Business BVI 2010 by Richard Georges

BusinessBVI 2010 Edition

The Premier Business & Investment Publication of the British Virgin Islands

www.businessbvi.com

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BUSINESS BVI 2009

Servicing a complex structure usually has a logical starting point In today's market, having a partner that understands the intricacies and challenges of effective wealth management around the globe is critical ... â&#x20AC;˘ a company that offers a comprehensive, yet bespoke, range of services in the key financial jurisdictions of the world â&#x20AC;˘ a global team capable of making multiple, complex solutions fit neatly together â&#x20AC;˘ an independent service provider that is not merely a department within a large bank or law firm, but one that can add real value through local knowledge and global expertise. Equity Trust is the world's leading independent provider of trust and fiduciary services. With more than 1200 professionals in over 30 offices around the globe, we can provide structures for extended families all over the world, manage multiple cross border assets and facilitate effective investments. With over 80 staff, including experienced lawyers, accountants and industry qualified professionals, Equity Trust (BVI) Limited is the largest and one of the most established licensed trust companies in the BVI, tracing its roots in this region back to 1992.

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BUSINESS BVI 2010

CONTENTS features CUBA: IS THE REGION READY? Are we prepared for when Cuba opens its borders to Americans?

by kaletha henry

MARKETING OUR HEALTHCARE SERVICES An alternative to helping us meet the challenges of an evolving economy.

by benito wheatley

DEVELOPING A CONSENSUS

A local businessman explores the possibilities of a common understanding of development.

by colin o’neal

THE NEW ECONOMY

How will it define the region’s small economies?

by mason marcus

GREEN OPPORTUNITIES

The greening of the economy presents opportunity to forward thinking entrepreneurs.

by freeman rogers

BUSINESS BVI 2010

DEPARTMENTS INTERNATIONAL BUSINESS

SHIFTING GOAL POSTS The BVI: 25 Years as a Financial Services Centre.

EAST MEETS WEST INDIAN A young BVIslander interns in the Far East.

MANAGING WEALTH Managing wealth with control and confidentiaity.

FAIR PLAY, FAIR COMPETITION The reality of Offshore Financial Centers.

A NEW VOICE Jose Luis Fernandez wants to make orange and cyan the most talked about colours in the BVI.

by mason marcus

by sarah harrigan

by sjoerd koster and johnathan bailey

by kpmg

by kaletha henry

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES 40 48

HOW DO YOU WANT TO BE SEEN? The importance of brand management and controlling public perceptions of your company.

DEEPENING OUR COMMERCIAL APPEAL The Supreme Court of the Eastern Caribbean opens the doors of its Commercial Division. by susanna hennighan-potter

FACE TIME Profiles of personalities in BVI Business.

CONTRACTORS ASSOCIATION Local contractors have come together.

by kpmg

LIFE IN BUSINESS AFTER POLITICS BusinessBVI sits down with a former Minister of Government. by kaletha henry

In nature. In life. In business.

{

BALANCE

Banking & Finance • Corporate • Commercial Conveyancing Property & Real Estate Jayla Place P.O. Box 216 Road Town, Tortola British Virgin Islands T: 1.284.494.2156 F: 1.284.494.2157 www.orion-law.com

REAL ESTATE & TOURISM DEVELOPMENT

THE 384 A new line of Cats arrive at Sunsail.

THE CROWN JEWEL Virgin Gorda’s continued role as the centerpiece of BVI tourism.

FAMILY PARADISE Oil Nut Bay offers luxury, privacy, and value.

ELEGANT UPGRADES The Moorings Mariner Inn: for the sophisticated traveler.

THE OUTLOOK ON REAL ESTATE The resilient market weathering the recession.

by jane bakewell

GREEN BUSINESS 95

A COURT FOR THE ENVIRONMENT The potential impact on the BVI and the Caribbean. by ominike robinson-pickering

NEWS FROM AROUND THE REGION 98

DR. LEN ISHMAEL’S ADDRESS TO THE 49TH OECS MEETING

102

DEAL PAVES WAY FOR TWO ALTERNATIVE ENERGY PLANTS IN THE USVI Colorado-based Alpine Energy Group plans to invest $440 million in the American territory.

10 14 16 104 108

EDITORIAL CONTRIBUTORS BOOKSHELF MOVING TO THE BVI FAST FACT GUIDE

by edward childs

BUSINESS BVI 2010

by aldeth lewin

Colorado-based Alpine Energy Group plans to invest $440 million in territory

EDITORIAL

Since Portia Harrigan Editor-in-Chief

BUSINESS BVI 2010

our last issue, there has been a major global economic earthquake. The United States, with the world’s largest economy, has seen major companies falter in the dust and smaller ones completely buried under the rubble. Who would have thought just a year ago, that Lehman Brothers and Bear Stearns would be no more; putting an end to a significant stream of Foreign Direct Investment in the Caribbean. It has been the longest and most difficult financial year in modern history and the aftershocks are still reverberating from the United States and Europe to the Caribbean. The massive financial earthquake has caused the G-20 nations to take a new look at the Offshore Financial Centres and the impact on tax revenues for their respective countries. Hence, there has been quite a scurry to meet the minimum requirement of twelve Tax Information Exchange Agreements. The Premier of the BVI has himself signed twelve TIEAs in the past twelve months, removing the country from the OECD’s grey list and exceeding the minimum requirement by three. But as the world continues to settle into the new economy, will there inevitably be a shifting of those requirements? see Shifting Goal Posts p. 18 There is no doubt, that as the aftershocks continue, the financial world as we knew it will never be the same. For one thing, this was no little quake; this was a quake of gigantic proportions. Companies and individuals around the world have lost trillions of dollars. The fallout from Bernard Madoff and Allen Stanford was in itself quite a major aftershock with the impact being equally deep as was wide with fissures well into the Caribbean. The big question is, “how will the region and by extension the BVI recover?” see The New Economy p. 68 How will we use our resources to ensure that when the dust settles and the major economies of the world have determined a way forward for themselves that we fit naturally into a renewed economic landscape? The “Green Economy” is likely to emerge a winner with regards to opportunities for small and emerging economies and we have the natural resources (wind, sun) to capitalize on many of these see The Green Economy p. 88 We must also revisit our waste management plan and determine how we can recycle more of what we use; for as a leading Chinese politician stated, “we cannot pollute our way into the future. It is to our economic benefit to manage our resources more efficiently, while ensuring a clean and healthy environment for our citizens.” The same principle must apply for the BVI if we are to advance into the new economy. We must also ensure that we have a well defined strategy for business development both for local and foreign investors, see Developing a Consensus p. 42 for while it is crucial that we preserve as much of our natural resources as possible, if we are to sustain the quality of life to which we have grown accustomed, we must establish a practical long term development strategy for the Virgin Islands. We can no longer continue without a vision for the future; without a master plan that outlines that vision and an implementation strategy or we will never truly rise from the dust of the economic earthquake. The ‘new economy’ emerging after the near depression of the last eighteen months will be one that is highly competitive and much more regulated. One in which nimble and agile countries and businesses will prosper if they have a clear strategic framework, designed to take advantage of new opportunities.

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I N D I ABUSINESS N O C E ABVI N 2010

The Premier Business & Investment Publication of the British Virgin Islands editorial board

russell harrigan

ceo, oyster global marketing group lorna smith

ceo, lgs associates elihu rhymer

ceo, bvi development consultants ayana hull-brathwaite

associate lawyer, maples & calder martein van wagenberg

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

portia harrigan oyster publications portia harrigan richard georges sheroma hodge, john black, richard georges rahel worede rahel worede

This year BusinessBVI has two covers - one edition branded for the International Finance Centre.

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

CONTRIBUTORS

MASON MArCUS hails from the windy city of Chicago and has been living and working in the British Virgin Islands for nearly two-and-half years. He frequently writes articles on criminal trials, the environment, public utilities for the BVI Beacon and edits the newspaper’s business section. An avid snorkler, he enjoys a day at the beach, scuba diving, and a good book.

kaletha HEnRY is an internationally recognized journalist with over 15 years of experience as a writer and reporter covering an array of topics in the realm of news, entertainment, culture, human interest and business. She has written feature articles, public outreach materials and copy for newspapers, magazines and corporate collateral. Kaletha obtained her Bachelor’s degree in Advertising and her Master’s degree in Communications from New York Institute of Technology and studied photography through the Maryland Institute College of Art. 14

BUSINESS BVI 2010

COLIN O’NEAL is a graduate of Boston University and the University of the West Indies and practiced in the firm of O’Neal Webster for nearly twenty years before becoming Chief Executive Officer of JOMA (Properties) Ltd., a real estate development company in the British Virgin Islands. Besides his legal and business careers, he has a long standing and continuing involvement in public service including appointments as a Magistrate, President of the BVI Bar Association, Chairman of the Public Service Commission, the Judicial and Legal Services Commission, Chairman of the Recreation Trust, and Deputy Chairman of the Financial Services Commission among several other appointments.

susanna henighan-potter is a writer and communications professional who has lived in the British Virgin Islands since 1999. She is also the author of Moon Handbook’s guide to the U.S. and British Virgin Islands.

jane bakewell is a freelance writer with a degree in Communications who has made her home in the BVI since 1994. Her articles have appeared in newspapers and magazines in the US. She has also worked as Associate Editor of the BVI Welcome Tourist Guide. She is a regular contributor to the BVI Welcome, Limin’ Times and Experience BVI. Jane currently runs her own freelance writing and marketing business, First Water Writers. SJOERD KOSTER is a member of the Society of Trust & Estate practitioners (STEP) and has worked in the financial services industry since 1999. He was employed by ABN AMRO Bank, Amsterdam, Netherlands from 1999 until 2006. In 2006, Sjoerd joined Equity Trust Group and assumed the responsibility for fiduciary business development in the Americas for both private clients and international incorporations. He holds an MSc degree in Business Technology and a BA degree in International Business and Management Studies. Sjoerd is located in the British Virgin Islands. FREEMAN ROGERS, the editor of The BVI Beacon, has lived in the territory for about three years. His writing has appeared in various local and international publications, including Caribbean Travel & Life and Slate. com. He is from Travelers Rest, South Carolina. JOHNATHAN BAILEY moved to the BVI in October 2007 from Newcastle in the NorthEast of England. In Newcastle, he worked as a solicitor in the Private Client Department for Dickinson Dees LLP specialising in Wills, Trusts, and Estates. He is a qualified but non-practicing lawyer in England and Wales and a qualified lawyer in Anguilla and the BVI. At Equity Trust, Jonathan specialises in trust law specifically VISTA Trusts, CSCs, and Private Trust Companies. edward childs is qualified as a Chartered Surveyor. He joined the British Virgin Islands office of Smiths Gore Overseas Limited in 1990 following training as a commercial surveyor with Savills in London. At Smiths Gore he has expanded the commercial sector of the firm, undertaking a range of instructions on hotel, marina and development properties throughout the Caribbean. Recently, he has been involved with development projects in the British Virgin Islands, Anguilla and Barbados.

OMINIKE D. ROBINSON-PICKERING consummated her professional status when called to the Trinidad & Tobago Bar in October 2008 and then the BVI Bar in May 2009. She is currently in training at Walkers. She is the eldest of five, deeply spiritual with a profound appreciation for family. Her heritage is as staunchly political as it is undeniably Caribbean as her parents are actively involved in their respective national political arenas in Trinidad and the BVI. BENITO WHEATLEY is an Analyst in the International Affairs and Services Department at the Financial Industry Regulatory Authority (FINRA) in Washington, DC. He is also a Program Board Associate at the Institute of Caribbean Studies where he actively participates in forums on Caribbean Affairs. His areas of interest are Caribbean Development and International Relations. SHEROMA HODGE. Photographer, makeup artist, model, writer, musician and stylist are just a few of the hats that Sheroma Hodge wears. Also known as “Brass.Angel”, Sheroma was born in the USA but raised in the Virgin Islands. Currently in her senior year pursing a Bachelor’s Degree in Media and Communication with a Specialization in Multimedia at U.W.I. Mona, this 24 year old continues to take the world by storm as the entrepreneur of Brass.Angel.Enterprises. johN black. I am a Master of Light. Not forgetting shadows, I record the world we live in. I record how we live. I, John F. Black, am a photographer. For more of my work visit www.johnfblackphotography.com or join me on Facebook (johnblack) for a comprehensive portfolio spanning over 38 albums. richard georges is an illustrator, designer, and writer who teaches literature and composition at the H. Lavity Stoutt Community College. Most of his time outside of the classroom is consumed by art, prose, and photography. You can read more about Richard, and view his blog and portfolio at richardgeorges.com

Real Estate Sales Vacation Villa Rentals Appraisals Planning

miths Gore opened its first overseas office in the British Virgin Islands in 1965 and has since expanded its activities into North America, Europe, Malaysia and Brunei. The United Kingdom practice was founded in London in 1845 and currently operates from 26 offices throughout England and Scotland. While the Caribbean practice continues to be based in the BVI over the years there has been a tendency to specialise in the sale and valuation of properties throughout the region. British Virgin Islands Brittannic Hall, P.O. Box 135, Road Town, Tortola T 1(284) 494 2446 F 1(284) 494 2124 E info@smithsgore.com

United Kingdom 17-18 Old Street, London W1S 4PT T +44 (0) 207 290 1611 F +44 (0) 207 290 1617 E london@smithsgore.co.uk

“Tis not too late to seek another world” –Tennyson

www.smithsgore.com

BOOK SHELF

how the mighty fall jim collins “How the Mighty Fall” uses the same criteria from “Good to Great,” only in reverse, to show how and why once great enterprises have fallen. Collins does this with the same attention to detail and passion as in his previous works. S. Durocher crumbled small sir ronald sanders “In the book entitled “Crumbled Small”, Sir Ronald, who worked at the Caribbean Development Bank and served as consultant to the OECS and chairman of the Caribbean Financial Action Task Force states that the small states of the Commonwealth Caribbean are in crisis and that there is need for urgent action at the domestic, regional and international levels to spare them from sinking into widespread poverty and becoming client-states of larger nations upon whom they could become economically reliant. “ Oscar Ramjeet capitalism’s achilles heel raymond w. baker “...Challenging the view that financial scandal and tax dodging are isolated cases in an otherwise robust system, Capitalism’s Achilles Heel shows how these ‘negative externalities’, as economists call them, have generated a spirit of lawlessness that threatens the integrity of the market system and the finance industry as a whole...” The London Review made to stick chip & dan heath “Made to Stick” gives you the tools you need to revamp your own messages. It provides “do it yourself” conuslting in book form, which will be appreciated by activists, entrepreneurs, and businesses of all sizes. Amy Tiemann

BUSINESS BVI 2010

good to great jim collins I’ve read many business books, but this one stands out. I highly recommend it for 3 reasons: Jim Collins clearly identifies the three critical factors to running a great business of any size; He develops a compelling profile of what it takes to be the leader of a great enterprise in the modern day. And it is probably NOT what you think it would be; He demonstrates the building of successful enterprises as a result of ethical behavior rather than despite the perceived compromises ethical behavior brings. This is an especially relevant issue in the current climate of corporate scandals. Happy reading! Randal Chinnock in fed we trust david wessel “David Wessel brings his deep knowledge of the Federal Reserve and U.S. politics and economics to a topic that will be studied by historians for decades to come...No one can understand what happened and what did not happen without reading this book.” Joseph E. Stiglitz the battle for america 2008 dan balz & haynes johnson “Dan Balz and Haynes Johnson...capture the momentous contest in a polished account refreshingly free of last year’s breathless sound bites, pundit instareaction or fixation on trifling gaffes...an evenhanded and comprehensive account of the race...” Randy James, TIME Also see... womenomics claire shipman & katty kay “Womenomics describes the workplace trend that finally makes it possible for women to be successful and sane at the same time. And happily, it’s a recessionfriendly formula.” Tina Brown

internationalbusiness

BUSINESS BVI 2010

GIS

INTERNATIONAL BUSINESS

Premier Ralph T. O’Neal signing TIEA with New Zealand

Shifting Goal Posts The BVI: 25 years as a financial services centre mason marcus

it a baseball out of the park, and you know it’s a homerun. Knock a rugby ball through the posts and you know you’ve scored a conversion. But for the British Virgin Island’s Financial Services Commission, hard and fast rules for coaching the territory through the international regulatory playbook haven’t always applied. The Organisation for Economic Co-Operation and Development and other multinational organisations have a history of moving the goalposts. For years, international organisations like the OECD have attacked IFC’s with accusations of tax evasion and secrecy, but efforts internationally to clamp down on tax avoidance picked up steam since the worldwide economic recession caused governments to tighten their belts and seek out new revenue streams late last year. So far, 2009 has been the year of the Tax Information Exchange Agreement. Offshore finance centres from the Cayman Islands to the Channel Islands have been inking agreements to remove themselves from the stigma of falling on the OECD’s “gray” or “black list” of non-compliant jurisdictions and the stalwarts of European secrecy, Switzerland and Lichtenstein, have been coaxed or coerced into deals of their own. 18

BUSINESS BVI 2010

By mid-September, the BVI had concluded 13 TIEAs internationally and was in the process of finalising agreements with Ireland, Germany and Mexico, placing the territory firmly with the requisite number to be shifted from the OECD’s grey to its white list. For some, the OECD has lent its weight to many positive reforms for the offshore world. “It gave us an idea of what needed to be done to improve respectability and move into the fold of nations,” said Appleby managing partner Michael Burns, adding, “The offshore world is a harder world of business than the onshore world. Transparency is the order of the day, and any jurisdiction that falls behind probably deserves to.” Premier Ralph T. O’Neal called the agreements integral to the survival of the territory’s financial centre. “The highly competitive nature of the environment in which we operate coupled with the downturn being experienced in the global economy, makes it even more imperative that we do all in our power to maintain and further improve our standing in the international arena,” he said. But what further regulation can the territory expect? At least one observer believes the territory should not stop signing tax agreements.

“I think the BVI cannot be satisfied with 12 TIEAs,” said Lorna Smith, in a recent interview. Ms. Smith, who served as past-director of the International Finance Centre and the now-defunct International Affairs Secretariat, said the territory should preempt criticism by signing as many tax agreements as possible. “I think that our aim should be to sign with all [the OECD member and non member] countries, so there will be no excuse to say that we are not compliant. Then, if the developed countries are going to be looking for a goalpost, they will have to move beyond the goalpost of the international standard, or the gold standard that was set by the OECD and nonOECD countries,” she said. For Ms. Smith and others—almost every time the US or European economy takes a beating, the OECD or G20 comes knocking. “I think we are going to see this [pressure] for as long as the global economic instability continues,” she said. “I think that the G20 countries were delighted to have found a whipping boy, or an excuse, or a fall guy, and this was the international finance centres.” As the worldwide community levies attacks against the IFCs, lawyers and legislators from around the globe have taken to the airwaves and Internet to defend their cases. Last September, Maples and Calder Senior Partner Charles Jennings posted a response to a critical article in the Guardian Newspaper, questioning the reporter’s carping portrayal of the Cayman Island’s financial services sector. “Many banks here are branches of banks regulated in onshore jurisdictions under Basel II principles. Many Cayman hedge and private equity fund managers are regulated by the UK Financial Services Authority and many funds are listed on recognized stock exchanges. Multinational companies routinely disclose their overseas subsidiaries in their public annual reports. The Cayman Islands Monetary Authority, which regulates financial services businesses, often co-operates with overseas regulators,” Mr. Jennings wrote. The BVI frequently mounts a similar defence: applauding the territory’s strong regulatory arm and robust legislative framework. But Ms. Smith said she believes finance centres, like the BVI, need to actively market to the international community. “We need to do some more research and we need to present a case for justifying the need for IFC’s…we need to say we are not interested in doing dirty business, we are not interested in tax evasion, we are here for a purpose as offshore finance centres and we do contribute in a positive way,” said Ms. Smith. Speaking from his Road Town law offices, former BVI Attorney General Lewis Hunte agreed too little is known internationally about the territory’s

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BUSINESS BVI 2010

INTERNATIONAL BUSINESS

financial services. “I feel that the OECD countries do not know about what goes on down here,” he said. “That they believe we have huge bank accounts in these offshore countries, that really compromise their tax dollars, and that is absolutely not so. So they will continue to move the goalposts until they find, or they believe they find out what the situation is. Mr. Hunte, who shepherded the first business company act through the BVI government in 1984, said increased regulatory pressure from abroad would continue. “Since they find that we achieve the target so easily, that is an encouragement for the [OECD] to set bigger targets, and they will continue to do it, because they feel there will come time when we will reach a breaking point. I believe they are wrong again in that regard.” For Peter Goddard, of McGuireWoods London Llc, who began working in the Cayman Islands in 1994, tax evasion will no longer be a valid criticism going forward as each jurisdiction builds a “sophisticated regulatory, anti-money laundering and anti-terrorist financing infrastructure,” The only possible objection to the top tier of IFC’s, says Mr. Goddard, is the fact that they are zero-tax centres. “Some major onshore jurisdictions have deliberately offered zero-tax options in the hope of attracting similar business; and still others thrive on offering very low-tax solutions to international businesses… So, if that is a valid criticism of IFC’s, it is one that must also be levelled at some OECD and EU member states as well,” he wrote recently. For Mr. Goddard, tax transparency should yield its own dividends to IFC’s. “There will always be a need for tax efficient, tax compliant structuring for private clients in centres of excellence, so that line of business should continue. Clients will be able to maintain confidentiality of their affairs, provided they are not breaking the law,” he said. For the past 25-years, the BVI’s financial services industry has shown ingenuity in the face of an uncertain future. When the UK and US unilaterally cancelled their double-taxation treaties with the territory in the late 70s and early 80s, the territory crafted international business company legislation. By 1995, the territory could boast 47.7 percent of all global offshore company formation. But greater international success meant greater international scrutiny. In 1998, the OECD published its report on harmful tax practices, naming and shaming the VI and 34 other countries as tax havens whose offshore financial activities were “harmful to the developed world,” including the BVI. For the last decade, the territory has worked to remain compliant with various initiatives emanating from international organisations including the OECD, the Financial Action Task Force (FAFT) 20

BUSINESS BVI 2010

and the European Union’s Savings Directive, which collectively have pushed for greater transparency and automatic exchange of information, amoung other concerns.

