Business BVI January 2017 by Business BVI

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CONTE NTS JANUARY 2017

SECTIONS 14 15 Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 BVI Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Ahead of the Curve . . . . . . . . . . . . . . . . . . . . . . . 22

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . .

Insight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

BUSINESS

33 62 Tourism and Real Estate . . . . . . . . . . . . . . . . . . . 75 Business BVI Guides. . . . . . . . . . . . . . . . . . . . . . 93 Over And Out . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Masthead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

JANUARY 2017 EDITION

BVI ON CHINAâ&#x20AC;&#x2122;S BELT AND ROAD

BANK OF ASIA: THE NEXT GENERATION OF BANKING

INTERVIEW WITH JULIEN JOHNSON

PRIVATE EQUITY INVESTMENT OPPORTUNITIES IN CHINESE FAMILY BUSINESSES

BREXIT REFLECTIONS

ADADPTING TO THE FUTURE THE OUTLOOK REAL ESTATE 2017

THE BVI ADVANTAGE: MAXIMISING FOREIGN DIRECT INVESTMENT AND BOOSTING GLOBAL COMMERCE IN EMERGING MARKETS

BVI FINANCIAL SERVICES: THE VALUE OF THE BVI TO THE GLOBAL ECONOMY

100

MOVING TO THE BRITISH VIRGIN ISLANDS

106

FAST FACTS ABOUT THE BRITISH VIRGIN ISLANDS

TOURISM AND R E A L E S T AT E

BUSI NESS BVI GUIDES

JANUARY 2017 EDITION

CONTE NTS F E AT U R E A R T I C L E S

40 Merging with the Future 44 Building the Brand 60 Wealth Management: The Future will be Shaped by Technology 72 Wired to Create

JANUARY 2017 EDITION

CONTE NTS INSIGHT

Standing at the Crossroads of Protectionism

JANUARY 2017 EDITION

E DITORI AL B OARD RUSSELL HARRIGAN

CEO, OYSTER GLOBAL MARKETING GROUP

ELIHU RHYMER

CEO, BVI DEVELOPMENT CONSULTANTS

SIMON SCHILDER

LORNA SMITH, OBE CEO, LGS ASSOCIATES

AYANA HULL

SENIOR ASSOCIATE, HARNEYS

KENNETH M. KRYS

PARTNER, OGIER

FOUNDER AND CEO, KRyS GLOBAL

MANAGING EDITOR & CHIEF CONTENT OFFICER PUBLISHER P R O J E C T C O - O R D I N AT O R DESIGN

RUSSELL HARRIGAN OYSTER PUBLICATIONS LTD PORTIA HARRIGAN OYSTER DESIGN TEAM

PHOTOGRAPHY

BVI TOURIST BOARD TODD VANSICKLE

ADVERTISING

RUSSELL HARRIGAN KATE MULLAN

BUSINESSBVI.COM

Business BVI is a bi-annual magazine published by Oyster Publications LTD P.O. Box 3369, Road Town, Tortola, British Virgin Islands Tel: 284-494-8011 Fax: 284-494-3066 www.oysterbvi.com Email: info@oysterbvi.com Please send comments and address changes to this address.

PORTIA HARRIGAN

Business BVI and Oyster Publications LTD 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 this content 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.

Opening Remarks

BVI Global: Reimagining the BVI Economy The Greek philosopher, Heraclitus, is quoted as saying “Change is the only constant in Life.” After what has been a generation of relative geopolitical calm, stretching back to the fall of the Berlin Wall in the late 80’s, the world is taking a decidedly populist, authoritarian strongman-like turn to the right in its politics. This shift seems to be driven by economic dislocations and widening disparities of wealth, an unfortunate outgrowth of globalization. With this rightward shift has come a huge dose of global uncertainty in many spheres of life. Without any doubt, 2016 will be recorded as the year when this period of uncertainty reached a tipping point in the minds of many. However, we must brace ourselves for what is sure to be further consolidation of this shift in 2017, especially in the European space. The topline manifestations of this uncertainty thus far have been; the in-your-face Brexit decision by voters in the United Kingdom, the election of Donald Trump as the 45th President of the United States, the growing rise of the right across Europe especially in France, the Netherlands, Poland, and increasingly in Germany, coupled with the rising angst about globalization in the West. Underpinning this uncertainty has been the sustained sclerotic pace of economic growth in the vast majority of the global community. I must say however, that as we go to press evidence is beginning to trickle in that some strong ‘green shoots’ are emerging in Europe led by the UK and Germany. I am sure a welcome sight for many. On the local front, 2016 has been a year when the BVI has been buffeted by significant challenges to our financial services sector, influenced by derivatives of the same fierce currents reshaping the global order. Principal among these have been the shock of the Brexit decision and the inherent long-term attendant fallout, before that the Panama Papers and Beneficial Ownership, and now the unfolding Trump era. The rising angst about globalization must not be underestimated given that the BVI has advanced and benefited from globalization. It has been the propellant that had fueled the jurisdiction’s rise on the global stage in the offshore space. No man is an island. These external pressures are fast-forwarding the evolution of the BVI economy, a process that has been underway for sometime, albeit on a low boil. It is clear that the local economy is changing and the principal challenge facing the territory in this regard is how do we reposition the BVI to competitively keep pace with this inevitable change and thus continue to accrue long-term economic benefits.

The theme for our just concluded annual BVI Business Outlook Conference was BVI Global: Reimagining the BVI Economy. The theme was intended to focus our attention as a territory on the need to take a deeper look at our economy with a broader horizon in mind. This is a timely relook, designed to ensure that we keep top of mind the critical role a competitive economy plays in ensuring the quality of life we enjoy. A defining element of the architecture of the global economy is its hyper competitive nature. Essentially, you compete or you stagnate. The BVI differential advantage as a small producer must be to always focus on producing a super premium product across our economy, finely attuned to the demands of the global marketplace. This must be the new mantra and foundation for our continued economic stability and sustainable growth. It must apply not only to the current twin pillars of the economy but it must also drive areas of opportunity for possible diversification such as medical tourism, technology, research, fishing and other yet to be identified areas of potential economic activity. The core idea must be to look at diversification broadly, firstly within the tourism and financial services space, while also ‘raising our gaze’ beyond those two key sectors to include what could be considered informed ‘moon shots.’ We must reawaken the imagination and entrepreneurial zeal we harnessed in the early 80’s that resulted in the creation of what has become the globally ubiquitous Business Company. An innovation that has not only assisted in the rise of China as global economic power but one that has also facilitated globalization, which has resulted in hundreds of million of the world’s poor in every corner of the planet being lifted from grinding poverty. They have been afforded opportunities that previous generations could only have dreamed of. A high quality of life that is no longer the special privilege of those lucky to have been born in the United States, Europe or in the small number of other wealthy nations. Now, that is Soft Power! Enjoy and please let us have your feedback and comments – russell.harrigan@oysterbvi.com

RUSSELL HARRIGAN Managing Editor & Chief Content Officer

JANUARY 2017 EDITION

Contributors

will be key to the future success, or otherwise, of the BVI’s economy.” --- Tourism & Real Estate ‘Adapting to the Future – The Outlook for Real Estate 2017’ p.76.

ALASTAIR CAMPBELL Alastair Campbell is currently a director of Asian Capital Partners Group (ACP) an independent investment firm headquartered in Hong Kong. He has many years experience advising governments, financial institutions and multinational companies on a broad range of China trade, investment and government relations issues.

Edward Childs’ annual outlook for the Real Estate sector in the BVI is always a widely anticipated, read and referenced piece in the January edition of Business BVI. This year we have redesigned the section to include an economic review, BVI Villa Market Report and Development Summary and Strategy for the Real Estate Market. Always a worthy read.

--- BREXIT Watch ‘Brexit Reflections’ p.68. “The referendum is a device of demagogues and dictators” Keynes “In this context, China’s growing confidence, assertiveness and pride in its own cultural, political and scientific traditions are understandable. When the US and its allies make their largest deployment of troops worldwide to Asia, it should come as no surprise that the Chinese view this at best, as an attempt to maintain a measure of influence in a region they once dominated and at worst, as an aggressive attempt to blunt China’s growth and contain its physical and ideological expansion.”

Lorna is a long time and frequent contributor to Business BVI. She currently serves as Interim Executive Director of BVI Finance.

After 15 years in the public sector, Julien Johnson decided to take the plunge. “I’ve always loved boats and being in the water”

PAUL CHRISTOPHER & GUY CONNELL

--- Business/Global ‘Private Equity Investment Opportunities in Chinese Family Businesses’ p.56.

“Brexit and Trump: hardly the results one would have predicted at the start of 2016. But as we close out the year, voters in the UK and the United States have spoken at the polls, with a backlash against the establishment. These pivotal choices will shape the politics of Europe and North America for the coming years, with no one quite certain as to the end result with either. Both the referendum and the election will have an impact on the Caribbean market in terms of investment and tourism. The BVI had its own defining moment with the release of the Panama Papers in May 2016. Adapting to change

Our Fast Facts Guide p.106 is intended to provide top of mind data about the BVI, its economy and doing business in the territory. We rely on Patlian Johnson to ensure we are current. Ms. Johnson holds a Masters of Science Degree in Economics and Finance from the University of Bristol.

in Hong Kong, proceeding to Beijing, Tianjin, Hangzhou and ending in the epicentre of China’s finance, Shanghai.” --- Business/BVI Business ‘BVI On China’s Belt and Road’ p.34.

--- Business/BVI Business ‘An interview with Julien Johnson’ p.50.

Paul is a frequent contributor to Business BVI and has chaired many panels at our annual BVI Business Asia Regional conference in Hong Kong. Paul is the Managing Partner of Mourant Ozannes, Hong Kong and in this edition, he is joined by his colleague Guy Connell, Senior Associate, Mourant Ozannes, Hong Kong contributing:

EDWARD CHILDS

PATLIAN JOHNSON

“Yes, because we’ll play a different role to what the industry does, [as well as] the regulator and government. We’ll be keeping our eye on what happens globally from a neutral perspective. We’re not just focusing on the funds industry, the business incorporation industry, the wealth management industry; we are not just looking at it from solely a regulatory perspective or a governmental perspective: We’re encompassing all those views. So if there’s a regulatory change in China, for example, we need to understand what that means for us on the island across the industry. Perception management is critical as well. We need to know what the view of BVI is in China, in Latin America, in Europe, London and New York. By understanding what people have as a view of the BVI, we can make sure the correct messages are being delivered. That’s key.”

“A positive sum game? To summarise, as the Chinese economy resettles to find its “new normal” and China’s next generation sets its sights on prospects further from home, a window for investment has opened. Family-owned businesses in relevant sectors make attractive investment opportunities for a variety of reasons, including their management practices, shared vision and entrepreneurship, as well as, the fundamental background of continuing growth. Experienced private equity firms bring plenty of capital to the table but also have the knowledge and expertise required to grow businesses to a greater level of success that may have been unachievable under generations of family control.

FREEMAN ROGERS Freeman is the editor of the The BVI Beacon and helps us to navigate our interviews with business personalities. In our January edition he has assisted with three interviews: --- Business/BVI Business ‘Merging with the Future – Farara Kerins takes on a Partner’ p.40.

When his year-long stint as executive director of BVI Finance came to a close at the end of April, he started working full time at Island Time, a Nanny Cay-based powerboat rental company he purchased in December 2015. The tourism job is a major change for the entrepreneur: His previous career included a post university stint with the Financial Services Commission and more than a decade at the Financial Investigation Agency. In November, Mr. Johnson met with Business BVI and recounted the ups and downs of his new life outside the boardroom.

After operating independently since 1985, Farara Kerins in October announced a merger with Collas Crill, a Channel Islands law firm with offices in Singapore, London, the Cayman Islands, Guernsey and Jersey. “The whole question of name recognition is something that I believe is of less importance now than it was when I started the practice of law, because if you confine yourself to a certain level of practice then that is essentially where you are going to stay.” --- Business/BVI Business the Brand’ p44.

‘Building

It’s a big year for BVI Finance. The agency, which is charged with promoting the territory’s financial services industry, is transforming itself from a government entity into a corporation.

WAYNE YANG “Then the 2008 financial crisis hit, and the wealth management industry in Asia after peaking, started a precipitous decline both in client satisfaction, trust and confidence and of course margins and size. Complexity became the new bad. Litigation became the new norm. Some individuals felt cheated, perhaps justifiably so, and many financial institutions took the blame as regulators sought to protect the interests of their constituents. Today, the banking industry continues to feel the after affects of the cranked up “naughties” and one only has to check the headlines to read about the latest Department of Justice ruling. So what’s in store for the future? I don’t have any crystal ball obviously, but after 25 years of being a practitioner in wealth management, in most of the countries around Asia Pacific and to many of the wealthiest individuals controlling our economies on this side of the world, I’ve got a view to offer. And in my view, the future will be grounded in technology.”

LORNA SMITH, OBE

--Business/Global ‘Wealth Management – The Future will be shaped by Technology’ p60.

“It was, as exhilarating as much as it was rewarding and the BVI must ride that momentum while it’s coming our way. What follows are some highlights of the BVI Asian Trade Mission last fall, led by the Dr. the Hon. D. Orlando Smith, Premier and Minister for Finance. It started

Wayne Yang has over 25 years of experience in banking and wealth management while working at Chase Bank, Citi Bank, Merrill Lynch, and Deutsche Bank. He was recently Head of Client Coverage for Citi Private Bank’s Asia Pacific Division. He currently resides in Hong Kong.

JANUARY 2017 EDITION

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CALENDAR J A N U A R Y

T O

J U L Y

2 0 1 7

J A N U A RY 1 // New Year’s Day 2 // Public Holiday in lieu of Sunday 1st January 12-19 // 25th Annual BEYC Midwinter Regatta // www.beyc.com 12 // Bomba Shack’s Full Moon Party (All full moons until July) 12 // Trellis Bay Full Moon Party (All full moons until July) 12 // Foxy’s Full Moon Party Series (All full moons until July) 18 // BVI Business Outlook Conference // www.bvibusinessoutlook.com 21 // Painkiller Cup // painkillercup.com 22 // The Fish ‘n’ Lime Inn’s Beat ‘n’ Run Race // www.fishnlime.com 30 // Dive BVI 5K Race-Race 1 VG // www.divebvi.com

JANUARY 2017 EDITION

F E B R U A RY 7 // TSC Triathlon //www.tribvi.com 10-12 // 39th Annual Sweethearts of the Caribbean & 34th Annual Classic Yacht Regatta

JUNE

18 // Blenheim Trust 5k Series – Race 1 25 // Dive BVI 5k Race Series – Race 2 VG // www.divebvi.com

5 // Whit Monday (Public Holiday) 11 // Ceres Juice 10k series- Race 1 24 // Dinner In White

MARCH 3-6 // BVI Spring Fest 6 // H. Lavity Stoutt’s Birthday (Public Holiday)

24 - 26 // Lowell Wheatley Anegada Pursuit Race

M AY

10-13 // Loro Piana Caribbean Superyacht Regatta & Rendezvous

5 // Foxy’s Cinco de Mayo Party // www.foxysbar.com

11-14 // Annual Dark & Stormy Regatta

7 // Blenheim Trust 5k Series- Race 5

13 // Commonwealth Day (Public Holiday)

7 - 8 // Bitter End Yacht Club Challenge // www.beyc.com

14 // Good Friday (Public Holiday) 15-16 // Spanish Town Fisherman’s Jamboree 15-17 // Virgin Gorda 50th Anniversary Festival Celebrations 17 // Easter Monday (Public Holiday) 17 // Virgin Gorda Festival Monday Parade

14 // Dive Marathon/6 Mile Challenge 20-22 // BVI Dingy Championships

30 // Public Holiday (In lieu of Saturday July 1, Territory Day)

J U LY 1 // Firecracker 500 2 // Ceres Juice 10k series – Race 2 16 - 17 // Premier’s Cup (TBC)

20-21 // Foxy’s Wooden Boat Regatta

19 - 24 // Summer Sizzle BVI // www.summersizzlebvi.com

21 // Junior Minister of Tourism Competition

23 // Ceres Juice 10k series - Race 3

27 // Sensus Get Pinked 5k

28 - 9 AUG // BVI Emancipation Festival

28 // Leverick Bay Poker Run

29 // Christmas in July

17 // Foxy’s St. Patrick’s Day Party // www.foxysbar.com 19 // Blenheim Trust 5k Series - Race 2 26 // Dive BVI 5k Race Series –Race 3 VG // www.divebvi.com 27-2 APR // Annual Spring Regatta

APRIL 2 // Blenheim Trust 5k Series-Race 3 8 // Love City Country Music Festival // www.lovecitycountrymusicfest.com 9 // Dive BVI 10k Race – Race 1 VG 22 // Tortola Torture // www.tortolatorture.com 23 // Blenheim Trust 5K Series – Race 4 30 // Dive BVI 10k Race – Race 2 VG

JANUARY 2017 EDITION

A H EA D

JANUARY 2017 EDITION

OF THE

CURVE

Opposite Page: Resort Centre T: The Stables B: Esta Villa

What’s Trending at Oil Nut Bay? For this season:

On the Horizon:

+ An expanded beach - 40% longer, it extends halfway up the

+ Their Helipad was scheduled to be completed and operational by

Peninsula towards Pajaros Point.

early January 2017.

+ A huge variety of fruit trees along with some herbs were planted in

+ Their brand new Spa is scheduled to open as we go to press.

the Orchard and garden beds of their new Organic Gardens - the fruits

+ Pier 2 at our Marina is almost completed and will bring the number

of which will be used in the cuisine of the Beach Club Restaurant. + We now have stable buildings and horse pastures just next to our

of slips to 59. The Marina Village will open later this year, however, the slips are currently rentable for those who arriving by boat

Organic Gardens - home to their five rescue horses. + Three new villas completed in December. One available now in the rental pool second to follow as we go to press. This will bring their total rentable villas and suites to 9.

INFO: info@oilnutbay.com +1 800 761 0377 www.oilnutbay.com

JANUARY 2017 EDITION

Ahead of the curve

The Premier leads extensive trade mission to China

n October 28, the BVI completed an historic trade mission to China. The BVI Asia Trade Mission 2016, led by Dr. the Honourable D. Orlando Smith, OBE, Premier and Minister for Finance of the British Virgin Islands (BVI), his first extensive visit to China was a highly successful and productive 12-day roadshow to Hong Kong, Beijing, Tianjin, Hangzhou and Shanghai in the People’s Republic of China (PRC). In addition to meetings with Chinese Government officials and business leaders, the Premier gave nine speeches and remarks on the five-city tour. The Premier led a 29-member delegation (varying in different cities) comprising both government and private sector practitioners from the BVI, China and Hong Kong. The Premier also did a number of media interviews for both print and television, including one with CNBC. Director of BVI House Asia, Ms. Elise Donovan, said she was pleased to host the BVI’s Premier and delegation, and further noted that the “mission achieved its objectives, with the outcomes of greater opportunities for business development and a deeper relationship with both the Chinese Government and business community.” Below please enjoy the highlights from the mission.

Hong Kong The BVI Asia Trade Mission launched in Hong Kong on October 17 with Premier’s meeting with the Honourable Chun-ying Leung, Chief Executive of the Hong Kong SAR Government. This was followed by an extensive schedule of meetings throughout the day. Later that evening, more than 150 guests attended a cocktail reception hosted by BVI House Asia in the Sky Lobby of the Central Plaza Building. British Consul General Andrew Heyn, OBE, gave opening remarks followed by the Premier, who mentioned to the private sector delegates present the importance of the relationship between Hong Kong and BVI, and the BVI’s desire to continue to diversify its financial services offerings. One lucky guest won the door prize of a five-day sail on a luxury yacht compliments of the Moorings BVI and the BVI Tourist Board. On October 18, Business BVI hosted its third annual Business BVI Asia Regional Conference in Hong Kong, held at the Renaissance Harbour View Hotel. Themed “Creating the Future: Leveraging Our Relationships & Technology,” the conference attracted more than 100 industry experts and leaders from the most progressive businesses in Asia and the BVI to exchange discussion, insights and knowledge about the key issues driving the offshore industry. “We are one of the world’s leading financial centres, and will continue to be so for the foreseeable future,” Premier Smith declared in his conference keynote address, which focused on globalisation and the value of the BVI and other offshore centers to the global economy.

JANUARY 2017 EDITION

Beijing Premier and his delegation paid a courtesy visit to Mr. Xu Chen, Director of the Department of European Affairs, Ministry of Foreign Affairs, People’s Republic of China. Mr. Chen expressed China’s desire for a more fair and equitable world order and China’s willingness to work towards greater cooperation. The Premier expressed the need for continued global interconnectedness and explained the important role BVI has played for the past 25 years, particularly in facilitating global investments.

While in Beijing, the Premier and public sector delegates were also hosted at a banquet dinner by the Chairman of APEC (Asia-Pacific Economic Cooperation) Business Advisory Council Dr Zhang Lijun at the Diaoyutai State Guesthouse.

Premier Smith also met with Mme. Yi, Lin, Vice President of the Chinese People’s Association for Friendship with Foreign Countries and discussed the possibilities for economic, political, social and cultural exchanges between the BVI and China.

The BVI delegation was warmly welcomed by the President and Vice President of the China Association of Small and Medium Enterprises (CASME). China has 70 million SMEs, representing 99.7 percent of the total enterprises in China. Senior CASME members from the banking, investment holdings, energy, technology, consulting and marketing industry sectors, joined the BVI delegation. Discussions were held about how BVI structures could be used to support Chinese SME development.

The BVI Beijing roadshow, held at the Westin Hotel Beijing Financial Street, was judged a complete success. The BVI delegation presented “Strategies for Global Success for Chinese using BVI.”

Premier Smith met with Vice Chairman Li Shihong and other senior members of the marketing and international cooperation departments of China National Tourism Association to familiarise the organisation with the BVI as a tourist destination. The meeting was in pursuit of the BVI’s goal to receive “approved destination status” (ADS) in China. Achieving that status will enable the BVI to be marketed and sold in China for group travel through Chinese travel agents and tour operators. The CNTA expressed optimism for future partnerships with the jurisdiction and believes that the BVI can become a destination of choice for Chinese tourists.

Premier Smith met with Mr. Xingyong Yuan, Vice Governor of The Export and Import Bank of China.

JANUARY 2017 EDITION

Tianjin In what Premier Smith called “a truly historic moment,” the BVI signed a Strategic Cooperation Agreement with the Administrative Commission of the Tianjin Binhai New Area Central Business District (CBD). Following the MOU signing, the Tianjin-BVI Cross Border and Financing Forum was held for an audience of about 100 business and community leaders from the free trade zone. Premier Smith told the Tianjin officials, “Although your population and indeed your province are vast compared to the BVI, we share so much in common: we are both port cities so to speak – notwithstanding that the BVI is entirely surrounded by water, we are both keen to promote our financial services, our tourism, technology, and perhaps most significantly we are jointly committed to supporting China’s Go Global Strategy.”

Hangzhou The Premier met with the principals of LianLian Pay the third largest mobile payment vendor in China after Alipay, a related company of Alibaba. LianLian facilitates mobile payments for many Chinese merchants, making cross border payments in 19 currencies. It provides simple, fast and efficient access to Chinese merchants for foreign earnings. The company is integrated into the PayPal system and AMEX is their biggest investor. LianLian serves as the cross border currency exchange platform for merchants and businesses across a wide spectrum of industries. Discussions covered the use of BVI entities within Chinese group structures and various industries and how the BVI may benefit from new opportunities in these innovative spaces.

JANUARY 2017 EDITION

Premier Smith opened the BVI Asia Trade Mission roadshow, held at the Sofitel Hangzhou Westlake Hotel, with an inspiring message to the people of Hangzhou. The Hangzhou audience included members from the Hong Kong Family Office Association, a partner for this event. Later in the day Ms. Donovan signed an agreement between BVI House Asia and the Association to develop greater cooperation in the region.

Premier Smith and the BVI delegation also met with Mr. Zheng Yumin, Secretary General of the General Association of Zhejiang Entrepreneurs (GAZE) and Mr. Yong He, President of its youth arm. The Association is comprised of 249,000 members, many of whom already do business using BVI structures. Mr. Jack Ma, founder of Alibaba, is President of the Association. Mr. Zheng expressed his appreciation to the BVI for providing a platform to many Chinese as a bridge to their overseas investments. He also expressed the hope that the BVI would further engage with the Chinese business community in a more direct way. Finally, he expressed his appreciation for the establishment of the Bank of Asia, which he considered to be an example of deepening the BVI relationship with China.

Shanghai The BVI delegation held its roadshow event at the Grand Kempinski Hotel Shanghai followed by a dinner in which the BVI delegates interacted with about 60 VIP guests.

