin Islands has established itself as a prime maritime safety administration in the Eastern Caribbean, in terms of high standards and levels of compliance and the quality of vessels based in the Territory and those generally operating in its waters, commercially and for pleasure. Speaking from personal experience, Mr. Gibbs believes that to ensure future growth, a shipping registry must be operated as a business. As such, it is important to identify a target market, research the competition, pinpoint and resolve any difficulties, perhaps through amendments to the law and then take the product to the market. Captain Sallah also believes that VISR is well-positioned to become a solid source for revenue for the Territory. However, if VISR is to fulfil its potential as a Category One Red Ensign Group Registry, it cannot afford to rest on its laurels.

jurisdiction. Here, the role of the private sector, working in combination with VISR and a supportive Government, is fundamental in ensuring that the Territory’s legislative framework is modified as needed in order to deliver innovative solutions which respond to the needs of the industry.

Conclusion

VISR continues to satisfy the quality and standards required of a Red Ensign Group Category One Registry. Two years after receiving this designation, the Territory is well-positioned to ensure that the international maritime community knows the value and benefits of registering their vessels in the British Virgin Islands. Although ship registration as a business has not been immune to the wider global pressures, VISR can report a more positive trend as the number of vessel registrations thus far this year has already exceeded the 2009 total by 15%. As the world climbs out of recession, VISR similarly prepares to invigorate its efforts to devise and deliver a product that clearly distinguishes the Territory from its fiercest competition.

The Way Forward

Internally, Captain Sallah has always emphasized the importance of appropriate and adequately trained professional staff as a key factor in VISR’s reaching its potential. To this end, VISR continues to work with the H. Lavity Stoutt Community College and other centres of higher learning to encourage and prepare graduates for career opportunities in the maritime field. Although he acknowledged that there will be many challenges ahead, Captain Sallah remains confident that VISR has and will continue to have the right people and skills in-house together with the motivation to succeed. Captain Sallah also endeavours to increase and energize VISR’s outreach beyond these shores with more vigorous and professional marketing promotions aimed at increasing the profile of the Territory on the world stage. Citing the successes of neighbouring jurisdictions such as Panama, the Bahamas, Bermuda, Cayman Islands and Antigua and Barbuda who consistently feature as major players in the shipping industry, Captain Sallah is convinced of the benefits that can come only as a result of dynamic and extensive international marketing campaigns, supported by continued Government investment and training. The input of a strong and aggressive private sector is also central to developing a successful shipping registry that is responsive to the needs of the industry. The Territory’s success in the corporate sector is indeed indicative of what is required in terms of a marketing effort on the part of the private sector. Practitioners who frequently interface with industry players are critical in terms of identifying both difficulties and possibilities for competitive advantage. In an industry renowned for making deals on a personal handshake, the participation of an active private sector in forging the personal contacts that fuel new business is essential. Historically, the British Virgin Islands has capitalized successfully on its sensitivity to industry needs and has responded repeatedly with creative legislative solutions that engender confidence in the services on offer in this

VISR’s Director, Captain Baboucar M. Sallah

Sources Shipping Industry Group: PricewaterhouseCoopers Global Shipping Benchmarking Survey 2009 Captain Baboucar M Sallah Director, Virgin Islands Shipping Registry Peter Gibbs Former Director of Shipping, Cayman Islands

BVI BUSINESS & LIFESTYLES

BOOK SHELF

13 Bankers Simon Johnson & James Kwak “How Modern Wall Street—the most powerful and concentrated financial sector in the country’s history—both created the financial crisis and ensured a bail-out for its own benefit.”—The Economist

Three Cups of Tea Greg Mortenson & David Oliver Relin “Greg Mortenson’s dangerous and difficult quest... is not only a thrilling read, it’s proof that one ordinary person, with the right combination of character and determination, really can change the world.” — Tom Brokaw

Management Rewired Charles S. Jacobs “This is a lively and often likably eccentric book that does a solid job of surveying some sensible management practices” —Harvard Business Review

Borrowing Brilliance David Kord Murray “A wonderfully enjoyable tour of the creative process. Murray’s lively description of how he used these tools to create his own products is a major plus. People will be stealing from this work for years to come!” — Roger von Oech, author of A Whack on the Side of the Head and The Creative Whack Pack

The Next Asia Stephen Roach “Stephen Roach’s prescient collection of insights and analyses, from his many years in Asia as one of the most experienced decoders of China’s political and economic trends, are cogent, valuable, and immensely helpful.” —Henry A. Kissinger

California Crack Up Joe Mathews & Mark Paul “Both [California gubernatorial] candidates may want to read the book’s diagnosis of the potentially terminal problems that one of them is certain to inherit.”— Wall Street Journal

Origin of Wealth Eric D. Beinhocker “This is a remarkable book. The title betrays the scale of its ambition, yet the scale of its achievement comes close to matching it. There are thought-provoking ideas on almost every page... It is unquestionably the most important business book of the year.” — John Kay, Management Today Overhaul Steven Rattner “Overhaul is filled with delicious descriptions of what happened behind the scenes in the White House and at the Treasury Department as the effort to save GM and Chrysler unfolded... a riveting read.” — Wall Street Journal

This Time is Different Carmen M. Reinheart & Kenneth S. Rogoff “The definitive book on financial crises.”— Steven Pearlstein,Washington Post “Essential reading... both for its originality and for the sobering patterns of financial behaviour it reveals.”— Economist

Dead Aid Dambisa Moyo “The wisdom contained here—if absorbed by African and global policymakers— will turn this chronically depressed continent into an inspiring miracle of dazzling economic growth.” — Steve Forbes

Obamas Wars Bob Woodward Aptly dedicated ‘To All Who Serve”, “Obama’s Wars offers the reader a stunning, you-are-there account of the president, his White House aides, military leaders, diplomats and intelligence chiefs in this time of turmoil and danger.” — Obama’s Wars

Start-Up Nation Dan Senor & Saul Singer There is a great deal for America to learn from the very impressive Israeli entrepreneurial model... Start-Up Nation is a playbook for every CEO who wants to develop the next generation of corporate leaders.”—Tom Brokaw

BVI BUSINESS & LIFESTYLES

making

think tankS A Strategic Asset in Our Development benito wheatley

As the British Virgin Islands (BVI) struggles to regain its economic footing in the aftermath of the global economic crisis it is clear that the territory requires new policies to create sustainable growth and development moving forward. The Territoryâ&#x20AC;&#x2122;s traditional economic drivers, tourism and financial services industries, can no longer be relied upon as robust drivers of economic growth; and the territoryâ&#x20AC;&#x2122;s development in its current form is proving to be socially and environmentally unsustainable. The emergence of these problems indicates that the policies that have guided the territory over the past 30 years have run their course. New policies for economic development, governance, economic growth, security, and social development are needed to build a more secure BVI.

A New Public Policy Vacuum

Since the mid-twentieth century, government has taken the lead in modernizing the territory. It has driven the process through the instrument of public policy, which has placed the Civil Service and political parties at the center of policy development. The rise of these institutions, by default, has made them the premier conduits for new policy ideas. However, as the territory has grown in size and complexity, the Civil Service and political parties have become preoccupied with political issues and managing the territory’s affairs. Few other institutions, organizations, or channels exist for developing public policy or introducing new policy ideas to the public, save media outlets. Local radio shows are the premier venues for public engagement on policy issues. These programs provide the public with opportunities to weigh in on policy debates

Think tanks are a feature of the public policy landscape of these societies and help to ensure a steady flow of new concepts and policy ideas into the mainstream. or make their own suggestions for moving the territory forward. Beside radio, local television programs have quickly become popular forums for discussing policy matters. In addition to these, print and online news publications occasionally publish articles offering insights on public policy. However, these publications rarely if ever, devote the content space required for a full exposition of the issues. The limitations of media and the bureaucratic and political constraints of the Civil Service and political parties have left a public policy vacuum that must be filled.

Where will fresh thinking and new ideas come from?

In light of the BVI’s need for an alternate institution or organization dedicated to public policy, a local think tank would be ideally suited to help in the development and advancement of new policies. In the United States (U.S.), United Kingdom (U.K.), and other developed countries, think tanks are research-based organizations that, for a limited period (e.g., six month, one year, etc.), host, fund, publish, and distribute the research of respected thinkers, such as: academics, former public servants, corporate executives, former legislators, etc. This arrangement between the think tank and public policy experts is commonly referred to as a “fellowship” program; and the experts are accordingly referred to as “fellows” or “policy fellows.” Think tanks are a feature of the public policy landscape of these societies and help to ensure a steady flow of new concepts and policy ideas into the mainstream. Their research reports and policy proposals are carefully considered by policy makers, advocacy organizations, and members of the public seeking to gain an understanding of a particular issue or solutions to critical problems or innovative ideas for improving some aspect of society.

As it stands today, there are no official think tanks in operation in the BVI. Policy development remains firmly in the hands of government, and political parties and the Civil Service remain the conduits of public policy and new ideas. The establishment of a local think tank is needed to remedy this situation.

Setting Up a Think Tank

Launching a think tank in the BVI will require the initiative of enterprising individuals who are willing to undertake the challenge of establishing such an organization. This endeavor will require filing for incorporation, forming a Board of Directors (Board), securing operational funds, hiring managerial and administrative staff, and recruiting respected thinkers to serve as the aforementioned policy fellows.

Incorporation and Board of Directors

With regard to filing for incorporation and forming a Board, these steps are fairly simple as incorporation procedures for organizations already exist in the BVI. Filing Articles of Incorporation which establish a Board and set out bylaws is an essential part of this process. The responsibilities of the Board, led by a Chairman, would be to recruit and oversee a Chief Executive Officer (CEO); approve the organizationâ&#x20AC;&#x2122;s annual work program; and raise funds for operations and an endowment. In terms of recruiting Board Members, individuals would be selected who understand the need for a local think tank, support its mission, and are willing to carry out the responsibilities of the Board. Importantly, the CEO would be responsible for staffing the organization; setting out the organizationâ&#x20AC;&#x2122;s annual work program; recruiting policy fellows; and managing the organizations day-to-day operations.

Funding

One of the most challenging aspects of operating a think tank is securing funding for operations. However, fundraising can be done in a number of ways. First, a think tank can solicit individual donations and corporate contributions in support of its mission. Second, funds can be raised through the publication and sale of policy reports and journals in which advertising slots are sold to private companies. Third, funds can be raised through registration fees for local and international workshops and conferences related to policy development. Fourth, funds can be raised through the sale of tickets to formal events held by the organization, such as black tie dinners. Fifth, funds can be raised from international organizations like the United Nations Educational, Scientific, and Cultural Organization (UNESCO) that offer grants for research. Sixth and lastly, corporate sponsorship can be sought from the private sector to fund a policy fellow. Combined, these sources would provide a stable source of funding for the organization’s operations and activities.

Recruitment of Policy fellows

Relative to the BVI’s population size, the society boasts a significant number of public and private sector professionals capable of performing the research and analytical work of a policy fellow. The many thought leaders upon the Island offer a combination of international exposure, local knowledge, and professional experience making them ideally suited for the task of crafting solutions to local problems and devising new strategies to tackle international challenges. However, limitations do exist with regard to the range of expertise available in the territory, which could have a detrimental impact on recruitment over the long-term. In any such recruitment effort, local residents would make up the primary group of policy fellows, but limited recruitment outside the territory would be desirable in terms of compensating for any local shortage of public policy expertise. Recruitment could be extended to public policy experts in other Caribbean-based British Overseas Territories (BOTs) and the United States Virgin Islands (USVI). This geographical grouping would provide for sustained recruitment of policy fellows over the long-run. Another hurdle in the recruitment process is the ability of individual policy fellows to secure a temporary leave of absence from their employers to pursue a fellowship. This issue could be addressed by the think tank’s CEO and Board working along with government and the private sector to establish an “alternative leave” program that places policy fellows on short-term loan to the think tank for a six to twelve month period. The fellow would in turn pursue a public policy issue of common interest to both the employer and think tank. In return, the employer would receive the results of that research. On the think tank’s part, the organization would financially compensate the policy fellow for his or her time and contributions to its body of public policy knowledge and information, which would also be the case for all participating fellows, and not only those on leave from their place of employment

The Way Forward

A think tank is an essential tool in the policy development process of a modern society. Its work provides the society with a pool of new policy ideas from which to develop policies to guide its progress. In the case of the BVI,

a local think tank would be a strategic asset in the territory’s development. Its operation would strengthen the territory’s internal capacity for policy development at a time when new policies are urgently needed. Moreover, a local think tank would be a welcome alternative to the Civil Service and political parties whose activities are limited by the demands of politics and bureaucracy, and would provide a forum for public policy debate beyond the limitations of local media. If the BVI is to succeed as a society in the post-crisis world, it will undoubtedly require the new policy ideas that a local think tank would provide. Benito Wheatley is CEO of The Wheatley Consulting Group LLC, a consulting firm providing strategic analysis of international developments in financial regulation, political economy, and geopolitics. He has a decade of experience in International Affairs and has held positions in the Financial Industry Regulatory Authority, Winrock International, and Southern Center for International Studies. He has also worked on a number of projects for the World Bank, Institute for Caribbean Studies, and Foundation for Sustainable Development. Mr. Wheatley is a Researcher for the Center for International Relations (Arlington, Virginia) and a member of the Baltimore Council on Foreign Relations. His published work includes “The Caribbean in the New World Order.” CARICOM (2009) and “Continental and World Affairs (Update):” Africa in Transition. SCIS (2005).

BVI BUSINESS & LIFESTYLES

GOVERNOR McCLEARY the online governor

russell harrigan and freeman rogers

en days after Governor Boyd McCleary arrived in the territory, Hurricane Earl struck, prompting him to write a blog entry titled â&#x20AC;&#x153;My baptism of fire.â&#x20AC;? In the following weeks, he was faced with two floods, the second of which was the worst in recent memory. In October, Governor McCleary sat down with Business BVI to discuss his goals, his first impressions of the territory, and the merits of saving paper, among other topics.

We’ll start at the end: When your term of office has ended in the BVI, what would you like your legacy here to be? Governor McCleary:// I suppose what I’d like to think is that I’ve been able to make something of a difference. I haven’t come here just to lie on a beach. One of the things I’ve pointed out in earlier interviews is this is something I wanted to do; it wasn’t something that was forced on me. It’s a job I applied for. I was interested in taking on this new responsibility. It’s a different sort of job from that which I’ve done before, but I think it complements well the sorts of things I’ve done previously, and I certainly relish the challenge of taking on this new role. What five major challenges do you see the BVI having to deal with in the next five years? Governor McCleary:// One is around the financial services sector. I think the pressure we’ve seen over the last two years coming from a number of European countries is not going to go away. I think those standards will continue to rise. The bar will continue to go upwards, and if we don’t meet that bar, if we don’t raise the standards to match, then we will slip behind and lose business. I think that’s probably the single most important challenge the BVI faces. I think the second area is around tourism. We’ve seen that during the economic crisis there is a degree of vulnerability — particularly in this period from North America, where so many of the tourists to the region come from. With the fall off in prosperity during the recession and the ongoing uncertainty, I think there is a challenge there, too, which needs to be addressed. I think the challenge there is to try and get those tourists back, to persuade them that the BVI is still an attractive place to come, and to ensure that the facilities are there to meet their aspirations. So we need to ensure that we continue to grow the facilities, to ensure that we’re meeting the expectations of the high-end tourists who come to this market, and continue to market the BVI effectively in that competitive environment. The next challenge is around the disaster management field. I think we have a very good team here managing the disaster preparedness and recovery effort, but the recent hurricane and the heavy rains and flooding we’ve had over the last few weeks have reminded us all of the fact that we live in a very volatile environment. The premier has talked, as have other ministers, of the additional risks around climate change. The climate is changing. It’s not as predictable as before. We may be seeing systems coming into the islands out of the normal season. So I think we have to ensure that our disaster preparedness is as effective as possible. And we have to look at some of the underlying issues which have caused the recent flooding to try and develop long-term strategies to reduce or mitigate the risks to life and limb and property. The fourth area is around good governance. I think that it’s critically important for any territory to be seen to be managing itself effectively — particularly at times when the economy is under pressure. We have to ensure that our budget is under control, our expenditure is managed effectively, and that we have financial management systems in place which allow us to supervise — to understand — what we’re spending and how we’re spending it, and ensure that we’re getting the best possible value for the revenues the government takes in. A fifth: One of the things that struck me in coming here is that the links to Britain are not as strong as I had expected. Although this is a territory which has very strong traditional links to the UK, and the Union flag still sits up in the top left-hand corner of the flag of the BVI, and the national anthem is “God Save the Queen,” my sense is that some of those linkages with Britain have weakened over the years. I don’t think anyone set out to do that, but it’s just a fact of life that as new people come to the territory, as you get new generations coming forward who haven’t had such strong traditional links to Britain,

that there has been some weakening of the links. And I’d like to do what I can to strengthen those links. We have a new government in Britain which is determined to refresh and regenerate the relationship with the overseas territories. Our ministers have talked about ensuring that the territories feel part of the broader British family, and I think we want to embrace the territories in a way which perhaps hasn’t happened for the last few years. And I think that’s a good thing: It’s a good thing for Britain, and I think it’s a good thing for the territories, too. So I’ll be looking for ways in which to build the relationship. Last year marked the expiration of the 1999 White Paper, Partnership for Progress and Prosperity: Britain and the Overseas Territories. Is the ongoing review of that document a plank that you think should play a part in the new relationship? Governor McCleary:// I think our ministers are looking for ways to grow the links. There’s been no announcement made yet as to what the future will hold in detail, but the clear intent is to build closer relationships with the overseas territories — make the territories feel, as I said, part of that larger British family. We’ll learn over the next few months what more they have in mind. But, for example, there’s already an announcement made by our minsters to build a new airport in Saint Helena. We’re determined to try and bring democracy back to the Turks and Caicos Islands: Although elections have been postponed for now, the intention is that we should enable that territory to revert to a normal situation as soon as we think they’re ready. So I think you’ll see increasing signals coming from our ministers about what this new relationship is about. They’ve talked about a dynamic partnership, and we’ll find out in the months ahead what exactly that might mean. We are sure the UK government has its own ideas as to what should be in that relationship. 83 Is there a role for the BVI public’s input here? Governor McCleary:// There’s always scope for people to feed ideas in. I’d be happy to hear what people think. We won’t be able to do everything people would like to do. We have our financial strains and stresses as well, and I don’t think we’re talking about huge additional expenditure from the UK coming into the territory. I don’t think that’s what the territory needs. I think the territory needs to become self-sustaining, needs to grow its own economy. It needs to develop. It needs to, for example, build new niche areas in the offshore financial services sector; grow the legal business more; look at intellectual property. There are ways in which what’s here can be developed and grown. And we may be able to help in some areas, but I think it’s about creating opportunities for more linkages between Britain and the BVI, and if anyone has any ideas we’d be happy to hear them. The civil service play a dynamic role in a small economy like this. What are some of your priorities for that area? Governor McCleary:// First of all, I’d say that we have a lot of very qualified and professional civil servants here, and so we’re not starting from a low level of competence. We’re starting from a relatively high level of competence, and that’s good. So I think there’s capacity there which can help the territory to move on. If you look at the Financial Services Commission — they’re not civil servants, but they’re an important public service which is doing a good job helping to ensure the legislation is brought through, that the structures are in place, to continue to attract offshore business — but they are supported by the Finance Ministry, by the Attorney General’s Chambers. The administration of many parts of government is in good hands. But I suppose one of the issues we face over the next few years is the economic issue that we’re not going to have a lot more money; we’re going to have to do more with less. And every government across the world is facing that challenge at the moment, and so I’d be looking to work with the civil service to ensure that we get value for money and we manage our resources as effectively as possible.