“I think that our aim should be to sign with all countries, so there will be no excuse to say that we are not compliant.” For some, the EU Savings Taxation Directive may be the focus of a new regulatory thrust. Earlier this year, FSC CEO Robert Mathavious warned industry members that the EU was not satisfied with their tax take from the directive, and was revisiting the idea of expanding the legislation to include corporate vehicles and trusts. “It may be prudent and timely for the BVI to consider switching voluntarily from the transitional withholding tax option to the automatic exchange of information option,” he said. Other jurisdictions have also taken notice. Martin De Forest-Brown, director of international finance for the Chief Minister’s Department in Jersey, said the Channel Island publicly stated its support for automatic exchange of information, as a “matter of principle,” but wants to see it adopted as an international standard. “This would be a fundamental change for jurisdictions such as Switzerland as the requirement would be in conflict with their national banking secrecy laws. On this matter the European Union already leads the way under the EU Taxation of Savings Directive. As a result of the G20 initiative it is expected that the requirements for the EU Savings Directive to move wholesale to automatic exchange of information will be met by January 2012,” he said. Richard Peters, managing partner of Harney‘s, in the BVI, said the EU may try to “plug up some of the loopholes,” concerning withholding tax, though he argued regulators would likely not touch dividends. The implementation of the Savings Taxation Directive had one goal, to allow EU Member States to tax the foreign interest income of their resident individuals. But it remains unclear whether tweaking the regulations will fill Europe’s tax gap. According to a recent working paper published by the European Commission’s Taxation and Customs Unit, tasked with examining tax co-ordination, the implementation of the directive has not lead to major shifts in international savings. “A possible reason for this surprising result is that the existence of loopholes makes it easy for investors to circumvent taxation on foreign-source interest. Furthermore, the countries where most of the international deposits are held (Switzerland

and Luxemburg) did not exchange information, but levied a withholding tax with a relatively low rate of 15 percent in the period surveyed by this paper,” the study reported. With increased transparency and automatic exchange of information on the horizon, some in the industry say key services will differentiate the IFCs that survive through the next few years—and those that fall by the wayside. For Andrew Burns, the new director of the H. Lavity Stoutt Community College’s Financial Services Institute, IFC’s that once gained competitive advantage from tax avoidance vehicles will now take the lead by offering “intellectual capital.” According to Mr. Burns, few IFCs around the world have invested heavily in what he calls the “bricks and mortar” of financial work, qualifying professionals with international accreditation from Institute of Chartered Secretaries and Administrators or the Society of Estate and Trust Practitioners. “The jurisdiction that enhances its own intellectual capital will certainly have the capability to find new uses for their current offshore products. In developing and differentiating its core capabilities those offshore jurisdictions will create an ability to take advantage of emerging markets,” he said. Mr. Peters, Harneys managing partner agreed. “I think we have to upgrade the human resources, including resident directors in cases and compliance officers,” he said. “The roles of fiduciary officers are going to be increasingly in demand.” Ms. Smith, the former director of the IFC, also said she would like to see more BVIslanders become accredited in their financial professions. “I would like to see more [BVIslanders] doing the chartered secretary qualifications, the ICSA qualification, because as a chartered secretary, for instance, you can command not only a large salary but you really would be involved in the industry and be part of the industry in a meaningful way, rather than just being a secretary,” she said. To keep pace with other IFCs, the government will have to pay internal reform more than just lip service. A recent proposed new labour law that would have capped work permit terms sent shivers through the financial community, which depends on its ability to attract highly qualified expatriates to the territory. To Ms. Smith, preparing for the future will require long-term planning and strategic thinking. “I think government has to be proactive, but the government must first know what they want to do, where they want to go, they must know what benefits they will get from it. If it is beneficial for the nation, plan it, get your nationals involved, get your nationals trained, so even if they aren’t able to get at the top level in the beginning they will get involved, she said.

EastMeetsWestIndian a young bvislander interns in the far east sarah harrigan

23 hour travel day, with 17 hours of flying seems like a daunting task on paper, but is just a small part of the big picture to a wide-eyed, experience driven, thrill seeking, open-minded intern. Hong Kong-SAR, known as both the financial center and the New York City of the East, would become my home away from everything I have grown to know. Especially, family, friends, and western customs for eight weeks. I was far away, alone, and excited about the new customs, people, traditions, attractions, and food that I would come across in a city that would become my second home… Traveling to China, a personal goal of the past 8 years; was an opportunity to finally become a true citizen of the world, understanding why my roommates from boarding school did the things they did, ate the things they ate, and spoke the language that they did. It was the best way to acquire realistic knowledge of what international business and relations were and how they worked; it was my opportunity to learn first hand what the business analysts of the world meant when mentioning China as being the “Next Big Thing.” Not only was this to be an experience with business related growth, it was me becoming cultured and open to new things - a trait I have always valued in myself. Upon arrival, I could immediately see what makes Hong Kong a leading global centre for business; not only was everything from the speed and efficiency of public

transportation, customer service, and immigration lines remarkable, but the sophistication and attention to detail were above and beyond anything I had experienced in my 20 years. I could see upon arrival that efficiency and service were a large part of business-as-usual in the Chinese Culture. The language barrier that I expected was non-existent with the majority of Chinese in service industries and 31% of the population being well versed, or almost fluent in the English language and eager to speak with me. It wasn’t long into my first week of interning, before I realized the importance of international training and its long term effects on my future business career. As an intern, incomparable to a professional, I came into contact with many well-read, well-traveled, and hardworking leaders in their fields and being able to hold a five minute conversation on the current happenings of the business world was extremely important. Surprising, even to me, was learning of the close business ties between the British Virgin Islands and Hong Kong. Both are small in size but are large participants in the world’s financial services. The BVI - an offshore financial services centre where the financial services make up 50% of the country’s GDP and Hong Kong - the world’s 11th largest trading entity,

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i came into contact with many well-read, welltraveled, and hardworking leaders in their fields and being able to hold a five minute conversation on the current events of the business world was extremely important.

the similarities are many. Having worked in the BVI, the United States, and now Hong Kong, it was interesting to learn where business was done similarly and where it differed. The most apparent difference, the Chinese work ethic, was one that took me some time to get used to. The Chinese work ethic, which I was quick to learn, authentic to Hong Kongese, is one that Westerners would find startling. The day, beginning at 9 a.m., is filled with hurried and well thought out work and the office is often times filled with people late into the night. It is understood wholly that time is money and almost everyone is willing to work hard or put in overtime, despite their personal sacrifices to make sure the work gets done. Hard work and late evenings at the office are a sign of diligence and, more times than not, will result in a raise or advancement within the company for many. Despite the positives in job advancement, this work ethic seems to have its negative effects on the amount of time spent with family, friends, or on extracurricular activities; all of which are highly valued in western culture. Contrary to western cultures many prefer to spend their time in the office or at late night social scenes - like bars, where mingling with coworkers or expatriate business men and women from other companies is the greatest lure. The Asian society is largely business oriented, where self advancement and the growth and success of your company in the Global Market are the driving forces to everyday successes. With a huge international presence in Hong Kong that these partners had their own cultural or entertainment influences throughout the city. Hong Kong, previously a crown colony of the United Kingdom and now a recently returned sovereignty to the Peopleâ&#x20AC;&#x2122;s Republic of China in 1997, began as a trading port and those influences still exist today. The city is a cosmopolitan centre where East meets West in all areas

- from cinema and music to cuisine. After visiting some of the best Chinese museums, shopping districts, and some of the most beautiful vistas, I did some research and found some of the best restaurants and social scenes from Africa, the Americaâ&#x20AC;&#x2122;s, and the Caribbean. A hole-in-thewall African nightclub and restaurant introduced some of the most vibrant music and foods from West Africa. That discovery along with the best Ox-tail, Japanese, Filipino, Singaporean, Taiwanese, and American foods, Hong Kong cuisine was the best Iâ&#x20AC;&#x2122;ve ever had. Whether your visit is business or personal, the cuisine will be an adventure for your tastebuds. Globally known as an International Finance Centre, Hong Kong is a robust business environment, where company growth, global awareness and inter-company advancement is at the fore-front of everyday activities. Along with the competitive business environment and open market, Hong Kong also presents: a shopping treasure trove; a great culturally varied entertainment scene; and a lavish international cuisine repertoire for those who visit with non-business intentions. Regardless of the purpose of your trip, Hong Kong offers a competitive environment to satisfy all your needs, and exceeds your expectations. I came to Hong Kong expecting to be over-whelmed by a different language, culture and people, but left satisfied, educated, impressed and yearning for more. Despite the distance from my beautiful laid-back British Virgin Islands, this phenomenal city - with its one of a kind skyline and fast-paced business culture - has great potential to be my future home.

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There is no generic wealth planning structure available for HNWIs and their families. New wealth planning solutions will depend on each specific client situation and the ongoing familyâ&#x20AC;&#x2122;s objectives.

Managing Wealth

Managing Wealth with Control and Confidentiality sjoerd koster and johnathan bailey

Changes in the global economic and financial landscape Recent months have brought many changes in the global economic climate whereby stock markets around the world have fallen drastically, large financial institutions have collapsed, and governments have had to come up with rescue packages to support their financial systems. The downfall of the global economy has of course impacted upon the investment portfolios of High Net Worth Individuals (HNWI) and wealthy families. The economic downturn has also highlighted concerns of HNWIs and their advisers over control issues with regards to their investment portfolios, which are traditionally held through fiduciary structures. Every HNWI situation is unique and has different requirements, however in general the structures are in place to limit the risk and exposure from events such as divorce, insolvency or incapacity and the desire to create an effective wealth transfer mechanism for future generations. In addition to the changes in the financial landscape, wealth planners are also faced with changes in the regulatory environment requiring greater transparency, following various national and international initiatives and driven by international organisations such as the Organisation for Economic Co-operation and Development (OECD) and the Financial Action Task Force (FATF).

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Factors for successful wealth management Is it therefore possible to define the specific factors required for successful wealth structuring? There is no generic wealth planning structure available for HNWIs and their families. Therefore, new wealth planning solutions will depend on each specific client situation and the ongoing familyâ&#x20AC;&#x2122;s objectives of preserving their wealth. However it is even more apparent than before that in the changing international environment, there is a clear need for collaboration with a team of wealth planning professionals. Solutions have to be carefully structured and properly advised upon, with consideration to the domicile of the client, the location of the assets and other client-specific requirements. Trusts will typically have an investment manager, who must be given clear parameters to work within. The manager must consider the investment criteria and the risk level as well as capital and income requirements. For added control over the investments, some trusts may have investment committees to help monitor the investment of assets. Whatever structure is decided upon, increasingly HNWIs want to retain an element of control. HNWI involvement in managing their own wealth Professional Trustees want to minimise their exposure to risk in respect to the value of investments, while HNWIs often want to increase their control of the investments within the trust without jeopardising the trust structure. The British Virgin Islands (BVI) continues to be pro-active in addressing these needs and has introduced legislation enabling HNWIs to increase their control of investments and management of companies without eroding the integrity of the trust. Two possible solutions available in the BVI are discussed briefly below. One of the attractive wealth planning solutions available in the BVI, which allows clients direct control over the underlying investments, is VISTA (Virgin Islands Special Trusts Act, 2003). The principal asset of a VISTA Trust is a BVI Company which can hold the investment portfolio(s) of the HNWI as its asset. The legislation provides that, subject to certain events, the Trustee does not have to take any involvement in the running of the company and

consequently the investment of the fund. The HNWI can be a director of the company and take responsibility for the running of the investments and the appointment of the appropriate investment advisers. In addition to allowing the HNWI to control the investment, the VISTA Trust also allows the portfolio to remain in trust for future generations. The VISTA Trust can be primarily used as a holding vehicle for trading companies, as well as for holding investment portfolios through a BVI company, plus many other bespoke purposes. Another wealth planning solution allowing the HNWI to retain some control is the Private Trust Company (PTC). A PTC allows the family to create and own the trust company, which acts as a Trustee for their family trusts and assets, as opposed to having an institutional Trustee that offers its services to the general public. Many HNWIs are concerned about their privacy and the risk of disclosure of confidential information regarding their assets. By making use of a PTC they enjoy a greater degree of control over such information and are also able, as directors, to control the investment of funds. In addition, professional Trustees may be reluctant to take on ownership of assets where a substantial risk may be present, as their preference is normally for a diversified portfolio of low-risk investments. As with VISTA Trusts, PTCs can be used for many purposes other than to allow the HNWI to have an input into control of investments. In a world of increased transparency and with the recent changes in the economic environment, it is essential to have appropriate wealth management structures in place to manage the assets of wealthy families and HNWIs, limiting the risks and achieving the desired investment goals. There are still many opportunities for international wealth planning. It is however the duty of the professional wealth planners involved to guide and advise the clients, to create sustainable fiduciary structures which will be essential to the future of the international wealth planning industry. The BVI offers ways of doing this by involving the HNWI directly, without jeopardising the legitimacy of the structure, whilst protecting the reputation and limiting the risk of the Trustee. This article is general in scope and is not intended to be comprehensive. It is not a substitute for legal advice.

Johnathan Bailey and Sjoerd Koster of Equity Trust BUSINESS BVI 2010

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CUBA

IS THE REGION READY? kaletha henry

The American passport is considered by many to be one of the most coveted travel documents in the world. Itâ&#x20AC;&#x2122;s the golden ticket that allows hassle-free access into a myriad of ports worldwide without one having to be scrutinized, interrogated, or threatened. For the most part, Americans donâ&#x20AC;&#x2122;t even need Visas to travel to the destination of their choice. At the spur of the moment, U.S. passport holders can book a ticket, pack a bag, print a confirmation, and head straight to the airport. Possessing the little navy booklet with the gold emblazoned Great Seal of the United States is a natural inheritance for most, and yet a symbol of achievement for others. Through this 32-page booklet Americans are free to visit all seven continents and any Caribbean island of their choice; except for Cuba, the largest island in the Greater Antilles.

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ACCESS GRANTED International and American leaders are calling for the removal of the economic embargo that America placed on Cuba in 1960. In 1992 the Cuban Democracy Act was passed – described as a vehicle for moving Cuba towards democracy – that prohibits foreign-based subsidiaries of U.S. companies from trading with Cuba, travel to Cuba by U.S. citizens, and family remittances. In 2009 an estimate of 25,000 U.S. citizens and up to 50,000 plus visitors of Cuban descent reportedly traveled to Cuba. While Americans are known for taking unapproved trips to Cuba by way of Jamaica, Mexico and Canada, Americans traveling to Cuba are required to seek permission from the U.S. Government in the form of a license – which also permits them to spend money in the country – that is typically purpose based: academic travel, teaching abroad, journalists on assignment, humanitarians working on specific projects, athletes, and persons returning to visit relatives. Flights to Cuba from the U.S. are executed by charter planes because U.S. commercial flights are prohibited. However, once the U.S. Government inevitably removes the travel restrictions, a surge of visitors are expected to descend on Cuban soil, an island whose population the Central Intelligence Agency claims as over 11,450,000. While the forecasted explosion of visitors to Cuba has economists, diplomats, policy makers, and government leaders analyzing and strategizing for any repercussions that may occur, it has provided tourism officials and analysts both regionally and internationally with a unique set of perspectives.

big questions must be answered: When the flood of tourists come, where are they going to eat lunch and where are the land based travelers going to sleep if the majority of existing hotels are booked? “Cuba’s tourism today is primarily Canadian, Spanish, German, and Italian, and these people go to Cuba in the high season. If the U.S. market is available then you’ve got a capacity issue.” Regarding a downturn in tourism to the British Virgins Islands, Kavulich doesn’t see the same demographics of travelers to the BVI as he sees visiting Cuba. From his perspective, the top three countries more likely to feel the initial impact of American tourism to Cuba are the Bahamas, Jamaica and Mexico, specifically the city of Cancun.

Cuba

Honorable Chantal R. Figueroa, Deputy Commissioner of Tourism for the U.S. Virgin Islands, recognizes the intrigue U.S. travelers will have for Cuba. As a new destination it holds a lot of possibilities, yet the Deputy Commissioner and her marketing team have an advantage with the American traveler. “We’re focusing on developing the U.S. Virgin Islands experience. Only 27 percent of Americans have a passport. Cuba may not be an option immediately, but you would still need a passport and we’re going to continue to play up this selling point. “One of the other benefits that we have for U.S. tourists is that our language is the same, our political and legal systems are the same, our currency is the same. “Yes we’re all in the Caribbean, we all offer beautiful beaches, and we have nice weather but because of our three main islands, we have such distinct personalities,” she explained while highlighting the cultural experiences found on St. Croix, the ecotourism available on St. John, and the widespread shopping awaiting tourists on the streets of St. Thomas. Deputy Commissioner Figueroa’s position on whether or not the region has any reason to feel threatened by American travel to Cuba is one of optimism. “Well I think whenever someone else comes into the playing field, we can look at it as an opportunity.” As she and her marketing team make preparations for their own territory, she explained others [islands] should question what they can do to strengthen their product; how they can gain the loyalty of their travelers; and how they can improve their destination overall. “Repeat traveler business is paramount. What can you provide that will lure them back? Even if they stray, we need to keep in mind how to get them back or how not to let them go at all.” Jamaica has had a relationship with their Cuban neighbor for years; and according to Honorable Edmund Bartlett, Minister of Tourism for Jamaica, travel to Cuba by American tourists neither poses a threat to their country’s tourism product, nor hints to any debilitating numbers in visits to their island. Jamaica ranked within the top three Caribbean destinations in terms of visitor arrivals and up to September 2009 the country received 1,359,000; a 3.8 percent increase in arrivals from the year prior. “We do not perceive that Jamaica’s tourism product would be threatened if Americans were allowed to travel freely to Cuba. We would see it as friendly rivalry, which would push Jamaica to enhance our product to an even higher level. We consider Cuba as a fine destination with which Jamaica has had a long tradition of mutual friendship and respect. We share a great deal with Cuba. A lot of our nationals migrated to that country, and Cuba has trained many of our professionals. Jamaican owned hotels are operating very successfully in Cuba.” In terms of how the region could be affected economically, Minister Bartlett says there is value in competition and believes it would be good for the island. “Cuba’s presence in the market would, in fact, be beneficial to Jamaica,

[has] varied topography, lush mountains, one of the longest reefs for scuba diving in the world, and a very rich history.

American INSIGHT Mr. John Kavulich, former Head and current Senior Policy Advisor of the U.S. based U.S. Cuba Trade and Economic Council (USCTEC) is equipped with an arsenal of information regarding Cuba. Having worked on gathering information on the island for the past 20 years, Kavulich said the organization was also the first of its kind to conduct major tourism reports on the island’s airlines, food services, rental cars, and cruise ships. As a seasoned policy advisor, he foresees an initial wave of American tourists visiting Cuba as soon as they’re permitted to travel there freely. But, unless Cuba addresses its infrastructural problems he cautions many travelers will find themselves immensely disappointed, and the negative impact will send American tourists back to their favorite destinations. “It depends what Cubans decide to do and what kind of infrastructure they put in place. [It depends] on how their commercial, economic and political structures are fairing when they make these changes.” The outcome on American tourism to Cuba is largely dependent upon how the travel door opens, Kavulich says. For air travelers in search of high end hotels, it would take at least two to three years for the country to establish itself and erect true five-star properties that equal the level of accommodations to which many Americans are used to enjoying. Until that’s provided, he doesn’t foresee other islands having too much at stake. However, tourists arriving by sea, pose a different threat. “Cuba does have a possibility to impact Caribbean countries more immediately because the cruise ships do not require the same type of infrastructure as air travel. All Cuba needs is ground transportation which it has and which is easily increased.” In the longterm, he believes Cuba has the potential to be a substantial player within the cruise ship industry. Excellent food venues are reportedly absent as well. Aside from El Floridita and El Aljibe, an eatery famous for chicken dishes, Cuba lacks quality restaurants. “Most people enjoy the beaches, but believe the food offerings are from horrible to acceptable, and the overall infrastructure from horrible to acceptable.” Although eating facilities can be created relatively quickly Kavulich notes two 28

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HOW WILL THE REGION BE AFFECTED?

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as it would present an opportunity to offer two aspects of the Caribbean – the Spanish and the English speaking traditions. In fact, we are about to sign a Memorandum of Understanding to engage in marketing of our destinations jointly, especially to long haul visitors.”

MYSTERY, MAGNETISM, HISTORY, AND CULTURE Cuba is envisioned by numbers of Americans as an island transfixed in time: for having 1950 classic American automobiles like Chevrolets and Buicks; and for the renowned tobacco notes found in their first-class cigars. For legendary celebrities and the well-heeled, Cuba evokes memories of an era synonymous with partying, gambling, drinking, and vacationing in style. It was the Caribbean’s Monaco. Today, Americans are yearning to discover what has been kept 30

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from them for so long. They want to see the place “frozen in time” before it becomes saturated with American consumerism and materialism. Each Caribbean island has at least one component with which its neighbors cannot compete. Kavulich describes Cuba as having varied topography, lush mountains, one of the longest reefs for scuba diving in the world, and a very rich history. Locations such as Old Havana, Ernest Hemingway’s house and the Bay of Pigs site are just a few of the notable interests. In the meantime, Americans will have to quell their anxiety for a glimpse into Havana’s crumbling façades and rich history while they continue to wait for the removal of travel restrictions to a country where visitors from the rest of the world are already being received, and the region will have to make plans for what is yet to come.