Premier Smith attended the second day of the China Offshore Summit, and told delegates that for close to 30 years “BVI companies and structures have been the key tools to success in building wealth in the domestic market as well as for taking your businesses global.” The summit was attended by almost 500 Chinese business people. The Premier’s speech was the last of nine speeches and remarks that he has gave across China on the BVI Asia Trade Mission roadshow. Premier Smith and delegation members met with Chairman Jianrong Yang of the China Council for the Promotion of International Trade Shanghai. The Premier and the Chairman discussed a number of topics related to the BVI and China, including economic and business development, tourism, environment and arbitration. Premier Smith attended the second day of the China Offshore Summit, and told delegates that for close to 30 years “BVI companies and structures have been the key tools to success in building wealth in the domestic market as well as for taking your businesses global.” The summit was attended by almost 500 Chinese business people. The Premier’s speech was the last of nine speeches and remarks that he has gave across China on the BVI Asia Trade Mission roadshow.

JANUARY 2017 EDITION

Ahead of the curve

Equiom Group enter the BVI market with the acquisition of Heritage Trust Group

quiom Group has announced the acquisition of Heritage Trust Group, an independent Asian corporate services provider with offices in Singapore, Hong Kong and the British Virgin Islands (BVI). The move will bolster Equiom’s ability to serve clients, especially those from Mainland China and Southeast Asia. Equiom was established more than 30 years ago and now has offices in key international financial centres. Serving both corporate and private individual clients, the firm has developed a global approach to wealth management. They offer a comprehensive range of high-quality services including family office, corporate management, trusts and foundations, yachting and aviation services, tax solutions, eBusiness services and property structuring. Heritage Trust Group, established in 2002 and led by Chief Executive Officer Angelo Venardos, provides trust, foundation, fiduciary, corporate and accounting services. A total of 60 Heritage staff, including the senior management team have joined Equiom Group. Heritage will rebrand to Equiom in January 2017. Venardos sees this acquisition as a positive move for the company. ‘Our priority has always been to provide the best service in the industry and this has become increasingly difficult in an environment faced with more competition and regulatory requirements,’ he said. For the last two decades, BVI companies have been synonymous with offshore companies in the eyes of Asian clients.

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Debby Davidson, Equiom’s Asia Director of Business Development said there continues to be strong interest among Asian clients in the BVI offering, especially from clients in China. ‘BVI is a well-known jurisdiction amongst our PRC and South East Asian clients’ she said. ‘Asian investors have a high level of familiarity with the BVI’s commercial, flexible and proven structures and are confident in the jurisdiction due to its British common law heritage, its wide pool extensive network of professional service providers, local creditor friendly legislation, and an effective judicial system of registering charges.’

Whilst the industry has had to adjust to

Venardos, who has been a long-time supporter of the BVI, established Heritage’s Class 1 Trust operation in the BVI three years ago to serve two of their Asian offices. He is excited that the business is poised to grow substantially both for trust and corporate services and he noted there may be the need to increase the size of the team in the BVI.

trusts, tax and regulatory compliance needs.’

‘Becoming part of the Equiom Group will ensure our clients continue to receive the service they deserve, in addition to benefitting from the breadth of services and skills available through the wider Equiom Group,’ he said. ‘Heritage clients can rest assured that they will continue to liaise with the same contacts who will now become employees of Equiom,’ he added. ‘From their perspective, nothing will change other than access to a much expanded range of global services.’

increasing regulatory changes, tax compliance and data security challenges, Equiom Group’s global footprint and resources puts them in a solid position to support the BVI office’s expected growth. ‘Previously, a simple BVI company managed and controlled by its Chinese beneficial owners would have been normal practice,” said Equiom’s Davidson. ‘This standard use of BVI companies continues to be popular, however, we’re now seeing our clients request a much wider range of business services including more complicated

Equiom

has

experience

administering

BVI

structures used in asset finance or aircraft leasing transactions, as well as BVI structures used by onshore investment managers as investment vehicles for portfolio companies or as a collective investment scheme to cater for a wide range of investor types. According to Davidson, Asia’s continuing growth puts Equiom in a strong position to serve their corporate clients looking to expand their international reach and also to offer their private clients additional flexibility in global wealth management solutions. ‘Having the BVI as a jurisdiction within the Equiom Group will be a great asset and offers our Asian clients even more valuable services’ she said.

Offshore law firm Collas Crill has finalised its merger with BVI firm Farara Kerins, extending the client offering of both firms The merger will see Collas Crill expand its global presence alongside its Singapore, Cayman Islands, London, Guernsey and Jersey offices. The firm will remain as Collas Crill in its current jurisdictions and trade as Collas Crill-Farara Kerins for a transitional period in the BVI. The firm’s BVI offering will include funds, corporate and dispute resolution work. Collas Crill Group Managing Partner Jason Romer said:

“As Collas Crill continues to grow and expand within the offshore market, it was a natural step to cement our presence in the Caribbean, satisfying our wellestablished client-base.” Many of our clients across the world have asked us to have a presence in the BVI. It is a direct response to their needs and represents an exciting development to help us to further assist our clients with their global requirements. It allows us to provide a seamless offering across all our jurisdictions.”

L-R: JASON ROMER Group Managing Partner CHARLES KERINS Managing Partner, Bvi GERARD ST. C. FARARA, QC Senior Partner STEPHEN ADAMS Managing Partner, Singapore

Gerard St. C. Farara, QC, Senior Partner at Farara Kerins, said: “We are very excited to be merging with Collas Crill. The merger represents a strategic move for our firm to build on our excellent reputation and the foundations Collas Crill has made through its Cayman and Singapore offices. “Together we will be able to build on the firstclass service we already offer clients giving access to new and exciting markets and will raise awareness of our services in international legal markets.” This decision comes after Collas Crill’s successful opening of its Singapore office in 2011 and the firm’s merger with Charles Adams Ritchie & Duckworth (CARD) in the Cayman Islands two years ago. A dedicated and professional management team will be running the integration process. This will ensure that, in line with both firms’ ethos, lawyers will remain focused on clients and continue to deliver the excellent service on which each firm prides itself. JANUARY 2017 EDITION

Ahead of the curve

Michael Manley of Jamaica and Eric Williams of Trinidad and Tobago signed the Treaty of Chaguaramas and formed the Caribbean Community, CARICOM. Over the years CARICOM has grown, achieved many successes, learned many lessons along the way, and continues its commitment to enhance the lives of Caribbean citizens as we navigate the post colonial world together. Out of this union and commitment, as a region we have developed institutions such as the Caribbean Court of Justice, the Caribbean Single Market and Economy, Caribbean Disaster Emergency Response Agency and of course, the Caribbean Examination Council, CXC. As those leaders believed some 43 years ago, I still hold that belief that as a Caribbean Community, we stand a greater opportunity to rise above our challenges by unifying our efforts, our knowledge, our resources and yes, our people. Through the work of our individual education systems and with the leadership of CXC, we are continuing the path of enriching the lives of our people, particularly our young people through education. While locally we have debates about education and the direction we must take, I look around the region and the world and I am comforted by knowing that through the halls of the parliaments in the Caribbean we have educated Caribbean leaders. In the classrooms around the region and at the helm of the leadership of fine institutions around the world, such as at the prestigious Howard University in Washington DC, we have Caribbean educated individuals. In businesses on our islands, United Kingdom, America and Canada, we have Caribbean educated individuals developing businesses and providing services and job opportunities to the world.

REMARKS BY HONOURABLE MYRON V. WALWYN

“Launch of CAPE Financial Services Syllabus” EILEENE L. PARSONS AUDITORIUM, H. LAVITY STOUTT COMMUNITY COLLEGE NOVEMBER 3, 2016

he appropriate recognitions have already been made, so it should be sufficient to say, good morning to everyone. As Minister for Education and Culture I want to extend a warm Virgin Islands welcome to our guests from the Caribbean Examination Council (CXC), and also to my fellow Caribbean brothers and sisters that through the advances of technology are watching this presentation live, as it is being streamed by CXC. There is an old African Proverb that advises that, “If you want to go quickly, go alone. If you want to go far, go together.” On 4th July, 1973 Prime Ministers Errol Barrow of Barbados, Forbes Burnham of Guyana,

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So as the debate rages on about education, I take this time to congratulate the leadership of the Caribbean Examination Council, those past and present for their commitment, dedication and foresight to continually present opportunities to confirm the education of our citizens, and also to embrace and lead dynamic changes in education for the citizens of the Caribbean. As a country we have been a part of the Caribbean Examinations Council from its inception. Our very own Dr. Charles Wheatley sat on the first Council meetings as they made the way to providing the first examinations. His wife, Mrs. Jennie Wheatley sat on the panel which developed the first English syllabus and there are others among our teaching staff who were in that pioneering group. CXC has come a long way and we are happy to be a part of the growth and development of an institution which is really our own. Which brings us to today. I have a particular affinity for the young people in the Virgin Islands and the region. Because I remember the burning desire I had to get an education that would provide me an opportunity to work towards my goals. But the world has since changed. There are more obstacles facing our young people than were present in the days of many of our leaders. Yet it is those leaders that are charged with putting together the right policies to support and protect this generation of citizens against the inevitable effects of globalization, advanced technology, cultural integration and economic uncertainty. It is these considerations that have shaped the

“We are continuing to enrich the lives of our people through education.” education agenda of the administration of Hon Dr D. Orlando Smith, OBE, Premier of the Virgin Islands and many other leaders of the Caribbean. Just as CXC has done over the years, our government has sought throughout these past five years to provide new generation experiences and education to today’s students. So it is a proud moment for the Virgin Islands Ministry of Education and Culture to be the driving force behind the implementation of Financial Services as a CAPE subject in the Caribbean region. It was in 2013 that our Ministry of Education and Culture introduced financial services into the curriculum of our secondary schools to ensure the sustainability of the industry. By doing so, we were seeking to ensure that the interests, minds and talents of our students were developed to sustain our leadership position in the sector, to ensure our territory’s global competitiveness and to maintain the standard of living that we have grown to enjoy. This was all part and parcel of the imperative to make education relevant to what obtains in the workplace and in the global community. In the Ministry of Education in the Virgin Islands, we recognised that we must prepare our students to assume positions of the financial services sector. We must continue to advocate and support our people to acquire the requisite knowledge and skills to maintain and grow our industries. The success of our individual island states and our region depends on preparing the capacity of our citizens and residents to conduct our affairs on the global stage.

We cannot afford to allow students to just pass through our system. Their education must be in tune with the direction of our countries in a complex and competitive world, and we must help all students to identify their role in our development. We must also find ways to make learning interesting, ignite the curiosity and innovative capacity of our students to enable us to solve the challenges facing our individual islands now and in the future. Since the introduction of Financial Services as a subject at the Virgin Islands secondary level, literally hundreds of students have been exposed to and gleaned a degree of awareness of our Financial Services industry and its relevance to their lives. However, we are cognizant that what is being done to bring about awareness is not enough to build the capacity needed for the industry. We are therefore very happy that CXC heeded the call to develop this syllabus to take all of our students one step further in that direction. The CAPE Financial Services Syllabus along with the work of the H. Lavity Stoutt Community College’s Financial Services Institute will provide an opportunity for our young people to excel in various fields of the industry. I want to take this opportunity to also tell my brothers and sisters in the region, that you don’t have to go beyond the borders of the Caribbean to further your knowledge of the industry. I invite you to come right here to the VI, to learn from leading experts in the international financial services sector through the H. Lavity Stoutt Community College’s Financial Services Institute. This launch today comes at a very opportune time as well. Our ministry is getting ready to sign a Memorandum of Understanding with financial services industry partners as we aim to build connections between the financial services industry, the education system and most importantly with our students, the future of this industry. I would strongly advise other Caribbean countries to do the same to build bridges between our main economic industries and the education system. In education we are providing a product for the business community, and therefore it is in

the best interest of all of us, for those businesses to also have a hand in shaping the product that is being prepared for them. I am indeed once again very pleased that we were able to have this syllabus launched here in the Virgin Islands and I express sincere thanks to the Registrar of CXC, Mr Glenroy Cumberbatch and I must also thank the former Registrar, who is now the Director General of the OECS, Dr Didacus Jules, for working closely with me in making CSEC mandatory in the Virgin Islands education system. Allow me also at this time to express sincere gratitude to Mr Raj Krishnan who was our lead person on the discussions with CXC on the implementation of financial services as a CAPE subject. I must also thank Dr Robert Mathavious who was very helpful to the ministry, in reviewing the syllabus to ensure that our students had the best possible understanding at their level of the financial services industry. It is important as well for me to thank our local Education Officers, particularly Dr Lavern ChalwellBrewley who was given the responsibly to work with our local financial services industry partners, to develop our financial services syllabus for the Virgin Islands secondary education system. We look forward to seeing many students pursue and pass this subject at Grade 12 or here at H. Lavity Stoutt Community College. I trust that there will be great uptake of this subject in the region and even beyond. I congratulate CXC on yet another “new generation” subject being completed and ready for implementation and wish the organisation continued success in its endeavour to serve our region to ensure global human resource competitiveness through the provision of quality and comprehensive certification. I encourage all of us, on all of our islands to continue to support the development of the young people in our region. I fundamentally believe, that it is through the education of our youth that they will build the capacity to find opportunities and continue the development of our region. Thank you, and may God continue to bless us all. JANUARY 2017 EDITION

Ahead of the curve

Historical Commonwealth Walkway Earmarked For Road Town Plans are being made to establish a Commonwealth Walkway here in Road Town as an enhancement to the city’s attraction. Minister for Communications and Works, Honourable Mark Vanterpool said that the Government is continuing to improve the various historical sites and tours in the city of Road Town for visitors and residents alike. The Commonwealth Walkway is closely knit with this goal in mind. City Manager, Mrs. Janice Braithwaite-Edwards said that the Commonwealth Walkway is a part of the Healthy Spaces and Places initiative led by the Health and Wellness Advisory Council. The Office of the City Manager, the Town and Country Planning Department, the Ministry of Education and Culture and the BVI Commonwealth Games Association will all be involved in the execution of the proposed walkway. She further explained that the walkway will enhance the city’s aesthetic appeal for visitors and encourage persons to be active. “The prospective Commonwealth Walkway in Road Town will follow a route situated near historical sites in the city for which a bronze marker with the Queen’s Cypher, EIIR, will be placed to indicate each historical site. Additionally, a free app will be established to interpret and guide persons along the route” said Mrs. Braithwaite-Edwards.

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Chief Executive Officer for Outdoor Trust UK, Mr. Jim Walker will be in the Territory this week, accompanied by other UK representatives, to discuss the execution of the Commonwealth Walkway. During next week, Mr. Walker and the team will explore the prospective route, visit schools, and meet with government officials. A Commonwealth Walkway has four main goals: To connect people of the Virgin Islands - especially youth; to inspire people to learn more about the diversity and richness of the Commonwealth; to encourage people to walk more to benefit their health; and to celebrate Her Majesty the Queen as Head of the Commonwealth, in a subtle way. The Outdoor Trust succeeds the Jubilee Walkway Trust which aims to create 100 walkways in all 71 Commonwealth Nations and Territories. The British Virgin Islands will be the first in the Caribbean in establishing a Commonwealth Walkway. There are currently 17 walkways across the Commonwealth Nations. It is expected that the route will be used for the Queen’s Baton Relay in 2017. The Office of the City Manager is committed to improving the city of Road Town’s infrastructure, aesthetics and operations.

B USI N E SS

Business BVI Business

BVI on China’s Belt and Road

China’s economy is being reenergized by the ‘Belt and Road’ or ‘Go Global’ strategy announced by President Xi Xinping in 2013. Investors everywhere are devising ways to incorporate this strategy into their development plans. This strategy presents opportunity for the BVI. Of utmost significance and relevance to the BVI is the strong and unabated preference to incorporate BVI structures in the wave of development sweeping across China. It was, as exhilarating as much as it was rewarding and the BVI must ride that momentum while it’s coming our way. What follows are some highlights of the BVI Asian Trade Mission last fall, led by the Dr. the Hon. D. Orlando Smith, Premier and Minister for Finance. It started in Hong Kong, proceeding to Beijing, Tianjin, Hangzhou and ending in the epicentre of China’s finance, Shanghai.

LORNA SMITH, OBE

ollowing two intense weeks spanning visits to five provinces in China last fall, it is clear that that China’s growth and its investments are constrained only by the extent of investors’ imagination. China’s Gross Domestic Product (GDP) now ranks number two in the world. While its economy may have, in very recent times, showed some signs of slowing, momentum remains very strong in each of the provinces we visited.

JANUARY 2017 EDITION

Fintech in China. During a VIP luncheon between the BVI delegation and about a dozen captains of business in Hong Kong, we were invited by the Chairman of the Board of one of the leading groups of Fintech companies to visit the compound. Despite a very packed schedule, the Financial Secretary and I rose early the next day and made the journey several miles away in driving rain. And we were not disappointed. As about 50 young men and women rushed into the elevators to start their day - all keen and expectant - I asked our host how it all worked. His response was, ‘in different ways’. He went on to explain that the Incubation Programme is the main driver, supporting entrepreneurs and start-ups with financial assistance and a range of business and professional services to accelerate their growth in different stages. The key is to have a good business plan. Some of the young entrepreneurs, depending on the level of success,

operate from standard while others practice ‘hot desking’ and so on. At the moment, the focus is on the digital economy: all understood though that Hong Kong is expected to become the big data route for the Silk Road Economic Belt and 21st-century Maritime Silk Road (Belt and Road strategy). What was quite fascinating, was that globally known companies such as Microsoft and Lenovo were operating from the same compound. Even more fascinating was the fact that of the 400 companies in this Fintech area, 50 % of them are BVI companies. The programme equips young people to live in a much more technology-driven world, inspires them to be creators of solutions and game-changing ideas and encourages them to be innovative. The programme reimburses incubates with up to $42,000USD over a 24-month incubation period to help them jump-start their businesses.

So what is the source of financing for this and the many other activities to follow? The answer is simple - The Belt and Road Initiative announced by President Xi Jingping, nearly three years ago. In a nutshell, this initiative aims to connect Asia, Europe and Africa along five routes: The Silk Road Economic Belt which seeks to (1) link China to Europe through Central Asia and Russia; (2) connect China with the Middle East through Central Asia; and (3) bring together China and Southeast Asia, South Asia and the Indian Ocean. The 21st Century Maritime Silk Road, meanwhile, will use Chinese coastal ports to: (4) link China with Europe through the South China Sea and Indian Ocean; and (5) connect China with the South Pacific Ocean through the South China Sea. Focusing on the above five routes, the Belt and Road Initiative will take advantage of international transport routes as well as core cities and key JANUARY 2017 EDITION

ports to further strengthen collaboration and build six international economic co-operation corridors. These have been identified as the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan and Bangladesh-ChinaIndia-Myanmar. The expectation is that that whole region would be integrated into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade. Billions of dollars are available in the form of loan funds from the Asia Infrastructure Investment Bank. Equally stimulating is that in 2014, a separate fund of HKD40 billion was announced to invest in business rather than to just lend money for projects. The Belt and Road Initiative has indeed served to energise commerce across China. Every province we visited is buzzing with plans and keen to use BVI structures for their investments.

Bank of Asia. We await the opening of Bank of Asia in the BVI with great anticipation. Once merely a concept, we viewed the various platforms to facilitate application processing and met with the bank’s investors while in Hong Kong. The opening date scheduled for early in 2017, cannot come soon enough, as the opening of bank accounts has been the single biggest drawback to the growth of new business in Hong Kong.

Will Hong Kong remain the Gateway to China? Hong Kong has traditionally been the gateway to China, presenting every possible solution to the needs of mainland clients. Although Hong Kong continues to be the New York of the East, my observations are that Chinese mainlanders are more and more keen to find their ‘end to end’ solutions at home. This is not to suggest that Hong Kong will ever diminish in its significance as a financial capital but the phenomenon bears watching.

Beijing. Traffic in Beijing was as usual: trying! It took us well over two hours to get from the Beijing Capital International Airport to our hotel in the financial district. Our busy four days there included a meeting with one of the national organisations, which coordinates Small and Medium-Sized Enterprises (SME’s). These are of course collectively responsible for some 99% of Chinese business. For many of the group with whom we met, the Belt and Road strategy presented them with endless opportunities for a win/win between BVI and China in a number

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of areas including asset management, patents, technology and trade to name just a few. They were optimistic that a very large number of companies would be registered in the BVI in short order and were anxious to start the negotiating process in order not to lose momentum. Next steps include a visit to the BVI for further discussions.

Tianjin. BVI House Asia, located in Hong Kong certainly helps the BVI to maintain its momentum. Negotiations between the BVI and Tianjin have been ongoing, facilitated by that office. We therefore made the trek to Tianjin by coach where a new Central Business District (CBD) is being developed. The district is a spectacular project that includes hotels, hundreds of financial services companies including banks, an underground shopping centre and a host of other amenities spread over roughly 120 square kilometres. Three major amenities are within close proximity – a huge seaport, the CBD and the airport – all set to complement the comprehensive service platform of this Chinese Free Trade Zone (FTZ). Priority in the FTZ is given to financial innovation, new generation IT, cross-border trade and E–commerce, culture, media and the creative industry and financial services. To give a flavour for what is happening right now in the CBD, the Intercontinental Hotel will open this spring, as will a branch of the Juilliard School of Music. Alibaba, the Chinese online trading giant and Ten Cent, the multimedia, internet and entertainment giant are already ensconced in the Tianjin CBD. It was truly an honour and a positive signal to the future that the BVI signed a Memorandum of Understanding (MOU) with Tianjin on the day that we visited, paving the way for BVI companies to become involved with a number of the initiatives underway there. Like other provinces we visited, Tianjin is very much part of the ‘Go Global’ strategy. While in Tianjin, the BVI delegation, including several private sector representatives, laid out for some 60 delegates specially invited by the CBD Administrative Commission, the reasons why the BVI continues to be the international partner of choice in China.

Hangzhou. The coaches that awaited us after our short flight from Beijing to Hangzhou took us past the dazzling lights of Zhejiang, the host city of the last G20 Meeting, to our much more modest hotel in Westlake. With a population of nearly 10 million, Hangzhou’s economy is largely based on venture capital firms, e-trading by companies such as Alibaba, many other fintec and related e-commerce activities. It is among the wealthiest of the smaller provinces in China.

The Belt and Road Initiative will take advantage of international transport routes as well as core cities and key ports to further strengthen collaboration and build six international economic co-operation corridors.

could get the circumstances right. But this needs further thought.

It should not come as a surprise then that one of our several meetings was with a very large mobile payments group, whose cross-border payments support more than 39 currencies and serve more than 120 million consumers. Although they use BVI companies, they were keen to know more about using them more effectively to strengthen their business. This is undoubtedly an opportunity for persons in the industry to undertake without delay. I also thought that as one or two young BVIslanders are actively engaged in developing similar business, this could be an opportunity to compare notes – if we

Thereafter, we met on the famous Westlake Compound with the President of the Chamber of Commerce of the Zhejiang Province, who while expressing his appreciation to the BVI for providing a ‘platform’ for so much Chinese business as it is a ‘bridge’ to overseas, at the same time expressed a desire to see the BVI further engage with the Chinese business community, especially in light of the Go Global Strategy. He saw the need for the BVI to switch to a direct and stronger relationship with Hangzhou. Interestingly Jack Ma of Alibaba is the Secretary General of the Association, which has 249,000 members.

Shanghai. And finally to Shanghai! Since my last visit there in 2013, the skyline has been further transformed if one can imagine this: the tallest building now stands at 120 floors and the BVI delegation had the pleasure of meeting the owners! The huge accumulation of wealth in Shanghai is obvious and the opportunities for BVI business are vast. Standing at the window of my hotel it would appear that even the historic area of the Bund is being transformed in certain areas.

We met with several owners of Shanghai real estate, all of whom believe that the BVI presents a huge opportunity for investment. As with every trade mission of this nature, success can only be measured in the future as we, together with our private sector partners convert our many meetings into real business. This ought not to be difficult as even after 30 years, the buzz remains around BVI structures. As BVI financial services as we know them change, with a greater demand for more valueadded services, there are a few key things that BVI must do following this mission. We must stay very engaged with our business partners in China, we must hold more targeted - and perhaps smaller meetings with our partners, and equally important, we must understand the language - after 30 years in China, while the use of interpreters is inevitable, it’s time for more BVIslanders to communicate in Mandarin. We saw for ourselves how the room erupted in applause whenever our BVI House Asia Director, Elise Donovan greeted the audience in Putonghua, signaling the future. B JANUARY 2017 EDITION

Business BVI Business

Bank of Asia:

The Next Generation of Banking EETU KUNEINEN

he Internet and its supporting technologies, such as mobile devices, allow delivery of services in a completely different way, compared to the traditional face-to-face interaction. The global adoption of mobile devices and networks, which today have more power and speed than the fastest home computer and internet connection, allows for the delivery of services in real time, instantly, 24/7, with significantly lower costs, and removes the barrier of physical location of the service provider - or the location where the customer purchases and receives the service.