BVI BUSINESS & LIFESTYLES

To our knowledge, you’re the territory’s first blogging governor. Is your blog a personal initiative or a Foreign and Commonwealth directive? Governor McCleary:// It’s a bit of both. The FCO has started blogging: I think we probably have about 20 or 30 staff blogging. And that was initiated about two, three years ago with the endorsement of the foreign secretary at the time, who was keen that we as an organisation should become more open, more transparent, more engaged with the broader community. And I very much welcomed that and began to blog in Malaysia. And I’ve just started blogging here, too. I’ve only actually had one blog entry so far — it’s been a bit busy over the last few weeks — but I have got a blog on there which is called “My baptism of fire,” and that describes how after only a few days after arriving here in the BVI we were exposed to the hurricane and I was up in McNamara setting up the National Emergency Operations Centre at the same time as I was trying to set up my own family. I had to abandon my family in the middle of the hurricane to head up that operation, but that was fine, and fortunately all was well and Government House was safe, although we lost a lot of trees. But I find that blogging is somehow empowering, and I think it helps me to try and think what people might want to know about what a high commissioner or a governor does. It’s about demystifying the office. If you were to give one piece of advice to the business community in the BVI, what would it be? Please visit Governor McCleary’s Official Blog at http://blogs.fco.gov.uk/roller/mccleary/ Reproduced with permission of the Office of the Governor.

Recently, former Governor David Pearey and Premier Ralph O’Neal took steps to trim civil service spending that amounted to about $1 million annually. Do you think that’s enough? 84

Governor McCleary:// I’m sure we need to do more. I’m sure that’s a good start. That announcement was made jointly by the premier and by the governor: I think that shows a collective commitment to tackling some of the issues. And I’d like to work with the premier and other members of Cabinet to take this forward. We are looking at further opportunities to raise revenue. We’re looking at further areas in which we can cut spending. I think it’s critically important to prioritise. We have to prioritise our spending. We have to be careful about what we take on. We won’t be able to do everything we want to. So we’ll have to be careful about how to plan. Next year’s budget is going to be important. The budget over the last couple years has been pretty much in balance without much by way of surplus, and we haven’t been able to build up any reserves. What I would hope we could do would be to develop a medium-term strategy, which would enable us to build up reserves and ensure that any additional borrowing we have to take on would be affordable and manageable within what we can achieve. Are there any experiences that you’ve had in your previous posting as British High Commissioner to Malaysia that you can bring to bear here as BVI businesses grapple with more regulation and more competitiveness in the global economy? Governor McCleary:// I think Malaysia is also recognising the risks of complacency. Malaysia, like the BVI, has grown very fast in a very short space of time. Malaysia has also moved from what was essentially a subsistence economy 20 or 30 years ago to a middle-income country, which is now finding that it’s having difficulty competing. What happened in Malaysia was that 20 years ago it was easy to attract investment there because it was relatively lower cost. But today that’s no longer the case: Malaysia has become higher cost. And therefore the manufacturing investment which was there and which was easy to get in the 70s and 80s is no longer coming to Malaysia: It’s going to China; it’s going to Vietnam; it’s going to the Philippines. And so they have to up their act. They have to move up the value chain, and I think that’s the lesson the BVI also needs to learn. We need to continue to move up the value chain.

Governor McCleary:// I think my advice would be to be conscious that you’re living in a very competitive world. Don’t let your standards drop. Aspire to provide the best possible service to your customers, to your clients. And I think if you provide a good service to those you’re trying to deal with then they’re going to come back and ask for more. If you’re dealing with this competitive environment you need to demonstrate that people need to come and do business with you rather than someone else. And that’s true for the tourism sector; it’s true for the offshore financial services sector, too. On a lighter note, someone mentioned that one of the things you found amazing when you got here was the amount of paper. How are you dealing with that? Governor McCleary:// I’ve adjusted. I’ve had to adjust because a lot of paper passes my desk. But actually I’ve talked to the civil service about ways in which we can reduce the amount of paper, and I think there was a very positive response when I said that sort of thing. I’m not saying there’s no use of e-mail — of course there is — but some of the systems here are a bit conservative, and I’d like, where possible, where people feel comfortable, to move forward and use more electronic means, both in terms of serving the public and also in terms of improving the efficiency of the government machine. Interview conducted, condensed and edited by Russell Harrigan and Freeman Rogers.

BVI BUSINESS & LIFESTYLES

FACETIME

Raising the Food Bar

RTW opened in April 1961 as a small wholesaler selling staples such as flour, milk and sugar. Almost fifty years later it has become the prominent food and beverage distributor and retailer in the territory with five locations across Tortola, a 50% interest in another, a Cash and Carry and main Wholesale operation on Tortola and a Cash and Carry/Wholesale operation on Virgin Gorda. In September the company completed a major extension programme designed to offer its consumers a state-of-the-art facility. “It’s going to take the shopping experience in the BVI to a totally, totally new level,” Maduro said. This year the company also began a certificate program for staff to become trained in a variety of disciplines such as produce management, baked goods, meat distribution, dairy, and customer service.

Delma Maduro Holding First kaletha henry

Delma Maduro holds a lot of ‘firsts.’ She was the first female inductee into the Rotary Club of Tortola, the clubs’ first female president, the first female executive at BVI based food giant, Road Town Wholesale (RTW), and the first woman to become the company’s Chief Executive Officer (CEO) of the a title bestowed upon her in December 2009 after Peter Haycraft, the company’s founder and director stepped down. She joined RTW in 1978, as a secretary before veering into sales and reached the pinnacle after 32 years of hard work, dedication and a willingness to learn from her predecessor, Peter Haycraft. She refers to him as an astute businessman both for his vision and steadfastness in developing RTW into one of the largest and strongest companies in the BVI. Maduro also credits him for his mentoring and support throughout her career. At RTW Maduro was secured a full scholarship to attend the University of the Virgin Islands. At the time, she was in her early 30’s, married to Audley Maduro and mothering two young children. Ferry rides home meant spending weekends, holidays, and summers on Tortola with family, as well as RTW where she continued to learn the ins and outs of the business. After completing her bachelor’s degree in business administration Maduro returned to RTW as Joint Managing Director, and after two years became the sole Managing Director for the next 18 years. Her area of expertise in business management evolved primarily out of her experience with RTW. Now, as the head of this multimillion-dollar operation, she manages 375 employees while overseeing its strategic planning, policy issues and procedures to ensure the company is financially sound and positioned for continued growth.

Lessons from the Elders

Maduro’s early role model and chief executor of the family was her mother Idalia Frett-Davies, second wife to Maduro’s father Claremond Floyd Davies, a shipwright and builder of many boats. “My father died when I was 13-years-old and my mother became a single mother of 10 children. I have a great deal of admiration for her,” Maduro said. “She was the greatest planner and economist.” When her father passed away her seven older siblings stepped in to help though many had families of their own, “The older children were very supportive. We have a very close-knit family,” she said. Maduro’s parents were devout Christians who raised their sons and daughters in a strict home in the East End community of Tortola where the norm was attending church and Sunday school. From an early age, Delma learned the importance of extending service to others. “It’s better to give than to receive and I do believe that it’s the responsibility of every one of us to give back to the community,” she highlighted. “I have chosen Rotary as one of the main forums by which I can serve the community, because Rotary is a very critical service organization. It has the structure that really lends itself to community ervice among other things.”

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Profiles of Personalities in the BVI Business Community

DELMA MADURO A Portico to “Nature’s Little Secrets”

Hospitality and tourism, financial services, and retail are three industries whose continued development will be significant economic drivers’ in the future -- providing real opportunity for local empowerment. “It would be wonderful if British Virgin Islanders were able to participate at a deeper level in terms of ownership as well as in the senior management level. I think that would only help to solidify the economy here in the BVI,” Maduro said. “In tourism, I think we have lost our focus a little bit and we have to regain it in terms of whom are we targeting; who is our main market for tourism? I know we talk about upscale tourism, but I think we may have drifted a little bit from that,” she said. “We need to look at our product and look at our service, service throughout the BVI so that quality service resonates whether we go to the government offices or Rite Way Food Markets so that everybody, not just visitors, but everybody will be able to conduct business in an environment that is perhaps a bit more friendly and in an environment that is a bit more helpful. I think it will help propel us in tourism and in the way we do things overall.” On the retail end, she hopes to see a change in fiscal policies. “I think the industry in the BVI can grow as a whole, not just RTW or Rite Way Food Markets and I think one of the opportunities would be for our government to change our customs tariff structure, from one that currently calculates custom duty on CIF value which includes the cost of goods, all freight charges and insurance, to one that is based on the FOB value – the actual cost of the products only. This would place BVI businesses in a more favourable and competitive position with the USVI which is the territory’s closest and perhaps biggest competitor,” she said. Another step in the direction of stimulating the economy would be to make customs duty that is payable by businesses lower than individual consumers without increasing customs tariff. These can result in savings that would be passed on to consumers and definitely be more beneficial to the local economy.

Handling Her Business

If determination and focus lead to success, Maduro has what it takes. In addition to the food services industry, she managed to enter the tourism sector 14 years ago through the purchase of Allamanda Estate, a sprawling former residence turned villa located on Beef Island. “It’s a lot of hard work, but we’ve met some interesting people,” she said. She envisions herself expanding in this arena when the time comes, but for now, the island rental is host to visitors, and on occasion also used for functions and events. For this go-getter, the tourism industry may be yet another first.

BVI BUSINESS & LIFESTYLES

FACE TIME

Profiles of Personalities in the BVI Business Community

Michael Fay Going the Distance kaletha henry

What did a successful businessman; attorney, husband and father of three do in his spare time last summer? If he is Michael Fay, he enrolled in one of the world’s most prestigious executive programs, enlisted in a European marathon; and completed both arduous feats back-to-back. At Harvard Business School, he was absorbed in a sixday, 10-week, 14-hour a day advanced management program, and in Greece he planned to cross the finish line in the Athens Classic Marathon. Fay is a managing partner of Ogier (BVI), an international company that offers services in the areas of investment funds, corporate finance and banking, litigation and structured finance. He is director of the company’s fiduciary services, managing partner of the BVI businesses, and the head of litigation. He is also a member of the legal management board that oversees Ogier legal businesses around the world – more than half of his time is spent managing the BVI businesses and overseeing management of non-BVI businesses, the other half is spent as a litigation lawyer. In 1996, Fay began his career on Tortola as head of the litigation department at Harneys. After working for the BVI-based trust company for three years, he moved northwest to Turks and Caicos Islands. There he continued practicing BVI law, returning to the territory in 2001 as a founding partner at Walker Smiths, which later merged with Ogier in 2007. His upward climb and path to success are indicative of the values instilled in him as a child. Speaking frankly, he shared insight into his early development. “My parents had reasonably high expectations and always expected me to do my best, but there

michael fay

“I’m clearly at my best in times of a crisis.” 89

was never any pressure to go down any particular route,” Fay said. “As a child I would be relatively opinionated and headstrong, but they were happy that I learned my lessons, and they weren’t afraid of me taking risks.” That independence paved the way for this British born leader to chart his own course to practice law, a decision that steered him away from the legacy of physicians in his family: his mother, uncles and grandparents were all doctors. In 198 8, Fay obtained his LLB from Nottingham Law School and then attended Inns of Court School of Law between 1988-1989 and was called to the bar by the Honorable Society of Lincoln’s Inn in July 1989. In the United Kingdom he practiced law for nine years and was further admitted to practice law in England and Wales, the BVI, Turks and Caicos, Anguilla, and Nevis.

Community Involvement

Fay would like to be thought of as honest and reasonable, but admits he’s demanding in terms of his expectations of others and not hugely understanding of failure. “I’m clearly at my best in times of a crisis. I deal with crises well and I’m good at moving a situation forward to resolve the crisis,” he said. While he can be forgiving if things don’t run correctly, he expects peoples to learn from their mistakes. Within the community he has a vested interest in the BVI Watersports Centre and Dancefest which he sponsors along with his wife Sofia. At Ogier he and his staff have been supportive of the Joyce Samuel Primary School, and from time to time donate money, educational items and lend their voices to reading.

His Perspective on the Future of the Business Sector “The BVI has weathered the recession reasonably well and my expectation is that the BVI will continue to be a jurisdiction that’s used internationally for a long period of time,” Fay said. While he keeps a positive outlook, he also realizes the challenges that lie ahead. “The BVI business model is reliant on the sale of corporations with the provision of little, if any value to its services,” he said. When his company established itself in 2001, they did not intend to compete with that model. “Our business model is a model which the government approves. A number of other business have adopted this model, however there’s still a significant portion of BVI businesses that are reliant on the ‘stack ‘em high, stack ‘em low theory’ and I don’t think it has a long-term future internationally,” he said. On the importance of ensuring that businesses don’t fall foul, he said it would be crucial to preserve government revenue.

Setting New Foundations

As Fay progresses and makes Tortola home, he is also setting grounds for generations to come; professionally and personally.

BVI BUSINESS & LIFESTYLES

Heavyweight in Her Career

Sherri Ortiz Top of Her Game kaletha henry 90

Fifteen years ago, the Virgin Islands Daily News in St. Thomas spotlighted Sherri Ortiz on the cover of their special segment for Black History Month highlighting women who were making a difference. The front page photo showed her as a smiling, young, bright-eyed woman juxtaposed against the seasoned faces of women whose features showed the markings of wisdom and decades of life experience. An inside photo, captured her spending time with her husband and toddler son. In both images, she exuded the beauty and refinement associated more with a promising model, than that of a female powerhouse in banking. Ever since being featured as a woman at the top of her game with enough credentials to be viewed as a potential gubernatorial candidate – a post she has shied away from – Ms. Ortiz has steadfastly climbed the ladder of success, one focused step at a time. Her early passions and aspirations have become a reality: she obtained a master’s degree in business administration and opened her own business, (the well known and very missed ‘Mon Cheri Lingerie’). In the midst of fulfilling her personal and professional goals, she has unintentionally catapulted herself to becoming the Executive Director of the International Finance Centre, one of the highest positions within the financial sector of the British Virgin Islands. She now stands as the driving force behind the marketing of BVI’s financial services industry. Through it all, she’s been able to remain true to herself, her beliefs and her family.

The Importance of Family As a youngster, Ms. Ortiz spent time between St. Thomas, VI and the BVI, but her fondest memories are of summers running freely on the undeveloped landscapes in Tortola. As the eldest of nine children, she took on many responsibilities to assist with rearing her siblings, which may have helped develop her work ethics, which are firmly grounded in her strong family ties, dedication to mentorship and love of country.

“She’s extremely professional, very bright and always classy,” Were the words one of Ms. Ortiz’s female colleagues used to describe one of government’s leading executives. “I usually find such high accolades of myself very surprising and unexpected,” said Ms. Ortiz, adding that she works hard to live up to her own expectations. Her entrance into the financial sector began in 1987 with a position in the Virgin Islands Housing Authority, a USVI agency created to provide affordable housing to low and low to middle income recipients. While employed in the small agency Ms. Ortiz wore many hats, from qualifying applicants, to walking them through the entire housing process. After five years she stepped into the mortgage arena and became a regional manager at Met Mortgage, (a subsidiary of Met Life Insurance). Soon, her experience and proven track record opened the door for her to become the Vice President of Mortgage Banking at First Bank of the Virgin Islands, where she continued to build expertise in financial management and lending. After returning home to the BVI, in 1997, she accepted her first position in public service as the deputy financial secretary within the Ministry of Finance of the BVI, where she was responsible for public policy administration, fiscal policy management, and finance and budgetary supervision. She also supervised the Treasury, the Inland Revenue Department, the Customs Department, the Postal Services of the Government, and served as the Chairman of the BVI Development Bank. Five years later, she moved into the private sector and joined MWM/Abacus Trust, and then CITCO, finally returning to the public service in 2007 to the IFC. The level of responsibility Ms. Ortiz now holds is tempered between complexity, purpose and cause. She is directly charged with marketing and promoting the financial sector, managing the country’s global reputation as a viable financial services centre, and ensuring that the territory is ultimately viewed as a well-regulated jurisdiction by its peers, potential clients and international governments and organizations. She also works to ensure that business runs smoothly for the private sector both inside and outside of the Territory. There is little room for error and no room for a tarnished reputation. “My job speaks to ensuring the BVI is seen as a well operated, well grounded, transparent and stable jurisdiction,” she said. Ms. Ortiz regularly liaises with top ranking government officials from around the world as part of her work to secure the signing of Tax Information Exchange Agreements or TIEAs, which are now a vital part of ensuring the BVI remains at the forefront of international standards and requirements. Traveling is a significant component of Ms. Ortiz’s work life and when she’s away, she works twice as hard to promote the BVI’s financial services expertise to governments and businesses around the world. During a trip to London earlier this year her nearly two-week schedule was fully booked with back-to-back daily meetings, diplomatic functions and evening gatherings. However, Ms. Ortiz emphasizes, her work would not be possible without the high level of cross sector expertise resident in the BVI and the strong relationship between the private sector and the government. Only through this partnership can the Territory maintain its reputation as having a robust regulatory system, which meets and often exceeds international regulatory standards. In addition, and more

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Profiles of Personalities in the BVI Business Community

SHERRI ORTIZ

importantly for the community, it means the BVI is able to attract the requisite skills base from overseas while also developing these skills from its local human resources.

Community Involvement

Educating the BVI community and particularly its students on the significant contribution the financial services sector makes to the territory’s economy is of utmost importance to Ms. Ortiz. Her office staff conducts workshops and aims to create local awareness programs to teach youngsters about the bevy of financial service opportunities. “Our program involves going into the high school and with private sector service providers, discussing with students as early as third form – the career opportunities which exist in the financial services industry and the levels of education needed to work and contribute in the industry. “We must ensure that the future generations are exposed to the financial services arena in a capable and qualified manner. Private companies are willing to second our students to international locations because the firms have offices here in the BVI. This offers BVIslanders the most amazing opportunities to work all over the world in a range of financial services roles”, Ms. Ortiz said. The future of financial services is bright, but she maintains it is crucial for the territory to embrace it. “We need more of a national plan to embrace the industry,” she said. The majority of our people fail to understand that this industry is already a critical part of us.” Over the next five to 10 years, Ms. Ortiz foresees continued growth within the financial services industry. Clients are not investing as freely as they used to, but the jurisdictions that succeed will be those such as the BVI that maintain robust regulatory regimes which legitimate business will be attracted to.

Her Philosophy on Mentoring

Through all of Ms. Ortiz’s accomplishments, she cites the importance of giving. “If I don’t help someone else become as good or better than myself, I always ask, what have I achieved? We all need help. Someone helped me along the way and I find it extremely selfish if I don’t help someone else. Particularly the younger members of my staff,” she said. As Ms. Ortiz continues on her journey of success – she does not equate money, position, or title with being successful – she plans to carve a path to help others reach their aspirations. She’s already changed the flow and function of the IFC office to an open work plan similar to the style and communication of a medium-sized advertising agency. Ms Ortiz sees this as a model which improves the flow of communication and knowledge between staff. However, at the core is her intention to provide the knowledge, insight and guidance for other seeking to make a difference.

Real Estate & Tourism

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BVI PREPARES FOR THE INAUGURAL

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hat does a developer do after restoring one of the Virgin Islandsâ&#x20AC;&#x2122; top luxury resorts and breaking ground on the newest high-end residential community? For David Johnson, chairman of Victor International, the answer was to bring some of the worlds most glamorous boats to the shores of the Virgin Islands for the inaugural Caribbean Superyacht Regatta & Rendezvous.