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Marketing Our

Healthcare

Services Meeting the challenges of an evolving economy benito wheatley

In the midst of a sluggish global economic recovery, opportunities are emerging in the United States (US) healthcare market from which the British Virgin Islands (BVI) can benefit tremendously. At present the US is experiencing a healthcare crisis of epic proportions, fueled by burgeoning healthcare costs. The escalating costs are being driven by high insurance premiums, medical malpractice insurance, defensive medicine, high operating costs, and inflation, all of which have left millions of Americans with limited or no access to the US healthcare system. This untenable situation is forcing patients, healthcare professionals (doctors, nurses etc.), and healthcare institutions (clinics, hospitals etc.) to seek cheaper alternatives. In effect, the US healthcare crisis has opened up the healthcare market for those providers who can deliver quality healthcare and services at a lower cost. Enter BVI

Incidentally, the US healthcare crisis is occurring at a time when the BVI is aggressively upgrading its healthcare infrastructure with the construction of a new state of the art hospital. The new hospitalâ&#x20AC;&#x2122;s design and specifications give it vast infrastructural capacity, which presents the government with the enormous challenge of putting the facility to optimal use. A public-private partnership can harness its full operating potential and position the territory to capitalize on high US demand for medical care. Likewise, the US health care crisis is taking place at a time when excess human resource capacity may be building-up in the BVIâ&#x20AC;&#x2122;s financial services sector as demand for financial services remains below pre-financial crisis levels. The surplus of accounting, finance, and administrative talent in the labor pool positions the BVI to supply back-office services to the US healthcare services industry.

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Public/Private Partnership

A public-private partnership has the potential to maximize use of the new hospital’s infrastructure and to greatly improve the quality of care available in the territory. Moreover, it would help to offset the administrative and financial cost of operating the new facility. In a partnership of this type, the government would invite a recognized US healthcare provider to open a branch of its medical institution in the new hospital, where it would provide medical care to US patients and other individuals seeking medical attention. A select number of floors would be reserved for exclusive use and operation by the branch, which would in turn pay rental fees under a negotiated lease agreement. The branch would operate independent of government, but share information and expertise with local hospital administrators and medical staff. An arrangement of this type would benefit the territory in a number of ways. First, a public-private partnership would help alleviate the administrative and financial burden on the government to fund, operate, and staff the facility entirely. Allowing a privately operated medical institution to ramp up its own operations would alleviate some of this burden. Second, a public-private partnership would ensure that desperately needed advanced medical care is available in the territory. BVI residents would largely support the option to receive specialized medical care on-island, as opposed to traveling abroad to seek medical attention in Puerto Rico, St. Thomas, the US, or Europe. The argument is even more compelling in the case of medical emergencies. Third, the demand for services of different sorts and consumption generated by the operational needs of the private medical institution and the personal needs of its staff would stimulate the local housing, transportation, and retail markets and go a long way toward raising incomes and creating employment. Fourth and last, the draw of a ‘brand’ medical institution and medical care in the sunshine could open up the market for medical tourism in the BVI. The addition of a ‘medical’ attraction to the territory would be a great compliment to the BVI’s tourism product.

benefit from the sharing of medical expertise, knowledge, and experience in hospital administration and management.

Grasping the opportunities

The economic opportunities in healthcare lie in capitalizing on demand in the US market for a reduction in the cost of quality healthcare and services. This can be achieved through a public-private partnership that puts the new hospital’s infrastructure to optimal use for both the US and local markets, and in the process reduces the administrative and financial burden on the government to deliver healthcare to the public. In addition, providing healthcare back-office services to the US market would boost the private sector and positively impact employment and income. If these efforts are successfully undertaken, the BVI will be well on its way to developing a bon a fide healthcare industry and healthcare back-office services sector that will offer great social and economic benefits for the society as a whole.

FEATURES AND DESIGN SPECIFICATIONS FOR NEW HOSPITAL Levels

Total Building Area

Approximately 151,000 sq. ft (44,000 sq. ft is shell space for future expansion of the Hospital facility)

Beds

128

Operating Theatres

Procedure Rooms

LDRPs

Physical Structure

Steel Frame with cast-in-place concrete floors and clad with decorative synthetic stone and masonry units, glazing and a steel roof.

Health care back-office services

A significant portion of US healthcare providers’ costs are administrative and non-medical in nature, which are costly to perform in-house. Offshoring functions such as billing and collections, claims processing, accounting, payroll, and other activities would greatly reduce operating expenses and increase the provider’s ability to deliver frontline care. The BVI is well positioned to provide US healthcare providers with healthcare back-office services with its well established financial services infrastructure; its workforce’s ability to perform the required support functions; and its potentially lower labor costs.

UNITS BY FLOOR Ground Floor

Out-Patient Reception, OutPatient Waiting, A & E, Radiology, Laboratory, Hema Dialysis, Mortuary, Shell Space, Bio-Medical

Level One

Administration, Shell Space, In-Patient Reception, Reception/Security, Chapel, Registration, Pharmacy, Catering & Dining, Receiving & Stores

Level Two

Physical Therapy, Medical Records, CSSD, Shell Space, Plant

Level Three

Theatres, PACU, Recovery, Endoscopy, Critical Care Unit, Neonatal Unit, Labor Delivery, Obstetrics, Medical/Surgical In-Patient

Level Four

Psychiatric Ward, Public Waiting, Medical/ Surgical Ward, Stores, Shell Space

Level Five

Pediatric Ward, Public Waiting, Medical/ Surgical Ward, Stores, Shell Space

Level Six

Shell Space

Offer incentives and they will come

In order to attract a medical institution of the caliber of the Cleveland Clinic in Cleveland, Ohio or Johns Hopkins Hospital in Baltimore, Maryland, the government would have to offer the healthcare provider a package of incentives which would help to reduce its costs and make it advantageous to operate in the territory. These incentives could include the introduction of legislation that creates a friendly legal environment for medical professionals to practice. Such legislation could contain provisions which limit legal liability in medical malpractice suits and caps fines. A legal environment of this type would be attractive to medical professionals in the US who are forced to increase medical fees to cover the cost of medical malpractice insurance and defensive medicine. An additional piece of legislation could be drafted to create a non-prohibitive regulatory environment in which to provide unconventional medical treatments and conduct non-traditional medical procedures that could be potentially lifesaving. Other measures such as limited tax breaks and exemptions on duty on medical equipment, technology, and supplies, can be thrown in to sweeten the deal. In return, the people of the territory would receive access to advanced medical care on-island and the BVI’s own hospital will

Source: Ministry of Health & Welfare

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The following article is taken from the September 2009 issue of KPMG’s Global publication Frontiers in Finance. Frontiers in Finance is a quarterly magazine focusing on the strategic challenges facing financial services organizations and includes some insightful commentary from KPMG partners around the world. While the magazine typically covers a range of topics from both onshore and offshore jurisdictions, this article is particularly relevant to the British Virgin Islands.

O Fair Play, Fair Competition The reality of offshore financial centers 34

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ffshore financial centers are often misunderstood. Even the term ‘offshore’ can be misleading and ambiguous. Perhaps more accurately, many offshore financial centers are low-cost, tax-neutral jurisdictions which specialize in providing legal and institutional infrastructure for companies, primarily in financial services, to efficiently and cost-effectively structure their affairs. Why then the concern? Many concerns may reflect an out-of-date perception of offshore centers. In the past, admittedly, a number of common characteristics of offshore centers made them susceptible to abuses such as money laundering and tax evasion. Light touch regulation, lack of transparency over beneficial ownership of assets and low or non-existent domestic tax rates combined to create the potential for abuse.

Being a global financial center in the modern environment, however, requires critical mass and a scale of infrastructure that, for both fiscal and reputational reasons, precludes taking on questionable business. Over the last 20 years, initiatives such as those mounted by the OECD’s Financial Action Task Force (FATF) have ensured the implementation of internationally accepted standards to combat abuse of the financial system. In a series of reports since 2000, the FATF has named some two dozen countries as uncooperative in the fight against money laundering – including many ‘onshore’ jurisdictions such as Egypt and Hungary. However, progress in securing commitments to implement the OECD’s standards of transparency and exchange of information has been substantial. Standards of regulation and transparency in offshore centers often stand comparison with many of the best of traditional centers. In the UK, for example, the split capital investment trust scandal of the late 1990s was first exposed by the Guernsey Financial Services Commission. As of May 2009, no jurisdiction – onshore or offshore – is currently listed as an uncooperative tax haven, although the OECD still lists a number of countries which have yet to comply with international tax standards in full. Many offshore centers do indeed offer advantageous tax treatments to companies, such as hedge funds and insurers, which invest outside their jurisdictions. But this is true of many other countries as well; aspects of the tax systems of countries such as the US and UK are also structured to give favorable treatment to certain classes of companies or individuals. Labeling individual countries as tax havens can be unhelpful: many national jurisdictions frame their domestic tax policies in part to compete with international rivals. The increasing sophistication of international tax regimes means that location in an offshore center rarely offers absolute tax advantages. Instead, many offshore centers are generally tax neutral, imposing no additional tax burdens on companies, whose profits are taxed in the normal way when they are repatriated. Offshore financial centers meet a clear demand from institutions and professional investors who are looking for innovative and alternative investments offering a different risk profile with the prospects of enhanced returns. At a time of depressed returns in conventional markets and asset classes, such investments can play a valuable role in creating a balanced portfolio with the potential for long-term growth, safeguarding the savings and pensions of millions of consumers around the world. Innovation in offshore centers is bringing new asset classes into structured markets and products of which sophisticated investors can take advantage. Many collective investment vehicles, such as mutual funds and unit trusts, find it advantageous to be headquartered offshore to facilitate international distribution. Offshore centers can offer protection against political risk in onshore domiciles and prevent confiscation of assets and preserve legitimate wealth. Some offshore jurisdictions are also often chosen because they have stricter and more sophisticated controls and regulations than the territories in which the companies operate, and by cross-border joint venture operations seeking a neutral jurisdiction. It is interesting that the US government often stipulates that overseas recipients of loans set up offshore vehicles if domestic law is inadequate. Against this background, the apparently growing criticism of offshore centers in recent months is unfortunate. Much of it has been stimulated by the G20 London Summit’s search to explain the current financial crisis, and frame new

regulation to try to prevent a recurrence. Some G20 members appear to have taken the opportunity to push for greater regulation of hedge funds and, by extension, to encourage a further crackdown on the offshore centers where many of them are headquartered. Whether many of these moves have potentially protectionist motivations which seek to insulate their proponents from fair competition is another debate.

Offshore jurisdictions are seeking to compete in their own right as global financial centers on an equivalent basis. Instead of seeking to limit the competitiveness of offshore financial centers, the international community should perhaps accept the necessity of competing with them on level terms. Many offshore centers offer a distinctive and complementary value proposition, with benefits for professional and institutional investors which eventually feed through to retail customers. They are increasingly integrated into the global financial community, to the point where it makes little sense to regard them as a separate category. In their own right, many offshore centers play a major role in a number of global financial sectors: to give some examples, the reinsurance industry in Bermuda and the hedge fund industry in the Cayman Islands are so well-developed that they are some of the most successful in the world. We welcome a review of whether the current regulatory framework for offshore centers is suitable in the post-crisis environment. However, mis-informed or disproportionate regulation may be to the disadvantage of the global economy.

As one of the world’s leading offshore jurisdictions, the British Virgin Islands plays a significant role in the efficient and cost-effective structuring of global businesses. Upon signing its 12th tax information exchange agreement on 13 August 2009 with New Zealand, the British Virgin Islands was moved by the OECD to its ‘White list’. This achievement means that the British Virgin Islands is now recognized as a jurisdiction that has substantially implemented the internationally agreed tax standard. KPMG in the British Virgin Islands will continue to monitor and interpret developments in the local and international regulatory frameworks in the post-crisis environment. To access or download a copy of KPMG’s quarterly Frontiers in Finance magazine, please login to www.frontiersinfinance. com or for further information on how KPMG can help you please contact Tanis McDonald on +1 284 494 1134.

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A New

Voice

Jose Luis Fernandez wants to make orange and cyan the most talked about colours in the BVI kaletha henry

BUSINESS BVI 2010

These colors are symbolic of CCT Global

Communications (CCT) logo – a BVI telecommunications company established in 1986 as CCT Boatphone – that are seen throughout their branding, strewn across buildings and plastered on paraphernalia at sponsored events. Since joining the company in 2008, Fernandez, the General Manager of CCT and a seasoned telecommunications executive in his homeland of Spain and the United States, has made it a priority to improve the company’s image and service capabilities. Prior to moving to the Caribbean, he was accustomed to overseeing telecommunications divisions within companies. That level of exposure has made his arrival at CCT a solid one.

Steps towards Progress

Anyone residing in the territory prior to the arrival of CCT’s competitors, Digicel and LIME, will likely recall the morose days encountered by the telecommunications provider. For several years, disgruntled customers were known for expressing their dissatisfaction about CCT in regards to their products, services, dropped calls, poor coverage, and lack of options to join other carriers. However, in the past year and a half, some of the noise has settled and CCT has been able to slowly return to the ring. Fernandez is now at the helm and his expertise has allowed him to make decisions within a company some associated with low achievements. In a fastidious culture that was unfamiliar to him, he’s been able to engage an overhaul in the company’s marketing, product placement, service, and reliability; including the 70 percent addition of new sites on Tortola and a viable expansion on the Anegada site. By examining the past errors, Fernandez and his staff of 50 knew it wouldn’t be easy to project a new CCT, but it was also a task that inevitably needed to be done. A lot of revamping would need to occur in order to convey a supreme product in the minds of the public, and in the minds of potential and existing customers. In addition to improving their image and product base, CCT has also had to propel itself into the color spectrum of recognition to either beat or match the color presence of Digicel’s “red” and LIME’s “green.” Fernandez grabbed the reins to create a range of products he describes as unmatchable. Within the past year, the company introduced a Freedom Plan, noted by the General Manager as one of the most competitive voice plans on the market that includes unlimited worldwide text messaging, unlimited international long distance, and unlimited cross network calling. “Through the Freedom Plan, we have changed the rules of the telecommunications market.” CCT has made so many changes that Fernandez expects the competitors to follow suit. “We have improved our network big time and we have launched a number of services. By far we are the biggest innovator in terms of products and services.” Although Fernandez will not disclose the company’s number of subscribers, he will acknowledge that CCT has grown significantly over the past year and a half. In relation to how CCT ranks amongst their competitors, Fernandez is eager to shed light on that position. “Based on the effort and all the things that we have implemented last year, our understanding is that CCT is leading in the market at this moment in the BVI.”

The Biggest Changes

Fernandez says the biggest benefits in selecting CCT over any other telecommunications brand boils down to quality service and products, island-wide coverage, convenience in terms of territory coverage, cheapest rates in the BVI and the biggest range of products and services in terms of voice and data. Customers and potential subscribers may also find pricing to be a plus. CCT offers a simple transparent price structure that remains the same cost at all times of the day. Unlike other carriers, the user doesn’t have to worry about being charged a higher rate for daytime against evening and weekend usage. “The customer always knows what they’re paying,” Fernandez highlights. CCT’s roaming rates have also become competitive. With more than 200 roaming agreements in their pocket, CCT customers can use their phone while in the U.S., Europe, Africa, Latin America, and the U.K. for 49 cents per minute. “We offer customers a piece of mind that they will be covered. When you travel to the U.S. you pay 49 cents a minute to call back home, to make calls in the U.S. or to receive a call from somebody that called you. This is by far the lowest roaming rate offered by any service provider in the BVI,” Fernandez outlined. The company also hosts a range of data services that allow their customers to have supreme Internet mobility, Wi-Fi capabilities, and local hosting.

by examining the breakdown of past errors, fernandez and his staff knew it wouldn’t be easy to project a new cct Vision and Future Steps

In the rapid age of changing technology and product advancements, Fernandez wants to take CCT into the direction of innovation. By understanding the inevitable changes that usually come with growth, he feels CCT is well positioned to present current and potential customers with a wide range of telecommunications services, faster internet connections and by continuing to provide top notch products. Although Fernandez was not in the BVI from CCT’s inception, he has come to learn the company’s past reputation as being a poor network and lacking response to customer’s needs. “One of the main challenges at this moment… we have been working very hard to improve the network and taking into account where they’re [the customer] coming from. The most important thing is to be able to change the perception of the potential customer. We need to communicate this fact and make sure that both the potential customer and the existing customer understands this.” In advertising, a company’s image and message rests on the success of how the image is created and in what manner the message is distributed. A word, headline, or graphic can boost a company into the stratosphere of success or it can push a company to its downfall. In Fernandez’s view, the answer to removing CCT’s past image lays in the proper handling of all present and future expectations. In so doing, perception will be the biggest key. It will take time for everyone to realize that CCT is better. “If you travel around the BVI, you will notice a huge improvement in areas like Sea Cows Bay, Pockwood Pond, Carrot Bay, the airport, and Road Town. You will see and hear the huge improvement. Our network is similar to or better than any other network in the territory.” When in doubt, just look for orange and cyan. BUSINESS BVI 2010

INTERNATIONAL BUSINESS

BUSINESS BVI 2010

bvibusiness&lifestyles

For those financial services firms that have so far survived the crisis, the following article from KPMGâ&#x20AC;&#x2122;s September 2009 Frontiers in Finance magazine includes an important message. Attitudes and perspectives of the stakeholders of financial services firms have changed and regulation is likely to be tighter. Firms therefore need to re-evaluate and focus on core strategic challenges, including the building of a winning brand. And with any challenge, there are always opportunities, which some firms may consider taking advantage of during this time of change. Execution of branding/ re-branding may include assimulation of the brand into the corporate culture or consideration of regulatory consequences. However, failure by financial services firms to successfully execute branding/rebranding can have dire consequences and the pitfalls need to be identified and managed.

With the financial services landscape continuing to change dramatically, how a financial institution wants to be perceived should be a key strategic consideration. A quick glance at the various media channels offers ample evidence of a change in trust over the last six months and the brand response of companies to it. While for many in the current environment, actively managing the current brand is the priority; for some, repositioning, or rebranding can be an effective way of rebuilding consumer confidence – which is becoming a regulatory issue both in the UK and the US1 – but only if it is well executed and embedded in the corporate strategy. Brand management is often misunderstood. It is not just about marketing and it is not just a functional marketing issue. It is more frequently than not an on-going organization-wide process that can have a far-reaching impact on the business. In addition, there are some common triggers for a change in brand strategy including; acquisitions, disposals, restructuring, new product launches, market repositioning or major external events that effect the business. All too often companies fail to recognize and leverage the opportunity for change or enhancement that these triggers present. A good brand reflects not just what a company is known for, but a company’s values, what it stands for, and the end-to-end experience for all those involved in the value chain. Every stakeholder touch point whether they are a client interaction, a regulator’s review or an analyst’s buy or sell rating is a brand opportunity and threat. A successful brand can unify how a company is perceived. These considerations are true for both an individual product, service brand and the institution as a whole. The brand identity ties the association between the visual identity e.g. a logo, with the perceptual identity i.e. what your experience with the organization will be. An effective brand identity can both reflect and strengthen overall corporate strategy. However, if there is any disconnect between what the brand should stand for and customers’ experience of it, the brand equity will erode and the stakeholder base will be potentially more fragile as a result. To truly build a brand and convert trust into actions, promises should be translated and embedded into the relevant behaviors and the corporate culture. Capturing the hearts and minds of employees and customers is a challenge that is often underestimated. In our member firms’ experience the brand values should be integrated with organizational measures, personal measures and incentives to instill the desired attitudes, behavior and ways of working across the business. Simply put, some of the best brands are firmly anchored in the overall DNA of an organization and strongly support overall corporate strategy. The challenges of managing effective financial services brands, like any organization, are complex and can be made more so given the regulated nature of the industry. This may be further complicated by the multiple brands that many financial institutions carry. This is particularly the case when adding or rationalizing brands in an organizations’ portfolio, if the brands cross multiple functions and geographies. Realizing rebrand objectives requires a thorough understanding of the brand creation process within a financial services environment, detailed execution planning and professional project management. With a lot at stake, a successful branding/rebranding initiative can add significantly to the bottom line and even more to enterprise value. Equally, significant value can be destroyed if things go wrong.

a successful brand can unify how a company is perceived. The potential for value destruction arises from the fact that rebrand execution is multi-faceted and often one of the most highly visible tests of a company’s ability to deliver on its refreshed promise and image. There can be many moving parts which should be synchronized across multiple jurisdictions. For example: company and product registrations, tickers, system interfaces, email addresses, company stationery, business cards, thirdparty contracts, marketing collateral, client reports and websites are just a handful of those aspects effected. It is important to note that these changes cut across the power lines of an organization and those involved in planning and executing them should manage the political alignment challenge, as well as the business alignment and program challenges. While the visual designs can generate most interest, one of the real challenges lies in implementation. Brand execution has significant legal and operational interdependencies, and errors in planning for or implementing changes in this domain alone, can lead to failed trades or settlements and even prohibited product distribution and marketing. The last of which may have regulatory and legal consequences. In our member firms’ experience the process tends to be more complex and risky than many companies anticipate. Poor rebrand execution can result in lost revenues, negative reputational impact, operational disruption and failure to fulfill regulatory or third-party obligations. The successful launch of a new or updated financial services brand is a powerful business driver. It signals the quality which clients and business partners can expect. Their meaning, relevance and appeal should be clear to current and target customers. Aligning cultural change to help ensure the brand is delivered in employee and customer interactions can help to set a brand apart from the competition. Getting it right creates the opportunity to re-engage clients, staff and business partners and create positive changes in perception, momentum and value. Unfortunately financial services branding failures are highly visible, so additional risk management should form a key part of brand strategy, particularly in the current climate. Many customers are seeking a new relationship with financial services companies and they want to feel confidence and trust in who they deal with. More importantly, given what has happened, they are expecting a different kind of behavior. This is strongly supported by regulators as evidenced by the UK’s Treating Customers Fairly initiative, and the US’ Customer and Investor Protection Scheme. For trust to be rebuilt, the public perception of many financial institutions has to change. Many organizations should look at their brand positions and strategies. For some, new brands will be created to try to satisfy changing expectations. For organizations that seek to distance themselves from the past and reposition their brands in the minds of stakeholders, those with experience in planning and execution of such exercises will be much in demand.