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This may seem irrelevant for an offshore jurisdiction but in fact, the shift from offline to online environment can be critical for the survival of the financial services sector. The offshore services sector, has been driven on the premise that being physically located in the country has given service providers a major competitive advantage and even blocked the entry of new players from outside. However, if the same services can be offered from outside the jurisdiction, from anywhere in the world to anywhere in the world, without the need to physically travel to the offshore country, in realtime, instantly and at a low cost etc., the service providers must adapt to the new dynamics and find ways to stay competitive to ensure survival. So, what is the impact of the financial technology or Fintech on offshore jurisdictions? In short, it eliminates the difference between offshore and onshore, allowing the customer to access banking services from anywhere in the world. Traditional banks have been lacking the adoption of new technologies, partly because of very strict regulation, which has made the entrance of new players into banking very difficult, but also because they have been relying on the regulatory environment to protect the status quo. Fintech is boldly offering better solutions for banking across the board, some of them yet to be seen on a global scale. The traditional banks are simply not in a position to even leapfrog to the best and latest technologies available, as they are often burdened with hundreds of millions of investment

in inflexible legacy technology that they can’t just write off or modify to match today’s expectations. There are a number of amazingly popular payment services out there offering incredibly fast, easy to use, and almost or completely free service. These examples such as PayPal, Apple Pay, AliPay or WeChat Pay, have millions of happy daily users for a good reason: They simply get money transactions done using smart new technology. The same can be said for many other services such as wealth management or peer-to-peer lending, that are fast emerging, utilising the same underlying principle and entering the space that was traditionally dominated by brick and mortar banks. So what is the real challenge with these innovative Fintech services? They are not real banks and cannot offer the full range of banking services that licensed banks can. On the other side of the coin are the traditional real banks, servicing large corporates and the super rich, high net-worth private banking clients for high commission fees, which in return get lower, slower and more complicated online banking systems. You read correctly: the rich are getting poor service, slow, old-fashioned and expensive, when it comes to the traditional banks. The ones who transfer or deposit just one dollar get super fast, smart and inexpensive banking. Something wrong with this picture? We thought so too.

BANK OF ASIA Bank of Asia, or BoA, is an example of how banking service – an old, location based, brick and mortar and face-to-face business – can be transformed into a global service. One of the visible differences between BoA and traditional banks is that BoA has no physical branches where customers conduct banking. All services are offered online. The customer can access the full range of services, Fintech style, offered through any device, anywhere in the world. BoA is not a next generation bank. It is the next generation of banking. The account opening process or the user friendliness of it, is one distinguished feature that really makes BoA’s service stand out. Opening an account at a traditional bank can be painfully slow and the experience feels more like a third degree interrogation rather than quality customer service. To open an account, you have to physically visit a branch that might not be near you, present your passport and proof of address, along with other

“Traditional banks have been lacking the adoption of new technologies, partly because of very strict regulation, which has made the entrance of new players into banking very difficult, but also because they have been relying on the regulatory environment to protect the status quo.” documents depending on the account type. Then you wait and you wait; month after month, just to hear whether the bank decides to gracefully bank you, which is not always the case. Good people, clean money but no banking service. With the technology driven approach of BoA, accounts can be opened through any device, anywhere in the world, and in the middle of the night, if so desired. The technology behind BoA’s robust Know Your Customer (KYC) and Anti Money Laundering (AML) systems is based on a few different powerful identification and analysis systems. Unlike the traditional banks which hire thousands of employees to process KYC and AML, BoA has automated these processes. This enables BoA not only to save huge amounts of money on human resources, but also to eliminate human errors and faults. The main benefit of automated KYC and AML is that powerful computers can analyse big data in real time, in much broader and faster levels than humans are able to. When a customer applies for a new account, BoA systems analyse the customer’s location, device, internet service provider, and ask the customer to submit basic documents such as photo ID, address proof, selfie photo and a short video that includes voice sample. The application also requires submission of a mobile phone number that is verified by SMS. Applicants are also required to make a small deposit from a credit card under their name, which immediately identifies that the customer is in fact valid, with a real ID and has already passed the KYC to get a credit card. The application also performs cross checks in big data sources, as well as black lists, sanction lists and other suspicious lists to verify that the customer is not categorised in any parameter that will automatically prevent them from opening a bank account. In grey area cases, when the details raise questions that are not totally black or white, the system passes the KYC decision to human KYC experts, who complete the process manually, checking the details for the exceptions that only humans are able to verify. Because the system is based on computing

power and not on human resources, constant monitoring of customer behaviour, public status, and business behaviour for each and every transaction is possible. The AML checks apply to every transaction and not only to suspicious transactions, which is the current norm in the banking industry. In practice, the automation of the KYC and AML processes enables operation with very low costs, which affects the whole business model of the bank. In other words, BoA can bank more customers with less cost, offering greater flexibility and simplicity, more convenience and better quality service to the end user. Protecting customers’ privacy is a sensitive matter, especially when dealing with private banking clients. It has become an almost impossible task, due to regulatory requirements that naturally wish to expose the customers’ financial activities in detail. To deal with that in the right balance and not to cut corners, BoA operates an expert team that specialises in privacy, encryption and cryptography to ensure that customer data is not exposed to anyone who is not entitled to view it by law – therefore enhancing the service beyond any regulatory requirements. BoA will always be open – even when your traditional private banker sleeps. The trading platform puts the user in charge of the execution of trades. Trades can be executed any time the customer decides to or feels like trading; the service is not limited by any office hours. Technology allows 24/7 operation with faster, more reliable banking and without exposure to human error or greed of a banker, who makes a commission on every trade. Delivery of every service is instant, whether it’s a transaction or any interaction between the customer and the bank. Through the use of technology, BoA is also able to offer each service at a low cost. Where the traditional bank uses a person to approve, analyse and make decisions, the new way of banking allows technology to replace manual and expensive functions. The end result is not only a better customer experience, but also much lower fees. B JANUARY 2017 EDITION

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Business BVI Business

MERGING WITH THE FUTURE FARARA KE RINS TAKES ON A PART NE R Interview conducted, condensed and edited by RUSSELL HARRIGAN and FREEMAN ROGERS

It was a big step. After operating independently since 1985, Farara Kerins in October announced a merger with Collas Crill, a Channel Islands law firm with offices in Singapore, London, the Cayman Islands, Guernsey and Jersey. Senior Partner Gerard Farara QC sat with Business BVI in November to explain the decision and what he hopes it will mean for his firm’s future.

Firstly, congratulations on the merger. These are early days, but how is it going and where are you in the process? The process has been moving at a fairly quick pace. The initial contact between the Collas Crill Group and our firm took place around June, and it seemed to both sides at the time that this was something that made sense and would be mutually beneficial. We had in-depth discussions in August, and the merger agreement was signed in September and will be effective from the first of January 2017. So between the signing of the merger agreement in September and the end of the year, there is a lot that we have to cover in order to properly and effectively merge the two firms. That process is now on going.

Is there a checklist of tasks that you have to go through? Certainly, and the checklist is quite lengthy, because it involves really a complete assimilation of Farara Kerins into the already established group structure of Collas Crill in every respect. Myself and my partner Charles Kerins will continue to run the firm in the BVI as part of the Collas Crill Group, but from an accounting point of view, a billing point of view, and a strategic point of view — marketing, etcetera — we are being folded into the already established Collas Crill structure. There are also a few regulatory requirements, particularly in Guernsey and the Cayman Islands.

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Set the stage for us by speaking to what you were looking for in a merger from a strategic standpoint. This firm has been in existence for about 32 years, and is historically one of the local firms in the BVI. Over the years — particularly in the last 15 years or so — we’ve had quite a number of international firms that have set up offices in the BVI, as a strategic addition to their portfolio. That obviously is important in terms of enhancing the kinds of services which they can deliver to their international clientele. Farara Kerins have been involved in a range

of legal matters in the territory — not only serving the needs of international clientele but also local clientele — and we felt that it was important to maintain our own identity as a BVI law firm. With the number of international firms which have set up offices here in the BVI, the legal work — particularly as it relates to insolvency, companies, and general commercial work — has become very, very competitive. Those are areas in which we have provided legal services over many years. So as we moved forward, we considered that it was in the best interest of the firm that we must grow and adapt to the changing environment in the BVI and in the international community. The identification of a suitable firm with which to merge came about because of a personal connection which my partner Charles Kerins had with another lawyer who had worked in the BVI and who is now part of the Collas Crill

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Group. I personally hadn’t done any work with the group before, but when we finally made the decision to move in that direction, I was introduced to the Group. Immediately when we did our due diligence, we recognised that here was a group that had offices in a number of strategic locations in the world and were in a position where they were looking for a further expansion in the BVI. Thirdly, they were of a size where they would be more compatible with ours: They’re not a huge international firm, but we thought the size of the firm would be a good fit for us.

Farara Kerins is one of the leading indigenous firms in the BVI and by extension you are one of the territory’s leading home-grown legal minds. What do you want aspiring young BVI lawyers to take away from your decision to make this move? I hold some fairly strong views in terms of indigenous local lawyers and how they should look at the practice of law in the BVI. First and foremost, I think the days of being a sole practitioner, while they’re not completely extinct, are heading in that direction. There’s a lot that’s being done here in the type of legal services that are provided, and it is important for us to have lawyers who can offer those services to all that require them — including those who are not necessarily in a strong financial position. We must have a cadre of lawyers that are servicing a range of needs that exist in the territory.

At the same time, the strategic national decision was taken many years ago — particularly as it relates to financial services — to broaden and deepen the presence of international firms in the BVI and to allow those firms to provide BVI legal services from outside the country. That was a decision that in a sense has taken on a life of its own, and it cannot be ignored by anyone who is practising or aspires to practise law in the BVI. If you have your own firm, you have to be able to make strategic alliances in order to get sources of work. In order to do that, you have to put yourself in a position where you not only have a good reputation, but you also have the kind of contacts, essentially a global funnel in order to get that type of work. So for young lawyers to grow their practice and deepen their own experience, they need to develop sufficient strategic contacts that bring them business from outside the BVI.

You have been involved in the development of the McKinsey Report, and you are now playing an integral role in implementing its recommendations for bolstering the territory’s financial services industry. How has the report informed your decision to move forward with this merger — or maybe cemented your decision? I think that’s probably the better word to use: “cemented.” To be frank, I was already looking in that direction. So it has helped to cement. In quite simple terms, being able to look at that initiative and what are the possible fruits that it can bear reminds you in a very stark way that you

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The whole question of name recognition is something that I believe is of less importance now than it was when I started the practice of law, because if you confine yourself to a certain level of practice then that is essentially where you are going to stay.

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The decision whether to merge with an international firm is one which each firm has to make for themselves. And the question is at what point in the development of your practice do you make that decision? Some may argue that the earlier the better, and I believe there’s a strong case for that in the modern context of the BVI. The whole question of name recognition is something that I believe is of less importance now than it was when I started the practice of law, because if you confine yourself to a certain level of practice then that is essentially where you are going to stay. To break out of that mode you need to align with a firm or a practice that has more of a global reach. Whether that’s done through a merger or through developing strategic alliances is going to be an individual decision, but in final analysis most international clients are looking first and foremost to those international firms that already have that name recognition internationally if they want representation in the BVI.

need to position yourself in order to be able to benefit from whatever comes out of that initiative. In that sense, it certainly cemented my thinking and helped to prompt me into action in terms of finding a strategic partner.

Was there an “a-ha” moment in your discussions with Collas Crill when the light bulb went off in your head and you said to yourself that this is the firm that Farara Kerins should move forward with? I don’t know if I would describe it as an “a-ha moment,” but certainly when the representative partners of Collas Crill and myself and my partner met. I think we all came to those negotiations already with a certain level of comfort, but at that meeting both sides had to ensure that in a face-to-face meeting we were comfortable with each other as possible partners going forward. In short order — and this may be the “a-ha moment — having met and having socialised and discussed, it was clear that we had a certain level of comfort with each other. That was very, very important, because in many respects it’s like a marriage: You have to be able to live with the other person, and they with you. B JANUARY 2017 EDITION

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Business Development head gets to work at BVI Finance It’s a big year for BVI Finance. The agency, which is charged with promoting the territory’s financial services industry, is transforming itself from a government entity into a corporation. Gary Hales, BVI Finance’s head of business development, is playing a key role in that transition. He brings pertinent experience to the table: Before moving to the BVI last August, he worked for more than four years as business development director of a similar corporate entity in the Crown dependency of Jersey. In a November interview with Business BVI, Mr. Hales explained his vision for sustaining and growing an industry that is weathering turbulent times and facing an uncertain future.

Interview conducted, condensed and edited by RUSSELL HARRIGAN and FREEMAN ROGERS

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Business BVI Business Why the BVI, and why now? What was the impetus for you in taking on this assignment? When I was approached about the BVI Head of Business Development position, I already had a good understanding of the market. I had worked for Jersey Finance for almost five years and also worked with HSBC around the world. I immediately started thinking about the massive challenge that exists for all international finance centres. As I spoke to more people that I knew here on island, I got a very strong sense that the government was determined to make this work. The backing of the government was absolutely crucial: Without real involvement and commitment it wouldn’t work. In addition to that, the government and industry were keen for BVI Finance to take on the role of representing the financial services sector in the BVI. The commitment from all parties was very important and made me decide that I wanted to join BVI Finance.

Let’s start at the end. I believe this assignment is for a period of three years. What do you hope will be your signature accomplishments at the end of your tenure here in the BVI? There are a couple things that I look at as measures of success in that three-year period. For me it’s all about having a robust BVI Finance brand, both on island and globally. I would like for people to recognise BVI Finance — and that if they want to find out some information

incorporations. Yes, that’s a strength of ours and we will continue to focus on it, but there’s more to BVI than just that. So for me it’s really developing that clear narrative: “What is BVI; what does BVI do?” We are a place to come to and set up a family office. We are a place to do asset management. We are a place to have VISTA Trusts. We are a place to do funds — our niche is likely to be incubator startup funds. These messages need to get out there and overcome the perceptions that people have. Also one of the challenges the BVI has had over the last few years is it’s very reactive in terms of messaging. If something goes wrong — the Panama Papers is a perfect example — we didn’t respond as quickly as we should have. In today’s world, you’ve got to get out there and deliver that message very, very quickly and respond. The longer it goes, the worse the perception is. We need to be at the forefront and clarify for people what we can do rather than just be reactive and wait for it to happen.

Do you have a timeline on when you expect to bring the 14 employees on board? What I’m expecting is by the end of 2017 we’ll have the full team on board. It will probably be a phased approach. We’re looking at putting business development managers in Hong Kong, in London, potentially Miami, and either Dubai or Johannesburg to cover that Middle East-Africa

I would like for people to recognise BVI Finance — and that if they want to find out some information about financial services, they contact us. about financial services, they contact us. It’s about building that brand and some real quality and expertise behind it. It’s a small team — eight at the moment, which we expect to expand to about fourteen — all being experts in their area, focused on delivering success. The other challenge we are facing is that if you ask people around the world, “What is BVI?” they’ll go, “A company incorporation centre” — box it, close it off, and nothing else. What I’m hoping at the end of three years is that that’s not the perception of BVI anymore. I want people to think of BVI as a financial and business centre that actually does more than just company

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market. However, we won’t do it just yet in the African case, because we need to further develop an Africa strategy. So that will be last. London and Asia will be relatively quick. By the end of the year, we’ll be at full staff. The year has been very challenging for the BVI in the offshore space. It started with beneficial ownership issues, followed by The Panama Papers, the Brexit referendum, and now the election of Donald Trump in the United States. Underpinning all of these challenges is a rising global angst about globalisation, especially in Europe and the US. Are we in a new reality? I would say yes. From a personal point of view,

the world is almost in a protest mode. You’ve got elections in Germany and France next year, so you could well see this wave of protest against the current world regime continuing. I think one of the challenges is people know what they don’t want, but maybe they don’t know what they do want. So people protest vote, which I think we may well continue to see particularly in Europe. This is sort of the new norm, if you like. I don’t believe that it will suddenly return to what it was a year or two ago. So I think we have to be prepared for that. Who knows what that means for international financial services? For instance, we don’t know yet what Donald Trump’s worldview would be — whether it will be good or bad for BVI and international finance centres. There are all these continually changing regulatory demands and requirements, and there’s going to be more. The principle behind those is absolutely correct: It’s about making sure that each offshore centre does the right thing, has the correct rules and regulations in place, and meets the global requirements. The key for us in BVI is to make sure we’re ready and able to adopt those regulations — and quickly if they are global standards.

And you clearly see BVI Finance as being critical to navigating this environment? Yes, because we’ll play a different role to what the industry does, [as well as] the regulator and government. We’ll be keeping our eye on what happens globally from a neutral perspective. We’re not just focusing on the funds industry, the business incorporation industry, the wealth management industry; we are not just looking at it from solely a regulatory perspective or a governmental perspective: We’re encompassing all those views. So if there’s a regulatory change in China, for example, we need to understand what that means for us on the island across the industry. Perception management is critical as well. We need to know what the view of BVI is in China, in Latin America, in Europe, London and New York. By understanding what people have as a view of the BVI, we can make sure the correct messages are being delivered. That’s key.

What do you see as the BVI’s core strengths in the offshore space? If you look at the history, it is the legal aspect: English common law gives people confidence. At the end of the day, people want to know their

of capital around the globe and where BVI sits in that space. You’ve got, for example, growing infrastructure development requirements in Africa. So it’s how we continue to be part of that flow around the world, enabling inward investment into places around the world. That demand is going to continue. Similar to that is the growing middle class — the growing wealth you’re seeing in areas like Asia, Latin America, the Middle East and Africa.

Where do you see technology fitting in?

Business BVI Asia 2016 sponsored by BVI Finance

money is safe; and if there is some sort of issue, that they can go to the courts. That’s absolutely critical as our starting point. Also, there’s a bit of history in terms of the number of years we’ve been in financial services. We’ve developed a very good reputation of being efficient, cost-effective and responsive to what’s required around the globe. We’ve got good-quality individuals and firms on the island that provide that professional service around the globe, and that sets us apart from quite a number of others.

How do we as a jurisdiction stack up to competitors like the Cayman Islands, Jersey, Singapore and Hong Kong? I think the key is to focus on the areas where we have a niche. It will be very difficult to compete directly with Cayman on funds, for example. We can still get funds business — there’s no doubt about it — but we need to focus on where we have a competitive advantage or where we can get one. Where is our bang for our buck? If you look at funds, it’s potentially incubator funds, start-up funds: That’s really where we can develop an area of focus over the next couple years. We’ve got VISTA Trusts out there. The way we can develop ourselves is not going head to head with other jurisdictions: It’s going back to “Where are we strong?” That’s not just solely about the product or about the sector: It’s about the geography. Asia is a very

Cost is very important, and therefore technology is crucial. Cost efficiency in the BVI has been very good and has been one of our competitive advantages over the years, but that gets worn away over time and others compete on pricing. As costs come down, you need to find new ways to manage your own costs. Technology is naturally the obvious piece on that.

The way we can develop ourselves is not going head to head with other jurisdictions: It’s going back to

“Where are we strong?” important market for us and will continue to remain an important market for us, but there are other growing markets. Certainly, there’s a big opportunity in Latin America for us and there’s growing opportunity in Africa. So we need to identify which are the biggest markets that will give us the greatest return.

Where is the future heading in the offshore space? And what are some of the leading trends driving and shaping that future? The constant changing in regulation is no doubt number one, because that’s one we’ve all got to adhere to. That comes from all sorts of sources, whether it’s the OECD, EU, UK. We, along with every other financial centre, have to fall in line. That’s absolutely right, so there’s no issue with that, and we’ll follow that through if they are globally applied standards. Then you start looking at a couple of other things. You’re looking at the enabling of the movement

Technology is [also] very crucial in terms of data protection. The way we manage data and customer information is very important in terms of what is going on globally. And you’ve got the infrastructure element of broadband speed, those sorts of things. As we grow the industry on island — more people are here, more demands on firms — you’ve got to have top quality broadband speed so that people can engage globally.

In Asia, the sun is still rising for much of the global economy and the offshore space. The BVI already has strong brand recognition there, but does the territory need a specific Asia strategy to ensure its continued leadership in that market? I think what we’ve been doing in Asia has worked very well: We’ve got a good brand in Asia; we’ve got a good perception in Asia. There’s that shift that’s ongoing, which we need to be aware of. As a perfect example, as part of our strategic plan, JANUARY 2017 EDITION

we’re looking at putting a person in Hong Kong who’s Mandarin-speaking so that we can access and deal more effectively with the opportunity that exists in China. We need to be in China on a regular basis. Not just Beijing and Shanghai — obviously we’ve done that, but we’ve also visited Shenzhen and Tianjin. Last month the premier and a delegation including BVI Finance visited China as part of our annual tradeshow. We need to be recognising where the growth opportunity exists there. So it’s not a new Chinese strategy: It’s more adopting some tactical changes to what we’ve been doing to make sure we’re moving with the growth of China. I think that’s really the key element.

immediate view: “Well, actually, I’ve been hearing all this messaging about BVI doing this, being positive, adopting these regulations.” So the context is built better for them. We [also] need flexibility. If we wake up in the morning and there’s a negative story in the press somewhere in the world, we’ve got to respond rapidly. Having spokespeople ready within BVI Finance to deal with press around the world as well as on island is important, because everything moves very quickly in the media world. You need to be able to respond and deal with stories straightaway.

What do you see as BVI Finance’s biggest challenge in making the leap to more of a private-sector structure? I think we’ve overcome some of the biggest ones — the commitment and the process — so the key initial things that we need to sort out are the people ones: making sure we’ve got the right people on our team that can deliver. We have some significant objectives that we want to achieve with a very small team. You can only do so much promotion of BVI sitting in BVI. So you’ve got to have people in Hong Kong, London, and so on. Challenge number two is making sure that the message lands with the right people at the right time. A lot of it is going to need to be face to face, because that’s the most effective way of communication. We’re also developing our multimedia communications channels, including Twitter and LinkedIn. That’s very important for us. From getting advertorials and gaining press coverage of the activities that we’re doing and also engage on the website, and through e-mail campaigns. We are developing a full communications plan that ensures our message is out there. It is the drip-drip effect: You just keep telling people what we’re doing — talking about the positive things that are going on on-island — and subconsciously people start taking that on. There’s always going to be some negative comment about offshore centres, and quite often in the past BVI have been thrown into that with abandon. So we need to be able to develop our position of what we actually do so when those things happen, people have got an

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BVI Business Outlook 2016 sponsored by BVI Finance

You just keep telling people what we’re doing — talking about the positive things that are going on on-island — and subconsciously people start taking that on. The adoption of the Common Reporting Standard seems to be moving forward steadily across much of the world. Does the United States’ refusal to adopt CRS pose a risk to the offshore world? Firstly, CRS applies to everybody. We’re involved in that as much as anybody else, so we’re no better or worse off. The whole element of the US’ involvement goes beyond just CRS. So one of the challenges it does create is often an uneven playing field. It is a challenge when other places in the world don’t sign up to things. To comment specifically on the US is probably not correct, but it’s better for all if there is an even playing field.

You have been in the BVI for about three months so far: What has been your most surprising experience living here — not necessarily related to work? I think the heat surprised me. Having lived in Dubai for two years, I didn’t give the heat a second thought. But what I then realised when you’re here is that in Dubai you’re just in A/C one hundred percent of the time. Coming here, and then you’re not in A/C, you suddenly realise you’re a bit hot. So that was my biggest surprise, which is from a personal point of view. We’re glad it’s cooled down over the last few weeks, so I am sure I will acclimatise! B

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Business BVI Business

After 15 years in the public sector, Julien Johnson decided to take the plunge. Interview conducted, condensed and edited by RUSSELL HARRIGAN and FREEMAN ROGERS

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From the boardroom to boats. Entrepreneur leaves public service.

You essentially moved from one pillar of the economy to the other: financial services to tourism. What have you found as the most striking difference and the most striking similarity between the two sectors?

When his year-long stint as executive director of BVI Finance came to a close at the end of April, he started working full time at Island Time, a Nanny Cay-based powerboat rental company he purchased in December 2015. The tourism job is a major change for the entrepreneur: His previous career included a postuniversity stint with the Financial Services Commission and more than a decade at the Financial Investigation Agency. In November, Mr. Johnson met with Business BVI and recounted the ups and downs of his new life outside the boardroom.

Firstly, congratulations on taking the leap from the public sector to the private sector full time. How’s it going?

What were the key elements in arriving at your decision to leave the public sector? Was there a tipping point?

It’s going great. I’m enjoying it. It’s a welcome change in environment, a welcome change in terms of the flexibility of schedule. My new venture is on the marine side of the economy, the tourism side of the economy. I’ve always loved boats and being in the water.

I don’t know if there was a tipping point. I think I always had an entrepreneurial spirit. Even just coming out of college, I always saw potential for business opportunities in the BVI from as far back as I can remember. I always wanted to do my own thing at some point. I think it was just a matter of the right opportunity coming about. Back then, I would not have thought this would have been it, but it is what it is. I wouldn’t say there was any particular tipping point. I always had an inherent desire to work for myself.

I purchased a powerboat rental business called Island Time. The business has been in existence for 10 years, I would say, but I acquired it in December 2015 from a couple who just kind of wanted out of the business. When I bought it, it was in the back of my mind that I wanted to do it full-time, and once I saw the potential I realised that it definitely needed my full attention to get it to where I felt it could get to. A few months after that, I had come to a crossroads at BVI Finance in terms of “Do I renew for another year or do I move on?” With this going on, I decided my time with government had come to an end. The rest is history. The end of April was my last day with government.