Photo Credit: Jeff Brown, Superyacht media

Photo Credit: Jim Scheiner

REAL ESTATE & TOURISM DEVELOPMENT

“Boat International and YCCS’ history of hosting the greatest events around the globe, together with the physical beauty, elegance and unparalleled location of the new marina and yacht club and Oil Nut Bay on Virgin Gorda, is a natural fit for this special event.”

ictor International, the owners of Oil Nut Bay and Biras Creek will join with Boat International Media and Yacht Club Costa Smeralda (YCCS)—founders of the highly successful annual Loro Piana Superyacht Regatta— to host the four-day event in March. Regatta guests will be treated to elegant cocktail receptions, beach parties and gala dinners with an array of entertainment courtesy of the Oil Nut Bay Luxury Community. “Building on [the Loro Piana] success, it seemed logical to develop a series of international superyacht regattas, and the VI, with its beautiful waters, sounded like the perfect location,” said Riccardo Bonadeo, YCCS Commodore. “We look forward to organizing racing in the Sir Francis Drake Channel and around the islands of the archipelago. It will be reminiscent of our own regatta course in Sardinia, where islands and rocks act as natural buoys. We hope that our experience in organizing Maxi and Superyacht Regattas will contribute to making this a firm favorite on the superyacht calendar.” Tony Harris, CEO of Boat International Media, said he had chosen the location for the regatta after years of cruising in the territory. “Organizing a rendezvous and regatta in such a fantastic location will not be a hardship for us, and we look forward to ensuring that our participants experience on- and off-the-water fun that lives up to the usual Boat International standards,” he said. The Regatta will also provide Mr. Johnson with the opportunity to showcase his newest project: the North South Yacht Club, a megayacht marina with 38 slips that will accommodate boats up to 100 meters (328 feet).

The developer said the characteristics of the Virgin Islands—including the people, economic strength of the islands, and safety—made it an ideal place f or a regatta but that a marina large enough to house the many superyachts was lacking. According to Mr. Johnson, who spoke to this magazine in October just before we went to press, the territory’s newest marina and boutique yacht club was an important selling point for the Superyacht regatta. “[Boat International Media] was looking for ten years for the perfect location to have a Caribbean rendezvous that is complementary to Monaco,” said Mr. Johnson. “It’s been fascinating and complicated, but we are thrilled it has come together.” The developer plans to have the dock and marina completed by December 2010, while the “substantially complete” yacht club will continue to evolve over time based on the needs of the yachting community and the market.

“Our goal is to make the yacht club the best in the Caribbean and to ensure that it continues to evolve and expand… now that we have some of the world’s greatest sailboats coming to the event,” said Mr. Johnson. “I am proud to partner with Boat International Media and Yacht Club Costa Smeralda,” he said, adding, “Boat International and YCCS’ history of hosting the greatest events around the globe, together with the physical beauty, elegance and unparalleled location of the new marina and yacht club and Oil Nut Bay on Virgin Gorda, is a natural fit for this special event.” According to the developer, sailing yachts were quick to show an interest in attending the inaugural event, including the newly-launched and the Dubois-designed 164 ft. sloop Zefira, built by Fitzroy. Motor yachts include Lurssen’s 197 ft. Linda Lou, the 130 ft. Westport Resolute and the 150 ft. Trinity Vita. “This gives us a chance to feature the VI and our properties,” said Mr. Johnson. “We hope that people will choose the territory as their permanent base for their Caribbean base for cruising.” The regatta also provides Mr. Johnson with an opportunity to showcase the 88 properties of Oil Nut Bay. “It is hidden and tucked away,” said

Mr. Johnson. “This will really be a kind of front door presence. People will come into the North Sound and into the yacht club and we can take them around to see Oil Nut Bay.” The developer broke ground on the project in January 2009. By late last year, the developer said the resort’s infrastructure was substantially developed with four miles of underground utilities, seven conduits with fibre optics, two miles of buried electrical cable, freshwater and sewerage treatment. The arrival dock, beach club with three swimming pools, and first home had already been finished. Mr. Johnson said that five of the 10 beach front villa lots sold were also under construction. Property sales, he said, were “doing well.” But the focus in March, Mr. Johnson explained, will be on the sailing. “The regatta will feature both the North Sound and VI boating around the world. It is truly an international event that will be recognized around the world and featured at every one of Boat International’s events,” he said.

Photo Credit: Jeff Brown, Superyacht media

REAL ESTATE & TOURISM DEVELOPMENT

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When most people think about tourism in the British Virgin Islands: beaches, tropical drinks and warm weather come to mind. But nowadays tourism officials are starting to strategize about how to attract visitors with sports facilities and major competitions. From the Super Bowl to the World Cup, sports tourism has proven to be a lucrative market and an economic stimulus for many countries around the world. Many local officials now believe that it’s time to exploit this niche market in the BVI, while others think more planning and organization is needed before the territory can fully capitalize on sports tourism. BVI Athletics Association President, Dean Greenaway, has an idea about how to make sports tourism a possible economic pillar. But it is going to take some collaboration among sports and tourism officials. “I have heard a lot of talk about sports tourism,” Mr. Greenaway said. “What troubles me is that nobody has ever come to the sports associations and ask, ‘What major events are being held in the territory and what are you going to host?’” Although, Mr. Greenaway has met with the BVI Tourist Board about hosting certain events and how to prepare BVI athletes to better represent the territory, he maintains that there is not a clear vision or plan when it comes to sports tourism in the BVI. Sharing schedules and figuring out what events can be hosted here is the first step. “I have never heard of [a plan],” Mr. Greenaway said. The territory has an Olympic Committee, but not all sports are members. Nor does the BVIOC deal with the organization of events. “We actively encourage our 12 national federations to bid and host local, regional and where appropriate, continental and international sporting events,” BVIOC President Ephraim Penn said. The BVIOC has hosted the Caribbean Games Executive meetings in 2009 and the Queen’s Baton Relay earlier this year. The Committee sanctions and provides funding to assist federations when bidding for events. “We supported the CBC Basketball tournament in 2009 and have assisted many federations with not only funding but expertise,” Mr. Penn said. Sports Tourism is integral to the sports development process in the territory. Mr. Penn believes that a relationship between the BVITB, government, the BVIOC and other pertinent organizations must be forged if sports tourism is to develop and become a success. The BVI lacks a sports tourism director. Several countries in the region have sports councils, which are vital in then facilitation and hosting of events. Approximately four years ago a committee was charged with the development of a national sports policy. The committee was comprised of five or six Legislative Council members and met with representatives from the territory’s various sport federations. The objective was to share schedules and introduce a plan to incorporate various sports into the schools. “Sports tourism was never a focus of the committee, it was more about getting the young people involved,” Former Minister of Education and Culture Lloyd Black said. He said due to limited space, the policy was designed to help government focus on what sports to develop and facilities to house them. A draft document was prepared, but it did not come to fruition after the change of administrations.

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“We need to have more and greater sports administrators involved. People with a vision,” Mr. Greenaway said. “We are always going to have competitions, but what are we doing with bringing [events] here?” BVI Tourist Board Director Hadassah Ward confirmed that there is no formal plan of action. She said the BVITB helps facilitate clubs and sports organizations when hosting events. She thinks government’s role should be more focused on developing sports and improving facilities, rather than organizing events. “I think that is the more efficient way government should work with sports,” Ms. Ward said. “Sports are more about passion… I think for us; supporting from behind the scenes works much better.” Tourism officials cannot ignore the benefits of sports tourism, mainly: a smaller amount of energy and resources are needed to reach large groups of visitors, and sports also attract journalists who not only report about the athletes, but also cover the hosting destination. “Any time you have a reason to bring somebody [here], it makes it easier to market,” Ms. Ward said. Just by convincing one or two people to come here, can result in “hundreds of people coming to our shores,” the BVITB director said. As soon as people get here, whether they are here on business or to compete in a sport, there is a good chance that they will return with their families and friends, she added. “They can begin a life-long relationship [with the BVI], just because they came to play cricket,” Ms. Ward said. “It is an important niche. I wouldn’t say it is a new niche. People have been coming here for sports for a long time and our sporting teams have been traveling for a long time.” Other countries like the United Kingdom has seen the important role sports can play in its economy. According to VisitBritain’s 2008 Office for National Statistics International Passenger Survey, about two million visitors watched sports in Britain in 2008 spending more than £1.3 billion in the process. Meanwhile, 1.4 million visitors played some form of amateur sport, contributing £1.3billion in spending throughout their stay. In fact, most people who visited the UK for sports had a shorter visit, but spent more money. On average, a sports oriented visitor would spend about £900, almost twice as much as the ‘average’ visitor. Sports tourism helps create more than 50,000 jobs a year across the

UK. Wimbledon, the Premier League and test cricket are just some events that help stimulate the economy on an annual basis. There are also events like the Ryder Cup in Wales, the London 2012 Olympic and Paralympics Games, and the 2014 Commonwealth Games in Glasgow, which are also major contributors to the tourism product. The significant contributions of sports tourism to the UK’s economy is not lost on the new Prime Minister the RT Hon. David Cameron who in his policy statement on tourism said, “we have in the coming decade an unprecedented opportunity to take our tourism industry to a whole new level with so many big international sporting moments that will put us at the centre of the world stage year after year. Of course the Olympics – which will see the Triathlon right here in Hyde Park -and of course the Beach Volleyball on Horseguards’ Parade which I’ll be able to see from my bedroom window -- but also the Champions’ League final at Wembley next year, the Rugby League World Cup in 2013, the Commonwealth Games in 2014, the Rugby Union World Cup in 2015 and we’re fighting hard to get the football World Cup in 2018. And that’s just to name a few. Not to mention the Ryder Cup or the annual Six Nations. This really will be the greatest sporting decade in British history.” The UK is hoping that the billions invested in the Olympics not only help attract visitors, but transform London’s east side that has been considered poor and depressed. One of the ways it looks to improve the area is updating its infrastructure, including roads, railways and housing. After the games are over, officials are hoping the existing Olympic facilities will help provide jobs and affordable housing. Here in the BVI there are no precise statistics about sports tourism. But during the past six years, sporting facilities have improved to the point where it has enabled the territory to host regional events like the CBC Basketball tournament at the Multi-purpose Sports Complex and the Caribbean Union of Teachers Track and Field Championships at the A.O. Shirley Recreation Grounds. Both events attracted thousands of spectators from around the region and were deemed a success by both organizers and visitors.

“It has been growing since we have had the Multi-purpose Sports Complex and the [A.O. Shirley Recreation Grounds] has been upgraded,” BVITB Niche Marketing Manager Lynette Harrigan said. The BVI’s next hurdle will be hosting the 2011 Caribbean Athletic Confederation Age Group Championships on July 8-10, 2011, which will include 25-30 countries with eight athletes from each team for a total of 200 athletes. “Because of the youth a lot of people travel with these teams, more so than the senior teams,” Mr. Greenaway said. The territory’s infrastructure and facilities can handle an event like the CAC Age Group Championships without any problems. However, things change when the territory starts to consider hosting bigger events like the CARIFTA Games, which boasts about 600 athletes, coaches, fans and officials. “We are not at the stage yet to host the CARIFTA Games, because of facilities,” Mr. Greenaway said. Not only are sporting facilities in need of upgrades, but accommodations for athletes and visitors are also inadequate. “We have to look at our infrastructure,” Mr. Greenaway said. “It could be a strain on our transportation. There are certain things that we would not be able to host, because the basic infrastructure is not there, whether it is roads or accommodations.” He used St. Kitts as an example, which hosted the 2008 CARIFTA Games. Most of the athletes stayed at the Marriott Hotel, which has almost 400 rooms. In most cases athletes stay in one location. Tortola’s largest hotel is Long Bay Beach Resort and Villas in West End, which has 152 rooms. But its location is not practical for most sporting events, since the facilities are located in Road Town. The next option is Treasure Isle, which only has 65 rooms. Ms. Ward cautions that hosting a sporting event that is too large could hurt the infrastructure and the overall tourism product. She compares it to hosting too many cruise ships at one time. “We have to be very careful what we bid for,” Ms. Ward said. “On land we are very limited, on water we are not… It is basically balancing and knowing what your capacity levels are.” Ms. Ward said the BVI will always be limited in what events that it will be able to host. “It is all about attaching ourselves to a niche that will work for us,” Ms. Ward said. Mr. Greenaway said the athletes are not the only ones that have to be taken into consideration when hosting an event. In 2007 he attended a meeting in Mexico in preparation for the 2008 Olympic Games. He was told that supporters from the Bahamas, which are not affiliated to its athletic association, gave St. Kitts a $10,000 cheque as a deposit for hotel rooms for the CARIFTA Games. And during the 2010 CARIFTA Games in the Cayman Islands, the Bahamas came with two chartered flights. This kind of support from fans brings serious business to a territory and the Bahamas is not the only country that travels with an entourage. Other nations like Jamaica, Barbados and Trinidad are also considered powerhouses when it comes to supporters. “Let’s say you invest $100,000 to host an event,” Mr. Greenaway said. “Visitors are going to be renting rooms; they are going to be having meals. It is going to help stimulate the host economy.” He estimates that $800 to $1,200 is spent per person, not including airfare, while attending a sporting event here. Most events last about two to four days. Accommodations, food, transportation and departure tax is where most of the money goes.

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Another challenge with hosting the CARIFTA Games is the timing, which falls over the Easter holiday when the BVI Spring Regatta is held. The week-long regatta also injects millions into the territory’s economy, according to BVISR Chairman Bob Phillips. Currently, Mr. Phillips is working with the H. Lavity Stoutt Community College to help develop an economic study that shows the impact the BVISR has on the territory. Mr. Phillips estimates about $3 million dollars is circulated throughout territory during the regatta. According to the BVI Chamber of Commerce and Hotel Association, 95 percent of the territory’s hotels are filled during the event. Ms. Ward said she doesn’t see sailing as a sport or as a niche market, rather she sees it as a “staple” and “what [the BVI] does.” She works closely with most regattas that are held here and believes there are more options to deal with the onslaught of visitors when it comes to water sports. “We have more berths than we do beds,” Ms. Ward said. “[We assist] any way we can to make their stay much easier.” Mr. Greenaway said hosting multi events is a possibility, but scheduling is critical to the events’ success. The Dominican Republic last June and July hosted the CAC Junior Championships, which had almost 600 athletes. As soon as the event ended, the country was playing host to the Centrobasket Tournament, which had eight teams competing from around the region. “Having those events back-to-back helped stimulate the economy,” Mr. Greenaway said.

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Photo Credit: Dean “The Sportsman” Greenaway

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He believes facilities need to be built to a certain standard, so that associations can bid to host events. In the past, the territory missed opportunities to host events, due to inadequate playing facilities. In 2007, FIFA officials visited the A.O. Shirley Recreation Grounds — the proposed site of a World Cup preliminary match between the BVI and the Bahamas. FIFA officials would ultimately decide not to allow the match to be held here after failing an inspection, which included the security of the field, seating, police and fire services, hotel accommodations and the availability of team and staff facilities. The matches would be played in the Bahamas instead. The territory not only missed out on seeing its national team play at home, but also potential revenue and exposure. If the territory’s facilities are built to a certain standard, officials see more opportunities for generating money and attracting more visitors. “If we have the facilities, the BVI could be the go to guy, when other countries can’t host events,” Mr. Greenaway said. Renting facilities to professional teams to train for upcoming seasons, tournaments and Olympic Games is also a possibility. In 2004, Grenada’s football and track stadium was rented to the British Olympic Association for about three months so athletes could prepare for the Olympics. “You can pitch to cold weather teams to use your facilities,” Mr. Greenaway said. “Once they come, they are going to spend money. Fans are going to come.” Earlier this year, Minister of Education and Culture, Youth and Spots Andrew Fahie announced plans to explore the idea of bringing a drag strip to the territory. The department has awarded a $96,500 consultancy contract to further the development. However, the drag strip idea has received mix emotions from the community, but Minister Fahie said it would help create jobs and attract visitors. “With what we already have, as far as facilities, I think it is important we look at managing those first. Improving what we have by bringing them up to the standard, before we build anything else,” Mr. Greenaway said. “We have to decide where we want to be in the sports tourism market.” Ms. Ward said she wasn’t prepared to talk about the addition of drag racing in the BVI, but said if new sports or venues are added it should fit into the culture and enhance what is already offered. “We tend to connect to sports that fit into who we think is a typical BVI visitor,” Ms. Ward said. “You don’t want to invest in sports that won’t connect very well.”

She believes adding or developing a sport here should be done, firstly, for the people who live here, and not for the sole reason of generating tourism. “As a tourist board our main focus is sports that already exist here, or thrive here or will grow very naturally here and will fit into our tourism product,” Ms. Ward said. She thinks just starting something new here can be “dangerous” if it is not sustainable. She looks for signs of whether a sport can thrive here through tourism, and if the visitors can afford a hotel or a flight to get here. “Those are the questions that the tourist board would be putting forth and taking into question,” Ms. Ward said. “There is a lot that goes into a launching a new sport here,” Ms. Ward said. “But a consultancy would do its role.” Ms. Ward doesn’t see the BVITB marketing sports facilities. She believes that the board’s focus will be about focusing on the “experience” of hosting an event. “The facility is second to the experience,” Ms. Ward said. The BVITB has also worked with Messrs. Penn and Greenaway with preparing athletes when traveling abroad. “National representative teams shall travel with appropriate tourism materials on the British Virgin Islands and shall be encouraged to wear distinctive uniforms with the country’s name clearly identifiable,” Mr. Penn said. “Sporting activities and outstanding national athletes shall be utilized in the promotion of the British Virgin Islands as a major sports tourism location.” Sports tourism helps attract more regional visitors as opposed to areas that are more heavily targeted like North America and Europe. “The British Virgin Islands have always been a good host,” Mr. Greenaway said. “Once you start looking at hosting a major regional event, you will get the support from the rest of the region.” The BVI’s location is ideal for hosting sports events, because of its proximity to OECS countries. This would encourage teams to send larger delegations and more supporters here. If done properly, Mr. Greenaway would like to see events held throughout the year, even during the slow season. “It all comes down to a vision, planning and the ability to organize,” Mr. Greenaway said. “Countries that host and are involved in sports tourism benefit tremendously.”

Photo Credit: Dean “The Sportsman” Greenaway

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OPEN FOR BUSINESS

paul e. kandarian

crub Island Resort – the first resort built in the British Virgin Islands in 15 years – opened in February, on a 230acre craggy island just north of Tortola. It is a gorgeous, $150-million leap of faith for Mainsail Development of Tampa, which began the project years before the economic downturn in 2008. The island, which gets its name from pirate days when ships would put in here to get barnacles scrubbed off, was home to a restaurant/bar, Donovan’s Reef, run by the McManus family, named for the family patriarch’s favorite John Wayne movie. Joe Collier, a sailor and principal of Mainsail, used to frequent the place and made a deal with the family to develop the resort. Here are breathtaking views of the Caribbean, the Atlantic and Sir Francis Drake’s Channel,

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depending where you are on the island, a five-minute ferry ride from Trellis Bay on the mainland. The resort boasts 26 residential-style, one- or two-bedroom units, with top-shelf appliances in the gleaming kitchens (including ice-cream makers) and private patios overlooking Little Camanoe Island. Restaurants include the supremely elegant Caravela in the resort proper and the playfully named One Shoe Beach Bar and Grille (opening in spring) on the island’s far side on one of its four sugarsand beaches, the moniker coming from workers who’d frequently find single shoes washed ashore. The resort is a spectacular addition to the BVI, and includes one pretty cool amenity, available by late spring: Take your guest-room, GPS-equipped phone anywhere on Scrub and if you get hungry, call in and they’ll find you wherever you are even if you don’t know where that is. Another unusual feature: Cameras mounted on some nesting boxes of island birds of prey that broadcast to your rooms so you can keep an eye on what they’re having for dinner as you have yours.