The offshore jurisdiction of the British Virgin Islands is used by many international businesses in the achievement of their goals. For those international businesses already established with subsidiaries or branches in the British Virgin Islands, branding/re-branding considerations should be carefully synchronized globally between partners, service providers and regulators. Branding/re-branding considerations are not just important for current established businesses, but it is also important that the regulators, current service providers and other stakeholders in the British Virgin Islands continue to develop and improve the British Virgin Islands brand image so as to make it an attractive jurisdiction for continued future business. I personally take pride in the quality of services that KPMG provides in the British Virgin Islands and hope that our efforts make an impact on the perception of the British Virgin Islands as a high quality offshore jurisdiction for which international businesses would be eager to incorporate into their winning brand. To access or download a copy of KPMG’s quarterly Frontiers in Finance magazine, please login to www.frontiersinfinance. com or for further information on how KPMG can help you please contact Tanis McDonald on +1 284 494 1134.

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

it is time we look toward

Developing a

Consensus colin o’neal

The debate over development versus preservation, development versus conservation, development versus the old values, is as old as the concept of ‘development’ itself. Nostalgia for things past, the old ways, the old order, is a powerful conservative force. However, when pressed, few would really want to go back to the life and times of their parents or grandparents, or even their childhoods. Having said that, I love to wax nostalgic. I was born in the 60’s and came of age in the 70’s. I am old enough to know a British Virgin Islands vastly different from the one that we live in today. I am old enough to recall the days before direct dialing telephones – calling my mother at her office through the old Cable & Wireless telephone exchange and asking for “12A please”. I recall Road Town before Wickham’s Cay was reclaimed – old Main Street with two way traffic twisting along the water’s edge from Government House to the foot of Joe’s Hill. I remember the functioning Agricultural Station at Lower Estate. I remember dirt roads in the countryside and British Virgin Islanders still working the fields as subsistence farmers and when many did without the basic necessities even for that era, and when donkeys were transportation and not photography props. I am old enough to have been witness to the starting point of radical change. These were the 1960s, the start of modern development in the British Virgin Islands. The Early Days The birth of the modern British Virgin Islands was signaled by the start of the tourism industry as we know it today, which is often considered to have begun with the construction by Laurence Rockefeller of Little Dix Bay Hotel on Virgin Gorda. The contractor was the English construction company, Taylor Woodrow Limited. Many prominent local builders and tradesmen got their start on that project and grew their businesses on the base of the exposure they received on that first major commercial development in the BVI. The economic boom that followed in the 1970s including the construction of the deep water harbour at Port Purcell, expansion of Long Bay Hotel, the development of Peter Island Resort, Prospect Reef Hotel and home construction throughout the islands resulted in the growth in numbers of people earning good wages in construction, tourism commerce and the civil service and led to the influx of vast numbers of foreign labour from the islands of the Eastern Caribbean and Guyana. This took place alongside the entry into the BVI market of international commercial banks which provided the capital for growth.

BUSINESS BVI 2010

In a global economy,

incentives

must be offered in order to

attract direct foreign investment.

Similarly, in order to stimulate innovation and risk-taking among the domestic entrepreneurial class, incentives must be offered.

Beef Island Airport and Road Harbour circa 1960.

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

The growth that took place fostered a new economy, moving forever from subsistence agriculture to small enterprise and mid-scale tourism development. This was made possible by the entrepreneurial spirit of British Virgin Islanders determined to better their condition and that of the territory and through direct foreign investment and British grant-in-aid. A positive embrace of change and modernization prevailed as most everybody could see the benefits – a move from subsistence towards a wage-earning population, rising income levels and rising levels of consumption of goods and services. The British Virgin Islands was changing, or one might say it was ‘developing’. What do we mean by ‘development’? We may refer to ‘development’ in terms of quality of life benchmarks – such as literacy, infant mortality, per capita income, and, for example the eight Millennium Development Goals set out in the United Nations Millennium Declaration, which the UN hopes will be achieved by 2015 or 2020. For the purposes of this article, I identify broader, more aspirational development goals such as the following: World class infrastructure including reliable public utilities, roads, etc; First rate health care services through modern hospitals and public health clinics; Education through good schools and technical training and scholarship availability for study abroad; Innovation and competitiveness; Environmental protection and sustainability. These aspirational goals build upon those elemental moral benchmarks or indicators. In most instances, I refer to the process of ‘development’, which I take to mean the continuous economic expansion required to support and promote improved living standards signified by those development goals. In terms of the British Virgin Islands, rising government revenues from import duties, income tax on rising salaries, and transfer taxes on the sale of real property enabled government to expand public services in the British Virgin Islands to areas relatively untouched before – a modern secondary school and modern primary schools in every district, public health clinics, library services, an ever-expanding road network to open up lands that were practically inaccessible to their owners. The revenue base that provided the means to provide these services which are the basic requirements of modern living was private investment. The early growth spurt in BVI development took place before there was a significant trade and investment policy infrastructure in place in the British Virgin Islands. Typically, entrepreneurs saw a niche for enterprise and pursued it without active input from government as facilitator. Thus were born the first supermarkets, hardware stores, travel agencies, trucking and transportation businesses, construction companies and many others. Tourism was the exception, as for many years legislation offering tax and import duty concessions to hotel and resort developers were available, though never used as tools to attract inward investment. These 44

BUSINESS BVI 2010

concessions were usually sought by potential developers in tourism and in most instances they were granted once the relevant criteria were met. Interestingly, there was no similar incentive or concession legislation incentivizing local developers and entrepreneurs with the exception of the Encouragement of Industries Act which gave import duty concessions to so-called “pioneers” in certain classes of business although the concession has been expanded to new businesses in existing fields who could not be regarded as pioneers in any sense of the word. In all instances, the enabling of enterprise had been mostly through concessions rather than incentives. Concessions are merely deviations from the norm. Incentive involves encouragement and facilitation. To this day, the British Virgin Islands has not provided much in the way of incentives properly so-called to entrepreneurs be they local or foreign.

Road Harbour today.

Incentives for Growth and Development In a global economy, incentives must be offered in order to attract direct foreign investment. Similarly, in order to stimulate innovation and risk-taking among the domestic entrepreneurial class, incentives must be offered. In the United States for example, states actively offer incentives and assistance in establishing businesses in competition with one another. In Michigan, for example, the Michigan Economic Development Corporation website states: “For any company already in Michigan or considering a location in the state, the Michigan Economic Development CorporationSM (MEDC) offers one-stop business assistance. Our business development managers work with consultants, utilities, associations and local economic development agencies to best match businesses’ needs with Michigan’s opportunities. From attractive financing through our $2 billion 21st Century Jobs Fund to significant and long-term tax abatements, few places can offer a more attractive financial package. The MEDC is also the channel for continuous improvement of the state’s business climate.” To take another example, the state of Ohio established a program called “Ohio Means Business” to provide a clearinghouse of information about the incentives available to those considering a location for their business. Still further afield, similar programs are to be found in Ireland, Singapore, Dubai and many other countries. In all instances, governments at local and national levels recognize that the revenue stream needed to finance government services that affect quality of life, require a tax base and a labor market that must constantly adapt and grow, and such growth relies on an expanding economy built on businesses that can take advantage of investment incentives to facilitate growth. Just as important, there must be a shared belief that economic expansion is a necessary condition for sustaining and improving our quality of life. Goals and Buy-in If a development consensus is to be achieved, there needs to be a society-wide buy-in to the aims of development. That is to say the development goals must be clearly articulated. This should not be difficult as development goals are almost universal. For example the United Nations Millennium Goals could be regarded as a moral baseline. To these, I have suggested that the British Virgin Islands may realistically include the goals of world class utilities and transportation infrastructure, first class health care, universal education, innovation and competitiveness and a safe, healthy, physical environment. It is important for goals to be effectively articulated if there is to be the necessary buyin. However, there has been little in the way of a national political debate as to what the development aspirations of the British Virgin Islands should entail. The British Virgin Islands has been characterized by politics conducted at the micro-level, the level of the individual or the electoral district. Political considerations aimed at building support at the local level have led to policy decisions which ignore the national interest. Added to this is the fact that the political landscape has been made up of political parties which historically have been mostly groups formed on a more or less ad hoc basis for the purpose of fighting and winning elections on the understanding that each representative would be more or less free to carry out a narrow clientelist agenda at the district level. There are those who argue that the one significant departure came about in the 2003 elections when a political party came to power with a clear pro-development agenda. Once in power, they articulated relatively clear development goals and the means to achieve them: enhancing the business environment, attracting foreign investment, transparency in government, streamlined and efficient government delivery systems, and eradication of corruption in public life. Having radically changed the way politics

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

and business were played in the British Virgin Islands, they were voted out of office after one term largely because they failed to achieve the buy-in from a population long accustomed to politics at the local and personal level.

offshore financial centers and with relatively large educated labour pools and determined governments, it would be foolish to write them off.

What should we be doing differently? Establishing the Development Consensus What needs to be done to turn a development consensus into development While most governments have similar development goals, some succeed results? It takes planning and execution – long term planning and follow while others fail to achieve their goals. Some countries such as Singapore and through, which requires a semi-autonomous body in the form of a statutory Dubai for instance, may achieve their goals more easily because there is an corporation that will span the lives of successive governments while carrying entrenched ruling elite which has the authority (howsoever derived) to virtually out the mandate of the country to achieve the overarching development goals. impose policies in pursuit of the goals. Other countries, This corporation; a national development corporation the liberal democracies, have a harder task. They We will have to embrace needs to include in its directorate trade professionals, must convince their populace of the need to pursue physical planners, tourism and financial services development objectives and this vision must be more or the outside world industry leaders, and key government technical staff. It less shared across the political spectrum. The task will and encourage it to should serve as the British Virgin Islands investment, be impossible if the general vision changes as political come in while at the trade and export promotion agency, providing a range winds shift from left to right. At the most basic level, of business oriented services to the public, including the population must be convinced that development same time opening the attracting foreign investment to the British Virgin will result in all boats floating on a rising tide. Islands and identifying and assisting with procuring doors of opportunity Rather than having a shared vision, there appears to to our own people and technical assistance for local and foreign businesses be a polarizing of opinion in the British Virgin Islands and entrepreneurs. It should also function as the British among those desiring to facilitate the expansion of providing the impetus Virgin Islands official representative to regional and business enterprise and those who want to protect and encouragement to international trade missions, all aimed at assisting the narrow parochial interests. This trend is ultimately self- local entrepreneurs and government to meet development goals through revenue defeating of the development goals. There must be a enhancement. In addition, it must promote the British willingness to exercise a political leadership that vetoes investors to compete Virgin Islands as a business friendly environment and make-work projects in favour of investment in national locally and regionally. work with the public and private sectors to streamline infrastructure, that ensures competitive bidding on all bureaucracy and improve delivery of services. Finally major projects in the interest of fiscal responsibility, that enables us to invest it must do this in an environment of openness and transparency and become more in public utilities, public works, education and the other areas which a facilitator of enterprise, rather than a gatekeeper protecting entrenched build capacity for sustained improvement of the quality of life. interests. The development debate is beginning but reason is often drowned out by Examples of established and successful development corporations are shouting. Further, into the development debate has been thrown a bogeyman found worldwide: the Barbados Development Corporation and the National – the “small man” a term with various meanings – the “man on the street”, Development Corporation of St. Lucia are good examples close to home, while the small businessperson, the local as opposed to foreign businessperson or the Singapore Economic Development Board and IDA Ireland are examples investor. It was a term that was also used as a red herring to distract from the of successful corporations which have attracted global enterprises to those fact that some of the so-called “small men” were millionaires. In reality, it was countries through incentive legislation and enabling delivery systems. mostly used as a political slur by cynical individuals promoting and protecting The same approach of positive outreach is needed in the British Virgin Islands parochial interests against national priorities whose pursuit was potentially if it is to hold its place much less continue to move up the ranks of successful inimical to their interests or which could not be easily turned to economic countries. We will have to embrace the outside world and encourage it to advantage or political influence. It has been perhaps the most pernicious and come in while at the same time opening the doors of opportunity to our own cynical means of dividing the country by the politicians who exploit it and people and providing the impetus and encouragement to local entrepreneurs which was given birth by those other politicians whose blind eyes and deaf and investors to compete locally and regionally. On the other hand, if we view ears laid the seeds for its emergence. globalization and inward investment with suspicion and hostility and declare foreign investors to be “invaders” we will sow the seeds of our own economic The British Virgin Islands today and tomorrow decline. If we let xenophobia prevent us from seeking to attract talented In two generations, the British Virgin Islands has grown from Caribbean labour to our shores on the one hand and continue to have no clear policy on backwater to one of the leading offshore financial centers of the world whose immigration and the acquisition of naturalization on the other, we will deprive importance in global finance and commerce is little understood outside ourselves and the generations of British Virgin Islanders yet unborn of their a narrow coterie of regulators and industry professionals. Its tourism has future. developed to put it among tourism leaders in the Caribbean and in sailing, we What is clear is that a laissez faire or ad hoc approach to development is are world class. The result has been an improvement in living standards almost not a viable option. As the global economy turns the corner and emerges from without parallel in the Caribbean. To maintain this position, much less improve recession in late 2009 to early 2010, it is by no means certain that the same on it we must take concerted action. In a globalized economy, competition is players will resume their places in the standings in the world economy. Those fierce and there are real winners and real losers. The British Virgin Islands must countries that have invested in capacity building by using stimulus funding for compete to win. We must compete. There is no alternative, despite what the transportation and other infrastructure, for example, are more likely to emerge protesters may say. We are competing on a regional and a global stage and this stronger than those who spent a great deal of capital on bank bailouts. Those fact is as real as gravity. There is no opting out as many public commentators small economies like the British Virgin Islands which invested in tourism in the British Virgin Islands who rail against globalization would like the infrastructure and granted incentives to foreign capital are more likely to public to believe. We are competing with our Caribbean neighbors for tourism fare better than those that didn’t. Where the British Virgin Islands ends up in dollars. We are competing with Bermuda, Bahamas, Cayman, Channel Islands, this reckoning will depend to a great extent on our commitment to a vision of Dubai and others for offshore financial services revenue, and new players growth and the means of providing a fertile ground and business environment with competitive advantages are on the horizon aiming to take what we have: upon which economic activity will take root and produce the basis of continued Jamaica and Trinidad for example have both taken concrete steps to establish improvement in our standard of living. 46

BUSINESS BVI 2010

What is clear is that a laissez faire or ad hoc approach to development is not a viable option. As the global economy turns the corner and emerges from recession in late 2009 to early 2010, it is by no means certain that the same players will resume their places in the standings in the world economy.

Terrance B. Lettsome International Airport today.

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

life in business after politics an interview with lloyd black

“I detest mediocrity, and as long as I’m going to put my name to it, it has to be done well.”

BUSINESS BVI 2010

There are many people in life who never accomplish what they set out to do. Many spend years trying to “find themselves”, aiming to discover paths that are best suited for their personalities, or work unfulfilling jobs while clenching hopes of one day becoming successful at making it big, making it rich, or making it famous. A choice for many lies behind the ivory walls of coveted universities and cool lecture halls. Others skip the collegiate route for attractive opportunities in the military or trade, and then there are the dreamers who never awaken from their safety net of sleep. Lloyd Black, however, isn’t scratching his head for clarity. As a son of East End, Tortola and the former Minister of Education, Culture and Sports he bypassed the blockade of confusion to achieve his goals at an early age, and now at 48-years-old, claims an impressive cache of titles to include pilot, banker, politician, and nowadays businessman. As a teenager he received an academic scholarship through the United Nations that led him to Trinidad where in 1978 he became the youngest in his class to graduate from pilot school. Three years later he embarked on a pilot career for the defunct Air BVI where he flew a 50-seat turbo prop plane on the Caribbean route between the Dominican Republic and St. Vincent. He later obtained his M.B.A. in Barbados from the University of the West Indies Cave Hill and redirected his image from that of a finance man and public servant to that of a businessman. For the man whose days once involved navigating airspace, counting money, and attending legislative meetings, the self-proclaimed entrepreneur’s days currently consist of phone calls, and appointments with his own prospective clients. He’s enjoying his post as an executive and likes the notion of helping people with their challenges and business. “To know I can help you make your business more successful is gratifying. There is satisfaction in helping people realize their dreams.” Business BVI sits down with a former Minister in Government as he re-enters the business arena: an interview with Lloyd Black: BBVI A move from business to politics is a natural fit for many. How has your transition been from politics to business? LB “I wouldn’t consider it a transition. I worked in the private sector before politics; in banking. So having entered politics for eight years and then back into the private sector, it’s an area that I’m familiar and comfortable with even though I’m now working on a different side of the private sector. Before I worked as an employee, now I’m working as a business owner.” BBVI The public sector and private sector each pose their own set of challenges. Explain the challenges you faced as a minister and those as a business owner? LB “In the private sector, the decisions you make tend to be your own and you have to see them through. Not to say that in the public sector the decisions you make are not your own also, but generally in the public sector, decisions are made on a consensus basis. At the end of the day, its how many people can you get to agree with you to drive a process forward? It’s no one person that can make a decision and get it to go the way you want it to go in the public sector. That is primarily the main difference between the way business is conducted in the private sector and the way it’s conducted in the public sector. That in itself can present many challenges. One, being in the private sector we could be more responsive to changes and opportunities as they present themselves. While in the public sector you might have a very good opportunity, but then you have to present the case to those that work around you to get everyone on board, and if everyone is not on board at the same time you might miss an opportunity. You always hear the saying things take so long in government and it’s primarily for that reason. Yes, as a minister you’re a key decision maker, but not all the decisions you make will be acted upon with the same sense of urgency or dedication as if you were in the private sector.” BBVI In how many businesses would you say you’re involved? LB “Two. One is a business consulting and training organization, Greystone Solutions. It’s something I became interested in after completing my MBA since leaving office. I figured with my ten years in banking, and in more ways

than one, giving advice to businesses on how they should fund their operations and manage certain aspects of it – I figured well here it is – I now have some more tools that I can put in my arsenal, and instead of seeking opportunities like going back to the bank or working for a larger company, why not work for myself and do something that I’m already familiar with.” BBVI Many people have complained about the lack of customer service found amongst public and private companies within the Territory. How would Greystone address these issues? What would be some of your immediate solutions? LB “From the outset it is important to have a clear understanding of the organization’s focus and vision. Without this information there is little an organization can do to improve customer service. The more informed and the more an employee can participate in an organization’s visioning process, the more likely you are to see good, to excellent customer service within that organization.” BBVI You’ve partnered with a larger firm in the U.S. In what capacity do they serve Greystone and how does it benefit your company? LB “Greystone has a licence agreement with 360 Solutions to use their products which are industry leading, well researched, and proven among small and medium sized businesses worldwide. This practice is normal for independent consultants like myself. The relationship ensures that I have access to the latest trends and research, as well as access to the latest strategies and solutions to assist my clients. The relationship also provides me with access to over 300 independent consultants worldwide with whom I can rely on for support or assistance.” BBVI Within Greystone’s high performance model, which program has proven to be the most highly sought and why? LB “It is still early to report on this, as one of my main areas of focus with clients who may have a specific training request is to ensure that the appropriate groundwork is laid before that specific training initiative is undertaken. This usually involves programmes like the Trust Factor Series, Positive Impact and Emotional Intelligence Series which are each eight modules, and they provide an excellent intro into more specific training modules like developing high performance teams. This strategy has proven effective and is working well so far for the clients who have adopted this approach.” BBVI Looking at the economy and its current state, how has it been for you as a business owner, especially in this line of work? LB “Opportunities are there, and there are clients that would like to engage you but, it’s a question as to what are their immediate priorities? It’s always a challenge to tell someone: ‘Your ship is sinking. I can show you how to stop the ship from sinking, but, would that advice at this very moment be more important, or doing something else that can be beneficial to the company?’” BBVI What do you foresee as a need, business-wise in the BVI within the next 5-10 years? LB “I think a lot of businesses need direction, strategy and planning. We’ve had a lot of business persons who’ve managed to be successful for one reason or the other, but when you sit down and discuss with them – have you thought of what particular strategy, or have you understood how you’ve got to where you are today? – A lot of them cannot with great detail, tell you this is what they pursued and it worked. I see myself as someone who can bring that focus to many businesses.” BBVI Describe the parameters, if any, that you’ve had to face as a business owner in the Territory? LB “Business opportunities, I find in the BVI, are abundant. It’s amazing. The biggest obstacle for most persons getting into business is a trade license. I think that is the longest process anyone would have to face, but I think once you get beyond that, I mean, the sky’s the limit. There’s virtually nothing to prevent you from having a successful business operation. Like I said, there are so many opportunities out there.” BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

BBVI Why is it such a challenge to get a trade license for so many people? LB “That’s a mystery… I’ve always been of the view, even when in government, that especially for Virgin Islanders, the trade license process should merely be an administrative formality.” BBVI What made you launch your business and how many employees do you have? LB “About a year ago and just myself, for now.” BBVI How many clients do you have? LB “So far about five. Two are ongoing relationships over the past year.” BBVI Where would you like to see your business within the next five to ten years? LB “That’s a very interesting question. Of course my intention is to work smarter and not harder. One of the benefits of having your own business is that you can decide how far you want it to go and at the end of the day, how much you want to earn. If you want to earn two million a year, obviously it means working long hours; and if that is not something that you see as part of what you want to have for yourself in the future, then you have to consciously make a decision. You want to ensure you have a solid client base and that you’re getting paid and not just working hard. Earn a decent income and live a decent life.” BBVI Describe your personal persona and how it differs from your political persona. LB “I consider myself the most easygoing, get along, friendly kind of person. Politically, I would have to say, I’m a take charge kind of person. I crave excellence. I detest mediocrity, and as long as I’m going to put my name to it, it has to be done well.” BBVI Do you have any interest in returning to politics? LB “When I entered politics, I always said to people, I’m a strong believer in term limits. I don’t think persons should be there for any extended period of time. Generations change. People change. And leaders of the day should always be more or less in tune with the developments or changes that are taking place in the country at the time. Two, maybe three terms; that should be the limit for anyone seeking higher office, and then give someone else an opportunity.” 50

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BBVI If you did enter politics again, in what capacity would you run? LB “It’s very hard to say at this stage. It’s really difficult to say at this stage. I guess I’ll have to be guided by my advisers at that time; whether to run as a district candidate or run on an at large ticket or something.” BBVI Since your departure, have there been any changes in your district? What were you expecting and/or hoping to see change that has not yet taken place? LB “If it’s meant to be a critique of the current representative, it wouldn’t necessarily be fair for me to comment in the sense that I really don’t know what their plans were and even today what they are. Having said that, I haven’t really seen any changes” BBVI What would you like to see change? LB “A lot of what I would like to see change is more from a social perspective more so than physical, because I think that is where the greatest need for leadership is required. To me there’s a slow degradation of social values and tolerance, and understanding. There’s a serious conflict that exists in a lot of communities when we look at the various ethnicities. There’s sort of a polarization that exists and to me if we don’t try and focus on those little differences it’s going to continue to pull our community down. To me the BVI is a very small community, ripe for opportunity, and we need to focus on things like nation building. BVIslanders as a group cannot focus on nation building by themselves, because we only represent about 45 percent of the community and 45 percent of our community does not make a nation. So it’s from that perspective I think our leaders need to focus on and try and bridge some of those gaps, and deal with some of those challenge. It’s an area that if we continue to ignore it, it’s going to be like an ugly monster in the years to come.” BBVI During your post what was your primary concern? LB “Well my responsibility then was the Ministry of Education and my primary concerns were to point our education system in a direction that it can be well respected throughout the region, and to the point where it is well regarded internationally.” Lloyd Black has done a lot in his short life span. We’ll just have to wait and see if this is just another detour or his final destination.