After how many years? Coming out of college in 2001, I was with the Financial Services Commission for a few years, which was at that time a statutory body. From there, I moved to the Financial Investigation Agency — also statutory. So the last year with BVI Finance was really my first official stint within central government, or non-statutory-body. If you add it all up, it’s 15 years, and a few stints before I went to college.

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My last year of working for the public sector was an interesting time to be at BVI Finance, to say the least. It was certainly challenging. It was not entirely new to me, but certainly a different direction from what I was doing before. There were certain things about it I enjoyed and certain things I didn’t enjoy. But it was an easy decision to make once this opportunity came up — once I was able to confirm in my mind that I would make enough money so that I wouldn’t starve. Obviously, it’s not easy to give up a government pay cheque that you know is guaranteed on the 15th and the 30th of each month. But it was time to do it. I figured if I didn’t do it now, it would only get harder and harder.

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I always had an entrepreneurial spirit. Even just coming out of college, I always saw potential for business opportunities in the BVI from as far back as I can remember.

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Can you tell us more about your new venture?

I would say one of the most striking similarities is that the BVI brand is strong on both sides. On the financial services side, the people who use the BVI as their offshore centre of choice have an affinity for the BVI, regardless of what the naysayers say. There’s a strong allegiance to the BVI. And it’s exactly the same thing on the tourism side. I’m seeing clients that have been coming to the BVI for decades. Some of them come many times a year. The people who love us love us, and they keep coming back. We would really have to do something horribly wrong to break those relationships. In terms of a difference, it’s a completely different world in terms of a working atmosphere. It’s a lot more relaxed. Once you’re dealing with boats, you have daily stresses, but it’s a different kind of stress. With the challenges the financial services sector has been seeing for the last couple years, it’s like you’re almost fighting to keep the boat afloat. With that focus, it’s difficult to be innovative and to see where the next opportunities lie, because you’re just trying to fight the battles that are in front of you. On the tourism side, obviously, we have challenges as well, but you have so much more control over it. Sure, there are external factors — there are access issues and there’s competition — but you can manage those. I think the opportunities for growth are ever present, and it’s up to us to take them forward. There’s far less external pressures that are beating down on you on a daily basis. It’s just get out there and do it, you know?

How has life changed with this move beyond wearing a tie every day and going from meeting to meeting in air-conditioned offices? When you work on the tourism side of the economy, the whole idea of a 9-5 Monday to Friday falls away. If you’re renting boats or you’re renting cars or you have a hotel, you don’t close your door on Friday afternoon and put up your closed sign. It’s Sunday to Monday, 365. And we’re a small business so we’re a very small team: You’re literally working every day. In this business you could spend nine hours on a Sunday working, but on a Monday morning be hanging out or be doing something fun. It gives me a lot more flexibility with my son. On a slow day, I can pick him up

from school and we can hang out because I don’t have to run back to the office. That’s one of the best things about it: You no longer have those ups and downs in terms of how you feel about different days. It’s all consistent. You work hard: You’re always on. You think you’re off, but you’re on: A thought pops into your head and you’re on your phone. To some extent my career with government was like that as well, but I don’t miss the meetings, I must say. There are a lot less meetings on this side of the economy, at least in boating. The flexibility is really fantastic.

What’s the size of your team at Island Time? It’s two full-time, and we hire as we need for captains and so on.

What has been your most challenging day so far? We had a client who rented a boat from us, and heading out of Nanny Cay he ran into one of the channel markers, and the rope from the channel marker caused the engine to stall. He called us in a panic. The boat was drifting and ended up on the reef. We had to go out there and get him and his girlfriend, who was panicking at this stage. It was a boat we had just bought. That was probably the most challenging day, I think, but it ended up

fine. They were fine. The boat was taken off the reef and repaired.

How far into your tenure did that happen? It wasn’t too long: maybe a month, a month and a half. So I was fresh; I was green.

Did it cross your mind: What did I get myself into here? I wouldn’t say that. It gave me an appreciation for how quickly things can go bad on the sea. Fortunately, there were no injuries, and nobody’s life was in danger. Nanny Cay’s a very great community. The businesses there help each other out. So it worked out fine. We sat on the rocks, me and my colleague, and we looked at the boat on the reef and shook our heads, and the day went on. The next day, the sun was up and we were good to go.

Tell us about your most exciting day so far. It’s hard to say. Any day that I’m out on the water delivering a boat or interacting with interesting people. Every now and then, we’ll deliver a boat to a megayacht: It’s always a nice feeling to see your boat tied up to a megayacht. And just seeing the opportunities and trying to position yourself

to grow the business; to provide a service that’s needed; to be a part of the economy. The reality is this industry doesn’t belong to us — to BVIslanders — and the very same is true of the financial services industry. We’re not leading; we’re not owning it in many respects. I look at the businesses at Nanny Cay, and my guess is 90 percent or more are foreign-owned. Which is maybe just how it evolved, but it feels good to be a locally owned business in that space.

If you had a chance to effect some change at the governmental level as it relates to being an entrepreneur in the BVI, what three items would be at the top of your list for immediate attention? As an entrepreneur, one of the biggest challenges in the BVI is access to capital. If you wanted to start up a charter business, and you needed a million dollars to buy a boat — and to have some working capital and get your business set up the way it’s supposed to be — there are very little options in the BVI, if any. So it’s a challenge. I know it’s a challenge on both sides: There’s a high level of risk involved. Beyond that, I just think we need to make the BVI more business friendly. There has to be a balance struck between the needs of government and ensuring that we do not create an environment

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What pearls of wisdom would you offer anyone who is considering cutting the umbilical cord from the status quo and pursuing their dream of becoming an entrepreneur?

The BVI is a difficult place to do business just generally. And I’m not saying that to knock the government. The work permit issues, the immigration issues, the access issues, the infrastructure issues in terms of power and so on are all challenges that make it difficult to do business in the BVI. Hopefully one day we’ll get those things to where they need to be, but as of now they’re not there. So when you pile things on top of that, you’re just making it more and more difficult. I’m not saying you can’t do new things, but there needs to be much more dialogue, and things need to be implemented in a way that people can prepare for them and it doesn’t create embarrassing situations. People are coming: Numbers are up. So let’s make sure that growth stays in that direction; that we’re not shooting ourselves in the foot. Beyond that, I think we need to take much better care of the environment, and needless to say government has an important role to play in that. We have a huge waste issue in the BVI. There’s too much garbage around. There’s a lot of areas of the BVI that need to look better.

Is there a personal responsibility for each of us in that project? Absolutely. It needs to be led by somebody, but if I’m walking and see trash on the ground, it bothers me and I pick it up. I think we all need to do our part to try to improve how the BVI looks, but I also think there needs to be an additional focus from government and so on to address the issues. Despite that, the BVI is the most beautiful place on earth. I have visited places that I’ve never been before in the BVI within the last few months, and it’s not hard to see why people come here on their vacations. It’s truly a beautiful place.

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It’s tough. It took me fifteen years. It’s not something that you just wake up one morning and do. I think it depends a lot on where you are in life. I have a son. I have responsibilities. I own a home and things like that. So the paycheque is important. If you’re at that stage in your life, you just need to make sure of what you’re doing, that you’ve looked at the numbers. And you have to be realistic with that. Don’t have an if-you-build-it-they-will-come mentality. You have to understand what the demand is, what the market is, what is the real potential of whatever it is you’re planning to do. I was fortunate that I was able to buy an existing business, so I had historic data that I could use to help me with my decision. That was a big plus. If I was starting from scratch, it would have been a much harder decision. And get advice from people close to you, people you trust who have been there before. I used to think in my earlier days that I didn’t care what I was doing as long as I was doing it for myself. I think that thinking is a little flawed. You really need to enjoy and be passionate about whatever it is.

When you decided to pivot to the private sector, what was the reaction from your friends and family? Family expected it. Family knew my disposition and the things I wanted out of life, so they were thrilled for me. Some friends were: “Well, you know that fifteenth and thirtieth is guaranteed now: That’s money in the bank. You don’t have to worry about the hurricane coming, boats running up on the reef.” But I don’t think there was anybody who said, “Don’t do it.” It was more, “Make sure you understand what you’re getting into.” I’m not an impulsive person generally. Anything I do is usually fairly well calculated. I’m sure many people who don’t know me saw the move and said, “This man is crazy.” When you’re with government, the ceiling is there in terms of your earning potential and where you can climb to. When you’re working for yourself, those barriers don’t exist. It’s up to you.

The marine side of BVI tourism is vibrant. Where do you see the sector in five years? Are there some things that we must achieve in moving to that level? I would love to see us become a bigger player in the megayacht space.

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that becomes more onerous to do business and creates unpleasant experiences for our guests. Some of the recent things that have happened in terms of Customs regulations and work permits — things that affect the marine industry — I fully understand the rationale behind them, but I think in terms of implementation and so on there needs to be a lot more dialogue with the industry, with the Tourist Board, so that everybody understands what the issues are and what the government is trying to accomplish.

What do you think is preventing that at the moment? I’m no expert on it, but obviously there’s an infrastructure issue in terms of places that can accommodate the boats. Even where I am now, they can accommodate a handful of them, and then there’s just not enough space. So I think the facilities need to be a priority. That’s going to be private-sector driven, but something that the government needs to facilitate and encourage. I don’t know to what extent the access issue is a challenge with that: It probably is, so that’s something that needs to be part of the dialogue, as it is already. We need to do some research as a country: look at places like St. Martin, Antigua, St. Thomas. They have the infrastructure, but what are some of the other things that they have that we don’t have? If you have these boats based here, they’re provisioning here, they’re refuelling here, the crew’s here. It’s huge, and the potential is huge. How is business looking for the season ahead? I’m fairly new to it, but I think it’s going to be a strong season. The numbers are looking strong. The funny thing is: Despite our challenges, despite how difficult it is to get here, they’re coming. B

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Business Global

PAUL CHRISTOPHER and GUY CONNELL

amily run businesses account for the majority of non-governmental businesses in China, a sector that employs over half of the Chinese workforce. These family businesses range from household names such as electronics giant Midea and car manufacturer BYD, to the hundreds of thousands of small and medium-sized enterprises which have grown up since Deng Xiaoping’s market reforms a generation ago. Given the rapid growth of the private sector in China, many Chinese family-owned businesses are still controlled by their founders and are typically resistant to divesting interests to outside investors, who often have been forced to forgo controlling stakes in order to enjoy the spoils of China’s rapid growth. However, in what has been seen as a difficult sector to penetrate since China opened up to private equity firms in the early 90s, we are now seeing an increased number of investors taking larger stakes in mainland family businesses, and acquiring majority or even entire ownership. There are various reasons for this, but in summary they largely relate to the mounting challenges faced by aging entrepreneurs of succession and economic changes. Growth of family businesses. As a result of economic reforms over the last three decades, China has become the world’s second largest economy. It is estimated that there are now between seven and eight million private enterprises in China and that a majority of these are family-run businesses. Many Chinese family businesses continue to be run by their founders, whose success grew out of a culture of entrepreneurship, based on traditional relationships or guanxi. They are likely to be highly skilled in building a product, well connected and capable of dealing with domestic bureaucratic processes. Economic changes. After a generation of rapid growth, the Chinese economy is facing a well-documented slower period of growth coupled with a shift from an export driven economy to one that relies largely on domestic consumer demand. Year-on-year growth of gross domestic product has dropped from sustained double figures ten years ago to around 6.5% in 2016, its lowest in 25 years in the context of the global economy this remain significant growth nonetheless. Premier Li Keqiang has encouraged the second generation of family businesses to use their growing educational and business sophistication to build a more diversified and globalised business to assist navigating the Chinese economy to the “new normal” of slower but more sustainable growth. Businesses are confronting increased competition amid growing labour and real estate costs and tightening regulations. This has resulted in uncompetitive businesses facing fewer orders and lower profits. At the same time, access to much-needed funding has become an issue as banks become more reluctant to grant credit, owing to increased defaults, leaving many Chinese with the difficult option of looking to non-bank lenders who may charge very high interest rates on monies borrowed. However, China continues to be very attractive to investment both from internal and external investors. It remains the “workshop of the world” and due to its growing middle class and aging population, is predicted to maintain growth in sectors such as consumer, healthcare, financial services, leisure and retirement. Founders who have benefitted historically from China’s low operational costs and liberal regulatory environment, and have rarely had to face prolonged competitive challenges seen in the current economy, are now looking to assistance from outside of their business. Investors may be able to assist in modernising businesses run by founders faced with the need to focus less on pure entrepreneurship and implement effective strategic planning in order to stay competitive. Private equity is well placed to add value, by bringing in specialised professional management and expertise, which may otherwise be unavailable (or difficult to find) to aging founder-managers. JANUARY 2017 EDITION

Challenges facing succession. Founders are approaching the age where they would traditionally look to their children as their successors to the family business. However, according to recent PwC research, only 6% of family businesses in China have adopted succession plans, significantly less than the global average of 16%.

firms will offer a transition period during which a founder retains key roles in management. Alternatively, they may be made the chief executive officer of a subsidiary or manage a geographic area. Incumbent management are often retained and may be rewarded with equity participations.

When considering succession, a significant number of founders have encountered resistance (in what way) from their children who may have different aims and ambitions to their parents. Sometimes educated overseas in the West, the second generation has more options than its parents did before and young people are often reluctant to return permanently to the family home, preferring to take up positions in other parts of the world in other industries. To compound the issue the one-child policy, in place since the seventies, has only recently started to be phased out, leaving parents with limited options when faced with the need to make sweeping changes to their business model. That said, traditional family values remain strong in China, so children may unwillingly feel an obligation and be forced back into the family business.

Benefits of offshore structures in private equity investments. Private equity firms often prefer offshore investment structures given their legal certainty, familiarity, administrative ease, tax neutrality and well-understood regulatory frameworks. For example in Asia, Cayman Islands or BVI holding company may provide a quicker and more familiar route to exit the investment through an initial public offering or trade sale. Accordingly, investors typically use an offshore vehicle such as a Cayman Islands or BVI subsidiary to acquire a Chinese wholly foreign-owned company which will acquire or invest in the Chinese target business.

Opportunities for private equity investors. For these reasons, overseas private equity firms have recently found greater opportunity in buyout and control investments in China. This has not always been the case. United States and European investors with a long track record of investing in China typically have been limited to minority positions. They can offer founders the opportunity to cash in some of the value of the business and offer continued ownership of a smaller portion of a larger business and are able to bring resources and specialist knowledge needed to make the businesses competitive. For example, an experienced private equity firm will understand product branding, corporate governance, and how to incentivise employees using staff bonus plans and stock options schemes. They will have sector specialist managers with deep relevant experience, who are able to identify talented individuals for key roles in the business, and will often bring infrastructure and financial engineering necessary to modernise and improve the efficiency of the target business. Investment structures. Equity only. A large number of acquisitions are funded entirely by the investor (i.e. no third party debt). They present a lower risk strategy but require larger funds and (due to lack of leverage) offer comparatively lower returns compared to leveraged buyouts. A leveraged buy-outs (LBO), is an acquisition in which a nonstrategic bidder acquires a business, utilising funds containing a proportion of debt. By using debt to partially finance an acquisition, private equity firms are able to increase returns with gearing on their investment. However, obtaining finance is challenging and there is the added risk of the enforcement of security by lenders in the event of cash flow difficulties. A management buy-in may be equity only or by way of LBO and involves an outside management team acquiring a business and replacing the incumbent management team. A management buyout is where the existing management team acquires the business or part of the business they run. Role of founders following disposal. Founders may require a significant continued role, when disposing of control to an outside investor, not least due to their history with the business, but also due to cultural reasons, which benefit both the investor and founders. In most cases private equity

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Exit options. The exit route for private-equity backed companies in China, has historically often been by going public by way of IPO. IPOs suffer from the relative unpredictability of international and Chinese equity markets and securities regulators. For example, private equity investors have complained they are subject to increased scrutiny and a lengthy vetting process from Chinese regulators unfamiliar with overseas controllers of listed securities. However, this does not necessarily provide a full exit for a control investor. Further routes would be a trade sale or secondary sale. A trade sale is typically a full exit, where the whole interest held by the investor is disposed, while a secondary sale to another fund can be either a full or partial exit. Trade sales allow investors to take advantage of strong interest in China among strategic investors. A sale can be controlled and will not be subject to the equity market volatility. As with an IPO, trade sales are more efficiently conducted through offshore (such BVI or Cayman) holding vehicles. Secondary deals can be done relatively quickly, and often with minimal publicity due to the reduced need to make mandatory disclosures (assuming all parties are private enterprises), which gives investors maximum flexibility to negotiate the terms of a deal without unnecessary media of government scrutiny. A positive sum game? To summarise, as the Chinese economy resettles to find its â&#x20AC;&#x153;new normalâ&#x20AC;? and Chinaâ&#x20AC;&#x2122;s next generation sets its sights on prospects further from home, a window for investment has opened. Family-owned businesses in relevant sectors make attractive investment opportunities for a variety of reasons, including their management practices, shared vision and entrepreneurship, as well as, the fundamental background of continuing growth. Experienced private equity firms bring plenty of capital to the table but also have the knowledge and expertise required to grow businesses to a greater level of success that may have been unachievable under generations of family control. Offshore investment structures, such as those available through the BVI or Cayman Islands, provide efficient, predictable tax and regulatory environments that investors are familiar with and allow flexibility when the time comes to exit. For these reasons, we have observed continued enthusiasm for the use of offshore structures, particularly BVI and Cayman structures, to facilitate investment in family-owned businesses in Asia and expect such enthusiasm will only continue. B

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Business Global WAYNE YANG

hen I first joined the wealth management industry in 1990, private banking products and services were simpler. Wealthy individuals held their assets in BVI companies, bought and sold stocks and bonds, did a little foreign exchange margin trading and held a few mutual funds here and there. In the Asia Pacific region, entrepreneurs were busy building large conglomerates and private banks were seen as a safe harbour of savings, whereas the real estate market and booming industry were for building wealth. China was still socialist and was not a factor in wealth management. In the mid-1990’s, this started to change. Large financial institutions like Citibank, where I worked and other money centre banks, innovated and began engineering structures to take advantage of market volatility and switch mentality in the industry from wealth preservation to wealth creation. Market insight and views became more widely discussed, challenged and adopted, which could be converted into any sort of financial instrument that sought to take advantage of one’s conviction. Once the domain of institutions only, private equity and hedge funds were made accessible to individuals as were securitised debt obligation structures, structured notes, derivatives and high levels of leverage. Private investment company holding structures also proliferated with more jurisdictions offering more rules and regulation variety for the individual to tailor to their needs. And China began to exert its influence in everything from politics to culture, from economic growth to spending power. Private banks bulked up on human capital to build, and deliver the increasingly sophisticated product. Then the 2008 financial crisis hit, and the wealth management industry in Asia after peaking, started a precipitous decline both in client satisfaction, trust and confidence and of course margins and size. Complexity became the new bad. Litigation became the new norm. Some individuals felt cheated, perhaps justifiably so, and many financial institutions took the blame as regulators sought to protect the interests of their constituents. Today, the banking industry continues to feel the after affects of the cranked up “naughties” and one only has to check the headlines to read about the latest Department of Justice ruling. So what’s in store for the future? I don’t have any 60

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crystal ball obviously, but after 25 years of being a practitioner in wealth management, in most of the countries around Asia Pacific and to many of the wealthiest individuals controlling our economies on this side of the world, I’ve got a view to offer. And in my view, the future will be grounded in technology.

The Know Your Client / Anti-Money Laundering (KYC/AML) process is at risk since private bankers who write the source of wealth story, are only as good as the Assets Under Management (AUM) they collect, making it hard to be vigilant, particularly for new bankers or new banks needing to get to critical mass and cover those costs.

Large banks today continue to struggle with managing:

At Bank of Asia, we envision separation of relationship management from product advice. Technology, which can read a million pages of text per second, is going to be far more comprehensive intelligence than any private banker is able to humanly process. If it can be delivered in a customised framework specific to a client profile, it will remove the sell-side bias, drive down costs and be switched on 24/7. It still won’t predict the future but it will have much more processing capability, with many more data points than the existing system of analyst reporting.

• Lower profit margins • Higher capital requirements • Reduced head count and expenses • Antiquated distribution systems both physical and operational • Legacy litigation • Negative public perceptions • Zero interest rate policy in many of the largest world markets It’s not all doom and gloom, there are some bright spots. To name one, the world economy is stable which reduces loan write-offs but for the most part, managing for defence is now the bigger management strategy, rather than managing for growth and expansion. The opportunity to address many of the challenges is probably going to be found in technology and automation. At Bank of Asia, we aim to build from the ground up, a banking solution that is not anchored to a legacy way of thinking. Let me expand. Profit Margins. The existing wealth management business model is very expensive to deliver. It typically revolves around senior “Managing Director” level private bankers who have a satellite of product specialists and marketing assistants to manage relationships. They are responsible for sales, which need to be generated in enough volume to cover heavy fixed costs. As costs rise, they need to bank ever-larger pools of wealth in order to break even. The competition of course experiences the same issues so everyone ends up chasing the extreme wealth, further driving down margins and commoditizing product features. The conflicts of interest are managed as best as today’s compliance units can do with one arm tied behind the back of generating revenue, but it’s pretty transparent to clients that product sales are the octane that pays for the infrastructure. Despite the best attempts to convince customers that OUR (substitute any private bank for OUR) analysts can predict the future of the markets, we know that really isn’t possible over the long term.

The same is true for the KYC/AML process. Every one of us has a digital trail, more identifiable to us as individuals than maybe even a fingerprint. Beyond biometrics for identification, we can overlay the digital past, present and future that we all leave behind and fight financial crime with more than a private banker and compliance officer who get paid to acquire clients. Is this a dream? Not really. IBM has already built the Watson Explorer, which by the second is getting smarter at cognitive computing. Financial technology start-ups are dismantling pieces of the banking model and coming up with better more efficient ways to deliver the same result. Chinese banks and internet giants offer a digital platform that makes the old world banks look cumbersome. Perhaps the future of wealth management will be in simpler relationship management that focuses on the social value of being a private bank client. Making wealthy people feel good may never be taken over by technology but we can change the job profile from client acquisition and providing advice to guidance counseling and navigation of the system. Perhaps a degree in psychology or international relations will be the more pertinent learning of the future. And we can leave the lending analysis, investment advisory, market monitoring, portfolio trade execution and wealth structuring to artificial intelligence. All the Rest. I’m not trying to claim that we can solve all of the challenges in one fell swoop with just technology but think of the current industry and what cognitive computing does to the distribution model. Expensive head count is

reduced dramatically and is replaced by social networkers who require much less training and cost. The stacks of prime office space can be reduced to hot desks or maybe even just client meeting rooms, which could be far more sophisticated and enjoyable if the entire real estate budget were directed to hospitality. If all settlement operations were outsourced to third party end to end processing platforms and clients could directly instruct on their transactional needs, there goes the back office as well. We are constructing Bank of Asia with this vision in mind. Surely if we remove human advice from the equation, it will be harder to claim that a private banker mis-sold product and this will impact the future of litigations risks as well and provide better portfolio performance. I’m not sure what each of the unintended consequences is of the above. There are a number of unknowns but I do know that this is a step in the right direction towards higher quality wealth management, at far more efficient pricing. I also know that this should deliver the expertise to a much wider group of people who don’t have access to wealth management today because of the high break-even point required for AUM’s, which by default excludes the masses who need advice the most. The British Virgin Islands. If you’ve read this far, I’m hopeful that you have started to think about how we can work together to develop this future. From my perspective, I think the KYC/AML process we can build goes a long way to securing the fight against financial crime that allows BVI companies that are legitimate, to operate and conduct business in the Bank of Asia world. I also think that since Bank of Asia was formed with the support of the Premier, Dr. the Honourable D. Orlando Smith, OBE and with the BVI Financial Services Commission as the primary regulator, the opportunity to be at the forefront of transforming wealth management reaches much further than the shores of the British Virgin Islands. Bank of Asia won’t be the first or only one to occupy this future; if I’m right, it will proliferate and change the way we view wealth management everywhere. However, there are an estimated 14,000 banks in the world today and Bank of Asia doesn’t need to be the only one transforming the landscape; it just needs to be one of the thought leaders that survives into the next generation of wealth management. B JANUARY 2017 EDITION

JANUARY 2017 EDITION

Insight

REMARKS BY PREMIER AND MINISTER OF FINANCE

DR. THE HONOURABLE D. ORLANDO SMITH, OBE BUSINESS BVI ASIA ANNUAL REGIONAL CONFERENCE 18 October 2016, Hong Kong

partnership. Over this time, the BVI has become the international partner of choice for China, rooted in over 30 years of partnership and an unwavering commitment on the part of all of us who represent the BVI, our Government, our service providers. It is our expectation and intention to continue this collaboration into the future as we move forward together.

That these relationships have translated into successful commercial alliances both here and in the BVI is a testament to the strength of our

You see, it my firm belief that the future, our futures, the growth of our economies depend on continued globalisation of trade and opening of markets around the world. As I stand before you today, however, the world is changing and many sectors and nations are seemingly shunning the concept of globalization. In fact, we seem to be at the crossroads of protectionism.