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BVI spring regatta & Sailing Festival

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ABOVE: Squibs racing the first BVI Spring Regatta 1972. PHOTO: Courtesy of El Richardson

t began as just an idea. An idea sparked by a love of the tranquil blue waters of the British Virgin Islands, the warm steady trade winds and the picturesque scener y of the islands. In 1972, local sailors felt it was the right time to organize a major regatta. Bareboat char ters had already established themselves in the BVI, there were small Squib and Sunfish fleets and other privately owned yachts. In addition the BVI sailing contingent had a five-year histor y of organizing sailboat races. As members of the then BVI Hotel and Tourist Association, Peter Haycraft, Albie Stewart and others, used their influence to establish the first Spring Regatta. Over 20 boats, including Squibs, competed in

RIGHT: Vincitore, Racing A Class, BVI Spring Regatta & Sailing Festival 2009

the first regatta which was won by the yacht Nutmeg, skippered, by Alex Forbes of the United Kingdom. The very next year, with the formation of the BVI Yacht Club, the Spring Regatta became a joint effort between the BVI Yacht Club and the Hotel Association. Seeing the benefit of a partnership with the regatta, many local businesses soon joined as sponsors. As the eventâ&#x20AC;&#x2122;s marketing efforts have grown, those sponsors are part of not only a local event but receiving the added value of being promoted around the world. Due largely to the support of racing enthusiasts from around the world who return year after year to compete, and the people, businesses and Government of the BVI, the Spring Regatta has grown significantly in size and strength from its early success. Each year, as the Regatta grows the impact on the local economy also increases positively. Hotels across the islands are filled with racers, supporters and families. Villas, restaurants, provisionary, taxis all prepare for the nearly 3,000 visitors who will come and spend the week. In an unofficial economic impact study, the regatta brings approx. $3 to $4

Years later The BVI Spring Regatta Committee

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“...the event has evolved into six days of non-stop racing action.”

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million dollars of revenue to the island. In addition, many return to enjoy their holidays and bring new people to experience racing in the Caribbean. A few years ago a crew member had arrived early and was staying near the new villas at Nanny Cay. He decided to take a look and called his wife that day and said, I’ve just bought our dream home. The family returned in 2010 and raced both the Spring Regatta and actually won the Sailing Festival. The Regatta committee realizes the task of keeping the event fresh and interesting to those who return year after year, and have been successful in their vision and innovations. In 2000, the BVI Spring Regatta was the first to introduce separate start and finish lines on a windward leeward course. This enabled the race committee to individually tailor the length and number of races sailed by each class on the course. In 2003 organizers felt it was time to expand, and the event went through another major transition. The neighboring St. Thomas Rolex International Regatta happening just prior to the Spring Regatta provided an opportunity to for more days of racing and more time to enjoy the BVI both on and off the water. Thus, the Sailing Festival was born. The increased races, and number of days of the Sailing Festival has also helped the race committee in its mission to give back to the community that supports it. Each year all of the committee proceeds go to charity and non-profit organizations. Contributions from each boat go directly to the BVI Olympic Committee, in addition, they support the Youth sailing teams, KATS, and local business advocates. Again In 2006, the Race Committee added new classes to the one design area and the addition of a 3rd racecourse for one-design boats. They included lasers, laser radials, beach cats, formula boards and IC-24’s. Today, the BVI Spring Regatta and Sailing Festival is one of the Caribbean’s premier annual racing events. It has developed a reputation for serious competition and serious partying. By popular demand, the event has evolved into six days of non-stop racing action and seven nights of partying. Throughout the week, Bitter End Yacht Club and Nanny Cay Marina and Resort play host to participants with parties and prizes designed for those that sail and those that just want to have fun. “We also take our responsibility to the environment in which we play very seriously, said Judy Petz, Director of the Regatta, in 2008 we began recycling

all the bottles from the event; over 15,000 were collected. The following year we reduced the use of plastic by selling water bottles for $5 and Clearwater provided free water for all those who purchased the bottles. All the proceeds went to help support VISAR and the newly formed VI Green to further recycling development.” In 2009, following criteria from Sailors for the Sea, a special organization partnering with regattas in the US and Caribbean to promote recycling and environmental protection, the BVI Spring Regatta was the first regatta in the world to be awarded their Silver Certificate. “That was quite an honor.” said Petz. The BVI Spring Regatta and Sailing Festival will be celebrating its 40th Anniversary of racing the warm waters of the Sir Frances Drake Channel on March 28- April 3, 2011. On the quest for even more spectacular racing and special interest, there will be a new Classic Class added. Old schooners and wooden boats from around the Caribbean and the world have been invited to come and race the Sir Frances, very fitting for the celebration. The Race Committee will also initiate a new modern race on the lay days, level 3 Match Racing with the performance race boats, IC24’s. Much thought has gone into celebrating the 40th Anniversary, and special events and programs are in progress. A special committee has been formed to research and archive the past 40 years of the history of the regatta and to thank and celebrate those who have made this event endure and grow over those years. This sporting event has become an icon of the Caribbean and in many parts of the sailing world and is the largest event in the British Virgin Islands. The Regatta Village at the Nanny Cay Marina take on a carnival-like atmosphere with food, drinks, games, music, dancing and other forms of entertainment for landlubbers and yachtsmen who converge to eat, drink and make merry. Racing enthusiasts who have experienced the BVI Spring Regatta and Sailing Festival return year after year for fun, the great weather and innovative race management that introduces something new almost every year. The 2011 BVI Spring Regatta is presented by Nanny Cay Resort and Marina; the BVI Tourist Board is a Platinum sponsor; Gold sponsors are, LIME, First Caribbean International Bank, Heineken, Gill, SOL, Mount Gay, The Moorings, and the Bitter End Yacht Club.

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The Outlook for Real Estate 2011 edward childs

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hile many will argue about whether the major economies have truly emerged from recession or whether we remain on the brink of a double dip, no one questions the fact that, emerging or not, the future heralds a new economic reality. Q4 of 2009 and Q1 of 2010 provided optimism that the major economies were on the rebound. However, as winter moved to spring, and the fiscal measures provided by governments to stimulate their economies ended, the underlying weakness of the recovery was revealed. The fragile European economies, where wholesale collapse was predicted unless severe austerity measures were implemented, were matched by increasingly negative economic data emerging from the United States. By summerâ&#x20AC;&#x2122;s end, talk had returned to recession, or at best a troubled and lengthy recovery. Against this background, Apple launched the iPad and registered the sale of 2 million units in just 59 days from launch. Mercedes Benz enjoyed record sales in the US where sales were up by 25% in the first six months of 2010. Consumers showed more willingness to spend, particularly on small ticket items, while cutting back on dinners out and named brands.

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loomberg called it “the new abnormal”, where consumers would splurge on luxury discretionary items while at the same time divesting themselves of problem investments such as shares and real estate. Bloomberg called it “the new abnormal”, where consumers would splurge on luxury discretionary items while at the same time divesting themselves of problem investments such as shares and real estate. Perhaps there is only so many months that consumers can endure a recession and just not spend? By mid summer, the mini recovery had halted as the fragility of the recovery was revealed. The strong gains in the stock market fell back and consumers again became cautious with their spending habits.

Going back to the root cause of the problem, the toxic bundles of loans in the American domestic residential market, the fall out has been to create a liquidity crisis as lending has become more expensive and, in many instances, just simply not available. The result is that many real estate projects have halted while the property market adjusts and waits for the financial institutions to return to lending on real estate. As this edition of Business BVI goes to press, the world’s bankers and regulators have agreed new rules on how much capital banks should hold in reserve to prevent a repeat of the 2008 financial melt down. While welcomed as a step in the right direction in the long term, the requirement for banks to hold three times the reserves as previously required will have a short term cost and a likely a negative impact on the availability of credit. At the Caribbean Hotel and Tourism investment conference held in Puerto Rico in May, two clear messages emerged. The first concerned the level of investment in to the region through resort sector investment. From the peak of activity in 2007, the level of investment has slowed to a trickle as investors wait on the side lines for the market to bottom out. Investment in this sector was not predicted to start moving for the balance of the year with some increased levels of investment predicted for 2011 and improving by 2012 (although this prediction was made prior to the mid-summer blues that brought back talk of a recession). The second point of note was from the US based Smiths Travel Research which noted that resorts regionally discounted deeply in 2009 and 2010 in order to maintain occupancy. They predict that it will take the hotel industry eight years to return to pre-recessionary rates, adjusted for inflation, as a result of this discounting.

From a regional perspective, the recession has been slow to bite, but by mid 2010, many islands have seen their real estate markets grind to a standstill. The islands that engaged in the mid-sector condominium development market have been most heavily impacted, such as the Turks and Caicos Islands, as purchasers for this type of inventory simply no longer exist. Other islands, such as Anguilla and St Lucia, which were at one stage leading the Caribbean in terms of inward investment, are taking stock of a number of failed projects which have impacted investor confidence in these islands. Even Barbados, the once thriving centre of commerce in the Eastern Caribbean, has seen its share of stalled projects such as the high profile Four Seasons resort and residential development. Closer to home, the British Virgin Islands are also facing a challenging time. With elections less than twelve months away, the Government has had to face the challenge of a shortfall in Government revenues as income generated through tourism, the offshore financial industry and other revenue centres, has fallen by 3.6% in 2010 over the prior year. The 2010 budget of $271.7M is less than the 2009 budget of $280M and in the summer, the Government announced a series of measures to reduce public service expenditure. While several of the Caribbean British Overseas Territories have suffered in the recession, the BVI has so far weathered the worst impacts, although concern remains for the future. In February 2010, Colin Roberts, director of the Overseas Territories for the United Kingdomâ&#x20AC;&#x2122;s Foreign and Commonwealth Office, visited the Territory and found that the local economy has challenges but remains in better health than some of the other Overseas Territories in the region. A review of historic home sales in the British Virgin Islands reflects the changing fortunes of the last few years as the real estate market boomed through to 2007, flattened in 2008 and regressed in 2009 and 2010. The following chart summarises the total number of villa sales over $500,000 between 2003 and 2009 with a monthly comparison for January â&#x20AC;&#x201C; July for 2009 and 2010. The overall pattern shows an expanding market through to 2008 (when many sales contracted in 2007 would have closed due to the landholding licence procedure delaying closing by up to 12 months), followed by a contraction in 2009. While the number of sales closed in January â&#x20AC;&#x201C; July 2010 shows an increase over the corresponding period in 2009, the sales in 2010 include a number of closings at Scrub Island on contracts which would have been entered into prior to the current or prior year. If these sales are

A review of historic home sales in the British Virgin Islands reflects the changing fortunes of the last few years as the real estate market boomed through to 2007, flattened in 2008 and regressed in 2009 and 2010.

115 Source: BVI Government Land Registry Compiled: Smiths Gore

REAL ESTATE & TOURISM DEVELOPMENT

excluded, then the number of closed sales in 2010 through July is eight which is the same as for the corresponding period in 2009. The average sale value has also fallen from a peak of $1.5M in 2008 to $975,000 in 2009. The following table shows the participation of BVIslanders (Belongers) in the purchase of homes over $500,000. This shows that as the market improved between 2003 and 2007, the percentage of sales to BV Islanders fell, but after 2008 the percentage increased as the number of overseas investors fell away. Indeed, if the Scrub Island sales were taken out of the equation in 2010, the graph would show a more dramatic increase in the percentage of sales to BV Islanders in 2010.

Source: BVI Government Land Registry Compiled: Smiths Gore

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Statistics aside, the real estate market in the British Virgin Islands has not witnessed any dramatic falls in asking prices, although with demand for product from overseas purchasers very slow, any seller needs to be realistic with their pricing if they wish to sell. As seen above, while the overseas market may have slowed, there remains a small, but active, local market. For many years, the local market has benefitted from the protracted landholding licence procedure in the BVI as vendors have been willing to accept more competitive offers from a local investor who does not have to wait for landholding licence approval. Now, more than ever, a local investor should be able to negotiate a competitive price from a motivated vendor. In contrast to many Caribbean islands, the BVI does not have any partially built, but now stalled, private sector developments. Both Scrub Island and the joint developments at Oil Nut Bay and North Sound Yacht Club are proceeding despite current economic conditions. Bettina Grimsley of Mainsail BVI, the developer at Scrub Island noted that the opening of Scrub Island Resort in February this year has greatly improved their penetration of the real estate market as prospective purchasers are able to visit the resort and see for themselves the standard of finish and enjoy a vacation as part of their purchasing experience. The Oil Nut Bay development, by experienced developer Victor International from Michigan, USA is set to become a leading Caribbean destination catering to investors seeking a luxury residential resort with a focus on nature, well being, learning and family. As David Johnson the developer states: â&#x20AC;&#x153;I am in the fear management businessâ&#x20AC;? ensuring that investors in his developments do not have to worry that his developments in the Territory will fail like so many in the Caribbean. The lack of recourse to bank financing to develop the infrastructure for the resort has ensured that Oil Nut Bay can ride the tough times as well as look forward to improved economic conditions. The beach club at Oil Nut Bay will be completed this year and the first residential

villas are under construction. Work has also started on the North Sound Yacht Club adjacent to Biras Creek with the inaugural Caribbean Superyacht Regatta and Rendezvous to take place between 16 and 20 March 2011. This event, sponsored by Boat International and hosted by Yacht Club Costa Smeralda, is set to become a regular event promoting the BVI internationally amongst the ultra wealthy. On Tortola, Nanny Cay Resort & Marina has enjoyed strong sales of its new condominium units over the past twelve months despite the downturn in real estate activity in the BVI. Of the total of eight blocks comprising thirty two condominiums, three blocks have been completed with the fourth due for completion at the start of 2011. The site has also been prepared for the commencement of the second phase of condominiums, with construction starting in the late summer of 2010. Nanny Cay is also turning its attention to more

ambitious projects, with plans being finalized for a major expansion of the marina and boat yard together with additional residential and commercial development. Looking forward, concerns remain about the fragile state of the economy worldwide and the length of time it will take for consumers to regain confidence and start investing in real estate again. While tourism has shown signs of improvement in 2010 compared to 2009, and we are hopeful for further improvements in 2011, the Caribbean investment climate has yet to demonstrate a similar improvement in activity. Against this backdrop, the British Virgin Islands has remained active with both public and private sector construction projects which have helped maintained a positive outlook for the economy. With an election next year and the economic outlook for the Territory by no means certain, the next twelve months will be crucial to the growth in the real estate sector.

Green Opportunities

GREEN OPPORTUNITIES

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Colour Choice 2011:

e g a t t o C Green

annie westcott-macphail

If I had to choose a colour trend for 2011 in the Territory, I would call it, Cottage Green. In the world of fashion and retail products, colour schemes are chosen by looking at past, present and future trends thereby setting the tone for designers to base their concepts on each year. This year, in BVI as in the rest of the world â&#x20AC;&#x153;Going Greenâ&#x20AC;? by way of reducing waste, cleaning up our environment, living more conservatively, and using less energy, is hot. And that is good business for Nutmeg Designs, my sustainable goods store in Road Town. For me, it started about 6 years ago. Having moved temporarily from Tortola to St. Maarten for business, I found myself stopped in my tracks one day when I came across several pieces of furniture on a sidewalk outside a shop. These organically shaped pieces were not made out of newly cut and milled wood but from something no less beautiful. They were farmhouse-rustic like something one might find in New England or the French countryside; some of the pieces had old iron nails in them. I had to find out more.

cottage green combines the refreshing blue sea & the warm yellow sun

Inside the shop, I met Dutch proprietor Catharina de Bruin. And it was this chance meeting that changed my business plan and hence my lifestyle choices forever. What I found out that day was that Ms. de Bruin and her Australian business partner Nicola Swynnerton were just launching House of Wonders, furniture, accessories and gifts made from the retired hardwoods of East African sailing dhows. Ms. Swynnerton was based in Tanzania overseeing a team of 20 fundis (craftsmen). She had scouts finding derelict boats along the coastline of Tanzania and their owners for which to make cash offerings. After a purchase, a team of her men would go to the site, break down the boat, load and truck it to her workshop outside of Dar Es Salaam. From there, the wood was brought back

to life using all hand tools and only one electric drill. The finished pieces were then shipped to Ms. de Bruinâ&#x20AC;&#x2122;s gallery in the Caribbean for sale. The end result was pure fate: the two women needed my help and I could assist by rounding out the team. I owned a marketing and consulting business called CaribAtlantic whose mission it was to assist small Caribbean businesses by creating custom and tidy branding, marketing and media packages which tied into their business processes, thereby giving them a cohesive presence in the international marketplace. In addition, it was clear that the Internet was here to stay and could make or break your business if you were based in a relatively small set of islands with a limited market. It was essential to have a presence outside.

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These two women would become mentors and eventually I would join them in partnership, using my expertise to develop and grow the business. Several years later, I returned to the British Virgin Islands. Simultaneously, Ms. de Bruin decided to expand the business by relocating to Europe. This window of opportunity allowed me to have ownership of the Caribbean basin and the Americas as my region for our line of furniture. At this very same time I started to research reclaimed textiles that would compliment our furniture for the upholstery work on our ottoman cushions, pillows and chair seats. In Brazil, cotton tarpaulin is used to cover cargo that is trucked across this massive country. At the end of its life on the road, it is discarded into landfills. The fabric is so tough and thickly woven that it does not biodegrade. At a furniture trade show, I discovered an 80-year-old company in Brazil that reconditions, embroiders and then wholesales this fabric. This was the solution I was looking for. Having success with this beautiful fabric in one application, I decided to try my hand at another. I sent a few drawings of handbags by email to the textile company. They produced samples and sent them back to me. This was the birth of annie macphailâ&#x201E;˘ bags: a line of sustainable travel, tote and hand bags that I would be able to make an international brand. Logistically speaking, I knew the difficulties I would face in doing international trade shows with the furniture, but I also knew that I could spotlight my home and region by taking the bags to such wholesale shows outside of the Caribbean. While waiting for my first container of furniture to arrive on the shores of Tortola, I took the bags to the New York International Gift Fair where they were an immediate hit. Suddenly, I had retailers selling goods designed in the BVI at the Rosewood Hotel in Dallas, and in high-end boutiques from California to New York and Washington DC.

122 Hand-crafted reclaimed dhow wood furniture and accessories made in Tanzania.

Meanwhile, back in the BVI, I realized a timely movement was afoot in the Territory for cleaner living, one I had not seen before I had left for St. Maarten. Businesses and foundations such as Green Tech and Green VI were cropping up and I saw it as an opportunity to work with like minds to bring much needed change to the region. Green blossom pattern Tech was starting to import (shown left) biodegradable and compostable restaurant take away containers, Green VI was in the process of, setting up a glass recycling programme. The programme consists of building a glass furnace and manufacturing products on island; a full circle recycling plan and the first in the territory that works with the entire community from the businesses that import the glass, to the trucking companies who collect it, to the men and women chosen to enter the apprenticeship programme. What better time to set up a retail business as more and more people were looking for my products? Nutmeg Designs in Wickhams Cay II has developed into just that, not only a shop for House of Wonders Furniture and annie macphailâ&#x201E;˘ bags but a place for others who produce goods from reclaimed and sustainable materials to showcase and sell their wares. It has given individual small business owners who have cottage industry style companies an outlet to not only sell but to educate upcoming generations about the value of sustainable living. In addition, I have designed and developed other products and outsourced the production to local companies: fish pot coffee tables, furniture from the sheet metal taken from derelict automobile trunks and hoods, artisan-created recycled chairs, found beach-rope art, hand blown recycled glass terrariums complimented by a only a few imported goods: biodegradable table and picnic ware, solar Christmas lights, seed paper gift cards (thrown into your garden will sprout wild flowers!).

trumpet pattern annieâ&#x20AC;&#x2122;s colour pallet for her rejuvenated truck tarp fabrics

sweet pea pattern

The British Virgin Islands is renowned the world over as a colourful destination: the refreshing blue sea, the warm yellow sun. The way we may be recognized in the future should certainly be Cottage Green, a perfect combination of the two: bright, forward thinking, industrious and positively eco-opportunistic.