DEEPENING OUR

COMMERCIAL APPEAL

The Supreme Court of the Eastern Caribbean: Commercial Division susanna hennighan-potter

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

ustice Edward Bannister, QC began his appointment as the BVI’s first Commercial Court Judge in unusual surroundings. While workers completed the new Commercial Court building in central Road Town, Justice Bannister and his staff moved into the Reef House at Prospect Reef. Surrounded by dolphins, tourists, macaws and stunning ocean views, the Commercial Division of the Eastern Caribbean Supreme Court opened its doors last April. Within the make-shift courtroom serious legal matters are being argued and decided. Over the first three months of the Court’s life, Justice Bannister heard Bernard Madoffrelated disputes and several insolvency matters, and a July ruling involving the Fairfield Sentry funds was reported in the New York Times. There have also been business disputes involving oil and gas concerns in Indonesia; division of family assets in Russia; and an insolvency matter dealing with assets in Brazil. “The geographic extent is very wide indeed,” the judge said. The global nature of the cases is an indication of the calibre of legal matters which take place in the BVI. “This is a phenomenal jurisdiction,” Justice Bannister said. “The Global Financial Index puts BVI at number 27, one ahead of Bermuda. What goes on here is already impressive stuff, and I see no reason why it should not become even more impressive.” Justice Bannister, whose stern demeanour is softened by a dry sense of humour, says that while the addition of a Commercial Court will not necessarily drive business to the territory—no one plans to have a commercial dispute—he sees the new Court as an important addition to the British Virgin Islands as a jurisdiction. “Commercial cases have always been here. But it is an important presentation point to have something called a Commercial Court,” he said. “It says to people that they will not have to queue up and hope

that they will be heard soon.” The oldest and largest Commercial Court in the world is in London, where, Justice Bannister said, the standard is “astonishing”. “In London judges don’t have to have things explained to them, and certainly don’t have to have things explained to them twice,” the judge said. Other commercial courts of note are found in Bermuda, Sydney, Toronto and Hong Kong. The Commercial Court situated in the BVI is part of the regional Eastern Caribbean Supreme Court, and it hears commercial cases from nine Eastern Caribbean countries and territories. In order to be heard, claims must have a value of more than US$500,000 and concern commercial, insolvency, trust, business arrangements, dissolution or similar matters. While most of the cases heard by the Court stem in some way from the BVI’s financial services industry, local or regional business disputes may also be heard. The Commercial Court is an institution long in the making. In the early 2000s the BVI government commissioned a study to examine the question of whether a commercial court should be established in the Virgin Islands and, if so, what type of administrative relationship it should have with the regional court. The government eventually accepted the recommendation that a commercial court should be established as part of the regional court and in 2008 construction of the commercial court began in central Road Town. Recruitment of a top-flight jurist to serve as the court’s first judge took place and in May 2009 Hon. Chief Justice Hugh Rawlins presided over a special sitting of the Court of Appeal to open the Commercial Division of the Eastern Caribbean Supreme Court. Local officials, leading lawyers and regional judges all heralded the event as an important milestone for the BVI, its financial services industry, and for the regional court. The expected opening

“I want the Court to attract as much new business as possible and to be as user-friendly as possible. Apart from being courteous, this means hearing cases as quickly as possible and getting decisions out as speedily as I can.

BUSINESS BVI 2010

There are people practising here of very high calibre, and I would like to see the local bar being so strengthened that people would not feel they have to bring in lawyers from London or elsewhere,” of the new court building in the fall of 2009 will bring a sense of completion to this ambitious project. But in other ways, the real work is just beginning. For Justice Bannister, the opportunity to lay the foundation for a new commercial court in a jurisdiction such as the BVI was one which he would not pass up. “It’s an amazing opportunity,” he said. “Besides Chief Justice of the Dubai International Finance Centre Sir Anthony Evans, I don’t know of anyone else who has had an opportunity to come and start up a new court.” As Justice Bannister expected, the job has proven demanding. The Court’s calendar has been full, and when he is not hearing arguments, Justice Bannister is writing decisions or directing the administration of the court. Most importantly, however, is the unspoken responsibility of establishing a good reputation for the new court, and Justice Bannister believes that the best way to achieve this goal is to simply get down to business. “I want the Court to attract as much new business as possible and to be as user-friendly as possible. Apart from being courteous, this means hearing cases as quickly as possible and getting decisions out as speedily as I can. Parties have normally invested a huge amount of money and they want to know what the answer is. My judgements tend to be short, but I aim to get them out in a matter of days, not weeks. I regard speed as very important,” the judge said. Justice Bannister says that he hopes the establishment of the Court will lead to the further development of the local bar. “One of the things I want to see is the growth, in the local sense, of a flourishing and available local commercial bar. There are people practising here of very high calibre, and I would like to see the local bar being so strengthened that people would not feel they have to bring in lawyers from London or elsewhere,” Justice Bannister said, referring to the practice of lawyers from top London law firms coming to the BVI to appear in a single matter. “A dedicated Court and a local bar—that seems to me to be an asset to the BVI as a financial services centre,” the judge said. Justice Bannister came to the BVI following 35 years as a commercial barrister, many of them as a senior member of Chambers at 3 Stone Buildings in London. A Queen’s Counsel since 1991, Justice Bannister specialised in company, insolvency and commercial litigation and appeared in Courts all over the Commonwealth. Justice Bannister says while on the face of it commercial law might appear ‘dusty’, it is interesting and intellectually stimulating. “It’s rigorous,” he said. “You have to be very, very precise about what you are thinking and saying ... [In commercial law] you’re always finding areas of commerce and business which you didn’t know existed. I think it’s constantly surprising and interesting. It’s almost never dull.”

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

FACE TIME

Profiles of Personalities in the BVI Business Community

Captains of Industry

Clarence Faulkner and Brodrick Penn susanna hennighan-potter

From humble roots, Clarence Faulkner Jr. and Brodrick Penn have risen to senior positions at two of the BVI’s leading financial institutions: the BVI Social Security Board and the Financial Services Commission respectively. Smart, passionate and uncompromising, both men are poised to be among the best of their generation—the next captains of industry. Business BVI sat down to talk to these two young BVIslanders about their careers, their education, their family and their futures. Childhood Clarence Faulkner Jr. grew up in the Valley, Virgin Gorda, the only son of five children born to Cordella and Clarence Faulkner Sr. It was a childhood steeped in love and the transmission of values that remain with Mr. Faulkner today. “I often tell young people this: Whenever you have to make a tough decision, think on the potential results and then think of what your parents would say. It’s the best guidance I know,” Faulkner said. Faulkner recalls lessons taught by his parents: Manners and respect will take you through the world. The first impression people have of you might be the last, therefore present yourself well. If you don’t know something, declare ignorance and ask a question. If you do something with a crowd lead, don’t follow. Faulkner says he also developed his strong religious and moral values during his childhood. Penn was raised in East End and Long Look, Tortola primarily by his mother, Aritha Maloney. He knew his father, Basil Penn Jr., but “it was a tumultuous relationship”. From his father, Penn garnered an appreciation for hands-on, technical skills. “He taught us the value of using our hands,” he said. But his father’s lifestyle also instilled in Penn a desire to be a different kind of husband and father. Penn’s mother emigrated to the BVI from St. Vincent and although Brodrick is a BVIslander, he thinks of himself as a product of both St. Vincent and BVI, having also been highly influenced by his family’s Vincentian culture. He credits his mother with instilling strong morals and a strong work ethic in her children. She valued church, education and hard work and she passed these values on to her children. “My mother always was that driving force in my life that kept me on track,” he said. Education & Early Career Both Penn and Faulkner attended public school in the BVI; for Faulkner it was the Bregado Flax Educational Centre on Virgin Gorda and for Penn the then BVI High School on Tortola. When it was time for college, they both looked not only outside of the Virgin Islands, but outside of their comfort zones, and both say they are glad that they did. 54

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After graduating from secondary school and flirting briefly with a dream to fly fighter jets, Faulkner enrolled at St. Mary’s University in Canada where he studied both accounting and finance and graduated with a double degree in 1996. He credits his experience at college in Canada as teaching him not only professional skills, but also life skills – most importantly, the ability to survive on his own. Penn attended Eastern Illinois University, a top quality state university where he studied finance—inspired in part by a post-secondary school job at Barclays Bank. In addition to getting a sound technical education, college opened other doors for Penn. “I wanted to experience another culture, and I got my wish,” he says. Eastern Illinois University had 12,000 undergraduates and was located in “the cornfields of Illinois”. Penn reckons that, besides one other BVIslander, he was the only Caribbean student there and the experience forced him to interact and become comfortable with all kinds of people, exposure which Penn recommends highly to others from the BVI. “I always encourage people to broaden their horizons and to experience different people, especially in terms of racial diversity,” he said. After university, Penn went straight to work at the then-Department of Financial Services. The year before, in 1996, the BVI passed its Mutual Funds Act, and Penn was interested in the field. “I was attracted to mutual funds because the field was growing and it was exciting. It’s a very dynamic field,” he said. On graduating from college, Faulkner returned to the BVI where he spent three years working on the investment funds team at Harney Westwood & Riegels (sometimes interacting with Penn, who was by then at the Department of Financial Services). In 1999 he joined the Social Security Board where he has been ever since. In 2002 he earned an MBA from Wright State University through the H. Lavity Stoutt Community College. Career Penn has been regulating mutual funds at the FSC since 1997 when he joined the Department of Financial Services as Assistant Registrar of Mutual Funds. “I came on board, helped to recruit the first Registrar of Mutual Funds, and together we developed the area,” Penn says. Over the 12 years that followed, the number of investment funds registered in the BVI has grown, and Penn advanced in the mutual funds area. In 2001 he was appointed Registrar of Mutual Funds and a year later was named Deputy Director of Investment Business. Now the Director, Penn oversees all aspects of the FSC’s Investment Business. Penn has enriched his career through additional education and training. In 2005 he received a Masters of Law degree in tax planning from St. Thomas University in Miami’s Walter H. and Dorothy B. Diamond Graduate International Tax and Finance Programme, which he studied for via distance education. “It was the hardest I have ever worked in my life,” Penn said, “and it gave me a significant appreciation for how and why BVI vehicles are used for tax planning.” In 2007, Penn went on a 6-month secondment with mutual fund managers GAM in Dublin, which he credits as a valuable experience that allowed him to return to the FSC with new energy and focus. “BVIslanders need to take or be afforded the opportunity to live and work abroad,” Penn said. “It develops you not only professionally but also culturally and socially and it exposes you to the wider world.” In addition to his career, Penn has been involved in various community and civic organisations. He was part of the Young Professionals, a group of young civil servants established as part of the now-defunct Public Sector Development Programme in the early 2000s. Penn also founded, with his late brother Kendoy, the Nottingham Investment Club, and he served as chairman of a government committee looking into the cost of living during the height of the spike in fuel and food prices in 2006 and 2007. Faulkner, meanwhile, derives his professional passion from one source: knowing how his actions affect the contributors and their families who depend on the Social Security Board for benefits. Faulkner’s job is to manage the Board’s portfolio of investments, a responsibility that would BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

intimidate some, but not Faulkner, who relies on sound strategy and careful due diligence to guide his decisions. Even in the recent financial crisis, when markets around the world plummeted, Faulkner remained calm. “The market is a large playground and you’re not going to play with every piece of equipment,” Faulkner says, explaining that the Board avoids high-risk investments. When he needs inspiration, Faulkner walks out to a small landing overlooking the lobby in the Joshua J. Smith Building, where he can watch the Social Security recipients open their benefit envelopes. “Validation comes when I see the beneficiaries receive their entitlements and smile. It gives me a sense of ‘Mission accomplished’”, he says. Faulkner has a no-nonsense approach and a direct bearing—advantages when he is negotiating with investment advisors on behalf of the Board. “I command the very best for the people and tell our service providers quite simply that if our established standards are not adhered to, they [the investment service provider] will be replaced. It’s either you can do the work, or we’re not going to be doing business.” Faulkner’s success on behalf of the BVI Social Security Board has not gone unnoticed in the region. In addition to his daily responsibilities, he serves as Vice Chair of the International Social Security Association Technical commission on Investments. Based in Geneva, Switzerland, this body is charged with developing policies and guidelines to assist social security systems worldwide in the proper investment and management of their funds. Faulkner was also selected by the Heads of the CARICOM Regional Social Security Systems to chair a committee to, identify the most feasible methods of pooling of resources for investment outside of the Caribbean Region. Family & Free Time For many years Faulkner’s dedication to his job drove him to lead what some might consider an unsociable life: up before dawn to watch the financial news and taking files home to work on in the evenings. Things changed for Faulkner last September, however, when his fiancé Sahodra Pertabsingh gave birth to his first child, Ethan “He has brought balance to my life,” he said, noting with a laugh that instead of constantly watching CNBC at home he’s more likely to be tuning into Brainy Babies. Penn, meanwhile, admits that previous pastimes such as cycling and other sports have taken a backseat in recent years to his family: wife of 8 years Stephanie Russ-Penn and 3 girls, Alexia, Ashleigh and Arison, who range in age from 1 to 6 years. Penn appreciates the richness family has brought to his life: “Family life is a good life because your focus changes,” he says. Both Faulkner and Penn say that outside of work and family, there is not a lot of time left over. But both do carve out time for activities which are important to them. For Faulkner, that is Saturdays spent free diving with his father off Virgin Gorda and Anegada. He’s been bitten by sharks twice, but Faulkner says that 60 feet below the sea is the one place he can clear his mind and relax. For Penn, staying in touch with a close circle of friends is the activity that has kept him grounded over the years. When other activities like going to the gym and playing sports were lost to other time commitments, Penn was careful to hang on to a few hours each week for his friends. “My favourite thing is to just shoot the breeze with my close friends,” he says. Future The future for Penn and Faulkner should be nothing but bright, and both men clearly have much to give to the BVI. Penn says that he is at a cross-road. “I think that I’m better than being defined as a career regulator,” Penn says. “I am at a crossroads where I am trying to figure out what else I want to do with my life.” Possible options for his future include entering the private sector; venturing into a new field, such as real estate development; or even going into the public service. At one point Penn says he might have considered politics, but he says that he has left behind that ambition. “I used to like politics but it is adulterating the innocence of people; it is dividing the country. I still like to talk politics but I don’t want to become the man that a politician becomes.” Faulkner, on the other hand, says he remains focussed on his present mission: making certain that proper structures, policies and accountability are in place to ensure that BVI residents enjoy financial health in their later years.

BUSINESS BVI 2010

Tomorrow’s Business Leaders Reynard Penn and Kenneth Hodge susanna hennighan-potter

REYNARD PENN Youthful and soft-spoken, Renard Penn is a young lawyer with a promising future ahead of him. Born in New York, Penn moved to the BVI at the age of 10. After graduating from the BVI High School, Penn enrolled at Vassar College, a private liberal arts college in New York State. There, Penn studied for a degree in Science, Technology and Society. At Vassar, Penn thought he would go into medicine, but a summer internship with a neuro-ophthalmologist in New York changed his mind. But Penn says that there are some similarities between medicine and his ultimate choice, law. “The same thing that appealed to me about medicine appealed to me about law. You are dealing with people and are helping them with a problem. With law, when you apply your mind to a problem you can almost always find a solution,” Penn said. After college, Penn spent a year working at PriceWaterhouse Coopers. It was during this year that he decided to pursue a career in law. He got his LLB from the University of the West Indies and completed the bar at the Eugene Dupuch Law School in the Bahamas. “I had an American experience and it was good to have a Caribbean experience too,” Penn said. And by studying law in the region, Penn’s courses and projects dealt with the laws of the Caribbean, not the UK. In 2007 Penn graduated with his law degree and returned to Tortola. He joined Walkers, the offshore law firm, as part of its rotation programme which places just-qualified lawyers in each of the firm’s departments for a few months. Over the past two years Penn has worked in various fields, including litigation, corporate, funds, trusts and estates.

“college was not an option. It was a must” Penn says that he went into offshore law because of the “mystique” about it. He was also drawn to the competitive nature of the field, which he felt would serve as a good foundation for whatever his future holds. Penn, who is 28, has been surrounded by business for his entire life. His parents, Romney and Margaret Penn, own two hotels on Tortola, a marina, commercial real estate, and an architectural and construction company. “It has given me a taste and feel for the way to negotiate and do business,” Penn says of being raised in an entrepreneurial family. “It has also given me a strong appreciation for the value of money and money management. I have a lot of respect for my parents and what they have accomplished,” he said. Penn’s parents also instilled in him the value of education: “College was not an option. It was a must,” he said. Penn is active in several community and professional organisations. He is the treasurer of the BVI Bar Association and is Parliamentarian to the Anglican Church Deanery. He is also a member of the Nurses and Midwives Council.

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

FACE TIME

KENNETH HODGE Kenneth M. Hodge is not afraid of difficult decisions. Last January the 39-year-old director at Trident Trust Company (BVI) decided to give up his decade-long career at the established company to venture out on his own. “If you have a primary aim for your life, and if you realize that you can’t do it where you are, you have to be brave enough to pursue your dream,” said Hodge, who also previously worked as financial comptroller of the BVI Electricity Corporation. Hodge left the comfort of steady employment to dedicate himself full-time to several businesses that he and business partner Angel George had established. Trinity Financial Services Ltd., Virgin Gorda Insurance Agency Ltd., Trintek Home Center, and Trintek Computer Store offer a range of services, including fiduciary accounting, technology products, insurance, appliance sales, ship registration, and director services. “We realized that there are niche markets in financial services and that there were other markets we could tap into,” Hodge said. Hodge was raised on Virgin Gorda by a single mother, Marcia, until he was 11 years old, when she met and married his stepfather, Martin Belmar. Together Marcia and Martin have owned and operated M&M Bakery since. Hodge says that his mother taught him the value of hard work: “We learned early on that you have to work for what you want,” he said. Hodge married his wife, Anne-Marie, in the UK in 1995, and the couple have two daughters, aged 12 and 9. Outside of work, Hodge is active in his church, the New Testament Church of God. He enjoys golf and swimming, and he reads and listens to books by a number of inspirational authors, including John Maxwell (The 21 Irrefutable Laws of Leadership), Jim Collins (Good to Great), David J. Schwartz (The Magic of Thinking Big), Brian Tracy (Eat that Frog) and Napolean Hill (Think and Grow Rich) and of course the Bible. Hodge graduated as valedictorian from the Bregado Flax Educational Centre in 1986. He attended Saint Mary’s University in Halifax, Nova Scotia where he graduated in 1991 with a degree in accounting and finance. “I believe it is very, very important to realize that there is a bigger world outside the BVI,” Hodge says of the experience going to school so far from home. “I can remember seeing snow for the first time. It was a whole different experience outside the BVI and I met and mixed with people from a cross-section of society. Just being there alone gave me something very valuable – it opens your eyes to competition.” As for the future, Hodge is optimistic. He acknowledges that quitting a steady job to focus on his businesses in the midst of an unprecedented economic recession is risky, but says “now is the only time you have.” Hodge considers the downturn as the right time to lay a foundation so that when the economy bounces back, he is ready to capitalise on it. “Some people wait for all the street lights to be green before they leave the house. I don’t do that,” he said.