Ladies and gentlemen. his is my fifth visit to Hong Kong. Between 2004 when I first visited and now, our relationship has reached a new dimension. I would like to especially commend Russell Harrigan for bringing together the Hong Kong business community in this fashion to facilitate discussion of critical developments in the BVI of relevance to the industry here. Each time I come I am reminded of the camaraderie that exists between many of you and those of us in the BVI and of the friends we have made here over the years.

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At the G20 Summit held in September, in Hangzhou, the G20 leaders, representing 85 percent of global Gross Domestic Product (GDP), agreed to reject protectionism and promote global trade. The summit came on the heels of the historic move by Britain to exit the European Union. It appeared then that the world’s leaders wanted to send a strong message that Brexit, or Britain retracting into itself, should not become a global trend for countries or be a precursor to major economies instituting protectionist policies. Today, the world watches nervously for the outcome of the November 8, United States elections. Both presidential candidates on some level have touted some form of protectionism, whether it is regarding the US-China trade deficit or the rolling back of the Trans-Pacific Partnership. Closer to home, we have seen an incessant attack on Territories like the BVI which provide the necessary structures, efficient processes and legal environment to effectively facilitate and enable global trade; and yet we hear the refrain and clarion calls from many nations and organisations to remove this value that offshore centres provide to the global economy. China’s President Xi Jinping said the leaders in Hangzhou agreed to improve the G20 trade and investment mechanism, endorse the G20 strategy for global trade growth and move toward inclusive and coordinated global value chains. US President Barack Obama said we need to ensure that the world economy is working for everybody. Global economists accept that over the last quarter century China has lifted itself out of poverty and in turn Asia has become the world’s largest regional economic powerhouse. From most accounts, globalization and global trade have worked well for our world. Yet, we must ask, why in 2016 are we standing at the crossroads of protectionism? What will the future look like? Why are we trying to close the channels that have worked so well for us? Let me explain some reasons why globalization has worked for our world.

Decreasing poverty levels: the rise of the middle class Globalization has been by far the greatest driver of human progress ever unleashed. Over the past decades, billions of human beings in every corner

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of the planet – including in our Caribbean region and in the BVI – have been lifted from grinding poverty and given opportunities that previous generations could only have dreamed of. Thanks to this movement, the blessings of infrastructure, health care, education and a high quality of life are no longer the special privilege of the lucky few, born in the developed and wealthy nations. Today, those basic needs are being met for more people, in more places than at any time in history and it is all thanks to our interconnectedness.

regulatory hurdles to be met. For banks, antimoney laundering (AML) and know your customer (KYC) regulations have become essential to doing business. Financial clients now have a level of confidence and comfort in their institutions that were unknown not that long ago. To do business in the global arena, you must be top quality and comply with the highest regulatory standards. I would hasten to add that the BVI does in fact comply with these global standards and has been doing so for many years.

Global Regulatory Standards: a flight to quality

Offshore Financial Centre: the plumbing in the global economy

Over the past 20 years, regulatory standards have improved and become globalized as standardsetters such as the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF) have worked to make international financial centres operate at a level and transparent playing field. For any financial transaction, there are a number of high

Today, capital that sits in New York, London, Tokyo, Frankfurt, Dubai, Shanghai, Hong Kong and other financial centres around the globe can be pooled and put to use to build a factory in Uganda, a bridge in Bolivia or start a business in Indonesia – this fact has unleashed progress for people the world over. Jurisdictions like the BVI have been fundamental to that powerful surge.

that bind will not solve the problems of our world. We will not uplift the poor by destroying the ability of investors to create wealth.

We must work together, not tear each other apart. We must unite in common cause to create a global economy and global community in which opportunity, prosperity and dignity are broadly shared and where corruption, terror and criminality are rooted out. Without offshore jurisdictions, global capital would struggle to be put to good use outside of national borders. If capital from multiple nations is to come together for a common purpose, it must be able to incorporate. And that place of incorporation typically cannot be the nation of origin of any one of the investing parties – after all, many of the other investors from other countries may never sleep easy knowing that their money was being held in a country whose laws they may not know, whose politicians they may not trust and whose regulators they cannot rely upon. Jurisdictions like the BVI have risen up over the past decades precisely because we solve that problem. We create a neutral space, underpinned by strong regulatory rules and a world-class legal system where capital from all over the world can come together and be deployed for a common purpose. Even in the case of those obvious and compelling reasons for globalization, there is a swelling tide towards protectionism. So where is the world headed and where must

we be? We are heading towards new paradigms such as Brexit. The long-term consequences of Brexit are still to be played out, but clearly there has been a global impact on markets as the UK, one of the previously stabilizing forces, seeks a new path outside the EU as its currency weakens. The Brexit result and even the US Presidential election campaign demonstrate a clear change of attitude by voters and civil society in the West, especially when it comes to multinational companies paying tax. The attacks on so-called elites have led to urgent instructions being given to international standard setters to address such matters head on. This has had a clear knock on effect into other areas including the ability of high net worth individuals to manage their affairs legitimately, while at the same respecting privacy, wherever they are based. The voices we hear today, louder than ever, calling for nations to turn inward, to cut themselves off from the world, to shun those who are not like them – they are wrong and they stand on the wrong side of history. People severing the ties

We must work together, not tear each other apart. We must unite in common cause to create a global economy and global community in which opportunity, prosperity and dignity are broadly shared and where corruption, terror and criminality are rooted out. Only together will we create that better and more just world we all seek. This era is a true test of our collective resolve. We are also headed towards new global policies and global regulation. As business struggles to adapt, it is also facing a slew of new regulation as international fiscal policy has come under focus as never before. The work that the OECD is undertaking in this area and in particular, the Base Erosion and Profit Shifting (BEPS) programme, reflect this. We have been watching the development of this programme closely and in December, the BVI will host a meeting of the OECD together with our colleagues from other countries in the Caribbean to assess more fully the potential impact. Our sense at this stage is that it will be minimal, given the type of business that the BVI supports. Nevertheless, as always we will play our part as a fully active member of the international financial community and ensure that our voice and those of our clients are heard. I will touch briefly on another key challenge, which BVI has surmounted – the Panama Papers. From the beginning of the Panama Papers frenzy to its end, the BVI worked with the world’s top-tier media, to ensure that our side of the story was told: the BVI operates in a legal and transparent manner, in compliance with all relevant international regulations. This effort was difficult, to say the least; preconceptions, particularly among journalists, die-hard. While this period did present some challenges for the BVI, it also posed broader questions about the way the global financial system operates. What I can tell you is that we are committed to actively supporting the development of a global regulatory framework, which is fit for purpose. We are currently engaging with the OECD, which is the international standard setter as well as the European Commission. Also, the very journalists themselves have noted that offshore centres were “perfectly legal”. Notwithstanding, the Panama papers served JANUARY 2017 EDITION

a useful purpose as an impetus towards even greater transparency. This is an area where BVI has taken global leadership - the exchange of beneficial ownership information.

Beneficial Ownership and Transparency Our proposal for a workable solution for global standards for beneficial ownership balances the need for appropriate levels of both privacy and transparency. It is focused on three key pillars – data security, appropriate legal constraints and the principle that any new standard must be applied globally to enable a level playing field. As all of you know, a world-class global financial services jurisdiction can only succeed if its regulatory framework meets the requirements of international standard-setters. We are committed to supporting the development of a global regulatory framework that is fit for purpose. However, I want to reassure you that we respect the need that many BVI clients have for privacy. The debate on beneficial ownership and our part within that is a clear demonstration of our approach. We have noted the calls for public registers of beneficial ownership and we have said no to public registries. Our belief is that our own systems are strong and work well. As you will all know, to register a company in the BVI you must have a registered agent; that agent must be licensed by the regulatory authority, and must undertake due diligence so that they are aware who the beneficial owner of a company is. Whilst we contend that the systems we currently have in place are effective, we recognize that new standards are emerging and as such, we are improving our mechanisms for sharing information with competent authorities and for cooperating in mutual legal assistance matters. At the same time, we also firmly believe that it is equally important to give you and your clients the assurance that we will vigorously guard our systems to ensure the highest levels of security are maintained to safeguard the levels of privacy and confidentially that clients value in BVI structures. It is our intention to continue to engage with influencers in this area. This will include Her Majesty’s Government, the media, especially in the United Kingdom as well as wider political stakeholders and civil society.

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BVI Advantages and Developments - Summarised I’d like to summarise a number of other initiatives in progress, which also set the BVI apart from its competitors, all of which positively affect individuals and companies in China and in the rest of Asia seeking to make use of BVI services and products.

Companies and VIRRGIN BVI companies worldwide continue to command a large market share with almost 500,000 active. The reasons for their popularity include security of assets, ease of operation and maintenance and control facilitated by flexible corporate features. The BVI continues to be a convenient staging post for outbound investment because, aside from its flexibility and legal certainty in using the product, it is also an acceptable investment vehicle that all parties are familiar and comfortable with. The BVI has for many years had one of the most innovative and efficient systems for incorporating companies, VIRRGIN, and is a global leader in this regard. Incorporations can take place within one or two days and VIRGGIN filing procedures have recently been streamlined even further. VIRRGIN Lite was launched in late 2015 to allow users located in Hong Kong to have access to the online registry system from outside the BVI. Among the services provided through VIRRGIN Lite, certificates of good standing and certificates of incorporation can now be collected at our offices in Hong Kong. Of course there are always growing pains and kinks to work out, as many of you experienced with the Register of Directors, but we continue to improve, reassess, upgrade and make adjustments whenever necessary. BVI Forward Campaign A year ago we launched the BVI Forward campaign, a far-reaching set of initiatives aimed at further strengthening the financial services sector and building greater awareness of the benefits derived from it. BVI Forward seeks to improve existing services and add more substance to the financial services sector to benefit clients. This initiative evolved from an in-depth study of the Territory’s financial services sector, which was commissioned by the Government in 2014 and facilitated by global consultancy firm, McKinsey & Company.

The study involved detailed interaction with the public and private sector in the BVI and internationally, and included benchmarking from other leading offshore financial centres. One of the key BVI Forward initiatives is to attract more value added services into BVI. We wish to pursue areas such as small corporate headquarters and family offices, e-commerce, green tech, maritime operations etc. Ultimately, we wish BVI to be a more substance-based economy. To support this, we have reviewed our immigration and labour laws to create greater efficiency in processes, as well as facilitate streamlined entry of business visitors and qualified investors. We expect to implement changes in 2017. Similarly, my government has recently approved the development of an investment policy to encourage greater investment in the Territory. We are moving to best practice in the development and promotion of financial services with the creation of BVI Finance Limited as an independent, private sector driven organization. The BVI has also introduced a new Limited Partnership Bill that provides customised legislation for the formation and operation of limited partnerships. The bill, which will become law in early 2017, will introduce a modern, up to date and business friendly approach to limited partnerships.

BVI Evolving as an Arbitration Jurisdiction The BVI is constantly evolving to remain best in class in the provision of global financial services. As many of you know, the ability of the BVI to support the area of legal dispute settlement was significantly enhanced in 2009 when the Commercial Division of the Eastern Caribbean Supreme Court was established in the BVI. I commit to you that the BVI will continue to strengthen our Commercial Court system to ensure that it deals with matters expeditiously, economically, proportionately and in a timely fashion. I am pleased to announce that to further augment this offer, a new International Arbitration Centre is soon to become fully operational. This has been established to provide essential dispute resolution services on behalf of parties that choose to settle their disputes through arbitration in the BVI.

Derisking and Banking As conversations within the international standard-setting bodies develop, we will keep you informed of our position. However, I recognize that there is one issue closer to home, which is that of correspondent banking and the difficulty of opening and maintaining accounts for BVI companies. I should first state that this is not only impacting the BVI but the whole Caribbean and there are some signs of contagion even beyond. As a result, Caribbean leaders have taken up the matter at the Caribbean Community (CARICOM) level. A step forward was recently taken by the US Office of the Comptroller of the Currency, which has now issued guidance to try to correct this tendency which stresses that de-risking should be undertaken on a case by case basis and not any wider. The International Monetary Fund also has issued statements recognizing that the tendency could create a major destabilizing risk for the global financial system. I also note, in another hopeful sign, that the Hong Kong Monetary Authority issued a circular last month acknowledging the difficulties small and medium- sized businesses have had in opening bank accounts in the SAR, and pledging that it will be seeking to make the process easier while maintaining high regulatory standards. It is hoped that these movements will have a positive impact. However, in a fast moving business environment neither the BVI nor its clients can afford to wait. I am therefore delighted to support the launch of the new Bank of Asia in the BVI. The bank will be launched early in the New Year with the most advanced, cutting-edge technology and will be dedicated to filling a substantial market void to the benefit of the BVI and incorporated business companies. I believe the Bank of Asia will play a key role in the development of a new global financial infrastructure, in parallel with China’s building of roads, railways and logistical support. China is already creating offshore trading hubs for the RMB as initial steps towards internationalising its currency. In Latin America and the Caribbean, there is a lot of Chinese business activity. On the logistics side, there is a new canal being constructed in Central America, deep water and port development in Trinidad & Tobago and Brazil and airport construction in Antigua/Barbuda. Commerce goes hand in hand with finance, so the need for

BVI continues to be one of the world’s leading financial centres, and will continue to be so for the foreseeable future. In partnership with industry, we remain focused on what matters most – creating value for all industry stakeholders including businesses, investors, service providers and the people of the BVI.

banking infrastructure will undoubtedly grow in importance. In tandem with the growth of the People’s Republic of China, there is a long-term retrenchment by western financial institutions. They are risk-averse, have weak balance sheets, and are hampered by cumbersome regulations. Many see this decline accelerating in coming years. This is where the Bank of Asia can step in and play an important role. We in the BVI are being proactive, moving out into the world to help reshape business and finance, rather than sitting on our island and letting business come to us. This is why we established an office here in Hong Kong – to allow us to be more responsive and deal with issues in real time and to continue to engage with you at every turn. As the BVI and its business offer has evolved, we have in turn, observed China’s own plans and in particular the development of the long-term Go Global strategy, including the One Belt, One Road initiative and the plans that run alongside it. While the programme is of significant scale, we believe that there are many ways in which the BVI can be a partner. For example, in 2013 alone, BVI companies enabled the investment of $82.5 billion into emerging market economies. I believe that speaks to the scale of expertise and the skills we have in the BVI who can assist you and it is my very firm hope that through this visit and

the conversations that flow from it, we can demonstrate how we can best support you in the future. The BVI remains the gold standard in easy to use, easy to maintain International Business Companies (IBCs) and is at the forefront of regulatory compliance with the OECD, FATF and other global standard-setters. Just as the BVI has been instrumental in Foreign Direct Investment (FDI) flows into China, assisting that country become the most prominent market globally, the next decade or two will see the BVI work with the PRC as FDI flows reverse. China has already overtaken the US as the largest source of global mergers and acquisitions (M&A). I will be traveling to Beijing and the other Chinese cities of Tianjin, where we will be signing a Memorandum of Understanding (MOU), then to Hangzhou and finally to Shanghai. Our message on this mission is simple and clear - The BVI/ China partnership has been one of success over the last quarter century. And today we are ready to take that success to the next level as a partner of the Go Global strategy. Finally, I note that one of the five major goals of the One Belt, One Road policy is the creation and enhancement of people-to-people bonds. I believe that in our relationship with you, we clearly demonstrate the benefits such bonds can bring to the enduring friendship between our two countries and I hope that through events such as this conference, those bonds will only deepen. BVI continues to be one of the world’s leading financial centres, and will continue to be so for the foreseeable future. In partnership with industry, we remain focused on what matters most – creating value for all industry stakeholders including businesses, investors, service providers and the people of the BVI. That has been our recipe for success for decades and nothing that has occurred will change that. We have seen controversy come and go in the past; we will see it again; and always, we endure by remaining fixed on the fundamentals. That is how we serve not only those we represent, but the many who benefit from our industry throughout the world. I leave you with the hope that as we stand today at the crossroads of protectionism, we will all heed the call of the G20 leaders, we follow China’s leadership in Going Global, embracing globalization and the potentials it offers for more progress and a world economy that truly works for everyone. BVI remains poised to help you. B JANUARY 2017 EDITION

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BREXIT Watch

“The referendum is a device of demagogues and dictators” - Keynes ALASTAIR CAMPBELL

avid Cameron might beg to differ, but he will surely be remembered primarily for his reckless misjudgment and entirely unconvincing “remain” campaign. The exit vote was symbolic of how disconnected from ordinary people Cameron and his elite political class had become. Even now, there is a degree of denial about popular antagonism towards big business, big banks and big bureaucrats. On the European side, the unelected Eurocrat oligarchy remain wedded to their federal agenda, despite a rapidly declining Gross Domestic Product (down from 30% of world GDP in 1980 to 17% today), and ignored the groundswell of anti – European Union (EU) feeling apparent in so many of the original EU member countries. The reality is that Europe is far from becoming a homogeneous bloc and the folly of enlargement has created an unmanageable federation of disparate states suffocating with low growth for lack of any intelligent fiscal policy. Moreover, a weakened EU cannot stand up to China, which like Russia will exploit the EU’s weaknesses to its own advantage - the divide and rule strategy has become so much easier.

“We live in a VUCA world” - General George Casey

VUCA is a military term that perfectly describes the challenging leadership context of today. It stands for Volatile, Uncertain, Complex and Ambiguous, which characterises the challenge of the 21st century environment, where leadership requires a radically new way of thinking and a whole new set of skills and knowledge, with actionable intelligence being of paramount importance.

The Brexit vote has intensified the level of volatility and uncertainty, which has characterised markets since the financial crisis of 2008, and greatly added to the complexity. It also reflects the growing lack of trust in politicians who are perceived as pursuing first and foremost their own interests, rather than the public interest and the corresponding rise of the right wing parties which have astutely aligned their policies with mainstream opinion. This has created a group of dysfunctional democracies and exacerbated the fundamental weaknesses of the European project. Indeed the shock to the unelected oligarchs in Brussels was palpable; neither they nor the Brexit campaigners had any prepared script to react to a popular decision not entirely without precedent (a previous inconvenient Irish referendum was ignored by Brussels), but wholly unexpected. The relatively childish rebukes and threats which then followed, reflected the horror with which the Eurocrats were forced to contemplate the dismissal of their grand vision for an enlarged, federal Europe to match the United States of America (USA). The Brexit vote provided a rude reminder that citizens do not always share their arrogant leaders’ dreams. We should not consider this just a relatively local affair, peculiar to Europe; the rise of authoritarian regimes, the rise of the right wing parties and corresponding challenges to democratic values are a global phenomenon and reflect another far more disruptive dimension - the progressive dismantling of the European/ American world order and the parallel resurgence of non-European civilisations. There is a growing contention by Russia and China that the previously unchallenged claims of antiquity and superiority for Western civilisation and the democratic values associated with it have run

their course, and a recognition that the current cycle of change brings us back to the period of history when Europe was a mere sideshow – an impecunious backward appendage on the edge of the continent until the Mongol conquests in the 13th and 14th centuries transformed the economies of Europe. Indeed, even before the Mongols arrived in the 12th century, it was to the East that men looked to make their fortunes and realise their ambitions, both material and spiritual. It is surely time therefore that we endeavour to view the world through Asian eyes rather than the prism of our own Western self-interest, and to recognise that the West’s preeminence only arose as a result of the late 15th and early 16th century voyages of exploration which transformed Europe into a key intermediary for trade between East and West. Now the geographic focus is shifting again and the ancient centres of civilisation, starting from China in the East, all along the ancient Silk Road, are reasserting themselves, as are the maritime routes pioneered in Zheng He’s Ming dynasty voyages. Many commentators dismiss the initiative as an attempt by China to revitalise its exports, in particular to export the excess capacity of many of its heavy industries like steel and cement, viewing it purely through the narrow lens of trade and related investment in infrastructure. However, they forget that it was always trade which underpinned the ancient city states which populated the original Silk Road; these became not only fabulously wealthy but also the major centres of civilisation through which culture, science and religion passed alongside the traded items of the day, including textiles, spices, porcelain and of course slaves. Moreover, we should not underestimate the underlying strategic and geopolitical intent of the Silk Road Economic Belt and the 21st century Maritime Silk Road (Belt and Road Initiative), which is the foundation of a cohesive global strategy to replace the patchwork of policies previously driven by China’s domestic priorities. The new, outward facing vision is to extend China’s economic and diplomatic outreach across the Eurasian continent and beyond, establish a secure and interconnected infrastructure to support the anticipated growth of trade and investment; and, as always, China will skillfully manipulate the relationships with host governments to secure their participation. JANUARY 2017 EDITION

To what extent this will provide opportunities for Western companies to form partnerships with Chinese counterparties remains to be seen, but such alliances will surely be weighted in favour of the Chinese, as it is they who now have the financial firepower. In this context, China’s growing confidence, assertiveness and pride in its own cultural, political and scientific traditions are understandable. When the US and its allies make their largest deployment of troops worldwide to Asia, it should come as no surprise that the Chinese view this at best, as an attempt to maintain a measure of influence in a region they once dominated and at worst, as an aggressive attempt to blunt China’s growth and contain its physical and ideological expansion. A newly weakened Europe therefore hands China another measure of latitude to divide and rule a disunited continent as does the dysfunctional politics of its main rival for global dominance, the USA. The grand vision of Europe’s founders is in disarray and it seems increasingly unlikely that the new Europe will pull together to form a

major positive force and counterbalance in the world economy, as opposed to a large consumer market whose diminishing manufacturing industries will increasingly serve the needs of emerging markets. The USA meanwhile, despite the vaunted “pivot to Asia” early in the Obama administration’s tenure, has failed to engage successfully and indeed, has positively antagonised China and driven it into the arms of its erstwhile competitor, Russia. Where does Russia stand in this new order? Too weak to stand up to either power on its own, Russia will naturally seek an accommodation with China, because it is closer ideologically and economic dependence is already a fact of life. To conclude here are a few observations Brexit has highlighted: 1. The systemic breakdown of the democratic model of government. 2. The growing rift between a political elite and the people they claim to represent. 3. The growing income gap between rich and poor and erosion of the middle class.

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4. The growing rise of populism and nationalism and concomitant racism and xenophobia. 5. The growing lack of faith in international organisations like the United Nations, the World Trade Organisation and the International Court of Justice. 6. The growing challenges to the international order by emerging nations, e.g. the Chinese dismissal of the Hague verdict on South China Sea demarcations. In short, it is not simply that we now live in a VUCA world characterised by volatility, uncertainty, complexity and ambiguity; we live in a world embroiled in navigating a contentious and challenging transition from a US dominated old order to a new order in which China and Russia will play an increasingly significant role. Gaining a deeper understanding of markets, prospective partners and the underlying geopolitical and economic drivers will therefore be essential for any financial or corporate institution to succeed in exploiting the opportunities available in such a radically altered environment. B

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“Excerpted from Wired to Create: Unraveling the Mysteries of the Creative Mind by Scott Barry Kaufman and Carolyn Gregoire. © 2015 by Scott Barry Kaufman and Carolyn Gregoire. TarcherPerigee, an imprint of Penguin Random House LLC.”