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Glass TAKES ON NEW AND HELPS THE ENVIRONMENT kaletha henry

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he next time you dump an empty bottle of Heineken or Carib into the trash it may find new life as an article worth cherishing; provided you choose the correct waste bin. Local non-profit group Green VI is planning to use these popular transparent green, and clear beer bottles to make vases, stem ware, drinking glasses, tiles and other functional pieces through their glass waste project, a program aimed at educating the public on the benefits associated with recycling waste. By the start of tourist season they hope to have bins erected in Cane Garden Bay that will be designated specifically for their collection. Initially, Myett’s Restaurant will be used as a starting point for compiling the disposed bottles. “It will be in a controlled environment,” said Green VI founder and organizer Charlotte McDevitt. “A contained area is best for a glass collection point.” A Vision for Refuse

While conducting research on waste management McDevitt noticed firsthand how precarious and problematic glass disposal posed for the local environment. Once glass is transferred to the incinerator it takes 10 days to cool before workers can get in and chip the material from the inside. The procedure is laborious and can be toxic to the environment. In 2007, McDevitt discovered a potential solution while on a trip to St. John. In Maho she was introduced to a ‘trash to treasure’ program used by locals who’ve turned waste into a venture; the initiative also encourages visitors to the island to participate in the program. The group on St. John used a furnace to transform disposed glass into recycled products and it opened McDevitt’s eyes to the possibility of operating a similar program in the BVI whereby waste education could be intertwined with tourism. She also saw the bonus of empowering locals to think differently about trash overall. “The island is overwhelmed with waste,” McDevitt said. This interactive project is one of many community projects to be unrolled by Green VI and the proceeds will fund the non-profit in their other endeavors. “This is a way to generate money that will help us to continue to develop green and sustainable projects,” she said. More than anything, McDevitt wants to highlight the many benefits attached with the glass waste project: It will reduce emissions, prevent landfill spaces from clogging, educate the local community about recycling, and create a new attraction for the hospitality industry. “I’ve always been interested in making things out of glass. I’ve always been eco-friendly. I wonder what will happen when we run out of places to dump our trash,” said David Hodge. Hodge is one in a small group of apprentices that Green VI has brought on board to study the art of glass blowing under the tutelage of professional glass blower Jake Baron.

Glass: from trash to Treasure A Furnace With a Purpose

Italian stem ware is the most elaborate item ever created by Jake Baron and the professional glass blower didn’t have to venture to Italy in order to accomplish it. For the past 20 years, he’s been putting his artistic skills – learned from living on the East Coast– to good use between the mainland and the Virgin Islands as a glass artist. A native of Vermont, Baron studied glass making through a number of art and craft studios in his home state before entering the profession as an apprentice. After devoting much of his time to the craft he opened a studio, working for years before shifting gears to the Caribbean. Though Baron has worked in the field for two decades and has created a unique career, he continues to develop his technique and perfect his craft. Some of his work can be seen at the glass blowing studio on St. John where he worked for the past six years teaching others how to develop the technique. Baron is now living on Tortola and will lead a group of apprentices who are 125 quite eager to learn the art of glass blowing. “I get excited over what I can create. There are such wonders with glass and having this is a win-win situation for the island,” Leon “Sandman” Rhymer, owner of Myett’s said. Cisne Benjamin, a young mother of six likes the local aspect of producing functional pieces from glass and is looking forward to making glass tiles. “My father was a tile man,” she said.

Leon “Sandman” Rhymer, Jacob Barron, Cisne Benjamin, David Hodge, Travis Jack

GREEN OPPORTUNITIES

Who said trash couldn’t be beautiful?

Glass blowing has become very popular in the United States, but it’s not an art form to which everyone is accustomed. Baron will work with Green VI to bring more attention to this delicate craft by offering a variety of products, demonstrations and lessons. “In the U.S. most universities with art departments have a glass studio on campus. I’ve noticed that many people in the Caribbean have never seen glass blowing and it’s a great place to do it,” Baron said. He envisions that he and his apprentices will melt between 300-400 pounds of glass per week, and once the volume of crushed glass is added, that figure can jump as high as 600 pounds. The process of melting glass is an overnight process with each batch taking roughly 12 hours to melt. One batch can equal anywhere from 200-250 bottles. After melting inside the 2,200-degree furnace that also contains a 180-pound crucible, the liquid becomes slightly bubbly before it rises to the top and pops. “Glass blowing is not the easiest art form. You have to shape and manipulate a ball of liquid on the end of a rod and when it comes to blowing, things can become tricky,” Baron said. When it comes to determining the type of bottles to be used and the amount needed to create a particular item, Baron said there are certain bottles that have proven to work best; the products are created based on the calculation of weight. Thus far, Sky Vodka and Heineken have worked well: one produces a bright blue, the other melts into a rich green and neither needs mixing additives or tints like the transparent bottles of Corona and Carib. These brands also make it less complicated for them. “Corona and Carib are easy to process and clean, the painted labels are easy to remove and they can be crushed and melted down, which means less labor for us,” Baron said. As the sole instructor he strives to work with the apprentices on a one-on-one basis and as a team over the next two years. On occasion and for added influence Baron plans to bring in guest artists who can provide further insight on glass blowing and the many techniques that exist within this artistry. Baron and his apprentices will be able to make decorative glassware, tropical fish, inexpensive souvenirs and other whimsical items. 126 They also plan to create products for architectural and interior design use, such as lighting fixtures, lamp shades, counter tops and tiles.

Form & Functionality: Recycled Glass Art (top & bottom)

Hear this critical message.

Have you ever stopped to consider the importance of waste management, or do you idly dispose of trash? Do you litter on the ground, or do you seek to throw your garbage in one of the many waste bins scattered across the islands? On a global scale, waste management has moved from being an afterthought in the minds of many to becoming a core concern for educators, health workers, families, students and government officials. McDevitt, a mother and waste management educator hopes everyone will come to view waste as an essential resource. “Recycling changes your perception of the resources in front of you,” McDevitt said. “It’s a paradigm shift.” The incinerator at Pockwood Pond can handle 40 tons of waste per day and although the new incinerator – once it starts operating – will be able to handle 100 tons per day, neither unit can handle glass. “Building a bigger incinerator is not the answer because it will cause high emissions problems,” McDevitt said. The answer is to close the loop and educate people on how to reduce waste throughout the territory. Trying to change someone’s mind set is an exhausting process, but she’s managed to be tenacious over the past year and a half. “I’m passionate,” she said. McDevitt is not a rookie in waste management. In South Africa, she made inroads in the plastics industry and was successful in getting people to reduce their waste, water and energy usage. Despite many challenges Green VI received a lot of local support in the forms of financing, transport, construction, insurance, supplies and materials from the Solid Waste Department, Sol Petroleum, Nagico, Meridian Construction Ltd., EZ Shipping, Overseas Territory Environmental Programme (OTEP), Drakes Traders, Caribbean Cellars, OBMI, TICO, Tortola Concrete, Civil and Structural Engineering Ltd., Groundworks BVI, BVI Technical and Vocational Institute, and Myett’s. Through the non-profit’s glass waste project, communities’ territory-wide can begin to observe the significance of thinking green and living green in the BVI.

Detail of multi-coloured glass. (middle)

GREEN OPPORTUNITIES

tourism leads the way with

green Projects mason marcus

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lug in a hair dryer, charge your cellular phone or flip on the lights at Peter Island Resort, and it is likely that at least some of the power was generated from twin turbines, spinning noiselessly on the south-western corner of the island.

Completed after a nine-month installation in March 2010—the two WES30, high performance, midsize 250kW wind turbines will help the resort decrease its fuel consumption by 25 percent and its overall carbon footprint by 75 percent. All told, the turbines could help the resort save more than 100,000 gallons of diesel fuel, worth some $250,000 annually. Speaking from his US offices, Peter Island Resort CEO Dave Van Andel said the decision to replace some of the island’s diesel generators with wind technology wasn’t made overnight. “We have been having discussions on upgrading some of the infrastructure of the island. Obviously we have had to look at all aspects of our costs and ongoing operational expenses, so, one of the technologies that we asked to be considered was wind technology,” he said. Invisible from nearly every point on the island, the turbines have the capacity to produce about 60 percent of the resort’s electricity needs at peak wind speeds. Plans are also in the works to demolish the old desalination and power facilities, replacing them with a solar power array that could bring the resort savings on water heating, which accounts for between 30 to 40 percent of the island’s energy use. “The decision to make the purchase and installation of windmills was predicated on cost benefit analysis,” Mr. Van Andel explained. Like other sister islands, Peter Island is not linked to the BVI Electricity Corporation grid. Behind wages, the second largest cost factor for the resort is generating power and water. “We factored in that we would be able to pay for those windmill in five years or less, contributing to the bottom line. They are not cheap, but over their life they are supposed to last 20-plus years. They will pay for themselves, lower the overall expenses for the resort, and make us more competitive in the marketplace as well,” said Mr. Van Andel.

“

Wind generation, questions of aesthetic appeal... some people look at them and say they are a thing of beauty.

”

The wind turbine construction is part of an ongoing rehab for the Peter Island Resort, which has been owned and operated by the Van Andel family since 1978. In 2009, the owners set about modernising some of the resort’s aging elements, including relocating the back-end operational facilities to the island’s south shore at Stoney Bay. At the base of the bay, the resort built a new 120,000 imperial gallon-per-day desalination plant and state of the art electricity plant with diesel generators. The generators are linked into a “municipal style” power grid, fed in part by the wind turbines. The turbines communicate with the plant, turning on and off the generators depending on load requirements and wind speed. The innovative system is monitored by a computer program via the Internet, which adjusts output based on activity and effectively tracks consumption. When making the decision to switch from diesel generators, Mr. Van Andel said owners looked at the amount and expense of parts, the cost and frequency of maintenance versus traditional power sources. “When we did that, we ended up with a nice cost benefit analysis that, in the long run, when we looked at, we said these things make sense, they will pay for themselves in a given period of time,” he said. The turbine project was part of a larger focus on green initiatives at the resort, which already has made efforts to recycle, minimise wastewater and decrease the amount of power consumption. The CEO says he hopes that others— including the government power supplier—will now consider using turbine technology. “Many people talk about what should be done, but we decided to do it. We are proud to lead by example in terms of the benefits derived for the environment and the resort cost structure. This is something we hope others will follow in as well as the region could greatly benefit from this technology.” With wind generation, questions of aesthetic appeal eventually cloud the debate, but the CEO said the 120-foot turbines’ benefits outweigh any unsightliness. “Some people look at them and say they are a thing of beauty, some people look at them and say they are ugly. You have the concern that you don’t want to destroy the natural beauty of the island, but at the same time, you have to say, look, isn’t having a diesel generator cranking on the island disturbing on a different way,” he said. In the coming years, the island’s owners will continue to rebuild the resort. In 2010, workers from Krauss Manning, the local construction manager, demolished two villas, tucked into the mountainside—a space where the resort now plans to build a sports complex with bocce, tennis, mini-golf and rock climbing. “We will slowly be going through the resort and upgrading and adding some new amenities and things of that nature,” said Mr. Van Andel. “As we touch different areas of the resort, we bring new things into the equation, and I think in the next five years people will see that Peter Island will significantly upgrade a lot of amenities including its rooms.” Elsewhere in the territory, other resorts are also turning to green initiatives to cut costs and promote a more environmentally friendly product. In 2008, Sir Richard Branson unveiled plans for what he called the world’s first carbon neutral resort at Mosquito Island, which would feature: low-flow showers; wind turbines; composting toilets; and solar-powered water heaters. Two years on, spokespersons for both Sir Richard’s Virgin Limited Edition and the BVI Government said that although a verbal agreement has been reached, final discussions to formalise the deal continue to stall development.

Oil Nut Bay, a luxury residential-resort development on Virgin Gorda’s eastern shores, is also planning for a greener future. The developer, Victor International, hired Dr. Larry Oswald to help implement the use of solar panels, thermal water heaters, wind turbines, composting, and recycling of treated sewage for methane production or irrigation. Dr. Oswald, who spent the last ten years helping to develop Chrysler’s

129

Windmill generator which sits atop Peter Island supplies power to the resort.

electric subsidiary, Global Electric Motorcars (GEM), said the resort was also considering turbines that he estimated could save the development around $650,000 annually in electric bills. “It is the right thing to do for the future,” said Dr. Oswald. “So, we are doing it maybe for selfish reasons to begin with, but the reality is that it is not selfish in the long run.”

Around the Region

AROUND THE REGION

132

puerto rico moves further up market with St. Regis mason marcus

133

n the 1950s and 1960s, Puerto Rico was a tourism market leader in the Caribbean, building and operating luxury resorts like the famous Caribe Hilton. But in the following decades, competition from high-volume properties in the Dominican Republic, Cuba and parts of Mexico—which thrive on low labour costs—has priced Puerto Rico out of the market. Today, backed by government incentives, the territory’s luxury market is experiencing a renaissance with high-end properties under construction from San Juan to Vieques. The philosophy rests on offering products to niche luxury markets that don’t depend on all-inclusive rates and volume-sales.

AROUND THE REGION

134

n July 2010, the government announced it would help finance the $1.2 billion Ritz-Carlton Reserve Dorado Beach Resort & Spa, with a $231 million loan for the first phase of construction. Scheduled to open in 2012, Governor Luis Fortuño said the resort is expected to generate 2,500 jobs during construction and will be the territory’s first six-star resort. Also along the north shore, Puerto Rico’s first five-star hotel, the St. Regis Resort at Bahía Beach is slated to open in November 2010. An initial $360million investment helped fund construction on the development, which will feature 139 beach front suites, 25 branded estate homes and over 100 villas ranging from 1,680 to 4,232 square feet. A Robert Trent Jones, Jr., designed golf course weaves through the property, of which over 65 percent has been preserved as green areas, sanctuaries and nature trails. “At Bahía Beach, it’s about being authentic, about being real, not recreating something that is really made up, but using the fundamentals of the location and the natural setting and carrying it across the architecture and the planning and the amenities,” said Federico Sánchez-Ortiz, president and chief executive officer of Interlink Group, one of the developers behind the project. The underlying concept behind Bahía Beach was designed in 2002, when Mr. Sánchez-Ortiz enrolled in the Harvard Graduate School of Design’s AMBP programme. As a final requirement to obtain the degree, the developer created a feasibility study for developing Bahía Beach as a high-end resort community. Shortly after completing the programme in July 2003, Mr. SánchezOrtiz teamed up with Antonio Muñoz, of Muñoz Holdings Inc to form BBP Partners LLC, of Puerto Rico. By September of the same year, the company had submitted a presentation to Banco Popular, and two months later had purchased the property for $40 million.

“Not every idea was in that project, but a lot of the fundamentals of Bahía Beach had their origin there,” he said. The resort is unique in Puerto Rico for its dedicated green-space and attention to nature. On a site visit in January 2010, Mr. Sánchez-Ortiz eagerly showed off the 3,500 transplanted trees, naming each fern and shrubs that hugged the roads and gravel paths. In October 2008, the property became the first residential resort community in the Caribbean to become a Certified Gold Audubon International Signature Sanctuary, in recognition of their efforts to design and implement a natural resources management plan. The 483-acre resort—which lies on two-miles of sandy beach front—also features 70-acres of interconnected lakes. Mr. Sánchez-Ortiz believes that the new resort will be able to compete more favourably against its Caribbean neighbours in the luxury and niche tourism markets. “Puerto Rico was not supplying the product, so, there was an unmet need or an unmet demand that we were trying to fill,” he said, adding “rather than this not being supplied, we should be able to compete in the segment.” Elis Gutierrez, an economist at the University of Puerto Rico, agrees. “I think [the new development] responds to a search for a niche in the market, where, Puerto Rico can deal with the mistakes that were made in previous decades,” he said. “We got ourselves out of the market, by establishing a price

“

ou need to start from the right place and build from that, and not try to be all things to all people, but to be unique, special and authentic.

”

structure which responded to inordinate costs, and I believe that here, there is an effort to seek a niche in the market that is not so responsive to prices, but more to quality and diversity, and to completeness and vintages with other destinations.” Mr. Guiterrez believes that in addition to the high cost of utilities on the island, hotels with casinos allowed unionized labour to push salary levels too high. “Now it’s a question of trying to come up with a product, that, even though it will always be at a very high cost level, will be able to balance that out with some other ingredients,” he explained. For the economist, new hotel and resort developments remain important because they “contribute indirectly to economic activity,” yet, he questioned whether these projects merit the heavy government involvement. “If those benefits were enough to balance out whatever subsidy or incentives the government were handing out to its operations… the question might come up with a positive balance, but this is not at all certain,” he said. Potential benefits from the planned resorts are a pressing matter in Puerto Rico, where in 2010 the territory was headed for a fourth year of recession. The services industry employs around 79 percent of the work force, and estimated tourist arrivals were more than 3.6 million in 2008. The unemployment rate, meanwhile, hovers around 16.6 percent. Developers believe the Ritz-Carlton Reserve Dorado Beach Resort and Spa will generate 1,500 jobs in the local economy, once complete. An additional $300 million is needed for the resort’s future expansion and $600 million to pay for the construction of a separate 400-room hotel, homes and condominiums. The initial funding on the project has come in debt financing provided by investment funds managed under UBS Asset Management of Puerto Rico and construction loans through FirstBank and the Government Development Bank. The Puerto Rico Tourism Development fund (TDF), a wholly owned subsidiary of GDB guaranteed the loan. The Bahía Beach development will also contribute directly and indirectly to Puerto Rico’s economy, Mr. Sánchez-Ortiz explained. “Notwithstanding the challenges of getting a hotel project off the

ground and getting financing, once you do, it is a great generator of economic activity. The hotel industry depends on suppliers, third party contractors, it generators income for the airlines, for food distributors and tour guides,” he said. The Sheridan San Juan Convention Centre, completed in November 2008 by Interlink created 500 new jobs and close to 1,000 indirect jobs, according to Mr. Sánchez-Ortiz who said the development at Bahía Beach will create 300 direct jobs and close to 700 indirect jobs. “These companies invest a lot of money and training in development, a component that is critical for the industry wherever they are located because they develop local talent for the future,” he explained. The Bahía Beach St. Regis is one of many projects announced in the last few years to redesign the look and feel of Puerto Rico. In April 2010, Starwood’s upscale W Retreat & Spa opened its doors on the island of Vieques, which boasts 157 guest rooms and suites; an Alain Ducasse restaurant featuring organic, local ingredients handpicked from the island’s growers; and seaside spa. The historic La Concha Beach Resort, a Renaissance Resort, re-opened in December 2007 after renovations that included a $220 million investment. The property has 20,000 square feet of meeting space including a panoramic indoor/outdoor rooftop area, five on-site restaurants and a casino. It was selected as one of the Top 21 Hottest Caribbean Escapes in 2009 by The Travel Channel.

Even the city of historic San Juan is due for a face lift. In a July publication, “The Walkable City,” Mayor Jorge Santini Padilla dreamed up plans for a $1.5 billion revamp of the city’s mass transit network, roads, intersections and beach point access. The plan would also ban cars from historic Old San Juan Isleta. Mr. Sánchez-Ortiz is confident that the unique luxury elements of the St. Regis Resort at Bahía Beach will help differentiate the property from competitors. The residential elements continue to sell, albeit at a lower absorption rate than in 2007, he said noting that hotel bookings for November have been “outstanding.” Asked about his success, Mr. Sánchez-Ortiz responded, “I think it’s a combination of the St. Regis brand, the Jean Georges Restaurant and the Audubon certification which shows that conservation and respect for the environment is not a trend, it is a reality. People appreciate that,” he said. Other unique touches include a nursery and hydroponic garden that will supply the restaurant with produce, 5,000 square feet of ballroom and meetings space, beach front pool facilities for adults and children, a 10,000 square food spa that features eight private treatment rooms and one room for couples. “It is not something that we took out of a catalogue and planted wherever we felt like,” said Mr. Sánchez-Ortiz. “You need to start from the right place and build from that, and not try to be all things to all people, but to be unique, special and authentic.”

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“We have still got a jewel and the question is how do we preserve it?”

SIR JOHN URGES YOUNG PROFESSIONALS TO

take charge of BERMUDA’S FUTURE

alex wright, the royal gazette, bermuda

ermuda’s up and coming young professionals need to take charge of their country’s future right now in order to bring it back from the brink.