BUSINESS BVI 2010

Glenroy Forbes Esquire All the Way kaletha henry

Glenroy Forbes is listening to local people. Not through headsets on talk radio or behind murky, plastic windows in civic run agencies; rather he’s listening to BVIslanders when they seek legal representation in matters ranging from corporate and commercial, civil and criminal, insolvency and litigation. Sitting behind an impressive desk in the corner suite of his polished executive offices, the illustrious lawyer is the cofounder and senior partner of Forbes Hare law firm; a practice he established in 2005 with attorney William Hare. The paper and journal-filled room in which he conducts business, paints an image of a man who spends hours poring over documents, details, and decisions for the growing local and international clientele he’s acquired. Merely steps from his current office is the Financial Services Commission where he, as Financial Secretary to the Government years back, was instrumental in putting together the predecessor

“Everything’s on the bottom line and it’s my bottom line. In the private sector, if you don’t do well, they’ll go to the next competitor so you’re forced to do it well, and you have to find good people to render that service.” BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

nascent organisation – the Financial Services Inspectorate. Glenroy still counts it as an honour and privilege to have served in such a capacity and to have held the post of Financial Secretary under the authority of three different administrations. After spending more than 30 years in the Ministry of Finance, the Department of Education; and the Department of Labour, Bureau of Labour Statistics between the British and U.S. Virgin Islands, he says this is the first time in his life where he’s been able to work for himself. “Every day is a new challenge, but I must say, it’s quite exciting and I’m enjoying it.” Forbes’s began his varied career in the BVI as a teacher in the late 1970’s after completing his education at the University of the West Indies in Barbados. In the early 1980’s he enrolled at the College of the Virgin Islands (now the University of the Virgin Islands) where he studied for three years before heading to Morgan State University in Baltimore, Maryland to obtain a Masters Degree in Economics. In 1986 he returned to the BVI for a post as Deputy Financial Secretary in the Ministry of Finance, and remained in that post until he was appointed Financial Secretary in the early 1990s. Towards the end of that decade, his course changed from a focus in monetary issues to judicial concerns when Forbes left the territory to study law in the United Kingdom. In 2001 he finished bar school and returned to the BVI. Upon reaching home, Forbes accepted a post at Harney’s, the oldest and largest law firm in the BVI. After one year he was unceremoniously summoned back to Government as Financial Secretary where he oversaw major financial reform in the Territory. Highlights, Lowlights, and Insights One of Forbes’ most impactful accomplishments while working in the public sector was his ability to implement a computerised system for the budget and data. During that time everything in Government was controlled manually. In addition, he also spearheaded the creation of the Financial Management Act which helped change the way Government managed its finances. Professionally, this high achiever hasn’t hit many roadblocks, but will admit that entering a new field posed its own set of challenges. Even though a large percentage of his local clientele have either come as referrals, or by persons whom recalled his persona in the Ministry of Finance, he still had to build a roster of clients, and establish himself from the ground up. Now that he’s operating his own firm, one of the biggest stumbling blocks is finding locals who are qualified to fill the positions. Though aware of the number of BVIslanders who are studying law abroad, he knows many of them will have to gain experience before coming on board, including one of his daughters who has already expressed interest in joining her father’s firm. In a mild mannered voice he explained why hiring someone seasoned is essential. “I need someone who can take the lead in an area and then less experienced (locals) lawyers can then play a supporting role, at least in the initial years.”

BUSINESS BVI 2010

forbes began his varied career in the bvi as a teacher in the late seventies after completing his education at the university of the west indies in barbados. Prospects in the BVI Economy Forbes says it’s imperative that the BVI continue to strive to develop its financial sector, and though he doesn’t foresee a collapse in the Territory’s financial system, he warned of the ricochet which could hit these shores. “When the U.S. sneezes, we catch a cold,” adding that the BVI is not too far behind the economic bust felt stateside and eluded that we could be next. In regards to tourism, “the majority of tourists come from the U.S. and if they don’t have dollars to spend, I don’t think tourism will flourish.” An area in which the BVI could financially benefit is international commercial arbitration. “If the BVI became a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arbitration could be an area for increased activity. If the Territory was recognised internationally for arbitration, it could bring in millions of dollars. It’s a great time for the BVI to get into it. The BVI is already recognised as the premier corporate domicile. Therefore, in addition to the court connected mediation currently being offered by way of alternative dispute resolution, it would be a fillip in the Territory’s product offerings to combine international commercial arbitration.” Matters of the Court Forbes Hare consists of six attorneys in the BVI office with affiliations in both Canada and the U.K. While Hare primarily handles the international side of the firm, Forbes oversees the local component and continues to receive inquiries as diverse as contract disputes, landlord and tenant disputes, and facilitation with divorce matters. A typical day for him is spent in court, operating his firm, and staying on top of his game. “Everything’s on the bottom line and it’s my bottom line. In the private sector, if you don’t do well, they’ll go to the next competitor so you’re forced to do it well, and you have to find good people to render that service.” While maximising his firm’s potential, he also works on giving back to the community by providing legal aid to locals who can’t afford the sometimes exorbitant costs associated with lawyer fees. Forbes continues to demonstrate his public service spirit within the society that has given him so much by serving on several public ad hoc committees: he is a director on the BVI Social Security Board and Chair of the BVI Health Services Authority.

Tim Peck

takes OBMI into the Future obmi staff

“Despite having achieved an impressive global presence, OBMI has managed to stay connected to its Caribbean origins while leveraging and incorporating its international expertise.”

The veteran architect and resort design specialist, Tim M.E. Peck is the new chairman of OBM International. Tim, who has 30 years of experience working in the firm, is now at the helm of one of the world’s leading architecture and consulting firms, which specializes in master planning, hospitality design, residential, commercial and interior design. In his new role, he oversees all of the firm’s business units and a network of seven global offices. Throughout his successful career, Tim has kept a relentless passion for architecture and an affinity for telling stories through architectural designs that capture the essence and heritage of a setting. After joining OBMI in 1980, Tim established himself in the British Virgin Islands where he started working on multiple resort, commercial and high-end residential developments. He later became the firm’s Regional Director for the Caribbean and most recently served as OBMI’s CEO for this region. As an executive officer, he directed corporate operations and business development, as well as provided his expertise on site analysis for developments in the Caribbean. During his tenure in these positions, the company developed many timeless projects in the British Virgin Islands including, the Long Bay Beach Resort, The Moorings Village and Scrub Island Resort and Marina. Through its work in the Caribbean, the firm has not only contributed to the region’s progress, but it has also achieved a positive impact in its economic growth. “Architecture in general, particularly hospitality architecture, serves as a bellwether of international economic prosperity,” said Tim. “Having the opportunity to contribute to the financial growth of the countries that we work with through our profession and vision is an immense privilege for us. This is especially true for the BVI, which I am proud to call my home and

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BVI BUSINESS & LIFESTYLES

having spent three decades living in the bvi [...] has also instilled in tim a deep sense of connection and understanding for the local environment. where our company has cemented our roots for so long.” In fact, 42 years ago the firm opened its first office outside Bermuda in the BVI, making it the first area of growth for the company. Since then, OBMI has become an important member of the BVI’s business community and the holding company for OBM International is still registered under its jurisdiction. OBMI’s Caribbean origins have also contributed to the firm’s strong knowledge of the local marketplace. Having spent three decades living in the BVI, where he still resides, has also instilled in Tim a deep sense of connection and understanding for the local environment. It is this submersion and sensitivity for his surroundings that helps him translate the organic aspects of a space into architectural typologies and landmark designs. This profound sense of purpose is also reflected on the company’s philosophy of capturing the indigenous characteristics of a project’s location and incorporating these into designs that fit the cultural context of a location. As Tim explains, “only with the utmost sensitivity to its natural environment, culture and history will a site become a place with a story and soul.” This regard for local identity is a concept that Peck and the OBMI team continue to employ as the company expands into new markets. In recent years, OBMI has embarked on a successful expansion plan that has taken the company into new and emerging markets, in the Middle East and North and Sub Saharan Africa, including countries such as Libya, Morocco and Oman. In this last country OBMI led the design work for The Wave in Muscat, for which the firm was awarded the coveted CNBC Arabian Property Award in 2008. Throughout the expansion process, Tim played a pivotal role in handling new business relations and managing OBMI’s efforts as the firm entered these territories. In addition to these markets, today the firm operates projects in over 30 countries on five continents.

BUSINESS BVI 2010

Despite having achieved an impressive global presence, OBMI has managed to stay connected to its Caribbean origins while leveraging and incorporating its international expertise. “Our focus for the future remains on ensuring the steady growth of our business and on generating opportunities in new markets. We plan to embrace these developments while keeping our core value of excellence and quality of design with an emphasis on incorporating new technologies and innovations,” expressed Tim. OBMI’s steady international growth is built upon a significant portfolio of major master planning, interior design and hospitality work, for both resorts and hotels, in the Caribbean, Miami, Europe, Africa and the Middle East. Examples of their extensive list of projects include Peter Island Resort in BVI, Veranda Providenciales in Turks and Caicos, and the Ritz Carlton Hotel Palm Hills in Egypt. For the upcoming years, OBMI has also scheduled many significant projects in France, Bermuda, Argentina, India and China, including the master planning project for the Shangchuan Island in Guandong, China. Since the company’s establishment seven decades ago, OBMI has remained at the forefront of creating sustainable developments. Tim has been fundamental in maintaining the integration of this principle into the company’s design approach. Along with his team, the firm has focused on creating a sense of balance between the environment and modern design, as well as finding ways to integrate the conservation movement with the hospitality industry. As Tim describes, this idea of respect for a site’s surroundings, is part of the firm’s commitment to design environments that are created in harmony with a site’s cultural, environmental and economic influences, while conserving the local heritage and bringing forward its essence and character. As part of its sustainability efforts, OBMI is part of the Caribbean Alliance for Sustainable Tourism (CAST) board and is an active member of the US Green Building Council. The firm also adopts and fosters the LEED system (Leadership in Energy and Environmental Design), with Tim setting the standard for his team recently obtaining LEED accreditation, OBMI bolsters its number of LEED accredited professionals throughout the world.

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In 199 ersonal Estate man, W ised in his co d d 8 st s , a a fo L rd u loyd re mmunit rant, r a pe e a Virgin Is , after tired fr two to y as a lands To lwyn was ma om The riod over 40 growing the sound de Cha urist Bo Mosesodore . He the office irman o becam ard in 2 S from a n re f British e 009 City Un catliffe holds staff of compa the chairman turned to the iversity, an LLM . BV ny of London (Hons) Degree the inte . He was also a major intern I where he ,E de rnation ational instrum Wolverh from the Un ngland and a gree from B a e tru lly know iversity VI, whe n n LLB (H a re he w of Wo n law fi tal in establish st studies, mpton, Engla o n s) over fiv lverham as senio nd. Prio rm ing Moses, Walk e years r to r partne pton, Scatliffe Barclay . r and c ers, in the s Bank was He pursuing her o PLC legal nsultan ad of O business Orion L t for peratio training for several y aw, a ns at ears. H gives h n h e e e w r lping c er sign legal a fi rm a lients n ificant n avigate nd a new a experie d Islands la pproac w. the co nce h urse of British V to irgin BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

The Aims and Objectives

a firm

foundation

fter much discussion in informal meetings and a myriad of concerns on the part of local Contractors, The Contractors Association of the Virgin Islands was officially incorporated on June 10th 2008. The membership currently sits at 35 and growing with the executive members of the group being Mr. Dion StouttPresident, Mr. Dion Jennings- Vice President, and Mr. Lansdell Potter â&#x20AC;&#x201C; Treasurer, Mr. Greg Hodge- Secretary and Mr. Mark Simmonds â&#x20AC;&#x201C;Ass. Secretary. The Association was formed out of the ever growing need for the industry to be regulated such that Contractors have greater accountability to their clients, higher standards are maintained throughout the industry and to ensure that local contractors have the ability to grow and benefit meaningfully from this evolving industry. These are just a few of the underlying factors that helped spawn the development of this group and after months of collaboration, bylaws, code of ethics and aims and objectives were developed which would not only ensure that contractors focus on the bigger picture of protecting the industry but also would make certain that complete transparency in their actions are displayed. The construction industry is one that has been the life blood of BVIslanders for generations. When looking at the economic landscape of these islands one can observe that numerous families have prospered over generations because of this industry. Within the last 10 -15 years the industry has blossomed to the point where it is viewed as one of the economic pillars. And the members of CAVI believe that with the constant demand for buildings and infrastructure there is a bigger need for policy changes or implementation that would ensure that BVIslanders can and will continue to grow with this industry and as such, remain an active 64

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Contractors unite to save the industry for future generations

part of this wheel of economic opportunity. The members of CAVI also believe that an association such as this would help to ensure that contractors would be responsible for their actions, ensure that the construction industry is represented on all levels so that when economic opportunities arise, the people of the Virgin Islands would be the first to benefit. Another key goal of this association is to restore across the board professionalism to the industry which it is hoped would have a significant effect on curbing the cost of construction which would be a benefit to all.. There is a Code of Ethics governing the Association, which states that only persons subscribing to the same will be allowed membership. One key initial objective of this group is to institute an apprenticeship program for all young people who have an interest in pursuing a trade within any of the construction fields. This would not only ensure that the industry is sustained by BVI islanders and belongers but also this would be another avenue of protection for the younger generations. It is quite evident that if it wasnâ&#x20AC;&#x2122;t for the likes of the more seasoned local Contractors, younger persons could not be a part of this industry, so the members of CAVI feel it is imperative that they ensure that others have the same or better opportunities than were afforded them. The association is steadfast in making sure that it addresses the issues that would affect the positive growth of the industry so; to achieve this they meet every other Tuesday at 6pm at a designated meeting place. And it must be clearly noted that the Association is by no means limited to Contractors on Tortola but outreaches to the entire Virgin Islands. Contact for the association: PO Box 4077 Road Town, Tortola BVI. Tel: 284 499 2236 fax: 284 494 9586

1. 2.

To assist Government and Private Developers, whilst ensuring that the most accurate information is available to both, as to ensure that projects of a certain size and nature are beneficial to the Virgin Islands. To enhance, promote, protect and defend the interests of CAVI, its members and the Construction Industry.

3. 4. 5. 6. 7. 8. 9. 10.

To promote transparency in the procurement process. To promote and facilitate the dissemination and exchange of construction information among members and other interested parties. To provide technical, advisory and other services aimed at promoting efficiency in the field of construction. To protect employers and the public generally against inefficiency in the Construction Industry by investigating genuine complaints against members and by taking such disciplinary action as may be deemed necessary. To provide members with legal or other assistance as may be deemed necessary in the interest of CAVI. To encourage, promote, develop and support the various skills and crafts normally used in the Construction Industry. To secure fair and equitable treatment for Contractors by negotiating with public and or private sector agencies, conditions and procedures for Tendering, Bills of Quantities, Specifications and Conditions of Contract. To establish and promote common procedures and methods and guide and assist members who are Contractors with regards to: The negotiation and conclusion of collective and other agreements relating to wages, hours of work and conditions of employment; The adjustment and settlement of any differences, difficulties and problems arising out of the operating of any such agreement; The prevention of any work stoppage pending the adjustment and settlement of any differences, difficulties and problems arising out of the operation of any such agreement and the recruitment and training of apprentices and other individuals employed or seeking employment in t the Construction Industry.

The Code of Ethics The code requires that members affirm that:• • • • • • •

Honesty is their guiding business policy. High standards of health, safety and sanitation be built into every home and building Maintain high professional standards in the contracting industry Members shall deal fairly with each other. As members of a progressive industry, research is encouraged to develop new materials, new building techniques, new building equipment and improve methods of home financing to the end that every home purchaser may get the greatest value possible for every dollar. All sound legislation proposals affecting the industry and the people served shall have informed and vigorous support. Work with the Industry and Trade Associations to promote ethical practices throughout the construction industry; to foster a strong education and apprenticeship program, and to encourage members to invest in the future of their company and the industry.

daily

rates electricians plumbers masons and finishers carpenters dry wall and tile installers sheet metal workers roofers truck drivers/heavy equipment construction labourers

$140 $140 $125 $120 $115 $110 $110 $110 $90

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THENEW

ECONOMY

and how it will define THE REGION’S SMALL ECONOMIES mason marcus

Remember

when economists weren’t sure what to call the global crisis? A disaster, a catastrophe, an emergency? Was it a slowdown, a recession, or, even a depression? As banks tried to unload toxic assets, as governments swept in with massive financing packages and homeowners struggled with spiraling mortgage payments: few could agree on the right words to describe the global economy. As it turns out, redefining what the global financial system will look like after the crisis has proved just as challenging.

Fast-forward to today: world leaders, economists

and businesspeople continue to stand at loggerheads on reaching a consensus path to recovery and growth. Business forces beset national recovery schemes. Local and national interests plague regional coalitions. One need only look to Ireland’s fierce schismatic fighting over a referendum on the Treaty of Lisbon, to see that harmonization across the European Union can scupper if just one country marches to its own tune. (Poland, the Czech Republic, and Germany have kept in stride—holding back, on amending their agreements with a keen eye on the Irish referendum). Global efforts at a coordinated response face similar challenges. At September’s G20 meeting, in Pittsburgh, US President Barack Obama lauded international cooperation that staved off a larger crisis and pushed for nations with large trade surpluses to begin spending and consuming more. But Obama’s counterparts face considerable challenges. China isn’t likely to cut back its international trade imbalances, if unemployment in export-oriented business continues to grow. In Germany, a higher rate of consumer spending could come at the expense of investment in capital-goods industries; crucial to the country’s economic recovery. US Consumer spending accounts for around 70 percent of all US economic activity, and it is no secret that America’s seemingly insatiable appetite for consumer goods, perhaps rightfully dried up during the recession. Many wonder how long frugality will remain in fashion. 66

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key eccu oecd

Eastern Caribbean Currency Union Organization for Economic Co-operation and Development

Starbucks, a poster-child for over-expansion and Mondo-sized carafes of coffee, has repositioned its brand, “Rebranding by Debranding,” as the Guardian glibly proclaimed. American Express and other credit card companies are working hard to regain consumer trust; while most spenders keep delaying the purchase of big-ticket items. The message from the White House is clear. “In the run-up to this crisis, many of the world’s largest economies depended on the American consumer to buy their exports to drive growth, and we made it easy. For too long, Americans were buying too much and saving too little. And that’s no longer an option for us, or for the rest of the world,” US Treasury Secretary Timothy Geithner told reporters, at the G20 meeting. But curbing the spending problem will take more than just hard talk. “There is no button Obama can push to make America save more and spend less,” writes Marc Levinson, Senior Fellow for International Business at the think-tank Council on Foreign Relations. And if there were, would he push it? Cutting back the US government deficit, which stands at $1.6 trillion this year thanks in large part to a ballooning stimulus package and a falloff in tax revenue, would come at the expense of popular pork barrel programmes. Political incentives, says Levinson, favor consumption. The wild success of US subsidies for purchases of cars or houses, “even though Americans have arguably consumed too much of both in recent years,” seems to confirm this. Some say the aftermath of the collapse of Bretton Woods has left the international monetary framework volatile, damaging and prone to crises. A growing consensus is calling for a global reserve currency to replace the greenback. Officials in the so-called BRIC countries—Brazil, Russia, India and China—have all called for an end to the dollar’s dominance. Russia’s president Dmitri Medvedev called the dollar system “flawed,” and the People’s Bank of China is reportedly vying to make the yuan a global currency. China has a lot to lose if the dollar deflates. The US dollar accounts for 65 percent of the world’s foreign exchange reserves, according to the Economist, “only slightly less than a decade ago and well ahead of the euro’s 26 percent share.” Three quarters of all reserves are in the hands of emerging economies, while China holds one-third of the global amount. “There is much domestic anger about the potential losses China may face as a result of its lending to rich Americans,” the Economist reported last July, but “any attempt to dump its stock of dollars would risk triggering a plunge in the currency.”

Last year, BRIC countries pushed hard for the SDR (Special Drawing Right) to become a global currency. The IMF created the SDR in 1969, basing the currency on the weighted average of the dollar, euro, yuan and pound. To date, SDRs add up to less than one percent of global reserves, but there are indications the currency is growing in popularity. In August, the Board of Governors of the IMF approved a general allocation of SDRs equivalent to US$250 billion to provide liquidity to the global economic system, by supplementing IMF’s member countries’ foreign exchange reserves. Yet, it remains unlikely the SDR or yuan will replace the dollar’s dominance as a reserve currency any time soon. Many feel it would take years to create sufficiently liquid SDR money markets and, the bonds can only be bought and traded by central banks, rather than investors. (In March, Obama said he didn’t believe there was a need for a global reserve currency). While the yuan will be traded more frequently over the next decade, it too will find difficulties challenging the dollar. Relocations of political and economic power take years to effect, as Yousseff Cassiss argues in his history Capital of Capital. Major shifts in capitalist power centres, writes Mr. Cassiss, occur at an almost geological pace.

officials in the so-called bric countries (brazil, russia, india, and china) have all called for an end to the dollar’s dominance.