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Wired to Create Turning Dreams into Reality Falling in love with a dream—and with an image of one’s future self that has achieved that dream—deeply inspires us to make that vision a reality. But just as hard work and inspiration are both critical to creative achievement, nurturing passion requires both a dream and a plan. To nourish and sustain motivation toward a creative goal, we must not only fall in love with a dream of our future self, as Torrance says, but also love the process of becoming that person – including all the unglamorous, everyday hard work. Entrepreneur James Clear argues that dreaming about the results we desire is not enough to truly motivate us to stay focused on our goals, especially when we experience boredom or setbacks. Clear writes, “If you want to become significantly better at anything, you have to fall in love with the process of doing it. You have to fall in love with building the identity of someone who does the work.”i Indeed, passion and effort feed off of each other. Sometimes hard work can lead to passion, rather than it always being the other way around. Highly motivated creative people fall in love with an image of themselves as a person who will do whatever it takes to achieve their dreams—and this identification becomes, in a way, a self-fulfilling prophecy. It’s not just about achieving the dream but, as Clear suggests, becoming a person who has the grit—the passion and perseverance for a long-term goal—to do whatever it takes to realize that dream.ii Torrance’s dreamers—who went on to become creatively fulfilled and successful—used these visions of themselves not only as an expression of passion but also as a way to fuel their passion. Holding on to the dream is especially important in times of inevitable rejection and failure during the creative process and the times when motivation is most difficult to find. Having dreams and goals alone is not enough to push us through the difficult times and, when it comes to creative work, long hours of practice and experimentation. What’s clear is that while we need a dream and a positive self-image, we must also develop strategies for keeping sight of those dreams while we work through the investable challenges that the creative journey presents. Grit, optimism, passion, and hope are all strategies that we use to help us achieve our goals. Positive psychologist Charles Snyder’s 1991 hope theory posited that having hope involves having both the will and the ways to achieve your goals and is more effective than both optimism and self-efficacy as a vehicle for success.iii Snyder suggests that hope is a dynamic cognitive motivational system in which emotions follow cognitions, rather than the opposite. Guided by either a hopeful personality or a state of mind, people approach their goals with an attitude and a set of strategies that are conducive to success. Research has shown that people who are hopeful tend to create learning goals (like experimenting with a new type of sound), which support personal growth and improvement. Those without hope, on the other hand, tend to adopt mastery goals (like selling a certain number of records), which are less focused on growth, and more focused on outperforming others. Several studies have also linked hope to academic achievement, while one study found a hopeful

mind-set to improve divergent thinking, suggesting that those who were in a hopeful state came up with more original ideas and associations.iv Hopeful thinking may actually promote creative thinking skills, insofar as it involves coming up with various flexible strategies to achieve a goal. As Snyder suggests, we need the will, but we also need the ways. The work of New York University psychologist Gabriele Oettingen, who studies the science of motivation, emphasizes both the importance of dreaming and the fact that dreaming alone is not sufficient to get us where we want to go.v Oettingen explains that simply dreaming about what we want can actually make us complacent –we’re already mentally enjoying the fruits of our desired outcome, we may be less willing to take on the sacrifices and drudgery required to make that outcome a reality. So what does help? Oettingen employs a technique called mental contrasting, which involves imagining the desired goal, and then visualizing the obstacles (both internal and external) that might realistically get in the way of your ability to achieve that goal. What you’re doing here is looking at the contrast between a desired future outcome and the realities that you currently face and may face in the pursuit of this outcome. This method can help you not only to clearly identify a dream but also to identify obstacles and devise strategies for dealing with those obstacles. “We need the dream . . . this is a good starting point. Then what we need to do is identify and imagine the obstacles that actually hinder us from fulfilling these dreams. Then we understand what we need to do to achieve these dreams,” says Oettingen.vi Indeed, Oettingen and her colleagues have found this technique to be effective in boosting creative performance.vii Falling in love with a dream is frequently the starting point. Then, people who fulfill their creative dreams over the long haul balance optimism about the future with realistic strategies for getting closer to their goals; inspiration with hard work; and dreaming with doing. Nevertheless, the importance of dreaming should not be understated. As we’ll see next, there is a great continuity between the dreams of our youth and the more mature daydreams of our adult lives.

Clear, J. (n.d.). How to stay focused when you get bored working toward your goals. James Clear. jamesclear. com/stay-focused?__vid=130f18305a450132c9d022000b2a88d7. i

Duckworth, A. L., Peterson, C., Matthews, M. D., & Kelly, D. R. (2007). Grit: Perseverance and passion for longterm goals. Journal of Personality and Social Psychology, 92(6), 1087–1101. ii

Snyder, C. R., Harris, C., Anderson, J. R., Holleran, S. A., Irving, L. M., et al. (1991). The will and the ways: Development and validation of an individual-differences measure of hope. Journal of Personality and Social Psychology, 60, 570–585. iii

Lopez, S.J. (2013). Making Hope Happen: Create the Future You Want for Yourself and Others. New York,: Atria Books. Rand, K. L., Martin, A. D., & Shea, A. M. (2011). Hope, but not optimism, predicts Academic performance of law students beyond previous academic achievement. Journal of Research in Personality, 45, 683–686. Magaletta P. R., & Oliver, J. M. (1999). The hope construct, will, and ways: Their relations with self-efficacy, optimism, and general well-being. Journal of Clinical Psychology, 55, 539–551. Görres, R. (2011). Situational hope facilitates creative problem-solving. [Bachelor’s thesis.] Utrecht, The Netherlands: University College Utrecht. Day L., Hanson, K., Maltby, J., Proctor, C., & Wood, A. (2010). Hope uniquely predicts objective academic achievement above intelligence, personality, and previous academic achievement. Journal of Research in Personality, 44, 550–553. Curry L. A., Snyder, C.R., Cook, D.L., Ruby, B.C., & Rehm, M. (1997). Role of hope in academic and sport achievement. Journal of Personality and Social Psychology, 73, 1257– 1267. Snyder, C. R., Shorey, H. S., Cheavens, J., Pulvers, K.M., Adams III, Virgil, H., Wiklund, C. (2002). Hope and academic success in college. Journal of Educational Psychology, 94, 820–826. iv

Oettingen, G. (2014). Rethinking Positive Thinking: Inside the New Science of Motivation. New York: Current.

Gregoire, C. (2014, October 2). The surprising downside of looking on the bright side. Huffington Post. huffingtonpost.com/2014/10/02/downside-of-looking-on-the-bright-side_n_5901162.html. vi

Oettingen, G., Marquardt, M. K., & Gollwitzer, P. M. (2012). Mental contrasting turns positive feedback on creative potential into successful performance. Journal of Experimental Social Psychology, 48(5), 990–996. vii

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TOURI SM AN D R E A L E STATE

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Economic Overview

rexit and Trump: hardly the results one would have predicted at the start of 2016. But as we close out the year, voters in the UK and the United States have spoken at the polls, with a backlash against the establishment. These pivotal choices will shape the politics of Europe and North America for the coming years, with no one quite certain as to the end result with either. Both the referendum and the election will have an impact on the Caribbean market in terms of investment and tourism. The BVI had its own defining moment with the release of the Panama Papers in May 2016. Adapting to change will be key to the future success, or otherwise, of the BVI’s economy. As the UK starts to define its future relationship with Europe, the uncertainty over the nature of that relationship has led to a fall in the value of Sterling. Trading at $1.55 in October 2015, pressure on the pound increased in the weeks leading up to the referendum, before the pound plummeted to the low $1.30’s in the immediate aftermath of the Brexit vote. Currently trading in the low $1.20’s, pressure on the pound is predicted to remain while the EU and UK manoeuvre in the run up to Brexit negotiations in the spring of 2017. Critical to these discussions, will be the UK’s ability to retain access to the single market, while limiting immigration from Europe. “Hard Brexit”, the position favoured by the EU unless the UK concedes to free movement of labour, remains very much at the forefront of possible solutions, although the likely outcome is a hybrid solution somewhere in the middle. A “Continental Partnership” of controlled mobility of labour, while retaining access to the single market, which would leave the UK with a voice, although not a vote, in the EU single market process (see http://bruegel.org/2016/10/beyond-hard-soft-and-nobrexit/ for additional information on the options available to the UK). The recent signing of a free trade agreement by the EU with Canada, took seven years to agree and nearly failed at the last minute due to the complexities of the approval process within the EU. Negotiations with Europe will never be easy.

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For the Virgin Islands, the relationship with the UK as an Overseas Territory will soon be the subject of a further round of discussions on the constitution starting next year, not least of which will be the UK’s own relationship with the EU and how this impacts the BVI. The BVI Government has recently signaled that self-determination as part of a new constitutional arrangement with the UK and a scaling back of the powers of the Governor, will be at the forefront of these discussions. While the question of independence has been aired on many occasions in the past, the move towards self-determination, devolving more powers to the BVI, has, in part, been triggered by the UK Government’s position on the BVI adopting a public register of companies, a move the BVI Government and financial sector have stated would have a significant negative impact on the financial sector. While the attack on multi-national companies avoiding tax in the aftermath of the 2008 economic crash and the implications of using off-shore vehicles to help them, was originally the focus of European and American ire, it was the release of the Panama Papers this year which hardened the UK’s position that a public register would be the solution to the vexing question of funds being hidden in so called off-shore tax havens. In response to the increasingly determined efforts to stifle international financial centres, Dr. Orlando Smith, Premier of the BVI, created a task force whose remit was to implement the findings of the McKinsey Report which had been commissioned in 2014 to determine the future of the financial sector in the BVI. The Financial Services Implementation Unit, operating under the banner “BVI Forward”, is tasked with implementing the ten initiatives of the McKinsey Report, including simplifying the immigration and work permit procedures in the BVI and expanding the role of the financial services industry through value added business. BVI Forward “is the Government’s action plan for strengthening, diversifying and repositioning the financial services industry.”

BVI COMPANY INCORPORATIONS 12-month moving average

Annual Company Incorporations

These initiatives have not come a moment too soon as the latest data has indicated a significant decline in the number of new incorporations in the BVI over the last two years. New incorporations in the first six months of 2016 were down by 31% compared to the same period in 2015 and approximately half of their peak level in the second quarter of 2008, as shown in Chart 1.

(VALUE) Q2 2008 75000

(VALUE) Q2 2016

50000 (VALUE) Q3 2019

25000

0 2006

2007

2008

2009

2010

2011

2012 2013

2014

2015

2016

Source: BVI FSC. Compiled by Smiths Gore

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In response to the changing fortunes of the financial

of these yachts to relocate back to the USVI, taking with

services industry, the Government has looked to other

them the additional income made through refueling and

sources of income to help shore up government revenues.

provisioning. The charter industry in the BVI is faced with

In October 2016, the Government passed acts increasing

operating challenges not experienced in the USVI with

Hotel Accommodation Tax to 10% and increasing duties on

respect to labour, customs, immigration and trade licence

tobacco and liquor and is exploring other areas of increased

regulations which makes it more difficult for American

tax revenue. While the private sector has criticized the

crews to operate in the BVI compared to home porting in St

increases, citing concerns on the impact of these increased

Thomas. Discussion of extending the hotel accommodation

taxes on the tourist industry, the Government remains

tax to the yachting industry has also been met with concerns

committed to raising funds through other means apart from

by the charter companies. It remains important for the BVI

financial services.

Government to engage with this industry and understand the complexities of operating within the BVI.

In contrast, the BVI’s tourism industry has shown positive Hotel visitors have shown modest growth, increasing by

growth in arrivals as shown in Chart 2 which shows the ten

17% between 2011 and 2015. Virgin Gorda has seen the

year moving average for cruise ship and overnight arrivals

closure of Biras Creek Hotel in the summer of 2015 and

between 2006 and 2016. Following the recession in 2008,

then the temporary closure for major renovations of Little

the number of overnight visitors dipped, falling to 308,615 visitors in 2009 before recovering by 2015 to 392,302

Dix Bay Hotel in May 2016. These two closures total over

visitors and continuing to grow in 2016. Overnight visitors

130 rooms and suites (approximately 10% of the BVI’s

in 2015 comprised hotel (30%), charter boat (51%), rented

hotel room inventory) which has an impact not only on

accommodation (10%) and own/friend (9%).

overnight arrivals but also on employment on Virgin Gorda.

667,223

638,626 600,000

Annual visitors

500,000

404,510

400,000 300,000

100,000

345,891

308,615

200,000

British Virgin Islands: Annual Overnight and Cruiseship Visitors 2006 - August 2016 (12 month moving average)

Overnight visitors

Cruiseship

Source: BVI FSC. Compiled by Smiths Gore

The importance of the charter industry to tourism in the BVI cannot be under-estimated, with the charter fleet the equivalent in size to several hotels. The industry benefits the BVI by creating business for smaller islands which would otherwise find it hard to survive independently. However boats operating within the charter industry (particularly crewed yachts) can choose whether they locate in the USVI or the BVI. Restrictive legislation on the number of passengers a boat can operate with in the USVI (the “six-pack” law), has been lifted, opening the way for many

JANUARY 2017 EDITION

With no significant hotel construction in the BVI since Scrub Island a decade ago, the Government is looking to encourage the construction of major tourism development in the BVI, whether a resort on Beef Island or a mixed used development at Prospect Reef Resort. The cruise ship industry, as shown in Chart 2, has seen the number of cruise ship visitors in 2016, pass the number of visitors that arrived at the height of the market in 2007/08.

As an industry that constantly reinvents itself with larger vessels, the BVI has had to make a significant investment in new cruise ship facilities which included a longer jetty to support larger ships and a shore side facility, Tortola Pier Park, which provides retail and tourism outlets adjacent to the pier. The rebound in cruise ship arrivals after the opening of the pier at the start of 2016 saw cruise ship arrivals increase from 378,083 in 2014 to 667,223 in the twelve month period to August 2016. The UK’s changing relationship with the EU and the proposed discussions with the UK on the Virgin Islands’ constitution, combined with unprecedented challenges in the BVI’s financial sector, indicate that the direction of the Virgin Islands is being determined as much by external factors as internal processes. Adapting to these changing conditions will be the challenge for the BVI politicians as these new roles materialize. While the UK/BVI relationship will be defined in the coming years, the United States remains the dominant influence on the region. The election result, with President-Elect Donald Trump and the Senate

and Congress both under Republican control, opens the door to implementing Trump’s vision for the future without the political impasse experienced by President Obama with a Republican led Congress. As no one is quite sure yet what this vision is, the potential impacts on the BVI and wider Caribbean are harder to predict. However, a harder stance against Cuba may result in a slowing down in the thawing of American/Cuba relationships but a Republican led government is normally more favourable towards international finance centres like the BVI. The fall in the Sterling-Dollar exchange rate is likely to limit both tourism and investment from the UK, at least until some stability returns to the currency. While tourism and investment in the BVI have traditionally been dominated by the American market, there have been a number of significant investments made in the BVI by British, and European, investors. Ultra-high end investment may not be as affected by currency fluctuations as middle to low end investors, but the 20% reduction in value of the pound over the past twelve months will nevertheless impact British investment into the BVI.

JANUARY 2017 EDITION

BVI Villa Market Report and Development Summary

eturning to our annual review of the BVI villa market, analyzing the sale of villas over $500,000, we have updated the statistics to include leasehold sales since 2003, which has made a small adjustment to the total number of annual sales.

BVI HOME SALES Number of Sales and Average Home Sale Price $2.0

$1.8

Home Sale Price ($M)

$1.6

$1.4 $1.2

$1.0

$.8

$.6

$.4

$.2 $0

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jun 2015

Number of sales

Jun 2016

Median home sale price ($M)

Source: BVI Land Registry. Compiled by Smiths Gore

Chart 3 shows that the annual number of villa sales peaked in 2008 and in subsequent years reflect the uncertainties of the market after the financial crisis. While the market did show some evidence of recovery by 2013 and 2014, this was not sustained in 2015, when total sales fell to sixteen, compared to thirty-five in 2008. The first half of 2016 shows a small improvement over the same half year period in 2015, and encouragingly, there has been more emphasis on higher end villa sales, as shown by the increase in the median home sale price. The majority of villas currently on the market in the BVI are priced between $1.0M and $3.0M. Therefore, when only two sales occurred in this price bracket in 2015, compared to twelve sales under $1.0M in the same year, it does raise

JANUARY 2017 EDITION

concerns about the fragility of any recovery in the market. However, as shown in Chart 4, the sales figures for the first six months of 2016 struck a brighter note with four sales between $1.0M and $3.0M and two over $3.0M. This improvement is also reflected in total sales volume, which increased from $7,011,710 during the first half of 2015 to $16,317,000 in the first half of 2016. The half year median sale value also increased, from $665,000 in 2015 to $1.9M in 2016. These statistics are encouraging for the many overseas home owners in the BVI who have struggled to sell in recent years. While this does not necessarily reflect a substantial change in the fortunes of the real estate market (bearing in mind that there were only eight closed sales between January and June 2016), it is at least a move in the right direction. The sales statistics for the third quarter of 2016, indicate that the number of villa sales closing in the latter half of 2016 could show further improvement, with nine additional sales closing in the third quarter of 2016. Chart 5 shows the division of sales between Belongers and Non-Belongers. The standout feature of this chart is that Belongers have consistently remained in the market when overseas investors have fallen away as market conditions deteriorate, particularly between 2009 and 2012. Whereas prior to 2009 the market was dominated by overseas investors, now the market is spread more evenly between Belonger and Non-Belonger purchasers. However, out of the total of 81 sales to Belongers since 2003, 83% of the properties were priced below $1.0M and none of the sales was above $1.65M. This data clearly defines the Belonger market as being in the main below $1.0M. While we do not have the data to support any conclusions as to why these properties have been acquired, we do know that there is an active investment market by Belongers looking to acquire property to rent and hold as a long term property investment. This was particularly evident from the sales of the Nanny Cay town home development at Drakes Village, where over half of the purchasers were local investors.

BVI HOME SALES

Belonger and non-belonger

Number of Sales by Price Range 20

35 30

Number of sales

0 2015

Jun Jun 2015 2016

20 15 10 5

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Up to $1M

$1M-$3M

2003

Over $3M

Belonger

Source: BVI Land Registry. Compiled by Smiths Gore

2014

0 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Jun Jun 2015 2016

Non-belonger

Source: BVI Land Registry. Compiled by Smiths Gore

JANUARY 2017 EDITION

Since 2013, we have collected data on the number of properties over $500,000 on the market in September each year, with Table 1 showing the total listings by price band between 2013 and 2016. TABLE 1: Number of Homes Listed for Sale in the BVI Year

$0.5M-$1.0M

$1.0M-$3.0M

Over $3.M

Total

2016

114

218

2015

115

207

2014

104

206

2013

108

219

The data indicates that the number of properties listed for sale in the BVI is relatively stable. Over 50% of the listings fall within the $1.0 - $3.0M price bracket with almost a third of listings under $1.0M and only 15% over $3.0M. This indicates that the greatest competition between vendors will be in the $1.0 - $3.0M price bracket which, as noted above, had just two recorded sales in 2015 increasing to four sales in the first six months of 2016. TABLE 2: Price Changes for Properties Listed at Sept 2015 and Sept 2016 $0.5M-$1.0M $1.0M-$3.0M Increased

Unchanged

Over $3.M 1 13

Total 3 115

Decreased

TOTAL

161

TABLE 3: Total Volume and Average Listing Price Total Volume of Listings (US$) Average Listing Price

2015

2016

Change

$415,091,999

$418,242,800

$2,005,275

$1,918,545

-4%

Tables 2 and 3 show the change in pricing for villas that were listed both in September 2015 and September 2016. The price of the majority of villas (71%) remained unchanged while 27% reduced their price over the course of the year. Table 3 shows how the total volume and average listing price changed between September 2015 and September 2016. There was a small increase in total volume of listings and a modest 4% fall in the average listing price, from $2.0M to $1.9M.

JANUARY 2017 EDITION

Overall, the data indicates that the majority of vendors have stuck with their pricing over the course of the last year despite the slow pace of sale transactions, compared to the total inventory of villas on the market. Less than a third of vendors reacted to market conditions by reducing the asking price of their home.

We have analyzed 30 selected sales over $1.0M on Virgin Gorda and Tortola, comparing the original listing prices with the sales price achieved. This analysis also allows us to compare the markets of Tortola and Virgin Gorda, which are distinct from each other.

TABLE 4: Analysis of Villa Sales Over $1.0M on Tortola and Virgin Gorda (2010-2016) Year

Villa Sales Analysed

Avg Listing Price

Avg Sale Price

Difference

Avg Years on Market

2016

$3,265,625

$2,320,625

-29%

2015

$7,900,833

$4,849,000

-39%

2014

$3,053,571

$2,130,536

-30%

2013

$2,885,417

$2,492,875

-14%

2012

$7,001,500

$5,610,000

-20%

2011

$1,646,667

$1,346,250

-26%

2010

$1,646,667

$1,346,250

-18%

Source: Land Registry and Smiths Gore. Compiled by Smiths Gore

Table 4 provides an analysis of villa sales by year, showing the average difference between the listing price and the sale price. The table also shows the average time properties sold in each year spent on the market. While the difference between listing and sale price ranges between 14% (2013) and 39% (2015), it is the average length of time on the market which is interesting. The data suggests that in the years immediately following the financial crisis (post 2008), vendors became more realistic with their pricing and were therefore able to achieve sales in a shorter period of time at a more modest differential between listing and sale price. More recently, there have been a number of sales of villas which have been on the market for longer, where the vendors had to settle for a larger reduction between their original listing and eventual sale price. Most of these transactions were villas priced above $3.0M.

JANUARY 2017 EDITION

TABLE 5: Analysis of Villa Sales Over $1M on Tortola and Virgin Gorda (2010-2016) Villa Sales Analysed

Avg Listing Price

Avg Sale Price

Difference

Tortola

$3,463,235

$2,369,647

-32%

Virgin Gorda

$4,633,077

$3,711,635

-20%

34%

57%

Island

Difference

Source: Land Registry and Smiths Gore. Compiled by Smiths Gore

Table 5 shows the difference between the villa markets on Virgin Gorda and Tortola. On Virgin Gorda the average listing price is 34% higher and the average sale price 57% higher than on Tortola. Furthermore, the average sale price achieved for homes on Tortola was 32% less than the listing price compared to 20% less on Virgin Gorda. This data is consistent with the image each island presents to the market, with Virgin Gorda being seen as a holiday destination while Tortola remains a mixture of holiday villas and homes for residents involved in local businesses, particularly the financial sector. Reviewing the development pipeline in the BVI, the majority of new development is occurring in North Sound, with the build out of Moskito Island and Oil Nut Bay. On Tortola the largest single development is the expansion of Nanny Cay. In the outer islands, Peter Island Resort is going through a renovation of the common areas and Cooper Island Beach Club is finishing off its extensive renovations, undertaken by the owners, following acquisition in 2009. North Sound remains a unique luxury resort residential market, not just in the BVI, but in the wider Caribbean. The early years of development at Moskito Island and Oil Nut Bay, where infrastructure works and development of common areas took precedence, have given way to substantial villa development by end purchasers. Oil Nut Bay now has 13 completed villas and suites, with a further ten under construction, four of which will be completed by the end of 2016. A further three villas are scheduled to commence construction in the first quarter of 2017. Moskito Island has completed most of the common area infrastructure, together with the first villa, with additional villas now breaking ground. However, Virgin Gorda, and particularly local residents, felt the impact of the closure of two hotels, Biras Creek Resort and Little Dix Bay Resort, the latter in May 2016 for an extensive renovation programme. Fortunately, the construction activity at Moskito Island and Oil Nut Bay have created alternative employment opportunities for many of the displaced employees. While lots on Moskito Island have sold out, there remains significant inventory at Oil Nut Bay, so construction in both locations should be secure for several more years as the developments mature.

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Cooper Island Beach Club has emerged as the BVIâ&#x20AC;&#x2122;s leading green, boutique resort, thanks to investments in green energy, particularly solar power, with the resort now 85% self-sufficient in energy with savings of over 875,000 lbs of carbon emissions since solar power was installed. Other green initiatives, include extensive recycling, growing fruit and vegetables, waste water treatment to recycle water for the landscaping and even a micro-brewery, which reduces the need to import canned and bottled beers. Following the renovations, the resort has had to upgrade all of its utilities to cope with an expanding operation which includes a brewery, rum bar, ice cream parlour as well as the existing twelve guest rooms, bar and restaurant. A favourite weekend get-away amongst locals, the resort has managed to take an older, well-loved resort and upgrade with new facilities while retaining much of its original charm. Nanny Cay remains the most significant development on Tortola in the private sector, with an extensive new peninsular and marina under construction, with the first forty berths due to be ready for occupation by the end of 2016. Following a successful development of 32 town homes, now all sold out, Nanny Cay will commence in 2017, a new residential development on the recently created peninsula with the first phase comprising two blocks, each of six 3 and 4 bedroom apartments plus penthouse. While pricing has yet to be announced, the water front location and larger sized units will mean that pricing will likely commence around $1.375M, with an option to acquire a berth in the adjacent marina. In addition to the residential units and marina, Nanny Cay will be developing a new commercial area to add much needed facilities to the development to serve an expanding permanent residential community. With the development of these additional facilities, Nanny Cay will become one of the leading marina residential developments in the Caribbean. In the public sector, the opening of the Tortola Pier Park, a retail and office development adjacent to the expanded cruise ship pier, provides a new location for tourists and locals alike to shop. Comprising 77,000 sq ft of mixed-use space, the development has just 3,500 sq ft remaining to lease. The successful lease up of the space in the months prior to and after the official opening in February 2016, is an indication of the importance of this development to many new businesses established by Virgin Islanders to cater to both the cruise ship and land based market. One further building remains to be constructed, which is scheduled to be a Margaritaville branded restaurant and hotel. This building is expected to commence construction during 2017 and should provide the development with a major anchor tenant to attract additional business.

Overall, the picture painted by the statistics, remains very similar to prior years. The BVI remains a small market, with relatively few annual sales over the $500,000 threshold. The supply line of over 200 houses available for sale over $500,000 is a reminder that until supply and demand start to equalize, it will remain a buyersâ&#x20AC;&#x2122; market with vendors needing a clear strategy to exit their investment should they wish to do so in a timely manner.