That was the stark message delivered by Former Premier Sir John Swan to attendees at the Bermuda’s Emerging Professionals (BEPRO) Annual General Meeting held at the Chamber of Commerce in April 2010. Sir John told delegates they had a big part to play in saving the ailing Island and that they needed to start turning things around sooner rather than later. He also put forward a raft of wide reaching measures to help cure the country of its ills. “These are deeply troubling financial and social times for all of us,” he said. “Bermudians and residents have felt great anxiety about their jobs, finances and their future. “Yes, these challenges are formidable, but they are not insurmountable. Moreover, it is within these challenges that your opportunity to provide leadership and service resides.” Sir John urged the audience to plan ahead and to make a notable contribution to their community and professions, as well as opening the doors for their own success and that of Bermuda rather than waiting for something to happen. He said that Bermuda’s economy was in serious trouble, with unemployment rising and wealth being eroded, and was facing the same problems as the rest of the world as a result of the change it had undergone since the fall of the Berlin Wall, the collapse of the Soviet Union and communism and the subsequent rise of capitalism, which had had a knock-on effect on today’s economic situation. “We all thought we could enjoy the spoils of change without taking on the responsibility for it,” he said. “Bermuda and most of the world has had the highest level of economic activity for the past 20 years but we are now experiencing a downturn. “We live better than 99 percent of the world’s population, yet when you look at the things that are happening in Bermuda you would not think so.” Sir John said that the Island should be looking at achieving something similar to the tax treaty he brokered with the US during his term in office, which took six years to accomplish, but resulted in 20 years of unprecedented economic activity subsequently. He said that situation was reflected in the position the country found itself in today with the western world countries putting up economic barriers and

taxation, as well as becoming very insular in their outlook, but it was up to Bermuda to carve out its own destiny and determine a means to get there. Sir John went on to say that the country’s tourism industry was virtually dead and international business — the one pillar left of Bermuda’s economy — was under threat, and time was of the essence to halt that decline and 137 start the economic revival in order to continue to enjoy the success it had previously seen. He stressed the importance of finding a niche to attract people and companies to do business with Bermuda and set up their operations here to do so, using a solid infrastructure including a strong health care, telecommunications and professional services, while realising the limitations of size and population. He proposed to: • Extend the boundaries of the City of Hamilton. • Develop high rise departments for Bermudians and non-Bermudians in suitable areas • Draw up industrial, commercial and residential zones in Hamilton. • Introduce a transport system to shuttle people around the city. • Provide long-term or permanent residency for high net worth individuals to enable them to manage their assets and bring in key employees through domiciling in Bermuda. • Remove the impediment of people bringing their boats and planes to the Island. • Setting up a marina in Hamilton for yachts and parks for activity, including a casino and other social activities. • Set up a task force to look into boosting commercial activity, viability and profitability to benefit the country as a whole. “I believe in the future of Bermuda and I believe Bermuda probably has the greatest potential in the future of any country in the world,” he said. “We have still got a jewel and the question is how do we preserve it? “You, as the young professionals of Bermuda, are the treasure trove that can make a difference and others will join you when they see what is happening here. “We have not fallen yet, but we are getting very close. Before we bury Bermuda let’s make sure we have given it a fair chance to succeed.” Edited by Business BVI. Reproduced with permission from The Royal Gazette, Bermuda.

AROUND THE REGION

SOL

the Changing Face of the Oil Business the sol group

138

n February 2005, a newly formed Barbados-based company successfully acquired Shell’s distribution and marketing business in thirteen Caribbean countries. Sol is proud to be a wholly Caribbean owned and run organisation. Sol benefits from the expertise of its leadership team. At the forefront of this successful enterprise is the chairman, Sir Kyffin Simpson who has an extensive and successful history of growing segment related and other multi-national businesses in the region. His wealth of knowledge and insight into expansion strategies at an international level is complemented by the experience of the executives in the leadership team. CEO Gerard Cox and Chief Financial Officer, Andrew Rollins each had established track records in their field in the oil business. The leadership team has been guiding the execution of the regional strategies to ensure that the Sol Group remains on target to meet its vision of building a wholly Caribbean owned independent oil company with operations throughout the region and extending to Central and South America. By its fifth anniversary in 2010, the Sol Group had expanded its portfolio to include acquisitions of Shell in Puerto Rico, Esso in Haiti, Guyana and Suriname, and the Shell Aviation business in the Region. Sol now has operations in seventeen countries across the Caribbean, Central and South America. The acquisition of Shell’s business and marketing interests included a trademark licensing agreement. Over the past five years, Sol garnered much success as a licensee supplying fuels, lubricants, bitumen and Liquefied Petroleum Gas (LPG) to consumers through a growing network of service stations and to more than two thousand marine, aviation and commercial operations. The company is an agent for Shell Marine products and is the sole distributor of Shell’s fuels and lubricants. However, as a regional company based on continuous growth, Sol made the decision to rebrand its sites from Shell to Sol in an effort to solidify its presence in the region. This re-branding process, which began in April 2010, signals the continuation of the Sol Retail Brand, which was first unveiled in Haiti in August 2009. The re-branding of its operations with the Sol emblem and colours is an integral part of the company’s desire to re-affirm its position as a new and improved competitor in markets where Sol operates. The Sol Retail Brand has been developed as a modern, innovative and easy to maintain solution. Sol’s mission is to consistently provide leading

businesses in the region with customized, innovative products with efficient energy offerings. From its inception, the leadership team understood that each of the markets in which Sol operates has a unique set of needs that cannot successfully be addressed with a centralized operation. The way forward was to develop a customer-centric business with emphasis on marketing, distribution and fuel delivery. The leadership team was also sensitive to the reality of the social and community values of each country. Involvement and engagement has always been seen as imperative to meaningful assimilation and integration of the business. Dynamic and driven individuals as leaders in each of the markets were sought to take on the role of delivering on the Sol vision. Each country manager has been given the autonomy to assess the local needs and to act accordingly. The strategy of allowing managers to meet the market demands with a customized solution has been a success for changing the face of the oil business in all the markets. The results are clearly visible in the British Virgin Islands. Sol took over the Shell distribution and marketing business in the BVI on February 2, 2005. Its client base included three Shell service stations, some independent stations and a portfolio of marinas and commercial operations. With a mandate to provide a solution-driven service and establish Sol as an effective and responsive company, Country Manager, Deborah Benjamin, implemented changes that would better serve Sol’s customers. The hands-on approach allowed Deborah to instigate regular visits with the owner/operators and managers of the service stations, marinas and other commercial businesses to gain an understanding of their needs. The ease of communication and ability to respond in real time was key to improving customer service and realising incremental growth in business. Increased demand for fuel, lubricants and LPG required the Sol operation to install larger storage tanks and to expand its fleet and replace the fuel delivery trucks. Rigorous checks and balances on service station operations are maintained and the end-of-day fuel reconciliation has a multi-fold benefit to the business, the environment and the community. The system checks the fuel remaining in the on-site storage units at the close of business as measured against the amount of fuel mechanically and manually recorded as sold. Discrepancies are useful to detect any leaks or undue wastage that could be attributed to a faulty mechanism. Swift detection means that the cause can be addressed

AROUND THE REGION

SOL provides aviation fuel at the Terrence Lettsome International Airport, BVI.

remove 60,000 gallons of accumulated and current waste oil and slops (oil and incidental gas run-off) which are the by-products of the electricity generation plants. Sol was able to offer a waste oil recycling and disposal system that dealt with a serious problem of many decades: Through the installation of an 8,000 gallon holding tank, the waste oil and slops now are contained securely on site prior to being sealed, removed from the property and shipped off-island to recycling plants. Beyond the delivery of its products and services, Sol takes its social and community responsibility seriously. The leadership team encourages operations to be vested in the community through partnerships with organizations that deliver a benefit to the public. In the BVI, Sol entered a partnership agreement with the BVI Athletics Association (BVIAA). Since June 2009, Sol has committed to making a quarterly contribution towards the BVIAA from every gallon of fuel sold from participating Sol service stations in the BVI. Other initiatives that Sol supports locally include the BVI Spring Regatta and Sailing Festival, the annual Poker Run, the Glass Project and the Yacht Charter Society. Sol is now the largest petroleum company in the BVI. It is the sole provider of aviation fuel at the Terrence Lettsome International Airport, Beef Island. It supplies the marine community at Nanny Cay Marina, the Moorings, Bitter End, Biras Creek, Peter Island, Guana Island, Virgin Gorda Yacht Harbour and Leverick Bay. Sol recently expanded its distribution services to Hodges Creek Marina and Village Cay Marina.

SOL manages their own operations as good and responsible custodians of the environment

and any impact minimized and averted. Inadvertent wastage is curbed which contributes to the economic efficiency of the service station. Staff training is also recognised as an 140 essential requirement to ensure customer satisfaction and retention. Regular on- and off- site training sessions are scheduled with managers and forecourt attendants. The sessions are designed to ensure that the staff is knowledgeable about the products offered and also build awareness of the customersâ&#x20AC;&#x2122; expectations and needs. The training empowers the employees to exercise initiative and to engage with the customer. In keeping with this inclusive policy, the company has introduced the â&#x20AC;&#x2DC;Sol Excellenceâ&#x20AC;&#x2122; award programme. Sol Excellence is designed to stimulate and encourage pride in the work place. Retail sites and staff must demonstrate a level of exemplary performance, well-maintained and properly presented service stations and outstanding customer satisfaction to be deserving of the award. Sol is resolved to be a responsible oil distribution company. It implements a Health, Safety and the Environment (HSE) policy that promotes the best practice in the industry. The policy commits Sol and its employees to establishing a safe work place through health and safety training activities, risk management training, consolidated logistics, and regulation for the efficient use of materials and energy in the provision of products and services. Sol takes the HSE commitment beyond its immediate family and offers annual oil spill management training to its marine customers. The theoretical and practical exercises facilitate marina managers and their staff to respond appropriately and to manage their own operations as good and responsible custodians of the environment. Sol is responsive to its customers needs through a solution-based approach to challenges. Sol works with the BVI Electricity Corporation to manage and

AROUND THE REGION

In Memoriam of the late Prime Minister of Barbados, Honourable David Thompson.

142

ollowing is the full statement of Prime Minister David Thompson’s address to the nation on Thursday, September 30, 2010. Fellow Barbadians, residents, friends and well wishers – I am honoured to be spared this opportunity as your leader to renew our special relationship and update you on our partnership to build a better democracy and a better Barbados. I assure you that working together we can uphold each other and build a glorious legacy for our children. Last week Dr Richard Ishmael, my personal physician, issued at my request, a full statement on the condition of my health and the challenges which have confronted me since March. I am again grateful to those of you who have responded with overwhelming love and compassion towards me and my family. On this occasion I have chosen not to speak to you by live telecast. The nature of my medical treatment has occasioned obvious weight loss. I would rather that you get the portent of my message rather than the picture; and be concerned about the message, not the medium. While we cannot control what happens to us, we can control how we respond to what happens to us. In that sense I wish to assure you that my family and I are determined to battle this illness and are fully co-operating with the medical teams here

Barbados

In our 2009 edition, Business BVI published a speech given by the late Prime Minister at the closing ceremony of the Commonwealth Lawyers’ Association (CLA) 25th conference at the Ritz-Carlton Hotel St. James Jamaica captioned: Prepare for the effects of globalization. and in New York, to ensure that all that’s humanly possible is done to arrest and reverse this condition, while humbly recognising that ultimately the will of God will prevail. We are well aware that the future of us all rests in the hands of the Almighty. In recognition of this truth, I continue to solicit your intercession and prayers. The Apostle Paul in his letter to the Corinthians pleaded with the Lord to remove his impediment, but the Lord said: My Grace is sufficient for you, for My power is made perfect in weakness. Thus I am able to rejoice in hope and be gracious through faith.

All relationships, including those between premier and people, involve “We can’t go on, pretending day by day, that someone, somewhere will times of closeness and times of distance. I have grown to appreciate you in soon make a change. We are all a part, of God’s great big family, and the both circumstances, and I hope your experience has been the same. truth, you know, love is all we need.” In the meantime my reduced physical capacity has placed a strain on my That’s my fondest wish for Barbadians. That we use adversity to refocus ability to serve you as I would dearly want to, particularly in these challenging our energies on what’s best for Barbados and that we wrap our actions and our economic times when the signs are clear that full global economic recovery is utterances in the national flag and the furtherance of this great nation we call still a fair distance away. home. That’s my challenge to you. Unite and love. One of the blessings of my extended periods in North America is the - David Thompson - Prime Minister opportunity to read and observe, on a daily basis, the performance and analyses and Minister of National Security. associated with the United States, European and North East Asian economies. - Freundel Stuart - Deputy Prime Minister, We in Barbados and the wider Caribbean should not bamboozle ourselves Attorney General and Minister of with the notion that recovery is dependent on factors of our exclusive design Home Affairs. and making. - Chris Sinckler - Minister of The approach of our partnership over the past Finance and Economic Affairs. two and a half years has been to cautiously but - Ronald Jones - Minister of Education judiciously proceed; while ensuring at all times the and Human Resource Development. maintenance of a desired social protective net for - Michael Lashley - Minister of Housing, the most vulnerable. Lands, Urban and Rural Development. We will not be deviated from this path for it is - Patrick Todd - Minister of State in the most difficult to build a lasting democracy when Ministry of Housing, Lands, Urban and the needs of daily shelter and daily living remain a Rural Development with responsibilities struggle for far too many among us on this island. for Urban and Rural Development. That is why you may not have seen an abundance - John Boyce -Minister of Transport and of buildings going up across the country, but there Works, as well as Leader of the House. has been an improvement in the quality of health - Denis Lowe - Minister of Drainage, Water care, better management and operation of social Resource Management and Environment. welfare agencies such as the National Assistance - Donville Inniss - Minister of Health. Board, the Urban and Rural Development - Richard Sealy - Minister of Tourism. Commissions, the National Housing Corporation, - Dr David Estwick - Minister of Child Care Board and associated agencies, and the Agriculture, Food, Fisheries, Industry upkeep of our schools and conditions of work for and Small Business Development. public officers. - Dr Esther Byer-Suckoo Additionally, we have made the sacrifice of 143 Minister of Labour. containing bus fares and have even offered free - Steve Blackett - Minister of Social access thereto, to school children. Fellow Citizens Care, Constituency Empowerment and Friends, these are all deliberate strategies geared Prime Minister, The Hon. David Thompson and Community Development. to cushion the shock and to minimize the impact of - Stephen Lashley - Minister of Family, the economic decline. Culture, Sports and Youth. The weeks and months ahead will be equally - Senator Haynesley Benn - Minister challenging and it is for that reason that I have assessed of Commerce and Trade. the future, in the context of my illness and reduced - George Hutson - Minister of International capacity, and have determined that it is necessary and Transport and International Business. prudent that I divest aspects of my ministerial portfolio - Senator Maxine McClean - Minister of that require robust, day to day oversight. Foreign Affairs and Foreign Trade. But before I outline proposed changes to the - Senator Darcy Boyce - Minister in Cabinet of Barbados, I wish to address a matter of the Office of the Prime Minister with fundamental concern to me, as head of government. responsibilities for Energy, Immigration, Fellow Barbadians, ladies and gentlemen, Telecommunications and Investment. general elections are held in Barbados every five - Senator Irene Sandiford-Garner years. Historically, in the intervening period we Parliamentary Secretary, have always conducted ourselves in a focused, mature and patriotic manner. Ministry of Health. We have placed the best interest of Barbados foremost in our consideration. - Senator Harry Husbands - Parliamentary The Right Excellent Errol Barrow taught us that size does not have to be a Secretary, Office of the Prime Minister. deterrent to greatness. And former Prime Minister Tom Adams had a vision - Senator Jepter Ince - Parliamentary for Barbados that defied our limited landscape. Indeed, former United Nations Secretary, Ministry of Secretary General Kofi Annan on his visit to Barbados in 2002, noted that Economic Affairs. Barbados was a country “punching above its weight”. These changes will accelerate the delivery of vital policies and services. If we can unite first and foremost as sons and daughters of these fields and I have every confidence in the public service of Barbados to implement such, hills we call our very own, nothing will hold us back. We did it in the ‘60s and with the efficiency and alacrity that is required. ‘70s, and we make no wanton boast of what we can achieve. I take this opportunity to reassure you that I continue to feel greatly blessed, Michael Jackson of late memory reminded us in his song “We Are The World” that highly favored and deeply loved. Thank you for your expressions of support change will only come when we stand together as one. In his seminal work he wrote: and fervent prayers during this testing period. “There comes a time, when we heed a certain call, when the world must May God bless Barbados and may grace come together as one. There are people dying, and it’s time to lend a hand to and peace be multiplied unto all Barbadians. life; the greatest gift of all.

May God bless Barbados and may grace and peace be multiplied unto all Barbadians.

MOVING TO THE BRITISH VIRGIN ISLANDS

144

moving to the british

virgin

islands

Many dream of living in paradise, waking up to the sound of breaking waves, relaxing on white-sand beaches and living in a place where both the sky and sea are blue and the people are friendly and laid-back . Once you have decided to make this dream a reality and just before you take the leap you need to consider the practicalities such as informing your loved ones of your decision (highlighting the benefits to them as you do so), researching the cost of living and finally securing a job that is going to enable you to make this life style change. The British Virgin Islands, a beautiful collection of 60 islands, cays and rocks in the north eastern Caribbean some 60 miles east of Puerto Rico offer what many expatriates are looking for. The strong economy, characterized by a growing tourism and financial services sector, a strong public sector and a growing private sector continues to draw people from virtually every country in the world. The process of emigration is fairly straight forward once you know what to expect and how to go about it. WORK PERMIT AND IMMIGRATION MATTERS Once you have found your ideal job in the British Virgin Islands, if you are not a citizen of the BVI, you must obtain a work permit. This permit allows you to legally work in the Territory for a specific employer. Even if individuals plan to work for a few months, a Temporary Work Permit must be obtained. While work permits are being processed, perspective employees must reside outside of the BVI. Work permit applications are filed by the employer and not the employee. A new work permit application form must be filed with supporting documents, such as: • Cover letter from employer • Perspective employee’s resume • Proof of qualifications for the job • Copy of newspaper advertisement of the job • 1 passport sized photo of applicant Work permit applications are processed within 30 working days. Once the work permit is approved, the application if forwarded to the Immigration Department. Immigration then grants a clearance letter which will be used by the employee to enter the Territory. The employer will be given the clearance letter and a medical form to forward to the employee. A thorough medical must be done and a medical certificate granted before entering the BVI. Once the employee enters the Territory, the medical certificate must be approved by the BVI Health Services. If any additional vaccinations or test is needed to be done, this can be done by the Government’s health clinic. It is important to note that citizens of particular countries must obtain a visitor’s VISA to enter the British Virgin Islands. This can be obtained at the nearest British embassy in the applicant’s home or residing country. A full list of qualifying countries can be obtained from the Deputy Governor’s Office website at www.dgo.gov.vg. Additionally, while the need for passports to enter the BVI for United States and Canadian citizens have been extended; citizens of those countries are urged to obtain passports to enter the BVI. Upon entering the BVI, all expatriates must have a return ticket to their home country. Once in the BVI, the employee can receive their work permit by visiting the Labour Department. The Territory’s new work permit cards are a highly sophisticated holographic cards, that can also be used as a pictured identification card and are the size of a regular bank card. It is very important that work permit holders have their work permit cards on their person at all times.