In the 17th century, Amsterdam

was the epicenter of the world’s finance system. By the early 19th century, London became dominant and New York City in the last century. But over the course of three centuries, no one city has topped the list of global finance centres. Financial capitals have “remarkable longevity,” Cassis writes, “in spite of the phases of boom and bust in the course of their existence.” Over the long-term, currencies also move slowly. It was half a century after the American economy surpassed the United Kingdom, before the dollar replaced pound sterling. There is no sure indication that the Chinese yuan will overtake the dollar so quickly. Clearly consumer confidence remains badly bruised in the wake of global changes. James Surowiecki, who writes the New Yorker magazine’s financial page, points out a strange recent phenomena in Buenos Aires, in June: a snaking line of train customers trying not to buy tickets, but make change. “For well over a year now, small change has been hard to come by there,” writes Mr. Surowiecki. The likeliest explanation, he finds, is that Argentineans are hoarding coins because inflation is making the metal in them more valuable than their face value. “Hoarding causes shortages, shortages also promote more BUSINESS BVI 2010

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BUSINESS BVI 2010

International Monetary Fund

Gross Domestic Product

openness to international trade, a reliance on key exports and heavy indebtedness shook regional economies to the core, when revenue from offshore finance, tourist arrivals and remittances began to dry up. International bodies took notice. The region’s offshore finance industry came under increased scrutiny as G20 leaders promised the end of “tax havens.” Many predicted only a few OFCs would survive worldwide. A wave of new Tax Information Exchange Agreements swept across the Caribbean, and governments scrambled to update compliance regimes. The speed of the crisis took many by surprise. Firms and individuals faced with tightening borrowing conditions raised costs, and delayed spending on consumer and investment goods. Private capital outlays across the world plummeted and global production and trade of capital goods and consumer durables slumped. “GDP losses across high-income countries surged during late 2008 and early 2009, and emerging markets were hit as well—20 of 25 middle-income countries experienced GDP declines during the final quarter of 2008 and 24 of 26 during the first quarter of 2009,” the World Bank report, in a paper tendered to G20 leaders before they met in Pittsburgh, in September. Creative and proactive policy decisions across the region, mirroring worldwide trends, were late to follow. For the first few months after the crash of Lehman Brothers, the US bailout of AIG, Freddie Mac and Fannie Mae, and the British rescue of Northern Rock, advanced bookings belied the fact that tourists had stopped reserving hotel rooms and charter yachts. A lengthy US-presidential election was blamed for shaky bookings. Poor airlift access, kept tourists from traveling. As the fog cleared, few doubted that more proactive steps were needed to coax travelers to Caribbean shores. Under the strain of shrinking receipts, governments began to look elsewhere for funds. In the early months of 2009 a handful of Caribbean nations including Dominica, St. Lucia and St. Vincent and the Grenadines turned to the International Monetary Fund for emergency aid disbursements. The IMF, which at times has shared a troubled relationship with the region, has committed to lending a record $160 billion worldwide; doubled member countries’ access to funds; created flexible tailored loans; and streamlined loan conditions to focus on core recommendations. Caribbean nations have taken notice. In September, Jamaica accessed US $304.41 million, approximately 74 percent of its quota, from its Special Drawing Rights at the Fund. And both Antigua & Barbuda and St. Kitts & Nevis have been eyeing their own similar agreements. The British Overseas Territories haven’t fared much better. Earlier this year, the UK government imposed direct control of the Turks & Caicos Islands, citing widespread corruption. In September, Governor Gordon Wetherell said cutbacks would be made to reduce a swollen civil service, after he discovered the territory’s finances were worse than originally thought. Discussions were reportedly underway to relax the territory’s borrowing guidelines.

gdp imf

Other symptoms have been familiar:

ver the last year, the Caribbean has faced a confidence crisis of its own. The failure of CL Finance, the largest privately held conglomerate in Trinidad and Tobago, and the crash of the Antigua-based Stanford Financial Group, allegedly a massive Ponzi Scheme, drew fresh attention to the fragility of regional economies.

key

hoarding.” Mr. Surowiecki is careful not to write-off the problem as a particularly Argentinean anomaly. “The Argentine experience,” he writes, “actually underscores the degree to which all modern financial systems depend on confidence, and the problems that erupt when that confidence disappears.” Over the last year, the Caribbean has faced a confidence crisis of its own. The failure of CL Finance, the largest privately held conglomerate in Trinidad and Tobago, and the crash of the Antigua-based Stanford Financial Group, allegedly a massive Ponzi Scheme, drew fresh attention to the fragility of regional economies.

A few miles away, it seemed the Cayman Islands would not alba oecs key

Alternative for the Americas

Organization of Eastern Caribbean States

be so fortunate. Facing US $100 million budget revenue shortfall, the territory turned to the UK government for borrowing approval only to be handily rejected and told to raise local taxes. But in the eleventh hour the UK granted permission for the Cayman Islands government to borrow up to $229 million of the $372 million it had wanted over the next financial year on the grounds that it will make cuts and broaden the country’s revenue base. Earlier this year, Anguilla’s parliament approved a series of multi-million dollar loans without the UK’s support, to continue funding for the territory’s capital projects. Meanwhile, the Virgin Islands downgraded revenue projections by 5 percent, in September, while maintaining the territory’s finances were sound. Boosting counter-cyclical spending, the territory took on new loans to finish capital projects including a hospital, greenhouses and sewerage system. The move buoyed the VI’s public debt to $163.3 million, more than doubling the net debt ratio and bumping the debt service ratio from 4.21 to 5.37 percent. The situation across the Eastern Caribbean Currency Union (ECCU) looks equally unsettling. In 2008, ECCU economies grew a mere 2 percent, compared to 6.1 percent recorded the previous year. According to a recent report by the UN Economic Commission for Latin America and the Caribbean (ECLAC), the projected average growth rate for the ECCU economies in 2009, is a paltry -0.1 percent. Hardest hit were the construction and tourism sectors, which suffered significant deceleration, while the manufacturing sector also saw a setback fuelled by falling economic demand. The United States accounts for 50 percent of the Caribbean tourism market, which attracts 22 million visitors and injects $26 billion into regional economies each year. Europe accounts for another 40 percent of the region’s tourists, according to the CTO. To date, Saba, Cuba, Guyana and Jamaica have come out the only winners with a growth in tourist stop-over arrivals, according to the CTO. Anguilla, Bermuda, Grenada and St. Vincent and the Grenadines have been among the hardest hit. Cruise ship passenger arrivals across the region have fared marginally better, than over the same period last year. According to the CTO, light traffic destinations like Antigua & Barbuda, St. Vincent & the Grenadines and Dominica saw a bump in arrivals while other destinations like Puerto Rico and the US Virgin Islands, which land over one million cruise ship passengers annually, saw declines of 18.1 and 14.9 percent, respectively. In Martinique, cruise tourism dropped by 32 percent in 2009, over the same period, after violent riots broke out island-wide. In March of this year, strikes on the French island continued into their second month, as protestors demanded wage increases for low income earners. In its sister island, Guadeloupe, leaders signed a 200 euro, per month wage increase, financed by employers with help from the state. Worldwide tourist arrivals declined by eight percent between January and April 2009, continuing the sharp falloff recorded during the second half of last year. South Asia registered one of the largest drops, at 12 percent, while Sub-Saharan Africa showed a marginal increase over the period, according to the World Bank. Meanwhile, several planned regional hotels have either been delayed or have stopped construction this year. Of the 105 projects (22,136 rooms) under development in the Caribbean so far in 2009, about 51 projects were likely delayed until the economic situation improves, according to the 2009 Caribbean Trends report, compiled by Atlanta-based PKF consulting.

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Financial Post Newspaper, Toronto, Canada, February 4th, 2009. 2 © 2009 Oliver Wyman. All rights reserved. This information may not be reproduced or redistributed, in whole or in part and Oliver Wyman accepts no liability whatsoever for the actions of third parties in this respect. As measured by Oliver Wyman's Shareholder Performance Index SM (SPI) of the world's 400 largest publicly quoted financial services firms. Best performing financial companies with market value>US$15 BN (Aug 07 - Dec 08).

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

n fact, for several Caribbean States, a recurrent fiscal deficit has been the norm. Well before the surge of the global crisis, many faced serious difficulties in balancing public revenues and expenditures.

The CARICOM Single Market Economy

The Caribbean Community

caricom csme

key

For many countries, a revenue shortage

BUSINESS BVI 2010

has left little option but to go deeper into debt. In fact, for several Caribbean States, a recurrent fiscal deficit has been the norm. Well before the surge of the global crisis, many faced serious difficulties in balancing public revenues and expenditures. In August, the Canadian government convened a steering group composed of eight member countries of the ECCU along with representatives of the Canadian International Development Agency, to create dialogue on Caribbean debt management. The project is aimed at preparing national debt strategies to guide the acquisition of debt; and growing the Regional Government Securities Market to improve cash flow and debt management. In a regional development report authored in 2005, the World Bank found that government spending rose for every country in the Caribbean, from 27 percent of GDP over 1990-1997 to 32 percent of GDP, over 1998-2003. Meanwhile, “Average Caribbean debt in 2003 was 96 percent of Gross Domestic Product, compared with 65 percent of GDP in the six Central American countries.” Although average fiscal deficits, over the same period, fell about 3 percentage points of GDP, by 2008, according to ECCU estimates, fiscal deficits equivalent to 3.5 percent of Gross Domestic Product were recorded, while the balance of payments current account deficit remained at a very high level, approximately 34.4 percent of GDP. Large debt burdens have troubled recovery efforts of Caribbean countries, and low-to-middle income countries worldwide. In the wake of the crisis, G20 leaders agreed to adopt countercyclical stimulus measures averaging .5 percent of GDP in 2008, 2 percent in 2009 and 1.5 percent in 2010. But most regional economies don’t have deep enough pockets to sustain the upturn in spending without loan assistance. Compounding the problem, prospects for private capital flows this year remain gloomy. “With bank lending falling sharply through the first half of 2009, and FDI flows expected to reverse, total private flows are estimated to be in the order of $13 billion, almost one-third of the corresponding level of 2007,” the World Bank recently reported. Even though the Caribbean still attracts a disproportionate share of world FDI, its share has been falling since the 1990s (Caribbean FDI to GDP ratio was 3.7 times the world average over 1990-94, but had fallen to 1.9 times over 2000-02). Given the global economic decline in FDI, the Caribbean likely will be subjected to even greater pressure and increased global competition for investment. Regional economies’ reactions to the crisis have been diverse, ranging from bond placements to tightening expenditure. In St. Kitts & Nevis, where the major risk to economic stability stems from high levels of debt, proceeds from an EC$150 million

bond placement reduced the overdraft facility, reversing the steady upward trend in the overdraft for the first time in several years. By mid-2008, the overdraft in the domestic banking system was more than halved. According to Prime Minister Denzil L. Douglas, the country has decreased its national debt and primary surpluses have reached record levels. “My government has stated over and over that our debt was incurred to rehabilitate our hurricane-battered economy of 1990’s and early 2000’s and to pursue projects that would yield future economic benefits. The trajectory of our debt in recent years clearly demonstrates that we are now reaping those benefits,” he said. In Dominica, where real GDP growth is projected to be about 1 percent in 2009, after reaching 3 percent in 2008, the government has embraced a target budget surplus and passed new financial services legislation to strengthen the regulatory and supervisory framework for non-bank institutions, in particular, insurance companies. “The Government’s determination to continue implementing economic policies aimed at reducing the public debt ratio and creating buffers against external shocks and natural disasters is commendable,” reported an IMF mission, lead by Wendell Samuel. The country has also begun to look elsewhere for development funding. Earlier this year, Prime Minister Roosevelt Skerrit announced his government would request US$60 million loan from the Peoples Republic of China, for the construction of a 200room resort. Mr. Skerrit, whose government has also entered into Hugo Chavez’ Bolivian Alternative for the Americas (ALBA), has rejected opposition to the planned loan. “They have criticised Petro Caribe, they have criticised our relationship with Venezuela, with China, but we can see the benefits of that friendship and that relationship,” he said. St. Vincent and the Grenadines, which saw real output growth fall owing to a weak tourism sector and a fallout in construction projects, reduced its overall deficit by offering larger grants, making efforts at tax arrears collection and one-off non-tax revenue. In August, Prime Minister Dr. Ralph Gonsalves called other ECCU countries to support neighboring Antigua and Barbuda, which has seen a 35 percent falloff in revenues this year, despite maintaining 25 percent of the OECS GDP. “Now that Antigua & Barbuda is facing these extra ordinary difficulties it is incumbent that all of us, not only out of a sense of solidarity with Antigua & Barbuda, but in our own interest ourselves, in order to protect the Eastern Caribbean Currency Union and our financial system,” said Dr. Gonsalves. According to Antiguan Prime Minister Baldwin Spencer, the country is running more than a $100 million budget deficit, and would seek help from China for aid or loans. Antigua already

secured $50 million in grants and loans from ALBA to pay civil servants. Other ECCU countries have mobilised by implementing a number of regional policy decisions, including: The removal of Value Added Tax (VAT) and the Common External Tariff on selected commodities; safety net programs and unemployment benefits to cushion the impact of the crisis.

In the wake of the crisis, information sharing and

coordination among Caribbean economies remains a high priority as international associations blend risk across borders. When the Stanford Financial Group, Antigua and Barbuda’s largest private investor and second largest employer, after the government, fell to pieces, the Antiguan government and the Eastern Caribbean Central Bank took control of the Bank of Antigua. In turn, they passed operations to the recently created Eastern Caribbean Amalgamated Financial Corporation, a consortium of the Antiguan government and five indigenous banks from the OECS sub-region. When liquidity problems threatened the future of the massive CL Financial, which managed around $100 billion in assets, regional governments also stepped in. Earlier this year, the Trinidad and Tobago government took control of CL Financial’s largest assets including Colonial Life Insurance Company, while the governments of Belize, the Bahamas and Guyana took control of CLICO subsidiaries in their respective countries. Since, the Bermuda Monetary Authority announced it had started winding up proceedings against the Bermuda branch of the British American Insurance Company, causing concerns for clients. St. Kitts and Nevis will carry out a full audit of its local branch, although the Barbados branch is still registering growth. Many have complained that regional organisations have been ineffective in addressing the global recession. CARICOM’s virtual absence from a major coordinated response on both the CLICO and Stanford affairs and limited engagement in recovery efforts throughout the region has done little to instill confidence in the regional body’s push for a Caribbean Single Market and Economy and Common External Tariff. Strong opposition to giving up national decision-making authority continues to hinder efforts to create a stronger regional institution. Intra-Caribbean investment remains almost negligible and strict labour policies and caps make an unfettered and mobile workforce a distant reality. Still, the nature of the global crisis has underscored the real need for regional cooperation. Former LIAT Chief Mark Darby complained that skyrocketing local tariffs makes interisland traffic costly and many regional governments continue to expect volumes of traffic, without revenue guarantees.

ntra-Caribbean investment remains almost negligible and strict labour policies and caps make an unfettered and mobile workforce a distant reality.

Speaking at the launching of national consultations, on the proposed OECS economic union at the Eastern Caribbean Central Bank, St. Kitts & Nevis PM Dr. Douglas called for a “truly meaningful economic union.” “We have had to develop a stabilization plan that seeks to coordinate and harmonize a wide range of monetary, fiscal, regulatory, sectoral and social policies,” he said. Quoting Augustin Carstens, Deputy Managing Director of the IMF who said at an International Conference in Trinidad and Tobago that ”seizing the opportunities presented by globalization means by definition increasing integration with the world economy.” Prime Minister Douglas responded: “Unfortunately, increasing integration with the global economy is a very treacherous and risky endeavour for a small island state, especially a Nation with a population of 45,000.” But for many, the global recession underscores the importance of reordering the importance of international ties, in favour of the so-called BRIC countries. As interest in the region from the UK and EU appears to wane, China has been increasing its commitments. Both the Chinese vice president and vice premier have recently visited the Caribbean and China released its first policy paper on Latin America and the Caribbean in November. The region also needs to focus on making its voice heard in the international arena. This year, Bermuda received a nod from the Organisation of Economic Co-operation and Development, when it was elected joint vice-chairman of the Steering Group, of the OECD’s Global Forum. For James Boughton, an historian with the IMF, decisions on which countries have a seat at the table will have a major effect on what gets done and what gets set aside at future meetings. “Only the major participants in financial markets--industrial and emerging market countries--can devise new rules for finance, but they cannot by themselves devise new rules for trade in commodities. Nor can they cope alone with climate change or extreme poverty. The more inclusive the participation in the next Bretton Woods, the more likely the outcome will have long-run benefits for mankind,” he writes. For regional governments, turning abroad to new markets to seek financing and assistance during recessions may soften the blow in the short-term. But claiming a place at the negotiating table for the long-term, will likely ensure that during the next recession, the Caribbean is not left out in the cold.

BUSINESS BVI 2010

BVI BUSINESS & LIFESTYLES

realestate&tourism

BUSINESS BVI 2010

The 384

A new line of Cats at Sunsail jane bakewell

BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

The first one arrived on Totola’s shores from the Robertson and Caine factory in South Africa in November and was promptly whisked away by a sailing magazine editor for a test spin with his family. The other dozen “cutting–edge 384 Cats” are due over the next few months. In a bid too upgrade their fleet for entry level investors, Sunsail employed well–known multi-hull architects, Morelli and Melvin (known for the famous round the world racer “PlayStation”) to design this special fleet of 384 catamarans exclusively for Sunsail. The company hopes to place these vessels in their bases through out the Caribbean and Mediterranean. Josie Tucci, Global Project Manager from Sunsail headquarters in Florida speaks about the new design like a writer with an exclusive scoop. “For an entry level catamaran this is really top of the line” Tucci enthuses. “It is designed for high performance, yet great detail has gone into insuring that it is highly practical and easy to sail.” “The bonus,” Tucci continues, “is that there is no wasted space – from roof to flooring this catamaran is maximized for use.”

BUSINESS BVI 2010

The layout of the catamaran follows closely other models of a similar size: 4 and 2: four double staterooms and two heads. The difference in that having six foot six inch headroom in a ‘38 cabin is pretty remarkable and consolidating storage in under bunk lockers gives the cabins a more spacious feel. An additional single forepeak birth on both sides is ideal for families with children or just extra storage space. There are two things Josie Tucci feels will make this catamaran stand out in a harbour of look-a-likes. “The edgy design will catch people’s eyes. It is more angular with a longer water line in relation to the length which will minimize pitching.” The aft stepped transom is also unique being flat and open, so that when coming off a dock or dinghy with groceries or luggage, one does not have to step over the transom, allowing for easier boarding. The other feature in the hull design is that it offers a smooth ride while maximizing load carrying capacity. Steering with the specially crafted twin helm engines makes even a fairly large boat easy to maneuver in tight docking situations. The design also considered the captain, who never has to move far with a centralized sail control system within arms reach, which ensures that helming is both a simple and comfortable task.

“The Sunsail 384 is yet another example of our commitment to investing in our high quality charter fleet. By commissioning the best designers and builders, we have been able to produce a supremely comfortable and easy to sail catamaran that places sailing performance and customer comfort at the forefront,” comments Lex Raas, Sunsail President and CEO. Performance and ease of use are not the only selling features on the 384, but some “green” technology has also found its way onboard. Mounted on top of the large bimini hardtop that extends over the cockpit are solar panels. It is estimated that these panels will generate enough electricity to save approximately 20 percent on engine hours. This is in turn will increase the lifespan of the outboard batteries by up to five years. “The design emphasis for these boats is living outdoors, utilizing the sun and providing for ample shade,” Tucci explains. The trampoline on the foredeck, perfect for sunbathing, extends all the way across and is made of high quality comfortable Farrari fabric, which does not leave a “grid pattern” on your backside. The large shaded cockpit with additional seating gives cool sailing comfort on the warmest of days. The other luxury

components of the 384 include shore-powered air conditioning and electric dinghy davits for hoisting the dingy for sail verses trailing it behind on a line. However, what will catch the eye of potential investors is the entry-level affordability. Priced for purchase through the Sunsail Yacht Partnership Program, the 384 Catamaran fully equipped with electronics and sails start at $339K. And even the frugal traveler on a budget will find the charter sail experience an affordable option. At current BVI rates, the 384 Catamaran charter cost is approximately $650 a day - split between a party of eight, the cabin cost a night is only $81 per person. For a floating hotel room in the Caribbean, this is a value hard to beat. “We know this new fleet will add exceptional value to our yacht offerings in the BVI,” Josie Tucci explains. “We already have the entire fleet booked for the upcoming Kite Jam in March 2010.” This first of its kind water sports event organized by the BVI Tourist Board is aimed at promoting kite boarding. Organizers were looking for live aboard boats and Sunsail’s new 384 fleet of catamarans were selected and will most likely enjoy their own promotion at this event as well.

what will catch the eye of potential investors is the entry-level affordability.

Right Equipment! Lowest Cost!