JANUARY 2017 EDITION

Strategy for the Real Estate Market

ust as the Government has looked in depth at the future of the financial services industry and how both Government and the private sector can adapt to new challenges and markets, the Government has ...oalso reviewed direct investment in the BVI with the aim of implementing a range of initiatives. The appointment of Hon. Marlon Penn as Junior Minister for Trade and Investment, has led to a review of the approach Government has previously taken to investment, with a particular emphasis on removing red tape which has, in the past, deterred many potential investors. Key will be the introduction of the Investment Strategy Act, which will also contain consumer protection legislation, which should be enacted during 2017. In addition, the Government is engaging with CAIPA (Caribbean Association of Investment and Promotion Agencies) which will eventually lead to the establishment of the BVI’s own investment agency. The BVI investment agency will be responsible for promoting the BVI internationally and assisting external investors locally, in much the same way that BVI Finance promotes the financial sector overseas. Part of the review will be the investment incentives open to overseas investors, both in terms of financial incentives and also status. The current annual work permit status is recognized as not providing sufficient stability to those looking to make significant investment in the BVI. Already announced is the intention to reduce the red tape associated with immigration and labour processes in the BVI. Long seen as an impediment to investment, these processes will become part of “One Government” whereby companies and individuals will be able to access Government information on-line, including making applications available through relevant department web-sites to reduce the burden on both the applicant and Government with processing. A feature of 2016, has been the focus on local entrepreneurship, the encouragement of local business

initiatives, both existing and as start ups. The Branson Centre of Entrepreneurs Caribbean, the MWM Start Up Programme and Entrepreneurial Forum plus the Trade Department’s initiative offering training to local businesses, have all opened the door for local businesses to pitch for training and awards, with a number of international entrepreneurs offering their time and experience to help these initiatives. With the opening of the Tortola Pier Park, many local business people have been afforded the opportunity to put ideas into practice. It is notable however, that with all these initiatives, the policies governing the real estate sector have not been reviewed. With stamp duty at 12% (for overseas investors) and Hotel Accommodation Tax at 10%, there are opportunities for Government to increase revenues through encouraging investment in this sector. Table 6 indicates the change in stamp duty revenues between 2010 and 2015, the majority of which are from property transactions. Previously, annual revenues from stamp duty averaged between $4M - $6M, but the sale of a substantial property in 2014 and the stamp duty revenues generated by Oil Nut Bay and Moskito Island, have seen annual revenues increase by 100% or more in 2014 and 2015. TABLE 6: Government Stamp Duty Revenues 2010-2015 Year

Stamp Duty Revenues

2010

$4,679,203

2011

$6,320,171

2012

$9,094,950

2013

$7,105,711

2014

$16,190,957

2015

$12,261,897

Source: Macro-Fiscal Unit, Ministry of Finance

JANUARY 2017 EDITION

The statistics we have reviewed above help to define the current state of the real estate market with some of the key points outlined below :

to review the policies relating to the real estate sector and formulate a land policy that favours investment. To kick start a discussion, the following issues need to be addressed.

• Over 200 villas are on the market priced above $500,000 and yet there are on average only around 20 to 25 villa sales, or less, a year.

• The ownership of land by foreign investors is a divisive issue in the BVI. The BVI Territorial Song contains the following words : “To preserve our beauty we devised a plan; to retain ownership of our precious lands!” and the alienation of land in the BVI is not to be taken lightly. However, once alienated, Government could enable the sale of property from one foreign investor to another to take place, subject to status, without some of the red tape which currently delays processing. It is interesting to note that neither the Cayman Islands nor the Turks and Caicos Islands, also British Overseas Territories, require landholding licences for foreign nationals to acquire real property in either jurisdiction. While the landholding licence process contains many benefits for Government (it helps prevent speculation, gives BV Islanders pre-emptive rights over land acquisition and allows Government to vet incoming investors), a sensible land policy would assist Government to plan for the future without upsetting the delicate balance of land ownership in the Territory.

• The potential stamp duty revenue on the for sale villa inventory amounts to over $50M. • Assuming annual villa sales increase to thirty sales per annum at an average listing price of $1.5M, the stamp duty revenues generated would be $5.4M annually. • Stamp duty receipts at Oil Nut Bay and Mosquito Island have so far been in excess of $20M based on land sales. Both developments will continue to generate significant stamp duty and Hotel Accommodation Taxes as the developments are sold out and developed villas are sold in the future. Overseas investors face a number of restrictions on the use of their properties which limit the investment appeal of property in the BVI compared to other Caribbean jurisdictions. • In the BVI, overseas investors have no clear direction as to whether they can rent a property unless they acquire a property in a resort community where villa rentals are permitted. Purchasers of land are normally advised to apply for a trade licence to rent once they have completed their villa with no guarantee that permission will be granted. • Having acquired a property, an overseas investor is limited to six month’s personal occupancy each year unless they are prepared to apply for annual residency. • Having acquired or built a property, no changes are permitted to the structure without first applying to Government for a revised landholding licence to reflect the proposed change. This applies even to the addition of a bathroom or bedroom and this requirement has been sufficient to prevent many owners from investing further in their properties. • Consent to sell is required from Government even if the property is being sold to a BV Islander. • While the approval process for landholding licences has vastly improved from a decade ago when approvals would typically take longer than a year, there remain areas where the process could still be improved, particularly once Cabinet approval has been granted and the draft licence is being prepared for signature by the Governor. It would certainly be encouraging if the Government were

JANUARY 2017 EDITION

• Once a foreign national is licensed to hold property in the BVI, why impose restrictions (of a bureaucratic nature) on further development? Planning policy is the correct tool to determine whether further development is warranted and the requirement to change a landholding licence prior to planning being obtained, is an unnecessary step in the process. This is particularly vexing for purchasers of land who frequently have not crystalized their plans for a home at the landholding stage, but are compelled to outline their development plans when making an application, following which it is difficult to make changes. • The restrictions on foreign nationals being able to use their homes for more than six months a year, unless they apply for annual residency, will hopefully be reviewed by Government when they consider the Investment Strategy Act mentioned above. While immigration policy should not be altered lightly, restrictions of this nature on property ownership act as a deterrent to investment. • The current policy on allowing foreign investors to rent is less than clear, unless the property is in a recognized residential resort development. If a property already has a rental history, and a trade licence, then a purchaser is also more likely to be granted consent to rent in their landholding licence, subject to also obtaining a trade licence. However, Government needs to look at the rental sector and

decide if it is an industry it wishes to encourage or discourage. There are many advantages in encouraging villa rentals : the collection of hotel accommodation tax, the employment of staff, money circulating in the economy from car rentals, food provisioning, restaurants and day trips to name but a few. With significant risk involved in the development of new resorts, particularly on greenfield sites, the growth of the villa rental market could help increase the overnight tourism industry without placing a strain on the social fabric of the island. By not encouraging the villa rental market, the Government is forcing many owners to leave their villas empty for much of the year. In much the same way that a successful marina needs to encourage activity through charter companies and overnight berths and minimize the number of long term berth rentals, so the Government should actively encourage investors to rent their properties, thereby making use of many additional rooms in the BVI to circulate money in the economy and raise accommodation tax. While resort development will be needed to provide a different type of destination vacation, the villa rental market is using already available rooms, thus limiting the impact of development. Resolving these issues is only part of the solution, but

encouragement must be given to overseas investors to view the BVI as a place where property investment makes sense. The BVI possesses some wonderful natural assets which draw overseas investors to these shores, but a holistic approach to welcoming those same investors needs to be understood. Improved ports of entry with â&#x20AC;&#x153;nothing to declareâ&#x20AC;? customs lines, better infrastructure (particularly roads and communications), welcoming service in restaurants and hotels and (my biggest gripe) less rubbish around the island, will go a long way to making tourists and investors feel welcome. As we approach the end of 2016, the future has challenges ahead, whether Europe, America or the BVI. While the recession is behind us, the economic recovery has been slow and unpredictable with the BVI facing uncertainty over revenues from the financial sector. The Government has identified many of these challenges and embarked on a range of initiatives to drive the economy forward, with a focus on broadening the economy and attracting investment. In twelve monthsâ&#x20AC;&#x2122; time, it would be good to report on how the Government has also tackled investment in the property sector and reduced the bureaucracy which has generally limited investment in the BVI. B

JANUARY 2017 EDITION

B U SINE SS B VI GUI D E S

Business BVI Guides

he BVI grew as an offshore finance centre in the 1980s, by providing tax efficient solutions for U.S. businesses. Over the past 30 years, the BVI has evolved rapidly with the changing times to become the leading offshore corporate

domicile, offering an exceptional depth of corporate experience and expertise to individuals and interests from across the world. Just as the BVI Corporate Advantage has evolved to become about much more than tax, its geographical interests have widened far beyond the U.S. With almost half a million active BVI Business Companies, BVI structures have become a favoured vehicle through which to transact

The BVI Corporate Advantage: MAXIMISING FOREIGN DIRECT INVESTMENT AND BOOSTING GLOBAL COMMERCE IN EMERGING MARKETS 94

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cross-border commerce, M&A and investment. BVI companies remain popular with investors from China and Hong Kong â&#x20AC;&#x201C; in 2009 it is estimated that Hong Kong and the BVI together received 73% of Chinaâ&#x20AC;&#x2122;s FDI outflows. They are used increasingly by entrepreneurs and investors from emerging markets. BVI companies are behind many of the most substantial cross-border investments in Africa, used by investors from the U.S., Europe and China. According to the Financial Times, the BVI is the second largest global source of international foreign direct investment, with more than $125 billion invested through the BVI each year. The BVI has emerged as an engine of global economic growth. International investors do not choose the BVI to minimise tax, though this may be an added benefit. International investors make investment decisions based on risk profile, and will only invest in a foreign market if there is a reasonable prospect of success and the legal structure is sufficient to protect the investment. Using BVI corporate structures can help achieve this by mitigating structural risks.

The British Virgin Islands and Global Commerce

• The FATF ranks BVI as more compliant with international regulatory standards than the US and UK 1

The recent ‘Panama Papers’ hacking scandal

• BVI has inter-governmental agreements with the US and UK to comply with US FATCA, and UK International Tax Compliance to provide data on financial accounts held by its residents to the United Kingdom

and subsequent reporting appears to make little distinction between the allegations of misconduct by Mossack Fonseca and the important role that internationally regulated offshore jurisdictions like the British Virgin Islands play in international trade and finance. Much of the media coverage also fails to acknowledge basic facts about the

BVI’s role in international finance.

The British Virgin Islands has some of the highest regulatory standards in the world.

The BVI has some of the highest global regulatory standards in the world, as judged by the Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF).

As well as strict AML rules, due diligence policies, KYC protocols and domestic laws, the BVI’s financial regulators are recognised members of IOSCO (the International Organization of Securities Commissions, which is the global standard setter for the securities sector). Intermediaries in the BVI are bound by professional obligation to maintain adequate, accurate and current information regarding the beneficial ownership of any BVI company and to disclose to the BVI Government as required. The fact is that international regulatory standards have become much stronger – onshore and offshore – in the past two decades. Since the regulation of the offshore industry began 20 years ago, the BVI together with the majority of offshore financial centres have adopted fully compliant regimes and ongoing compliance with international standards, and continue to play a legitimate, fundamental, role in global commerce.

• BVI was one of the first jurisdictions in the world to implement the OECD’s Common Reporting Standard for the automatic exchange of tax information. • BVI has tax transparency agreements with over 100 developed countries including TIEAs with 27 countries and multilateral agreements providing for tax cooperation with 76 countries, under the OECD’s Convention on Mutual Administrative Assistance in Tax Matters. • BVI is ranked by the NGO Tax Justice Network as more compliant in tracking corporate beneficial ownership than half of the G8 countries (US, UK, Germany and Japan), and is ranked ahead of 20 countries in total.

The British Virgin Islands plays an important role in global commerce, promoting economic development and cross-border trade.

Not only are offshore structures legal but they are also normal and extremely common, and used by companies around the world to aid in the efficient organisation of their businesses. Law abiding, legitimate investors choose BVI because it offers a structural advantage, that delivers management control and access to new

markets, while treating all investors equally or as commercially agreed. Other advantages are credible and efficient dispute resolution and effective exit strategies. The BVI is the world’s leading international finance centre for facilitating the flow of foreign direct investment2; it is an engine of economic growth benefiting developed and developing economies alike. In 2013 alone, BVI companies facilitated the investment of US$82.5 billion into emerging market economies, into projects ranging from infrastructure development to technology advances and resources growth, all of which have fuelled socio-economic progress and access to services including water, power, healthcare and education3. FDI fuels socio-economic growth in emerging markets: through job creation, infrastructure development and access to services including water, power, healthcare and education. Through FDI, developed economies can access and serve new markets and customers, and access technological and natural resources. This means increased revenue for the home economy, which ultimately translates into economic growth, more jobs and better lifestyles for the people in ‘home’ economies. The BVI enables businesses, which would otherwise be forced to operate in jurisdictions that restrict access to international finance because of regulatory, political, legal complexity or development reasons – to access capital in the international market via equity investment, IPOs, project and acquisition debt financing. BVI’s laws and courts are based on UK Common Law. The Privy Council serves as the court of final appeal for the BVI and the local courts settle disputes efficiently and effectively. Globalisation is dependent on functioning free markets and free trade. Accessing corporate advantage is consistent with the principles of free market specialisation. The BVI’s depth of expertise in relation to cross border transactions (including the resolution of disputes) is a significant attraction factor and why BVI is and will continue to be the corporate solution of choice for cross-border trade, joint ventures, debt financing, IPOs and more.

JANUARY 2017 EDITION

THE BVI CORPORATE ADVANTAGE: • OECD-compliant jurisdiction • Progressive legislation that evolves with business demands, including the BVI Business Companies Act

• Competitive on costs relative to other offshore finance centres • Commercially focused and responsible corporate governance

The BVI embraces tax transparency

• Maximum corporate flexibility (ideal for multinational Joint Ventures and cross-border M&A)

The BVI cooperates fully with foreign tax authorities and the jurisdiction has led the way in adoption of automatic exchange of tax information, the gold standard of tax transparency. BVI was one of the first jurisdictions in the world to implement the OECD’s Common Reporting Standard for the automatic exchange of tax information. As the UK Government recognised in the communiqué of the Joint Ministerial Council in December 2015, “it is not appropriate to refer to these Overseas Territories as ‘tax havens’.”4 Unlike Panama, BVI and most offshore jurisdictions are not blacklisted by the OECD, and operate to the highest standards of integrity. The BVI is a tax neutral jurisdiction. Tax neutral jurisdictions do not add additional tax to whatever is imposed by onshore or home jurisdictions. Equally they do not reduce the tax burden otherwise owed in the ‘home’ jurisdiction.

The British Virgin Islands is not a secrecy jurisdiction

The BVI has robust anti money laundering and know your customer checks, which are absent in Nevada, Wyoming and Delaware, for example. The BVI regularly improves its transparency regime: for example, on 1 April 2016, the BVI introduced a central private registry of directors. The BVI actively investigates appearances of non-compliance and works with foreign competent authorities to detect, prevent and prosecute illegal activities, ensuring that its laws are enforced and action taken transparently if any wrongdoing is identified. For example, in December 2013 the FSC fined Mossack Fonseca for failing to undertake enhanced due diligence5. In 2014 the Global Shell Games6 report found that BVI service providers (94%) had some of the highest standards of compliance in the world, when it comes to refusing to establish companies without proper documentation, compared to the US state of Delaware (6%) and the UK (45%). In 2015 the BVI made commitments to enhance cooperation between UK and BVI law enforcement authorities on beneficial ownership at the Joint Ministerial Summit with the UK Government. Beneficial ownership registers are new, and they are not widespread. The UK introduced its own register of beneficial ownership on 6 April 2016. B

• Innovative fund structures for investment strategies with a higher risk profile • Companies can be registered with foreign character names (eg Chinese) in addition to their English name • Effective exit strategies for investors (IPO, share or asset sale) • Credible and efficient dispute resolution supported by a robust legal framework based on Common Law, with rights of appeal to the Privy Council in London • Transactional fluency through deep skill set, expertise and professionalism • A neutral environment where commercial partners are able to structure deal parameters and objectives securely and without local or foreign law bias • A Corporate Registry with an unrivalled Premium service for key transaction approvals (ie mergers) • Adherence with international initiatives for transparency, mutual cooperation, information exchange, and anti money-laundering regulation

• Rapid registration – within 24 hours, subject to satisfying regulatory requirements

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The BVI is evolving to become the most progressive Corporate Finance Centre focused on maximising FDI flows and global commerce.

BVI is ranked by the OECD (3 August 2015) as ‘Largely Compliant’ with FATF recommendations on beneficial ownership (the Financial Action Task Force sets global standards for fighting money laundering and terrorist financing) – in the same study, the UK is ranked Partially Compliant, and the US is ranked Non-Compliant 2

FDI is the major economic driver of globalisation and accounts for over half of all cross border investment. FDI facilitates socio-economic factors such as job creation and primary infrastructure and services (water, power, healthcare and education). Through FDI, companies can access and serve new markets and customers and access technological and natural resources. 3

The BVI is the world’s 4th largest recipient of FDI inflows. Despite its comparatively small size, BVI is a close competitor to the US, where $159bn FDI flowed into developing countries in 2013. 4

“Joint Ministerial Council 2015 Communiqué”, Foreign & Commonwealth Office, 3 December 2015. (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/488498/ Overseas_Territories_Joint_Ministerial_Council_2015_Communique.pdf) 5

http://www.bvifsc.vg/Publications/EnforcementAction/tabid/378/ctl/EnforcementSummary/ mid/1188/actionId/16935/language/en-US/Default.aspx 6

Findley et al (2014): Global Shell Games. Cambridge University Press (Cambridge). Global Shell Games tested standards in practice by sending 7,500 email requests to corporate service providers in over 180 countries around the world, attempting to establish companies without the proper documentation required by the FATF Recommendations.

Business BVI Guides

BVI FINANCIAL SERVICES:

The value of the BVI to the global economy STATEMENT BY PREMIER AND MINISTER OF FINANCE

DR. THE HONOURABLE D. ORLANDO SMITH, OBE DURING THE EIGHTH SITTING OF THE FIRST SESSION OF THE THIRD HOUSE OF ASSEMBLY OF THE VIRGIN ISLANDS

Monday April 18, 2016

adam Speaker, I have just updated this Honourable House with where we are in strengthening our Financial Services structure. Now I would like to put things into a different perspective, focusing more on the value of the BVI to the global economy.

Madam Speaker, no doubt that earlier this month, the world was shocked by the release of the so-called Panama Papers. The leak of over 11 million documents from the law firm Mossack Fonseca has raised troubling questions for people and governments the world over. For the BVI, the most important is the role of offshore jurisdictions in the international finance system and the position of the BVI itself The ongoing investigation by the BVI Financial services Commission is not a reaction to a scandal – but is fundamental to how we run – and how we have always run - our financial centre – with an unwavering commitment to transparency, integrity and proper regulation. Now, more than ever, these values are essential to the future of our financial services industry and the broader global financial system of which it is a part. Because today, that system is under dire threat. Many in the global media and in countries around the world have rushed to draw false conclusions from the revelations in the Panama Papers. JANUARY 2017 EDITION

These critics have built an unsubstantiated argument that indicts not just the corrupt individuals and institutions implicated in the leaked papers – but the entire global financial system and, in particular, offshore jurisdictions including the BVI. It is true that in the Panama Papers examples have surfaced of the law firm Mossack Fonseca establishing corporations in the BVI for potentially illegitimate purposes. The BVI does not now and never has claimed that our entire financial services system is 100% free of illegal activity. No financial system in the world has ever or could ever make such a claim. It is an impossible, unreasonable and unattainable standard. But, I stand here today before you and before the eyes of the international community and say with unwavering confidence:

The BVI’s financial system is well-regulated; it is well run; it is founded on a basis of integrity; and, we of the BVI are fiercely proud of our industry because we know the role it plays not just in our own prosperity, but in the progress and growth of the entire world. Those who today seek to smear the good name of the BVI and offshore jurisdictions generally must themselves be transparent about their real motivations and true message. Many of these critics are not simply offended by the allegations raised in the Panama Papers. Rather, they seek to sow doubt about the value of our modern, interconnected global economy. They fundamentally believe that the process of globalisation which has resulted in a totally interconnected market place, unhampered by time zones and national boundaries and which has transformed the world over the past three decades, has on the balance been a bad thing for humanity. They see the free flow of capital across borders as a threat to things they hold dear. And so they wish to turn back the clock. They wish to lessen the interconnection of nations.

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They wish to stem the flow of capital from one part of the world to another. They wish to slow the pace of global investment.

We create a neutral space where capital from all over the world can come together and be deployed for a common purpose.

I do not stand here to judge these critics. They are entitled to their own opinion and I trust that their intentions are good.

Whether an investor sits in Russia or America or Europe or Asia – they know that if they put their money into an investment project incorporated in the BVI – then they have recourse to well-run courts that uphold the British common law;

But I am here to say in the clearest possible terms – we could not disagree with them more. Globalisation has been by far the greatest driver of human progress ever unleashed. Over the past decades, billions of human beings in every corner of the planet – including in our Caribbean region and right here in the BVI – have been lifted from grinding poverty and given opportunities that previous generations could only have dreamed of. Thanks to this movement, the blessings of infrastructure, health care, education and a high quality of life are no longer the special privilege of those lucky few born in the United States, or in Europe or in the small number of other wealthy nations. Today, those basic needs are being met for more people in more places than at any time in history and it is all thanks to our interconnectedness. The fact that today capital that sits in New York, and London, Tokyo, Frankfurt, Dubai and other financial centres around the globe can be pooled and put to use to build a factory in Uganda; or a bridge in Bolivia; or start a business in Indonesia – that has unleashed progress for people the world over. Jurisdictions like the BVI have been fundamental to that powerful surge. Without offshore jurisdictions, global capital would struggle to be put to good use outside of national borders. If capital from multiple nations is to come together for a common purpose, it must be able to incorporate. And that place of incorporation typically cannot be the nation of origin of any one of the investing parties – after all, many of the other investors from other countries may never sleep easy knowing that their money was being held in a country whose laws they may not know, whose politicians they may not trust, and whose regulators they cannot rely upon. Jurisdictions like the BVI have risen up over the past decades precisely because we solve that problem.

They know that their corporation will sit under the oversight of the Financial Services Commission in a jurisdiction that has been named among the best regulated in the world, a jurisdiction which conforms to the absolute highest global standards; They know that while they will pay all appropriate taxes in their home nations and in the nations where they ultimately invest their capital, they will not have to pay a double-tax for simply holding their assets through BVI structures These benefits are profound. In 2013 alone, BVI companies facilitated the investment of 82.5 billion US dollars into emerging market economies. It is no exaggeration to say that in virtually every corner of the world today there are businesses being run, profits being generated, people being employed and local taxes being paid by companies that are domiciled in the BVI. And it is also no exaggeration to say that many of those investments would simply never have been possible had a jurisdiction like the BVI not existed, that could make the pooling of resources possible and efficient. And so I say to the critics who have risen up in the wake of the Panama Papers – think carefully about what you wish for. Yes, we all agree that global corruption is a cancer that must be fought. But heaven help us if we throw the baby out with the bathwater. If we begin to sever the ties that bind nation to nation and make global investment possible, it is not the rich and the powerful and corrupt who will suffer. The rich and the powerful and the corrupt rarely suffer. They find their ways to do their business. It will be the poor and the striving who are hurt. It will be the workers whose jobs will be destroyed or never created. It will be the local government whose drive to develop infrastructure will falter. It will be the communities who will lose out on badly needed wealth creation.

Those would be the victims of a de-globalised world. Here in the BVI, we will not be shamed into silence on this point. We know perfectly well that while we may not be perfect in the management of our financial services system – we absolutely adhere to standards that any nation – including the wealthiest and most developed nations on Earth – would be proud of. • Intermediaries in the BVI are bound by professional obligation to maintain adequate, accurate and current information regarding the beneficial ownership of any BVI company and to disclose to the Government of the Virgin Islands as required. The 2014 Global Shell Games report found that 94% of BVI service providers are compliant with regulations that compel them to refuse to establish companies without proper documentation, as compared to just 6% of providers in the US state of Delaware and just 45% of providers in the United Kingdom. • As well as strict Anti-Money Laundering rules, due diligence policies, Know Your Client protocols and domestic laws, the BVI’s financial regulators are recognised members of the International Organization of Securities Commissions, which is the global standard setter for the securities sector. • The BVI was one of the first jurisdictions in the world to implement the OECD’s (Organisation for Economic Co-operation and Development) Common Reporting Standard for the automatic exchange of tax information. • The BVI has tax transparency agreements with over 100 developed countries, including Tax Information Exchange Agreements with 27 countries and multilateral agreements providing for tax cooperation with 76 countries, under the OECD’s Convention on Mutual Administrative Assistance in Tax Matters. • The BVI is ranked by the non-governmental organisation (NGO) Tax Justice Network as more compliant in tracking corporate beneficial ownership than half of the G8 countries - ahead of the United States, the United Kingdom, Germany and Japan. • The Financial Action Task Force (FATF) ranks the BVI as more compliant with international regulatory standards than the United States (US) and UK[1] • And the BVI has inter-governmental agreements with the US and UK to comply with US Foreign Account Tax Compliance Act (FATCA), and UK International Tax Compliance to provide data on financial accounts held by their residents to the United Kingdom And let me be clear – the BVI was not dragged kicking and screaming to these reforms. We embraced them. Indeed, we led on them. To the extent that we have had moments of contention between us and various international bodies as well as other national governments – it has been over legitimate disagreements about the substance of proposed regulation. It is neither our duty nor our right to simply go along with every proposal emanating out of London, or Washington, or Brussels or elsewhere. Those capitals have their own interests and perspectives – and we have ours.