Once the card is received, employees must take the card and job letter to the Immigration Department. There a stamp is placed in the employee’s passport showing that the employee is a legal resident of the BVI. Once this process is done, employees are legally permitted to work, reside and travel in and out of the British Virgin Islands. Labour Department Immigration Department

284 468 3701 ext. 4708/ 4780 284 468 3701 ext. 4700/ 4770

SOCIAL SECURITY 145 Social Security is a compulsory insurance plan to which employers, employees, self employed individuals must contribute. It is designed to protect insured persons from financial distress by providing partial income replacement when particular contingencies arise. Sickness, maternity, invalidity, age, funeral, survivor’s and employment injury benefits are paid to qualified persons. All working individuals between the ages of 15 and 65 years must register with the Social Security Board and obtain a BVI Social Security card. This is a one time registration. To register, persons must fill out an Employee’s Registration Form and submit proof of birth, i.e. birth certificate or passport. Forms may be collected and filed at the Board’s office in Road Town. Social Security payments are mandatory. Contributions for private employees and self-employed persons are 81/2 percent of insurable earnings. Employees contribute 4 percent of that total and 41/2 percent is contributed by employers. Civil servants contribute 71/2 percent; 31/2 percent by employee and 4 percent by Government. Social Security contributions can also be voluntary for persons who have worked in the Territory and are living abroad or for persons who no longer work but are not at the eligible age of 65 to collect benefits. This contribution is 7 percent of earnings established by the Board. Social Security Board 284 494 3418 TRAVELLING TO THE BRITISH VIRGIN ISLANDS The Terrance B. Lettsome International Airport is located on Beef Island. It is the Territory’s main airport with internationally recognised airport code, EIS. Some travellers fly into the United States Virgin Islands’ island of St. Thomas at the Cyril E. King International Airport, code STT. After arriving at this airport take a 5 minute taxi ride to the waterfront ferry terminal in Charlotte Amalie where you can catch various ferries over to the BVI. The ferry ride is usually 45 minutes to West End, Tortola or 60 minutes to Road Town, Tortola. In St. Thomas, persons may also travel via sea plane to the BVI’s Sister Island of Virgin Gorda. If you choose to arrive in the BVI, via the USVI, you must clear immigration in the British Virgin Islands.

MOVING TO THE BRITISH VIRGIN ISLANDS

SHIPPING TO THE BVI Shipping personal effects from home furniture, personal goods and even vehicles can easily be done through a shipping agent in the Territory. Once you have identified the agent you would like to use, that agent will inform you of the closest company to your address in your home country that you can have items delivered to or packed for pick up. As the sender, you must provide shipping agents with a list of items to be shipped as well as their estimated costs.

Residents in the BVI can also obtain United States mail boxes through various companies in the BVI. This allows persons to have their international mail sent to a US post box and delivered by their hired company to the BVI. This is an excellent resource when ordering items online or to receive mail quickly from the United States. Major courier companies such as UPS, FedEx and DHL also operate in the BVI. Post Office

284 468 3701 ext. 4996

HOUSING The real estate market in the BVI is growing steadily. At times it may seem difficult to find your right home in paradise, but with persistence and a good realtor, in no time you can be listening to the waves, watching the sun come up from the hill tops or living in a town that still has more greenery than most in other parts of the world. Unlike some countries, the British Virgin Islands does not have a Housing Authority. Prospective tenants and home owners are responsible for finding living arrangements and negotiating the best rent and lease. Many landlords offer short term lease to accommodate the Territory’s migrant labour force. The average starting rent of a two bedroom apartment in the BVI is approximately $800. Most land lords require two months rent as a refundable deposit along with proof of income - such as a job letter, before renting to new tenants. If you are in the market to purchase or build a home, all expatriates must obtain a Non-Belonger Land Holding Licence. The application process is managed by the Ministry of Natural Resources and Labour. To obtain this licence the following documents are needed with a completed application form: Make certain you receive all documents and agreements pertaining to your shipment from the partnering agent in your home country in order to retrieve your goods once they have landed in the BVI. After that has been completed, 146 items are then shipped to the Territory. Once they have arrived you will be notified by the local shipping agent who will sign release forms to be presented to port authority and Customs officials to clear your items. The cost of shipping items to the Territory varies widely. Ensure that you research estimates from companies before deciding on a final shipping agent. Once your items arrive in the Territory, you will only then be charged for the service. It is always recommended to insure items with the shipping agent. To declare goods with Customs you must have an itemised list of goods shipped and their costs. Government waves up to $1000 for new residents on goods imported. The following is a break down of duty charges for other items: • Vehicles • Household goods/furniture • Electronics/ computer hardware • Clothing • Reading materials Her Majesty’s Customs

20% 15% 15% 10% 0%

284 468 3701 ext. 6800/ 6802

MAIL Though the Territory does not have home mail boxes, the mailing service is much like most postal services world wide. Without a private mail box, persons can collect mail sent to them at their community post office. Residents may apply for private mail boxes by submitting an application with the BVI Postal Service at the main Post Office in Road Town, Tortola. The annual cost for these mail box rentals is $35 for a letter size box. In 2006 the BVI launched its internationally recognised postal codes. These postal codes allow other mail services to have an exact and distinctive code for the Territory. This works just the same as zip codes in the United States and postal codes in the United Kingdom and Canada. This allows mailing companies to process mail to be shipped to the Territory more efficiently. Ultimately, this allows residents in the BVI to obtain their mail in a more timely manner.

• A police certificate • Four consecutive newspaper clippings of the property’s sale ad • A valuation report of the property • A financial statement showing one year of banking practices • Two references • Sale agreement for the property • Proposed purpose of property • A detailed description and time table of any works to be done on the property. The Ministry of Natural Resources and Labour reserves the option to ask for additional supporting documents from applicants. A non refundable fee of $200 is required for processing of the application. For corporate groups the application fee is $500. The average processing time for a Non-Belonger Land Holding Licence is 12 to 14 weeks. Once a licence is granted, property owners must follow development agreements that were stated when applying for a licence. Failure to do so may result in a fine of 40 percent of the cost of the property of forfeiture of the property. Property taxes are payable annually to the Government’s Inland Revenue Department. If home owners are seeking to rent their property, non-belongers or persons that are not citizens of the BVI, must seek permission from the Ministry before undertaking such a venture. Ministry of Natural Resources & Labour 284 468 3701 ext. 2147/ 2137 Inland Revenue Department

284 468 3701 ext. 2155/ 3140

TRANSPORTATION The British Virgin Islands does not have a public transportation system. However, taxi services may be called from any location on islands. Various ferry services operate inter-island shuttles throughout the major islands of the British Virgin Islands, Tortola, Virgin Gorda, Anegada and Jost Van Dyke. Plane services may also be obtained to travel from Tortola to Anegada and Virgin Gorda.

DRIVER’S LICENSE Visitors to the BVI may obtain a Temporary Driver’s Licence from the Licensing Department or car rental companies. For $10, drivers will get a temporary licence that is good for 3 months. If stopped by authorities, visitors must have this temporary licence along with their passport. If you plan to live and drive in the BVI for longer than 3 months, a BVI driver’s licence must be obtained. To obtain such a licence, once the temporary licence has expired, driver’s must file an application at the Vehicle Licensing Department, along with supporting documents; work permit, passport, BVI Social Security card, and temporary licence. Additionally, a written driver’s test must be taken. The written test is administered from 8:30 a.m. to 1:30 p.m. daily. Once a driver passes this test, a BVI licence will be granted. If a new resident is importing a vehicle into the Territory or purchasing a vehicle in the BVI, the vehicle must be registered and licensed in the BVI. Drivers may purchase licence plates from the Vehicle Licensing Department, then have the car insured and inspected before the car is registered and qualified to be driven in the BVI. Vehicle Licensing Department 284 468 3701 ext. 4938/ 4939 Banking The British Virgin Islands hosts a variety of private and public banks that are recognised internationally. Some of these institutions are: Banco Popular Scotia Bank First Bank First Caribbean VP Bank Presently the BVI does not host any credit unions. Once becoming a resident of the BVI, to obtain a bank account, persons are required to show proof of identification, passport as well as a social security card. Some banks allow residents to use a United States social security card when registering for an account. Account holders may then begin to build a financial identity within the BVI’s banking system. Persons may apply for credit cards, loans and mortgages and even consolidate accounts from their previous country of residence. HEALTH SERVICES Health care in the British Virgin Islands remains relatively inexpensive to consumers in comparison with other developing Territory’s. Peebles Hospital, the main hospital servicing the BVI is on the island of Tortola. Presently the hospital is being developed into a major health resource for the BVI. This includes renovations to the existing structure as well as building more rooms and improving the technology used at the facility. A number of private clinics also service residents of the BVI. These clinics have on staff senior medical professionals that are general doctors as well as practising physicians in a wide range of specialisations such as gynaecology and obstetrics, cardiology as well as dermatology. Supporting these clinics are various private pharmacies with competitive pricing for the latest medicines. EDUCATION There is a wide variety of child care facilities in the BVI. Day care centres accept children as young as 4 months old. The cost of this type of care ranges from $160 to $300 monthly. The average school year begins in early September and ends in late June. Children that will be at least 5 years old within the school year and up to 16 years old are required by law to attend some form of matriculating educational facility, this also includes home schooling by a child’s parent. If expatriate parents are travelling with children to take up residency in the BVI, the parents must seek permission from the Immigration Department to have the child in the BVI for the purpose of attending school. There is a separate application to have the child enrolled in the school system. When in the BVI, the Education Department will facilitate the processing of

applications for entrance into the BVI school system. It is important to note that if a parent plans to enrol a child in a private institution or home school their children, they must also register with the Education Department. Parents are then responsible for the filing of applications at private institutions. Parents have a choice of two schools when entering the public school system. While there are numerous primary schools, there is only one public secondary school on Tortola, Virgin Gorda and Anegada. Students living on Jost Van Dyke must commute to Tortola to attend high school. The following information about the child or children is required when applying to attend public schools: • List of previous schools attended • Birth certificate • Immunisation card • School report or transcript • BVI Health Services authorisation of child’s immunisation card Of the parents, the following documents are needed: • Work permit card • Passport • Contact information Once the child is approved by the Education Department to attend a public school, a letter is sent to the Immigration Department and the appropriate authorisation is placed in the child’s passport, declaring the child a legal resident of the BVI. There are a number of private primary and secondary schools in the BVI. Tuition for such schools starts at $300. Parents wishing to home school their children are required to submit a course outline as well as the home school programme they intend to follow. Closing dates for school registration are April 30 for entrance beginning in September of the same year and November 30, for entrance in January of the upcoming year. The Territory currently has two tertiary institutions. Students may obtain 147 accredited associates degrees from the H. Lavity Stoutt Community College as well as certification for various courses. The BVI also hosts a campus site for the prestigious University of the West Indies. Students are able to enrol l in classes and participate in face to face as well as teleconference and distance learning courses. Applications to attend these institutions are available at their offices on Tortola. Education Department

284 468 3701 ext. 2036/ 2037

LIBRARY SERVICES There are five public libraries in the BVI that are located on the Territory’s four main Islands. Two on Tortola; in Road Town and East End, one on Virgin Gorda, Anegada and Jost Van Dyke. To obtain a permanent library card, persons must be residing in the Territory for at least 6 months. If visiting the Territory for shorter than six months, visitors may obtain a temporary card by paying a refundable fee of $5 and submitting the name of one reference that can return borrowed books in your absence. Library Services

284 468 3701 ext. 4931/ 4932

MOVING TO THE BRITISH VIRGIN ISLANDS

fast fact guide

The British Virgin Islands

Anegada

Jost Van Dyke Virgin Gorda

Tortola

The Caribbean Region

FACTS AT A GLANCE Social Demographics Population

28,882

Population Density

183.2 km2

Population Growth Rate

2.5%

Nationality Ratio

65.8%

Literacy Rate

98.2%

Life Expectancy at Birth

79.32

Major Religious Denominations

Methodist, Anglican, Roman Catholic

Climate and Geography

148

Area

57.08 sq. miles

Rainfall

40”

Temperature

28°C

Time Zone

Atlantic Standard Time (AST)

Government Capital City

Road Town

Dependency Status

British Overseas Territory

Judicial System

Common Law

Head of State

Queen Elizabeth II

(represented by the Governor)

Economy Currency

United States Dollar

GDP (nominal)*

US$ 876 million

GDP per Capita

(nominal)*

US$ 30,331

Inflation Rate (2009)

3.0%

Unemployment Rate 1

3.1%

Labour Force ^

19,098

Major Industries

Tourism, Financial Services

Communication Country Phone Code

284

Zip Codes

VG1110, VG1111, VG1112

Telecommunication Providers

Source: BVI Development Planning Unit | * 2009 estimates | ^ figure 1 Please note that the rate of unemployment is based on 2001 census figures and therefore does not necessary give a comprehensive picture of the unemployed population that could be derived from a labour force survey.

POPULATION The population of the British Virgin Islands (BVI) is diverse and growing. The majority of persons are of Afro-Caribbean decent (approximately 82 percent based on 2001 census figures). Minority ethnicities include Caucasians, East Indians, Middle Eastern, Chinese, and Portuguese. Between 1991 and 2001 (the dates of the last census) the population increased by approximately 44 percent and based on projections it is expected to grow further as the demands for labour increase. An updated count, composition and distribution of the population will be available subsequent to the 2010 census. The major force driving population growth has been immigration mainly to meet the shortage in local labour supply. Approximately 74 percent of the employed are foreigners (based on 2008 employment information) thus accounting for a diverse and varied labour force. The BVI has modern labour laws which take into consideration international labour standards and outline: the framework for labour administration, the minimum conditions of employment, a system for the settlement of disputes and general observance of labour laws. The Labour Code, 2010 (the “New Code”) replaces the Labour Code – Cap. 293 (the “Old Code”) which has governed labour relations in the BVI for the last 35 years. The New Code came into effect on and provides for the oversight of a modern labour market. LABOUR Key features of the New Code include: • Equality of Treatment in Employment – the New Code addresses Discrimination, sexual harassment, gender equality and equity. • Recruitment of Virgin Islanders and Belongers – preference shall be given to Virgin Islanders and Belongers over a foreigner once they qualify for the job and have no disciplinary issues. • Provision of Retirement Benefits – employers are required to make provisions for a retirement scheme such as a pension plan. • Settlement of Disputes – the New Code establishes a Tribunal, a Board of Inquiry and a tripartite consultation between the Minister, employers and employees for the settlements of disputes. • Restrictions on Employment of Young Persons – prohibition of children working under the age of 14 and between 14 and 16 (unless under special circumstances approved by the Minister). • Work Permit Regime – foreign workers must obtain a work permit before engaging in employment in the Virgin Islands. The New Code introduces various types of work permits – emergency work permit, periodic work permit and temporary work permit. In addition the New Code allows a work permit to be granted for a period not exceeding 3 years at a time. Annually there are twelve paid public holidays. Trade unions are virtually non-existent and workdays lost through industrial action are infrequent. The government has set a minimum wage of $4 per hour to ensure that lower skilled workers would maintain a minimum standard of living. The Government sector is the major employer followed by the tourism industry and the financial services sector. EDUCATION Publicly provided education is free at the primary, secondary and now territory levels thereby facilitating access to all children. Education is compulsory up to the age of 16. The Government’s Ministry of Education operates 17 primary schools and four secondary schools, including a technicalvocational school and a school for disabled students. There are also several private primary and secondary schools; some parochial and some secular. The H. Lavity Stoutt Community College (HLSCC) is a two-year tertiary institution offering associate degrees in the areas of business, natural science, social services, hospitality, computer studies, marine studies and financial services. The College also offers specialty courses base d on the needs of the labour market.Through affiliations with other tertiary institutions HLSCC also offers degree and master’s programmes. The Education Act, 2004 regulates all aspects of the Territory’s education system including Early Childhood Education.

HEALTH Government health services are provided free to certain groups including full-time school children, the elderly, the mentally ill, health workers etc. Currently, primary health care is provided by Peebles Hospital, with additional services provided by a small private hospital and several private medical clinics. Patients requiring treatment services beyond the scope of Peebles Hospital are referred to Puerto Rico, the US Virgin Islands, Jamaica, Barbados and mainland United States. The Government of the BVI has embarked on extensive development of the health care infrastructure and administration with the aim of improving primary health care services. In 2004 the Peebles Hospital annex was officially opened, and the construction of a new state-of-the art hospital is expected to be completed in 2011. In 2007, a helipad to facilitate the transfer of patients from the outer islands to Tortola was completed. The BVI Health Services Authority established under the BVI Health Services Authority Act, 2004 is responsible for managing the public health care service throughout the Territory including the general administration and functioning of the Peebles Hospital and the recruitment and training of health care professionals. ECONOMY The BVI economy has two distinct economic pillars - Tourism and Financial Services. The economy has grown significantly over the last 25 years mainly due to developments in these industries which have also contributed to the significant growth in the construction, real Estate, wholesale and retail sectors As one of the major contributors to Gross Domestic Product (GDP) and government revenue the tourism sector is extremely important to the economic growth of the BVI. In addition the financial services industry is the major Government revenue contributor accounting for more than half of earnings as well as accounting for a significant share of GDP and employment. The GDP in 2009 was over US$ 876 million and the economy is one of the strongest in the Caribbean. Prices in the BVI have increased moderately over the last five years with an average growth rate of 2-3% with the exception of 2008 where average prices increased by 7% mainly due to rising commodity prices and oil prices. Inflation is mainly “imported” from the United States. The BVI’s principal trading partner is the United States. The majority of imports (goods) originate from the United States including Puerto Rico and the US Virgin Islands. Similarly, vast majority of BVI exports (in the form of services - specifically financial services and tourism) are used by United State consumers. The BVI is not a major export of goods. The steady growth in government revenue is driven mainly by financial service levies but also payroll taxes and import duties. In order to ensure sustained growth the BVI government continues to implement measures aimed at increasing revenue collection and managing expenditure levels. ECONOMIC INDICATORS 2006

2007

2008

2009

Nominal GDP (US$ millions) – revised estimates

934

1,011

992

876

Nominal GDP Growth (%)

7.3

8.2

(1.9)

(11.7)

Inflation (%)

2.7

2.5

7.5

3.0

3.1

34,858

36,731

35,151

30,331

MEASURE

Unemployment

(%)

GDP per capita ($)

– revised estimates

MAJOR SECTORS TOURISM

starting point for discovering the other islands. Major attractions include the nature trails at Sage Mountain National Park, the huge boulders at the Baths, the pristine waters of White Bay, the wreck of the Rhone and the flamingos at Nutmeg Point. Yearly scheduled activities which attract numerous visitors include: the Emancipation Festival in August, the BVI Music Fest in May, and the BVI Spring Regatta in April. Sailing is one of the most popular activities for tourists. The year round trade winds and numerous islands, inlets and cays have given the BVI the title of the ‘sailing capital of the world’. Other water sports such as scuba diving, snorkelling, windsurfing, kite boarding and kayaking are also extremely popular. The BVI is also a popular port of call for major cruise ships. Annual cruise tourist arrivals exceeded half a million annually since 2007. Although smaller in number overnight tourist contribute a greater percentage to government revenue and economic growth. The Government of the BVI is committed to the sustained growth and development of the sector. The Government continues to upgrade tourist attractions and infrastructure (such as improvements to the port facilities) and encourages private investment in the sector. Through the BVI Tourist Board numerous marketing initiatives have been developed to promote and enhance the Territory’s tourism product. The “Jewels of the BVI” programme promotes a collection of locally owned hotels, inns and villas by providing valuable information about the properties and activities via an official website (www.jewelsofthebvi.com) and a hotline. The “BVI VIP Club” rewards repeat visitors with special discounts at participating businesses throughout the Territory, special arrival privileges at the airport and tourism updates via a newsletter subscription. In 2009 just over 850,000 tourists visited the BVI with the majority of them originating from North America. Cruise ship tourists accounted for approximately 64 percent of this total while overnighters make up 36 percent of tourist arrivals in 2009. FINANCIAL SERVICES FINANCIAL SERVICES

2008

2009

Trust (General)

106

105

Trust

(Restricted)

104

119

Company Managers

Registered Agents

118

125

Captives

319

279

Domestic

Managers

Professional

258

170

Professional (Cumulative Active)

Banking and Fiduciary Banking

(General and Restricted)

Insurance

Mutual Funds

1894

1905

Private

Private (Cumulative Active)

831

816

Public

Public (Cumulative Active)

228

216

2008

2009

Actual Change

% Change

Managers and/or Administrators

Overnight

345,934

308,793

(37,141)

-10.7%

Incorporations

Excursionist

588,234

548,071

(40,163)

-6.8%

BVI Business Companies

61,716

47,477

TOTAL

934,168

856,864

(77,304)

-8.3%

BVI Business Companies (Cumulative Active)

414,620

410,293

408

421

3.2%

Partnerships

114

Partnerships (Cumulative Active)

588

629

TOURIST ARRIVALS

(Cruise Ships & Day Trippers)

Cruise Ship Calls Source: Development Planning Unit

With its crystal clear waters and white sand beaches, breathtaking scenery, intricate coral formations, tranquil atmosphere and warm people the BVI is a popular destination for sports enthusiasts as well as those who want a peaceful vacation. The largest island Tortola is the major hub for most visitors and the

Insolvency Practitioners Source: Financial Services Commission

149

MOVING TO THE BRITISH VIRGIN ISLANDS

FINANCIAL SERVICES The growth of the financial services sector in the BVI was mainly due to the success of the International Business Company (IBC) (now known as the BVI Business Company subsequent to the enactment of new incorporation legislation – BVI Business Company Act, 2004) first unveiled in 1984. In later years the BVI secured business that was redirected from Panama during the Noriega regime and from Hong Kong when it was handed back to China in 1997. The Asian market thus accounts for a large portion of company incorporations in the BVI. Modern and innovative legislation, a robust regulatory framework, clever marketing, economic and political stability, quality technology and communication facilities and a full range of legal, banking and account services have contributed significantly to the continued growth of incorporations. Closely related sectors such as captive insurance, investment business (mutual funds), trust and estate formation, company management, corporate restructuring, securitisation, insolvency and shipping and trademarks have developed. The industry is regulated by the Financial Services Commission (FSC) which is an autonomous body responsible for the licensing, regulation, supervision and inspection of all financial services business. Marketing of the financial services sector is conducted by the International Finance Centre (IFC) – a department within the portfolio of the Premier’s Office – which has organised various road shows in some of the major financial centres such as London, New York, Hong Kong, China, Dubai and Qatar. The Financial Investigation Agency (FIA), which was launched in 2004, functions as a specialist investigative law enforcement arm of the government with the objective of curbing financial crime. Its primary focus is to investigate the BVI financial services industry and support the Virgin Islands mutual legal assistance regimes.