When they advocate for certain proposals, sometimes they are driven by a well-intentioned desire to strengthen the regulation of the financial system. Sometimes they are driven by their own special interests who seek to advantage themselves at the expense of others. And in other cases – and this may be increasingly the case in the wake of the Panama Papers – these governments are simply responding to the pressure of the press and the public. Our job here in the BVI is to stand up for proper international regulation, to stand up for the global rule of law, and to stand up for globalisation as the transformative driver of human progress which it is. Ladies and gentlemen, let me conclude with this thought. We all live today in deeply uncertain times. Around the world, we witness growing problems like climate change, health epidemics and pollution and wonder what the future holds for humanity. And everywhere we see evidence of income inequality between the rich and the poor and we question whether justice will ever come to this world. I have no answers to these questions. But I do know this – the voices that we hear today louder than ever calling for nations to turn inward, to cut themselves off from the world, to shun those who are not like them – they are wrong and they stand on the wrong side of history. The problems of our world will not be solved by people severing the ties that bind. We will not uplift the poor by destroying the ability of investors to create wealth. And we will not stamp out corruption by destroying offshore jurisdictions like the BVI that make the global flow of capital safer, better regulated and more efficient. My fellow BVIslanders and my fellow citizens of the world – on all these issues there is but one direction we must go: forward. We must work together, not tear each other apart. We must unite in common cause to create a global economy and global community in which opportunity, prosperity and dignity are broadly shared and where corruption, terror and criminality are rooted out. Only together will we create that better and more just world we all seek. This era is a true test of our collective resolve. We will either let scandals like the Panama Papers, or the economic crisis frighten us into a global retreat – or we will use them as inspiration to do even more to create a global environment that promotes legitimate investment and deeper human connections. Here in the BVI we will stand and we will fight on the side of progress. That has been our way for decades. That is the foundation of our economy and our society. Those are the values we champion. And with the likeminded and the kindred spirits of the world we will move forward together to realise our shared vision of a better tomorrow. Thank you. B JANUARY 2017 EDITION

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 continue 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. BUSINESS BVI STAFF WRITER

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Business BVI Guides

must be approved by the BVI Health Services Authority. If any additional vaccinations or tests are needed, these can be done by the Government’s health clinic.

nce 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 • Prospective 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 is 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

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 his work permit by visiting the Labour Department. The Territory’s new work permit cards are 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 he or she is a legal resident of the BVI. Once this process is completed, employees are legally permitted to work, reside and travel in and out of the British Virgin Islands. Labour Department 284 468 3701 ext. 4708/ 4780 Immigration Department

BVI Establishes Visa Exemption Program

ffective September 1, 2016, the BVI will implement a Visa Exemption Program which will allow nationals of a country that require a BVI visa, but who also hold a United Kingdom (UK), United States of America (USA) or Canadian visa, and are visiting the Territory for business, tourism and other related matters, to enter and remain for a period less than six months. Visiting for the purpose of employment has been excluded as a reason to enter and remain in the Territory under this exemption program. The initiative is part of labour and immigration reforms designed to further streamline entry to the territory by visitors and is aimed at facilitating economic growth. Premier and Minister of Finance, Dr. the Hon. D. Orlando Smith, OBE said “My Government believes that the implementation of our visa exemption program will also help tremendously with our global marketability in tourism and in the financial services sector. Given recent advancements in trade, investment, tourism and financial services in the region, and with Britain’s exit from the European Union, it is in the Territory’s best interest to lift certain visa restrictions as needed in order to facilitate further economic growth in the British Virgin Islands.” The Premier added that it is an established fact that the UK, USA and Canada already have strong systems for issuing visas, therefore, visitors from a country that would typically require a BVI visa or a visa-waiver to enter the BVI, once they hold a current and valid visa issued by the United Kingdom, United States of America or Canada, can travel easily to the BVI. However, the UK, USA or Canadian visas should have more than six months of validity before travel to the territory, and would only apply to visits of six months or less. However, there are still a large number of countries requiring visas to visit the BVI. The Government of the Virgin Islands envisions that the next stage of its visa processes will be the implementation of an e-Visa regime designed to further streamline entry and facilitate economic growth in the Territory. Immigration Department

284 468 3701 ext. 4700/ 4770

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ocial 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

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he Terrance B. Lettsome International Airport is located on Beef Island. It is the Territory’s main airport with internationally recognised airport code, EIS. Some travelers 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 10 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.

the agent you would like to use, you will be informed 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. 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. Once completed, 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.

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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.

• Vehicles 20% • Household goods/furniture 15% • Electronics/computer hardware 15% • Clothing 10% • Reading materials 0%

Residents 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.

Her Majesty’s Customs 284 494 3701 Ext. 6800/6802

Post Office 284 468 3701 ext. 4996

To declare goods with Customs you must have an itemised list of goods shipped and their costs. Government waives up to $1000 for new residents on goods imported. The following is a break down of duty charges for other items:

hipping 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

hough 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.

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: • 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.

he 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 or lease. Many landlords offer short term leases 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

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 NonBelonger 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 or 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

he British Virgin Islands does not have a formal 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 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

isitors 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,

he 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 and 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

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pharmacies with competitive pricing for the latest medicines.

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.

here 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 $160.00 to $430.00 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.

ealth 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. The new Peebles Hospital was officially opened in mid December 2014. 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 gynecology and obstetrics, cardiology as well as dermatology. Supporting these clinics are various private

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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 enroll 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

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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

may obtain 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 enroll 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

• 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. Monthly 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

here 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

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PATLIAN JOHNSON

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GOV E RNM E N T The BVI is self-governing overseas Territory of the United Kingdom with the Queen as the Head of State represented locally by the Governor. The Governor is responsible for external affairs, defence and internal security, the Public Service and administration of the Courts. The ministerial system of government is led by an elected Premier, a Cabinet of Ministers and the House of Assembly. Government’s main source of revenue comes from financial service levies followed by 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. The Protocols for Effective Financial Management negotiated with the United Kingdom and the 2012 amendments to the Public Financial Management Act, 2004 set out the Government’s commitment to fiscal sustainability. This will be accomplished through medium term planning, regular review and reporting of economic and fiscal affairs, delivering value for money by efficient procurement processes and by managing risk.

Facts at a GLANCE DEMOGRAPHICS/SOCIAL Population^ 28,054 Population Density

183.2 km2

Population growth rate (annual average) 2.5% Nationality Ratio 64% Literacy Rate 96.9% Life expectancy at Birth 79.32 Major Religious Denominations Methodist, Anglican, Roman Catholic

SOCI E T Y

GEOGRAPHY/CLIMATE

POPULATION

Area (BVI)

The population of the British Virgin Islands (BVI) is diverse and growing. The majority of persons are of Afro-Caribbean decent. Minority ethnicities include Caucasians, East Indians, Middle Eastern, Chinese, and Portuguese. The major force driving population growth has been immigration mainly to meet the shortage in local labour supply. Approximately 68 percent of the employed are foreigners thus accounting for a diverse and varied labour force. The Government sector is the major employer followed by the tourism industry and the financial services sector.

Rainfall (average annual)

Annually there are twelve paid public holidays and the local labour code sets modest requirements for paid sick and holiday leave. Trade unions are virtually non-existent and work days lost through industrial action are infrequent. Local law provides for a work permit regime. Under this system a foreigner will only be granted with a work permit if a qualified local is not available to fill the position. The government has set a minimum wage of $4 per hour.

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 and the Education Act, 2004 regulates all aspects of the Territory’s education system including Early Childhood Education. The Government’s Ministry of Education operates 17 primary schools and four secondary schools, including a technical-vocational 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. Through affiliations with other tertiary institutions HLSCC also offers degree and master’s programmes in various disciplines. The College also offers specialty courses based on the needs of the labour market.

57.08 sq. Miles 40 inches

Temperature (average) Time Zone

28 degrees celsius Atlantic Standard Time

GOVERNMENT Capital City

Road Town

Dependency Status

British Overseas Territory

Judicial System Head of State

Common Law Queen Elizabeth II represented by the Governor

ECONOMY Currency

United States Dollar

GDP (nominal)*

US$ 973, 862 million

GDP per capita (nominal)*

US$ 33,408

Inflation Rate (2015)

0.85%

Unemployment Rate

2.9%

Employed Persons (2015)

19,501

Major Industries Tourism and Financial Services

HEALTH The recently implemented National Health Insurance (NHI) Scheme provides universal affordable health care to all BVI residents. Currently, primary health care is provided by Peebles Hospital and community health centres. The new Peebles Hospital is a state of the art facility includes a physical theory unit, psychiatric ward and hydrotherapy pool. Additional medical services are 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 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.

COMMUNICATION Country Phone Code Postal Codes

284

VG1110, VG1120, VG1130, VG1140, VG1150, VG1160

Telecommunication Providers

Source: Macro-Fiscal Unit and Central Statistics Office ^2010 Population Census * 2015 provisional estimates

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ECO NO M Y MEASURE

2014

2015

Nominal GDP Growth (%)

4.1

4.3

Inflation (%)

1.9

0.9

2.9

Unemployment (%) 1

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.

Source: Central Statistical Office 1

Please note that the rate of unemployment is based on 2010 census figures.

The BVI economy is based on two distinct economic pillars, namely Tourism and Financial Services. Growth in the tourism and the financial services industries has resulted in expansion of the construction sector, both private (residential and commercial) and public, the real estate sector (residential and commercial) and the wholesale and retail sectors. For the majority of the past decade economic growth has been positive and the BVI’s 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 1-2%. 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 exporter of goods.

TOURIST ARRIVALS

2014 *

2015*

Actual Change

%Change

Overnight

386,127

393,018

6,891

369,257

529,354

155,545

43%

755,384

922,372

166,988

22%

Excursionist (Cruiseship and day trippers)

TOTAL Source: Central Statistical Office * Estimate

F INANCIAL S ERVICES FINANCIAL SERVICES AT A GLANCE FINANCIAL SERVICES Banking (general and restricted)

MA J O R SE C T OR S TOURISM AT A GLANCE 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 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 Anegada Lobster Festival in November, 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 has given the BVI the title of the ‘sailing capital of the world’. Other water sports such as scuba diving, snorkelling, windsurfing, kite boarding, paddle boarding and kayaking are also extremely popular. The BVI is also a popular port of call for major cruise ships. The Tortola Pier Park facility opened in 2016 can accommodate larger cruise ships and the landside development includes shops (international brands and local treasures), restaurants and entertainment. The Government continues to upgrade tourist attractions and infrastructure and encourages private investment and public private partnerships in the sector. Other infrastructural developments expected in the near future include expansion of the T.B Lettsome International Airport and upgrades to various ports of entry throughout the BVI. Through the BVI Tourist Board numerous marketing initiatives have been

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2014

2015

Banking and Fiduciary 6

Trust (general) Class I, II & III

116

111

Trust (restricted)

Company Managers

Money Services/Financing Business

Captive Insurance

145

146

Domestic Insurance

Insurance Managers

115

120

1,511

1,453

Insurance

Mutual Funds Professional Professional (cumulative active) Private

Private (cumulative active)

539

480

Public

Public (cumulative active)

Incorporations BVI Business Companies

50,835

44,752

BVI Business Companies (cumulative active)

457,971

451,840

Insolvency Practitioners Source: BVI Financial Services Commission

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 and promotion of the products and services of the financial services sector is conducted by the BVI Finance (formerly the International Finance Centre) 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. The BVI London Office and the BVI Asia House in Hong Kong were commissioned to establish a presence in Europe and Asia to take advantage of economic opportunities not limited to financial services and tourism. The Financial Services Implementation Unit (FSIU) was established late 2015 to put into effect the recommendations of a report outlining a strategic plan to chart the future of the financial services industry with the goal of securing the future of the industry. The recommendations centre on attracting valueadded services, labour and immigration reform, strengthening business development and attracting investment in infrastructure.

B USINE SS CO M PA N I E S The BVI is one of the largest centres for the incorporation of business companies with around 1 million companies incorporated since the enactment of the International Business Companies (IBC) Act in 1984. Over 450,000 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.

I NSURANCE (CA PTI V E ) The BVI captive insurance market is one of the fastest growing and largest in the world 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. 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. More recently the Insurance (Amendment) Act and Regulations 2015 provide greater flexibility for captive insurers with the introduction of two new categories for captive licences.

INVEST M ENT BU S INESS The BVI is one of the premier jurisdictions for fund domiciliation and is now is regulated by the Securities and Investment Business Act (SIBA) and Regulations which came into force on 17th May, 2010 replacing the Mutual Funds Act 1996 (as amended 1997). 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. SIBA also provides a framework for dealing with insider trading and market abuses. The BVI continues to update its regulatory regime to meet the needs of stakeholders. The Approved Managers Regime came into force the end of 2012 and creates a new regulatory environment for fund managers by reducing the regulatory burden under SIBA. The SIBA (Amendment), 2012 facilitates the new regulations for the Approved Managers Regime. The FSC has created two new regulated fund categories – incubator fund and approved funds. They were created in order to provide more flexibility to smaller and start-up financial services businesses. Under the new fund categories, managers and principals of smaller, open-ended funds may be approved to conduct business within a lighter regulatory framework. The Securities and Investment Business (Incubator and Approved Funds) Regulations 2015 come into force on 1 June 2015.

BANK ING The Virgin Islands is characterised as a conservative banking jurisdiction. At the end of 2014 there were 6 banking institutions licensed to operate in and from within the BVI with total assets of approximately US$2.5 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.

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IN S OL V E NCY 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.

TRU ST MANAGE M E N T Trust Management forms a major component of financial services activity in the Virgin Islands. The BVI trust sector has experienced moderate growth since 1995. 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.

SH I P P I NG

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.

T AX INF ORM AT ION EXC HANGE AGRE E ME NTS

MEASURE

2014

2015

Annual Vessel Registrations

234

Total Vessels Registered

Source: Virgin Islands Shipping Registry

As the sailing capital of the Caribbean and an esteemed corporate domicile, the Virgin Islands is also a popular jurisdiction for the registration of ships.

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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.

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A Tax Information Exchange Agreements (TIEAs) is a bilateral agreement that has been negotiated and signed between two countries to establish a formal regime for the exchange of information relating to civil and criminal tax matters. The purpose of 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.

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 COM M ERC IAL COU RT The BVI now has a state of the art Commercial Court to serve the expanding 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 28 TIEA’s.

needs of commercial litigation in the Territory and the Eastern Caribbean.

The BVI has agreements with Ireland, the Netherlands, Curacao, St. Maarten, Aruba, the United States, the United Kingdom, Australia, New Zealand, France, the Faroe Islands, Greenland, China, India, Germany, Poland, Portugal, the Czech Republic, Guernsey, Isle of Man, Canada, Japan and South Korea and the Nordic group of countries Sweden, Norway, Finland, Denmark and Iceland.

in operation since May 2009) and specialises exclusively in domestic and

The International Tax Authority (ITA), established under the Ministry of Finance, is the Competent Authority in respect of all matters relating to Tax Information exchange. It ensures that the BVI effectively exchanges tax information with other countries under the laws of the Virgin Islands and the relevant TIEAs.

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 cross-border commercial and insolvency matters. Prior to the establishment of the Commercial Court, all cases were handled by the High Court.

BVI INT ERNAT IONAL ARBIT RAT IO N CE NTRE The BVI is now a centre for the resolution of domestic and international disputes. The British Virgin Islands’ Arbitration Act 2013 came into force on October 1st, 2014 making provisions for a modern arbitration centre. The recently established BVI International Arbitration Centre provides neutral, efficient and reliable dispute resolution services. The state of the art

RE AL EST AT E Buying and Selling Property in the BVI 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

facilities offers a variety rooms for hearings and meetings, video and audio conferencing, interpretation and translation services and concierge services.

PUBLISHER’S NOTE: All of the information in this guide 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 regards to any specific matters. Readers can contact the relevant authorities mentioned in this Fast Fact Guide..

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New Year’s Day

Monday, 2nd January

Anniversary of H. Lavity Stoutt’s Birthday Monday, 6th March

Territory Day

Friday, 30th June

Festival Monday

Monday, 7th August

Festival Tuesday

Tuesday, 8th August

Festival Wednesday

Wednesday, 9th August

Commonwealth Day

Monday, 13th March

Good Friday

Friday, 14th April

Easter Monday

Monday, 17th April

St. Ursula’s Day

Friday, 20th October

Whit Monday

Monday, 5th June

Christmas Day

Monday, 25th December

Sovereign’s Birthday

Saturday, 17th June

Boxing Day

Tuesday, 26th December

GOVERNMENT MINISTRIES Central Administrative Complex Road Town Tortola British Virgin Islands Website: www.bvi.gov.vg Premier’s Office Tel: (284) 494-3701 ext 2152/2058 Fax: (284) 494-6413 E-mail: premieroffice@gov.vg Ministry of Finance Tel: (284) 494-3701 ext 2144/3306 Fax: (284) 494-6180 Ministry of Health and Social Development Tel: (284) 494-3701 ext 2174/2172 Fax: (284) 494-5018 E-mail: 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

GOVERNMENT OVERSEAS OFFICES

STATUTORY BODIES/ ASSOCIATED AGENCIES Financial Investigations Agency Ritter House Wickhams Cay II Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 E-mail: fia@bvifia.org Website: www.bvifia.org BVI Finance Cutlass Tower, 4th Floor Road Town, Tortola Tel: (284) 468-4335 Fax: (284) 468-2590 E-mail: info@bvifinance.vg Website: www.bvifinance.vg BVI Tourist Board 2nd Floor, Akara Building De Castro Street Road Town, Tortola Tel: (284) 494-3134 Fax: (284) 494-3866 E-mail: info@bvitourism.com Website: www.bvitourism.com The BVI Commercial Court Old Banco Popular Building Main Street Road Town, Tortola Tel: (284) 468-2724 Fax: (284) 468-2729 cdecsc@gov.vg

Financial Services Commission Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 E-mail: webmaster@bvifsc.vg Website: www.bvifsc.vg Telecommunications Regulatory Commission Fishlock Road Road Town, Tortola Tel: (284) 494-6786 Fax: (284) 494-6786 Website: www.trc.vg

BVI London Office 15 Upper Grosvernor Street London WIK 7PJ United Kingdom Tel: + 44 207 355 9570 BVI House Asia Suite 5106, 51/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Tel: (852) 3468 8533

Virgin Islands Shipping Registry Cutlass Tower, 3rd Floor Road Town, Tortola Tel: (284) 468-2902/2903 Fax: (284) 468-2913 E-mail: vishipping.gov.vg Website: www.vishipping.gov.vg BVI International Arbitration Centre Ritter House Wickhams Cay II Road Town, Tortola Tel: (284) 340-9002 E-mail: info@bviiac.org Website: www.bviiac.org

Ministry of Education and Culture Tel: (284) 494-3701 ext 2151 Fax: (284) 494-5421

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Over & Out

Firstly, congratulations on securing the regulatory approvals for the establishment of the Bank of Asia in the BVI. I believe that this is the first new banking license in decades granted in the territory. Thank you and yes I believe this is the first banking license being granted in the BVI for over two decades. We appreciate the opportunity and believe that we will be adding value and filling in some hard gaps.

Why the BVI and why now? What was the tipping point for undertaking what must be a monumental task on many levels in establishing a new bank targeting the offshore sector? Starting a bank is not my mission in life and I am not forum shopping, so there is no question of why the BVI and why now. The genesis of the Bank of Asia is to provide a solution to the bank account opening problems for BVI and other offshore companies and this has taken on new urgencies given the Panama Papers and the reputational issues that the jurisdiction finds itself facing. We want to start a bank that has as its foundation, value a very robust KYC/AML process,

that leverages on cutting edge technology, which will per se promote the reputation of the BVI and bring to the jurisdiction the multiple opportunities that fintech generates.

The barriers for entering the banking space in the offshore sector are not only high, but are varied. What is the BoA core strategy for surmounting these barriers? The principal thesis of the BoA business model are (a) a captive market of over 430,000 BVI companies, and many more offshore companies, of which a majority are owned by Asians and for which account opening has been an issue for a number of years, resulting in a backlog of companies needing to have bank accounts opened (b) those owning BVI companies are (i) entrepreneurs (ii) private equity firms, (iii) state-owned enterprises and (iv) listed companies. While (iii) and (iv) may or may not need our help, categories (i) and (ii) have faced difficulties and by serving their BVI and other offshore vehicles we can have channeled access to this captive market

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What are the core guiding principles of the BoA? What will differentiate BoA from the other estimated 14,000 banks in the world today? The foundational principle of the BoA is that it has to be as transparent, compliant, credible, responsible and sustainable as a new bank without legacy can be. We must also make the best use of technology. We should also be very focused in our business, and not be all things to all people.

Clearly as a new institution one that will not have legacy related baggage, how will you utilize the new breed of FinTech in standing apart from your competitors in meeting the demanding needs of your clients? Mr. Wen (leftmost) during the Business BVI Asia Conference 2016

(c) fintech and regtech would enable us to undertake KYC/AML and credit assessment of customers with much higher efficiency and lower costs that give us huge competitive advantage over legacy banks (d) cutting edge technology and the use of big data would also enable us to undertake more incisive and comprehensive KYC/AML than what legacy banks do and (e) by focusing on the Asian, and initially the Chinese, market, we can customize products and services that would have special cultural appeal.

Speak to what you must see and must believe to be the growing banking needs of the offshore sector?

“

BoA was created for one primary purpose – to help solve the bank account opening problems of BVI companies.

“

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The problem for offshore companies in opening bank accounts is well known to those in the industry. The issue is not that offshore companies are illegitimate or otherwise problematic. Most of them are not and by having a robust KYC/AML process we ensure that we only serve legitimate customers. Given their usual use as holding vehicles, offshore companies simply do not have enough transactions to make them of business value to legacy banks particularly given how high compliance costs are today.

The BVI has a strong brand in Asia, how do you plan to leverage this in advancing BoA objectives in the region? The BVI does have a strong brand in Asia, in particular in China. We will work closely with the government and the offshore industry to make the Bank of Asia the bank to go to.

We have already built a KYC/AML engine that uses the best of fintech and regtech and are in the course of building a robo-advisor that will enable our customers to be served 24/7 efficiently and at lower costs than the competition. Strong and deep-rooted KYC – AML are the cornerstones of the DNA of any financial institution operating in the local or global marketplace. This has become even more critical with the recent data breaches globally over the last 18 months. How will the BoA approach this most critical and fundamental building block of the institution? As I mentioned before, we have already built a KYC/AML engine that uses cutting edge fintech/ regtech that enables us to leverage on the latest biometrics and facial/voice recognition technology, high-speed searches and big data analytics. We will in addition be using other established KYC/AML services as additional layers of protection. I have also arranged with one of China’s largest law firms to do on-theground due diligence for onboarding purposes. As the name of the bank clearly implies, the BoA will be targeting the Asia market. How will the banking and wealth management needs of first generation Chinese entrepreneurs factor into the bank’s list of target markets? Most of the high net worth individuals in China today are first generation entrepreneurs and selfmade men/women. They are most likely to want to make investment decisions themselves rather than just rely on private banking and wealth management professionals. We will as such focus on providing as much data to our customers to

facilitate their making of investment decisions and doing the transactions themselves on our platform, rather than handling investments on a discretionary basis as what private banks in the West would be asked to do.

we can make banking in sparsely populated terrains, which is what you will find in quite a few of the Belt and Road countries, a lot easier. As a digital bank, we are also able to provide services across multiple countries with ease. We also hope in the longer run to be able to look into project financing syndication opportunities in the Belt and Road initiative.

I know that the BoA has been moving forward with securing premises in the BVI, while at the same time standing up its complement of senior staff. When will the BoA go live? Also, speak to the level and quality of staff that the bank has been able to attract.

Similarly, the majority of the newly rich in China, a substantial market segment, are under 50 years of age. Are you targeting this segment of China’s HNWIs? We are definitely targeting this young, tech-savvy and well-travelled market. Most of them would have offshore banking needs that the Chinese banks are not well placed to provide. Do you see substantial opportunity accruing to the BoA from China’s Belt and Road development imitative? I see substantial opportunity for BoA accruing from the Belt and Road initiative. We have already been invited to set up a presence in one of the fintech hubs in Central Asia, where I found the use of BVI companies prevalent. As a digital bank

Plans call for the Bank of Asia to commence business during Q1 2017. We have been very fortunate to have brought onboard outstanding banking industry professionals such as Jocelyn Murraine, the former Managing Director of Scotiabank BVI; that is now our President. I would want nothing but the best team there can be for BoA. The establishment of the BoA comes at an opportune time for the BVI, as the jurisdiction pivots towards a future where value added services and substance are the dominant offerings on its menu of services. How do you see the BoA helping the jurisdiction to move to the next rung on the ladder in the offshore space? BoA was created for one primary purpose – to help solve the bank account opening problems of BVI companies. Of course doing this also brings with it opportunities. We will bring fintech and regtech on the ground, as we will use cutting edge technology. It will be madness for any new banking institution not to leverage to the fullest extent on the disruptive changes in fintech and regtech to enhance efficiency and lower costs. Hopefully BoA as a BVI bank will be one of the most technologically advanced in the world. There are many other opportunities for the BVI in the digital economy that I have conceived and have discussed with government, but I prefer to say so only when we are there. B

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