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BUSINESS COMPANIES The BVI is one of the largest centres for the incorporation of business companies with close to 900,000 companies (as of December 2009) incorporated since the enactment of the International Business Companies (IBC) Act in 1984. Approximately 400,000 are still active today. Because of the flexibility of its use BVI business companies have been used in a plethora of business transactions and structures including structured finance and securitisation, succession planning, IPOs and listings on stock exchanges and joint ventures etc. The incorporation regime has changed somewhat with the introduction of new company legislation – the BVI Business Companies Act, 2004 which replaced the IBC Act repealed on January 1 2007. The core features of the IBC Act, which made it a success, remain along with improvements to ensure the longevity of the Virgin Island’s market share. The new Act for instance widens the range of corporate vehicles available for use, simplifies the statement of capital and the registration of charges. INSURANCE (CAPTIVE) The BVI captive insurance market is one of the fastest growing and largest in the world. At the end of 2009, 279 captive insurance companies were licensed with the majority of business originating from the United States. Other countries of origin include Guernsey, Taiwan, Switzerland, the Middle East and South America. In addition to this excellent geographic spread of business, there also has been a significant distribution of captives from an industry segment standpoint. The captives cover the following industries: finance and insurance, construction, health care and retail trade. The domestic insurance market is, however, smaller in comparison with only 33 companies licensed at the end of 2009. The new Insurance Act, 2008 which replaced the 1994 provides a modern structure for licensing, supervision and administration of insurance business in the Virgin Islands while simultaneously meeting international insurance standards. The Insurance Regulations 2009 which replaced the 1995 regulations provides clarity on details relating to insurance business in and from within the BVI. Both came into force on February 1st, 2010. INVESTMENT BUSINESS The BVI is one of the premier jurisdictions for fund domiciliation and is now is regulated by new state of the art legislation. The Securities and Investment Business Act (SIBA) and Regulations came into force on 17th May 2010 and replaced the Mutual Funds Act of 1996. SIBA sets out the

new legislative framework under which the Financial Services Commission (FSC) regulates individuals, mutual funds and other investment related entities conducting business in and from within the BVI. Persons such as investment advisers, those dealing in investments or arranging dealings in investments, managers, custodians, those providing administration services with respect to investments, and operators of investment exchanges are now required to be licensed. SIBA introduces the authorised representative regime where all BVI funds are required to appoint an authorised representative resident in the BVI and licensed by the FSC. The new legislation also provides a framework for dealing with insider trading and market abuses. In addition, all existing public, private and professional mutual funds previously authorised under the repealed Mutual Funds Act, 1996 are required to comply with the relevant sections of SIBA by December 31st, 2010. The professional fund is the most popular of funds registered and recognised in the BVI. 65% of active funds were professional funds, 28% were private funds and 7% were public funds based on 2009 figures. BANKING The Virgin Islands is characterised as a conservative banking jurisdiction. At the end of 2009 there were 9 banking institutions licensed to operate in and from within the BVI with total assets of approximately US$2.45 billion. The domestic market is serviced by six commercial banks which offer a wide range of competitive services: Scotia Bank (BVI) Limited, First Caribbean International Bank, First Bank Virgin Islands, Banco Popular de Puerto Rico, VP Bank (BVI) and the National Bank of the Virgin Islands. The banking sector is regulated by the Financial Services Commission under the Banking and Trust Companies Act, 1990 and subsequent amendments. INSOLVENCY The Virgin Islands boasts a modern comprehensive insolvency regime that meets the needs of the growing incorporation, investment and financial services activities in the BVI. The governing legislation, the Insolvency Act 2003, makes provisions for the licensing and regulation of insolvency practitioners a wide range of liquidation and rehabilitation alternatives, a director’s disqualification regime and the establishment of an Official Receiver’s office. To date (2009) 16 insolvency practitioners are licensed under the Act. TRUST MANAGEMENT Trust Management forms a major component of financial services activity in the Virgin Islands. The BVI trust sector has experienced moderate growth since 1995 growing on average at a rate of 4% annually. Revised legislation, together with the highly flexible BVI Business Company, has opened up wider markets for the BVI trust. Trusts are formed under the Trust Ordinance 1961 (based on the English Trustee Act 1925), as updated and amended by the Trustee Amendment Act 1993 and 2003. The amendment Acts considerably modernise and update the legislation, creating a more flexible regime for trusts. Changes include provisions to make trusts more attractive in a commercial context and a new set of conflict of law rules that contain robust, comprehensive, and carefully crafted provisions to protect BVI trusts against “forced heirship” claims. In addition, the rules surrounding trust duty have been updated to make it clear what documents are subject to trust duty and how this must be paid. At the same time, rules which require no public register of trusts in retained, thereby protecting confidentiality. The Virgin Islands Special Trusts Act, 2003 (VISTA) is another piece of legislation which updated the trust regime. VISTA trust, overcomes many problems associated with the “prudent man of business rule”, which typically made trusts unattractive vehicles to hold assets which settlers intended trustees to retain. The Act enables a shareholder to establish a trust of his company which disengages the trustee from management responsibility and permits the company and its business to be retained as long as the directors see fit. The majority of Virgin Island trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction. There is a large and sophisticated community of professional advisers on trust matters in the Virgin Islands. Companies offering trust services must be licensed under the Banks and Trust Companies Act, 1990.

SHIPPING As the sailing capital of the Caribbean and an esteemed corporate domicile, the Virgin Islands are also a popular jurisdiction for the registration of ships. In 2008 ships 357 ships were registered and to date over 3,000 vessels have been registered in the BVI with the majority being pleasure vessels As a Category One Register, within the Red Ensign Group, large vessels of unlimited tonnage and mega yachts of up to 3,000 gross tons can be registered in the Territory. In both instances, the owners must be a Virgin Islands citizen, British citizen, British Overseas Territories Citizen, British subject, a British national under the Hong Kong Order 1986, a national of a European Union member state, or a body corporate incorporated in a member state of the European Union or a British possession, including the Virgin Islands. If you do not meet the nationality requirement, you may register a company in the Virgin Islands in order to register a vessel. Registration procedure also requires the de-registration of the vessel from its current registry, a survey of the vessel and the submission of ownership documents to the Registrar of Shipping. The registration fee is $550, and an annual fee of $100 is payable to maintain registration. In addition, there will be legal fees charged by the firm you choose to assist you with registration. TAX INFORMATION EXCHANGE AGREEMENTS The purpose of Tax Information Exchange Agreements (TIEAs) is to promote international co-operation in tax matters through exchange of information. TIEAs grew out of the work undertaken by the Organisation for Economic Cooperation and Development (OECD) to address the lack of effective exchange of information among financial centres. Information exchange is based on requests relating to specific criminal or civil tax matters that are under investigation. The BVI has a long tradition of providing legal assistance to foreign regulatory and law enforcement authorities and continues to be committed to the OECD’s principles of transparency and effective exchange of information. Under the guidelines provided by the OECD and the new international tax standard emanating from the G-20 Summit in April 2009, jurisdictions are required to sign at least 12 TIEAs. To date the BVI has signed 16 TIEA’s securing a spot on the “white list” of those countries including the United States, United Kingdom and Canada which have substantially implemented the internationally agreed tax standard as set by the (OECD). In addition to the United States, the BVI has agreements with the United Kingdom, Australia, France, the Netherlands, the Netherland Antilles, New Zealand, Greenland, the Faroes, Aruba, Ireland and the Nordic group of countries including Denmark, Finland, Iceland, Norway and Sweden. REAL ESTATE Foreigners planning to purchase property in the British Virgin Islands require a Non-Belonger Land Holding License. Agreements to purchase property are therefore made contingent upon such a license being obtained by the purchaser. Application for a Non-Belonger Land Holding License is made to the Government of the British Virgin Islands, Ministry of Natural Resources and Labour. If the application for a license relates to undeveloped or partly developed land, the applicant will be required to make a commitment to the Government of the British Virgin Islands to expend a specified sum on development within a specified time period. The purchase of property by all persons including citizens and foreigners is subject to a Government stamp duty subsequent to transference of the property. The rate of 12% of the purchase price or appraised value whichever is higher, is payable by any foreigner and citizens are required to pay a 4%. The stamp duty on leaseholds is lower. Other costs associated with the purchasing of property in the BVI include: legal fee (usually between 1.5% to 2% of the purchase price), bank fees, 10% deposit to the seller’s agent to be held in escrow on the signing of the purchase agreement, pending acceptance and completion. There are no restrictions on an overseas investor re-selling a developed property. The property must however, be advertised for four weeks in the local press to give any local person the opportunity to purchase the property on the same terms.

BVI COMMERCIAL COURT The BVI now has a state of the art Commercial Court to serve the expanding needs of commercial litigation in the Territory and the Eastern Caribbean. The commercial court is a division of the regional Eastern Caribbean Supreme Court (ECSC) and will hear commercial matters from nine Caribbean nations and territories, including Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St Vincent, St Lucia and the BVI. The court officially opened on 30th October, 2009 (although it was in operation since May 2009) and specialises exclusively in domestic and cross-border commercial and insolvency matters. Prior to the establishment of the Commercial Court, all cases were handled by the High Court. INFRASTRUCTURE ELECTRICITY Electricity in the BVI is 110/220 voltage. This Power is generated by the BVI Electricity Corporation, which is owned by the BVI Government. Water The BVI Water and Sewerage Department, provides potable water throughout Tortola, Virgin Gorda, Jost Van Dyke and Anegada. Most of the water sold by the Water and Sewerage Department is desalinated sea water, treated through the process of reverse-osmosis. In addition, most buildings and homes are constructed with cisterns (Water Tank). Rainwater is collected in these cisterns from the roof of the buildings or homes and flows into the cisterns through a guttering system. This water is safe for domestic use. There are also several local water companies which sell purified drinking water. Telecommunications The BVI has a modern and high-quality telecommunications infrastructure. This existed since the 1960’s. In 2006, the Government passed a new Telecommunications Act, which provides for gradual liberalization of the telecommunications sector. Because of this, there are now two companies offering mobile telephone services, with pending competition in other service 151 areas. The area code is 284 and available services include long-distance and local land-line communication, wireless connectivity, high-speed Internet, and cable television. Transportation It is easy to get around the BVI. Vehicles such as cars, buses, taxis etc., private and commercial boat services, and airplanes are among the most frequently used means of transportation in the BVI. The Territory has a road network of approximately 200 miles, of which 160 miles are paved. These include main roads, primary, secondary, collector, and access roads, as well as agricultural feeder roads. The Public Works Department is the department charged with the periodic maintenance of this road system. This department also spearheads plans for road expansion. There are four official passenger sea ports in the BVI: Road Town and West End on Tortola; Great Harbour on Jost Van Dyke; and Spanish Town on Virgin Gorda. Port Purcell, near Road Town, hosts the principal cargo port in the Territory. The BVI Ports Authority manages the port facilities at the various locations, as well as the Cruise Ship Pier in Road Town. Airports The BVI Airports Authority is the administration that oversees the airports. The Terrance B. Lettsome International Airport (code: EIS), is the main airport in the BVI; and is located on Beef Island which is joined to Tortola by a short bridge. There are daily flights to and from Puerto Rico, Antigua, St. Martin and other Caribbean Islands. The Government operates a helipad in Road Town and a number of private islands also maintain helipads. Entry and Immigration Visitors to the BVI may be granted entry for up to one month at the ports of entry, providing they have return or ongoing travel arrangements, accommodations while in the Territory, and proof of sufficient means of support. Visitors wishing to stay longer must apply in person at the Department of Immigration in Road Town, or the Valley, Virgin Gorda.

MOVING TO THE BRITISH VIRGIN ISLANDS

A valid passport is the principal requirement for entry into the BVI. On arrival to the BVI, you will go through screening by the Immigration as well as Her Majesty’s Customs. Your luggage and person are subject to search. Persons from the following countries must apply for a visa at the nearest British Embassy before travelling to the British Virgin Islands. Afghanistan Armenia Benin Burundi Albania Azerbajan Bosnia-Herzegovina Burma Algeria Bahrain Bulgaria Cambodia Angola Belarus Burkina Cameroon Central African Republic Chad China (except Hong Kong) Columbia Comoros Congo

Cuba Djbouti Dominican Republic Egypt Equatorial Guinea Eritrea Ethiopia Gabon Guyana Haiti Indonesia Iran Iraq Israel Ivory Coast Jamaica Jordan Kazakhstan Kirgizstan North Korea Kuwait Laos Lebanon

GOVERNMENT LISTINGS Government Ministries

Central Administrative Complex Road Town, Tortola British Virgin Islands www.gov.vg 152

Premier’s Office Tel: (284) 494-3701 ext 2152/2058 Fax: (284) 494-6413 premieroffice@gov.vg Ministry of Finance Tel: (284) 494-3701 ext 2144/3306 Fax: (284) 494-6180 www.finance.gov.vg Ministry of Health and Social Development Tel: (284) 494-3701 ext 2174/2172 Fax: (284) 494-5018 ministryofhealth@gov.vg Ministry of Communications and Works Tel: (284) 494-3701 ext 2183/2163 Fax: (284) 494-3873 Ministry of Natural Resources and Labour Tel: (284) 494-3701 ext 2147/2137 Fax: (284) 494-4283 Ministry of Education and Culture Tel: (284) 494-3701 ext 2151 Fax: (284) 494-5421

Liberia Libya Macedonia Madagasgar Mali Mauritania Maldova Mongolia Morocco Mozambique Myanmar Nepal Niger Nigeria Oman Pakistan Peru Philippines Qatar Russian Republic Rwanda Sao Tome & Principle Saudi Arabia

Senegal Slovakia Somalia Sudan Suriname Syria Taiwan Tajikistan Thailand Togo Turkish Republic of Northern Cyprus Turkenistan Ukraine United Arab Emirates Uzbekistan Vietnam Yemen Yugoslavia Zaire

Statutory Bodies/Associated Agencies BVI Commercial Court Old Banco Popular Building Main Street Road Town, Tortola Tel: (284) 468-2724 Fax: (284) 468-2729 cdecsc@gov.vg

BVI International Finance Centre Haycraft Building, Pasea Estate Road Town, Tortola Tel: (284) 494-4335 Fax: (284) 468-1002 info@bviifc.gov.vg www.bviifc.gov.vg BVI Tourist Board 2nd Floor, Akara Building De Castro Street Road Town, Tortola Tel: (284) 494-3134 Fax: (284) 494-3866 info@bvitourism.com www.bvitourism.com Financial Investigations Agency Haycraft Building, Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 fia@bvifia.org www.bvifia.org Financial Services Commission Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 webmaster@bvifsc.vg www.bvifsc.vg

2011 Public Holidays New Year’s Day

Monday, 3rd January

H. Lavity Stoutt’s Birthday

Monday, 7th March

Commonwealth Day

Monday, 14th March

Good Friday

Friday, 22nd April

Easter Monday

Monday, 25th April

Sovereign’s Birthday

Saturday, 11th June

Whit Monday

Monday, 13th June

Territory Day

Friday, 1st July

Festival Monday

Monday, 1st August

Festival Tuesday

Tuesday, 2nd August

Festival Wednesday

Wednesday, 3rd August

St. Ursula’s Day

Friday, 21st October

Christmas Day

Monday, 26th December

(in lieu of Saturday, 1st Jan.)

(in lieu of Sunday, 25th Dec.)

Boxing Day

Telecommunications Regulatory Commission Fishlock Road Road Town, Tortola Tel: (284) 494-6786 Fax: (284) 494-6786 www.trc.vg Virgin Islands Shipping Registry Sebastian’s Building Administrative Drive Road Town, Tortola Tel: (284) 468-2902/2903 Fax: (284) 468-2913 vishipping.gov.vg www.vishipping.gov.vg

Government Overseas Offices BVI London Office 15 Upper Grosvernor Street London WIK 7PJ United Kingdom Tel: + 44 207 355 9570

BVI Tourism Offices

Italy Aigo Communicazione Pizza Caiazzo 3 20124 Milano, Italy Tel: 39-02-667-14374 Fax: 39-02-669-2648 staff@aigo.it Germany Schwarzbachstr, 32 D-40822 Mettmann Bei Düsseldorf Germany Tel: 49-2104-28-66-71 Fax: 49-2104-91-26-73 g.romberg@travelmarketing.de

PUBLISHER’S NOTE All of the information in this guide has bee n carefully collected and prepared, but it still remains subject to change and correction. Use these contents for general guidance only and seek extra assistance from a professional adviser with regards to any specific matters. Readers can contact the relevant authorities mentioned in this Fast Fact Guide.

Tuesday, 27th December (in lieu of Monday, 26th Dec.)

United Kingdom 15 Upper Grosvenor St. London W1K 7PJ Tel: + 44-207-355-9585 Fax: + 44-207-355-9587 coliver@bvi.org.uk New York 1 West 34th Street Suite 302 New York, NY 10001 Tel: 800-835-8530 / 212-563-3117 Fax: 212-563-2263 info@bvitourism.com

Immigration/Labour Information Immigration Department 1st Floor, Ashley Ritter Building Road Town, Tortola Tel: (284) 494-3471 or 494-3701 ext. 4700/4770 Fax: (284) 494-4399 immigration@bvigovernment.org

Labour Department 2nd Floor, Ashley Ritter Building Road Town, Tortola Tel: (284) 494-3451/9 or 494-3701 ext. 4708/4780 Fax: (284) 494-4399 labour@bvigovernment.org

Emergency Numbers

Police, Fire & Ambulance 999/911/112 Virgin Islands Search and Rescue 767 BVI Electricity Corporation 494-3911 Fire and Rescue 494-3473 Hospital 494-3497 Police Headquarters 494-3822 Water and Sewage 494-3416