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REAL ESTATE & TOURISM DEVELOPMENT

VIRGIN GORDA the crown jewel of bvi tourism jane bakewell

BUSINESS BVI 2010

Who knew some 40-odd years ago, that the BVIs third largest and second most populous island was destined to become the “crown jewel” of BVI tourism? Certainly no one would have predicted in the early 60’s that this small island, which spans less than nine square miles, was destined to play a significant role in the international travel market. But one visionary in particular, may have had a lot to do with positioning this little corner of the Caribbean as a global competitor. That man was Laurance S. Rockefeller, who saw a lot of potential in this island which Christopher Columbus dubbed the “fat virgin,” for the way it appeared as a reclining Rubenesque woman from the sea. The year was 1961 and the Government of the BVI agreed to lease 365 acres of Crown Land on Virgin Gorda’s western shore to Rockefeller for a proposed development. Sandwiched between the main harbor and commercial center of Spanish Town, and a narrow strip of land bordering Savannah Bay, is the quiet cove of Little Dix Bay. Sheltered by a reef that extends across three quarters of the bay at the entrance, sits a pristine piece of land with a wonderful white sand beach. Rockefeller found what most upscale resort developers are looking for – virgin land that lends itself to two key components: exclusivity and privacy. Rockefeller also happened to have the particular foresight that all investors wish they had in hindsight. The design plan called for a low-density-high-end resort that would stand the test of time - a luxury getaway destination that would fit seamlessly into the natural environment. Well ahead of the prevailing market norm that economized rooms in tall concrete towers, Rockefeller envisioned instead, open pavilions with gardens and villas that blended into lush landscaped grounds. Even air conditioning was frowned upon in the early days. It was the perfect getaway for the jet set crowd. No phones in the room, no TV’s, no distractions from a paradisiacal environment. And it worked. With distracting non-essentials off the amenities menu – the resort could focus on what it does best: providing un-paralleled service in all areas and the highest quality in dining. Since the mid 70’s, now recognized as the era when the BVI began to gain recognition in the international tourism market, Virgin Gorda continued to stand apart as the island that seemed to attract visionary developers. It was early that decade that Myron and Bernice Hokin - veteran sailors and frequent winter cruisers to the BVI, were made an offer they could not refuse. That offer was to buy 75 acres of land in Virgin Gorda’s North Sound from fellow yachtsmen Basil Symonette and convert the few small villas he had constructed for charter captains, into use as a family retreat. That retreat grew into a worldclass yachting destination. Today, the Bitter End Yacht Club, as it is known, has made the Conde’ Nast Traveler’s “Gold List.” The resort’s name is a nautical term referring to the very end of a line (or rope) and aptly describes the rocky cliff that tapers to the northern most point on Virgin Gorda. What has kept this destination that offers 85 shore-side accommodations and 70 moorings “afloat,” is the insistence on a high level of service and attention to the environment. The Bitter End Yacht Club generates its own electricity, collects and distills its own water, utilizes solar power and takes treated grey water to irrigate the gardens. The other plus is exclusivity – you can only get there by boat! Rubbing shoulders in the North Sound with Bitter End Yacht Club and extending an additional 140 acres is Biras Creek Resort, another resort property with high attention to detail. Taken over in 2006 by Michigan developer David Johnson and his company Victor International, Biras Creek Resort has seen a major face lift in the last few years. The property has the advantage of spanning two major bodies of water, the Atlantic Ocean and the Caribbean Sea, both of which can be viewed from the hilltop restaurant. Ocean suites and garden villas have been refurbished in a sleek upscale Caribbean motif. The staff personally meets guests at the dock with a cool drink and warm scented washcloths and guests are promptly whisked away in a motorized golf cart to their accommodations. The resort service is truly personalized, friendly and professional. Victor International has made a further commitment to development in Virgin Gorda with the acquisition of Oil Nut Bay, a 300-acre adjoining peninsula with plans for 88 freehold villas. There will be a yacht marina and restaurant in a LEEDS -compliant development that is touted to be one of the lowest density resort communities in the Caribbean. Included in the

development plans are 27 estate lots with custom home designs. A prototype, the Jewel Box, has already been constructed with state of the art kitchen and bathroom features. Further down the western shore are two more unique resort developments. Just before the entrance to North Sound is the more low-key Leverick Bay Resort, which has 15 slips and 36 moorings for the yachting set, and hillside rooms and suites for those wanting to spend the night ashore. A yacht provisioning store and several restaurant choices surrounding a pool with shops make this anchorage another key destination for boaters and land -based tourists as well. A little further to the south and under the shadow of Gorda Peak on the western shore is Nail Bay Resort, an historic 148-acre former sugar plantation, now an on-going development for vacation villas and private home sites. With close to a mile of waterfront with a view to the Sir Frances Drake Channel and three beaches this resort caters to those who wish to be fully independent. The option for moderately priced villas appeals to a range of travelers looking for value for dollars and has garnered endorsements from Travel + Leisure as well as Frommer’s Guide. Managing Director of Nail Bay Resort, Ajit George, has a lot to say about the island’s high- end tourism development potential. “Major hotel and resort brands see Virgin Gorda as the key tourist destination in the BVI,” says George, a long time resident of Virgin Gorda and involved in several development projects on the island. “The island has a perception of being high end and newsworthy and therefore developers want to put their investment dollars here,” Ajit explains. Earlier this year it was announced that the developers of Nail Bay Resort and Mooney Bay Estates had signed a “Memorandum of Understanding” with the India-based Taj Hotel Resorts and Palaces. So the question arises, why is the island of Tortola, the commercial center and largest island, not attracting the same level of tourism development dollars as Virgin Gorda? One of the reasons is that Virgin Gorda is one of “Nature’s Little Secrets” prime jewels and offers a pristine island with several well –maintained national parks, beautiful beaches and coves and Gorda Peak at its center – surrounded by a semi-rain forest with diverse foliage. It is also home to The Baths, a hugely popular- giant granite boulder formation that forms mammoth caves and water pools at the southern tip of the island. There is also the historical draw to the sugar cane plantation ruins on the grounds at Nail Bay, and the spectacular hillside remains of a historic copper mine overlooking the ocean on the rocky eastern coast. Virgin Gorda also stands apart from other tourist destinations in the BVI by the sheer number of high-level accommodations available on one island. Tortola offers a variety of guest houses and exclusive villas (some very impressively high-end), yet there are only a few hotels and only two resort properties, both of which fill a particular tourism niche, but have not garnered the same level of awards from top travel publications. The outer islands of Jost Van Dyke and Anegada offer low-key accommodations for the adventurous, where mainly sailors come ashore. The other comparable factor with Tortola is that tourism is only one of the pillars of the economy in this bustling commercial and business hub. However, tourism is the main economy of Virgin Gorda. Most small businesses are directly involved in a supporting role in the tourism sector in the area of food supply, taxi and rental car transportation, water sports activities, restaurants and gift shops. This is an island where service to visiting tourists is the main ticket for putting bread on the table and resident islanders here have an appreciation for that in their desire to offer the best service. There is also the conviviality and warmth that comes from living on a small island community with less than 4,000 residents. It is a known truism in the highly competitive hotel industry, that buildings can be put up anywhere, but it is the level of service that differentiates one destination from another. It seems clear, that if the current new resort developments, which carry name recognition and prestige, add to the mix service that is exemplary; this will certainly add another golden boutonniere to Virgin Gorda’s high-end tourism product - which appears to be in full bloom right now. BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

Family Paradise Oil Nut Bay

BUSINESS BVI 2010

A new community sits tucked within the eastern tip of Virgin Gorda. Oil Nut Bay is the latest creation of award-winning real estate and resort developer, Victor International Corporation. Headed by David V. Johnson, Victor International has the rare distinction of being a debt free developer with over 40 successful U.S. developments to its credit, and has its first international community here in the BVI. The architecture and careful planning of this multi-generational family community integrates the very best of Caribbean lifestyle, while instilling a strong sense of home and privacy for its residents. Oil Nut Bay is truly in a world of its own as it is only accessible by boat or helicopter. Upon arrival by boat, guests are greeted at the newly completed arrival dock which is highlighted by a traditional thatched roof, richly-stained wood, coral stone tile flooring, and complete with underwater lights which illuminate the glorious sea aquarium below. The Ipe Bar, artistically hand carved by a local BVI artist, provides a perfect welcome, offering traditional island cocktails such as Mango Maniacs and Pain Killers. Rum sipping is complimented by stunning hues of blue bay waters, coral reef and surrounding Green Malayan Coconut palm trees that sprawl out over a newly rejuvenated, sugary sand beach. A variety of living options are offered and are under construction, each set on some of the most magnificent lots in the islands. Five of nine beach villas are still available, featuring spacious living areas, an infinity edge pool, vast ocean views and indigenous landscape. A variety of unique design choices, including island, traditional and beach cottage styles, are available to choose from or you are free to design your own individual style. Oil Nut Bay sets a new standard for eco-development in the Caribbean. This very low density community consisting of only 88 homes on 300 acres of land and shoreline, has been designed for minimal impact on the natural surroundings. As with all previous Victor International developments, quality of life trumps BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

the density and scale of the development itself. The Oil Nut Bay Beach Club reins as the social center and heartbeat of this full service resort community. The Beach Club facility includes a dramatic open-air pavilion capable of accommodating weddings, cocktail parties and other special events. On a daily basis, the Beach Club is a casual lounge, providing residents and guests with a breezy and picturesque haven in which to relax. The outside bar and grill offers daily luncheon options in a casual atmosphere near the beach and infinity-edged pools. Several unique amenities focus on the family element, including a state-of-the-art Nature Center which provides activities and learning experiences for the children of the community. Marine and environmental biologists are on hand to tell stories about the rich history of Virgin Gorda, North Sound and the BVI people. The Kids’ Club, otherwise known as “The Nut House,” boasts daily supervised activities such as ocean adventures, art projects, water sports and golf and tennis lessons. Oil Nut Bay is focused on wellness and activities for all ages. The resort amenities include a full service spa and fitness facility including yoga, tennis, and a myriad of water sports activities including sailing, wind surfing, snorkeling, kayaking, and beach related games and relaxation. Experienced instructors are available to lead and teach and just add to the fun of whatever activities you are most interested in pursuing during your stay. Victor International recognizes the importance of setting an example for how future resorts should be modeled in order to provide responsible, yet luxurious living alternatives based on sustainable methods available at the cutting edge of today’s technology. The leader of the Oil Nut Bay environment team is Dr. Larry Oswald, founder of Pure Eco Environmental Solutions. “Developer David V. Johnson has the unique ability to look at something and see future potential that few can imagine. In the case of Oil Nut Bay, he sees its future as the most beautiful place on Earth where families will build homes and lifestyles that will be passed from generation to generation,” said Dr. Oswald. Oswald oversees the process by which electricity for the community is generated by central wind and solar electricity generators. The community is also currently connected to BVI Power to provide for a continuous power supply. In addition, through the conversion of seawater via reverse regenerative osmosis and desalinization, freshwater is created for drinking, showering, and for use in swimming pools. “Grey water” from sinks, showers and other non-saltwater waste sources is collected and treated not only for use in irrigation, but also for charging the battery packs of the many electric vehicles used for community transportation and service purposes. Electric vehicles provide a mode of transportation with which Victor International has become quite familiar. During the summer of 2009, at one of its U.S. resort communities, Bay Harbor, Michigan, set the Guinness Book of World Records for the longest parade of electric vehicles, with 218 participating. Bay Harbor boasts the highest number of electric, or GEM cars per capita in the world. On the same day, David V. Johnson became the first recipient of the GEM Visionary Award for his outstanding contribution to the application of alternative fuel vehicles in planned communities. In addition to Oil Nut Bay, Victor International is also raising the bar in the area’s boating world by creating the North Sound Yacht Club, which will open in November 2010. Located in Virgin Gorda’s North Sound, adjacent to the venerable Biras Creek Resort and a short dingy ride from Oil Nut Bay, North Sound Yacht Club will be one of the world’s most unique and premier mega-yacht clubs. North Sound Yacht Club, surrounded by a quaint village complete with upscale retail boutiques, fine dining and private villas, features a state-of the-art marina with up to 38 slips for mega-yachts from 100-350 feet. Club membership also includes membership to the Oil Nut Bay Club and use of the Biras Creek Resort facilities. Victor International is proving true the adage that good things come in threes. In a trifecta that began in 2006 with the acquisition of Biras Creek Resort, a Relais and Chateau property, Victor International is now under construction with the world-class additions of Oil Nut Bay and North Sound Yacht Club.

BUSINESS BVI 2010

ElegantUpgrades The Moorings Mariner Inn, for the sophisticated traveler jane bakewell

Coinciding with their 40th anniversary in the BVI, the Moorings has added some lavish touches to their property on Wickams Cay II, a mainstay of the charter yacht industry in the Virgin Islands. Sixteen months in planning and execution has yielded a remarkable upgrade to this shore side enclave that consists of two marina’s, a newly refurbished hotel, and two restaurants- the latest of which, Charlie’s, has recently opened its doors. Winding through the newly landscaped grounds with lush tropical plantings, one is immediately confronted with the sense of Caribbean casualness fused with a smart and savvy polished feel to the properties furnishings and design. A business traveler would immediately want to loosen his tie in

the comfort of an air conditioned Ocean Suite and a charter guest fresh off the salty seas would feel luxuriant in a bathroom twice the size of a yacht berth, with a tub open to the bedroom by means of a smoked sliding glass door. Possibly meeting both of these travelers’ needs is what parent company TUI Marine had in mind, which has built a reputation for worldclass properties in exotic destinations globally. New construction began with the demolition of a guest room building facing the ocean. Seven exquisite Ocean Suites with plush new furnishings and state of the art electronics have a second story un-interrupted view to the Cruise Ship dock and beyond to the Sir Francis Drake Channel. The spacious suites are equipped with superior quality king or double beds and a BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

day bed for families. A balcony off the bedroom offers a quiet spot to relax and take in the ocean views. Just below the suites a multi-purpose building houses a yacht sales office, a briefing room and Ginny’s - a coffee house and ice cream parlour. Just a short distance down a hall walkway, one is greeted with an open sky garden patio with shower stalls for charter guests and a spa and massage room above. Flanked by an angular high ceiling reception center, open on three sides with a comfortable seating area - the overall feeling is a relaxed yet elegant ambiance. An additional sixteen Marina Rooms were refurbished with great attention to detail, such as framed yacht inspired artwork and photographs, nautical stainless steel hardware in door handles and “above the counter” glass bowl sinks. All rooms have wireless access; I-pod docking stations and flat screen TV’s, while the Ocean Suites also offer a mini bar and coffee station, DVD player and dual his and her sinks. Working with the design team at the Road Town office of OBM, also generated some “green features.” Eco-tiles in the bathrooms are from recycled materials, low-flush toilets conserve water, natural slate is the choice for exterior tiles and bamboo floors line the spa room. A newly constructed business center is wired for TV and computer presentations with removable chairs, which enables the space to be utilized for private business receptions or

corporate cocktail gatherings. With the Moorings Restaurant just a short walk through the patio, events are easily catered. A rocky point extending from the marina harbour was reclaimed and enhanced to serve as the foundation for the new waterfront restaurant, Charlie’s, named after Charlie Cary, the visionary sailor who founded the Moorings in 1969. Flanked on two sides by wide open steps leading to the courtyard, this easily accessible corner piece of the Moorings Marina serves both Caribbean and Italian themed dishes. A traditional stone oven cranks out authentic pizza, while grilled seafood dishes with tantalizing sauce combinations yield a Caribbean flair. In anticipation of the marina’s future growth, 80 new slips were added to the break wall just beyond the restaurant. The challenge for an independent water supply was met by a recently constructed Desal -plant that produces 60,000 gallons of fresh water daily. The marina also features a pump that circulates ocean water throughout the harbour keeping the dockside waters clean. TUI Marine’s major investment in the Moorings BVI follows a company policy of keeping a first class destination in line with their other properties worldwide. This sort of forward thinking growth in a development plan greatly enhances an important sector of the BVI tourism product and with it brings a new level of stature to what the BVI has to offer both the business traveler and yachtsman alike.

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The Outlook for Real Estate

edward childs

BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

A year ago when writing this column for the 2009 edition of Business BVI, I opened

the evidence indicates that the british virgin islands’ real estate market has indeed remained resilient to the worst of the recession.

BUSINESS BVI 2010

with the statement “Predicting the future has never been so difficult”. Twelve months later, we have been through the most tumultuous recession since the Great Depression of 1929. With weak signs of recovery for the major world economies, are we better off now than twelve months ago? Against a backdrop of the collapse of the banking sector, America went through an historic election with the first black American being elected President of the United States of America. While economies went into freefall, there was hope that many of the prior administration’s failures with regard to international relations would be reversed. The first few months of the Obama Administration were centred around saving the American economy together with the first tentative approaches towards rapprochement with previously hostile countries. Massive investment programmes in America and Europe to keep economies turning over were set in motion with the bail out of the North American car industry, tackling toxic financial instruments through guarantees and further stabilization of the financial sector. The G8 summit became the G20 summit with recognition that the expanding economies of China, Brazil and India could no longer be ignored. And then came the “White List”. Suddenly, these truly seismic world events enveloped the British Virgin Islands with the realization that global economics could, and do, impact these islands. In April 2009, the OECD published its list of co-operative and un-cooperative financial centres with the BVI placed on the “grey list” for failing to sign enough TIEA’s (tax information exchange agreements). While the BVI has now been promoted to the “white List” (with 15 TIEA’s signed), the realization came that the off-shore financial sector, so long the mainstay of the economy of the islands, could be vulnerable. Recent attention from the United Kingdom on some of its Caribbean Territories, including Cayman, Turks & Caicos and Anguilla, has focused on the dependence of these small islands on the off-shore financial sector with the UK Foreign Office warning that their future prosperity can no longer rely just on this sector. In the same article in 2009, I predicted that the property market in the BVI would remain stable despite worsening economic conditions. The events that have fashioned the world over the past twelve months have been far more dramatic than could have been predicted a year ago and yet I am pleased that the evidence indicates that the BVI real estate market has indeed remained resilient to the worst of the recession. While property prices have fallen in North America and Europe, and continue to fall despite the lowest interest rates for many years, we are generally seeing the market for land and houses in the BVI stabilizing without the dramatic fall in values experienced elsewhere. Certainly sales activity is down, but the market has always been small which has, in part, helped it to remain stable. In 2008, when sales of villas agreed in the prime real estate years of 2006 and 2007 were finally closed, a total of 28 sales of villas in excess of US$500,000 were recorded at Land Registry. This compared to just eleven sales in 2006. We will not know the impact on total sales in the BVI that have been agreed since September 2008 until the sales have closed and are registered, likely in 2010, however we can expect a reduction in the sale of both land and houses. The trends we have witnessed in 2009 indicate that in the local market, BV Islanders remain active in the acquisition of land. Of more concern is the increased number of listings of houses taken by real estate agents which is tipping the balance of supply and demand. While purchasers now have more choice than ever when seeking a home in the islands, there is no indication yet that sellers are motivated for a quick sell, another reason why asking prices have remained relatively stable. Bucking the trend of major development is the commencement of Oil Nut Bay, a resort residential community that is being developed by the Victor Corporation on the eastern peninsula of Virgin Gorda. The Development of the main resort facilities are underway. At a time when jobs are being cut in the tourism sector by many of the major hotels, the development of a new resort facility with the promise of employment, training and investment, is seen as an important economic boost for Virgin Gorda. Completion of the first phase of development, including the club house, wellness centre, nature centre plus the construction of the first villas, is expected by the end of 2010. Another resort development, Scrub Island, is scheduled to open in the New Year, with the first phase comprising the marina village, a mix of condominium units, a retail centre, restaurant, bar and docks. Despite some set backs in 2008, financing to complete the project was secured and this development remains on target to be the first major new resort to open in the British Virgin Islands for over forty years.

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Getting what you want when you want it is more than a promise here on Peter Island. It’s a way of life. You might call it luxury. We call it standard practice. For more information visit peterisland.com

The existing resort communities of Nail Bay and Little Dix Bay on Virgin Gorda continue with their residential sales where purchasers are offered the opportunity to participate in a villa rental programme and enjoy established resorts with central facilities. Two small residential developments are on the drawing board in Mooney Bay, Virgin Gorda and Anegada where the developer will be offering up market villas and serviced sites in a sensitively controlled environment. The commercial market remains strong despite the economic recession, with much of the activity in this sector insulated from external factors. The development of office buildings in Road Town to service expansion in the financial sector has continued to see activity with several new buildings underway including the largest pre-let to date to a law firm comprising over 40,000 sq ft of space. Retail development has also taken a leap forward with the redevelopment of Road Reef Plaza into a successful retail centre and the commencement of construction of a retail warehouse development at Pockwood Pond. Plans are also underway for further retail warehouse development at Fish Bay. On Virgin Gorda, the first tenants are now commencing fit out construction at the new town centre development at Virgin Gorda Yacht Harbour.

For foreign investors, the speeding up of the landholding licence approval process has been welcomed and has generally reduced the waiting time for overseas investors to obtain landholding licences. This will help stimulate the real estate market when activity returns, provided the recent efficiency for approvals continues. The move by Government to require foreign investors to obtain landholding licences when acquiring property that has been foreclosed by local banks has been viewed with mixed feelings in the banking sector. While for some this “loophole” had long needed to be plugged, the perceived increased risk for banks lending on some projects may result in more expensive loans for investors. There has been talk of an economic recovery for the past six months. While there are signs that perhaps the worst is over for major economies, the future remains uncertain. The road to recovery could be long and, for the BVI, the recovery from recession remains dependent on external factors not least of which is the focus on off-shore financial centres. Predicting the real estate market over the next twelve months remains a challenge. There is hope that as confidence starts to build in the North American and European economies, that investors will again return to the islands seeking their little part of paradise.

BUSINESS BVI 2010

REAL ESTATE & TOURISM DEVELOPMENT

greenbusiness

BUSINESS BVI 2010

green opportunities freeman rogers examines the bvi as it takes baby steps towards creating an environmentally friendly economy and society through profiling local entrepreneurs as they find opportunities for consumers who have become more green conscious.

BUSINESS BVI 2010

GREEN BUSINESS

Freeman Rogers

Crushed cars at the Sea Cow’s Bay Compound.

BUSINESS BVI 2010

Local businessman Floyd Stoutt caught the green bug while watching television and travelling. All over the world, it seemed, people were talking about saving the environment — and many of them were bent on turning a profit while they were at it. About three years ago, Mr. Stoutt jumped on the bandwagon: He turned in his contractor’s hat and started a recycling business in Sea Cows Bay that crushes vehicles and sells them abroad for scrap metal. “Before 2006, I was involved in cutting roads and foundations throughout Tortola,” Mr. Stoutt said. “But it got saturated, and it was time to diversify.” The decision to take over the function from a Trinidadbased company was motivated both by economic concerns and by a desire to help the environment, according to Mr. Stoutt. By compacting and shipping away as many as 2000 vehicles each year, he significantly reduces the territory’s solid waste stream. Certainly, then, a business like Mr. Stoutt’s benefits the Virgin Islands environment. But can it also earn a reasonable profit?

Asked if his business, which is subsidised by the government, pays as well as his former contractor work, Mr. Stoutt grinned and shrugged; “It’s balancing out,” he said, adding that he also augments his profits by operating an excavator he owns. Besides, some of Mr. Stoutt’s rewards can’t be measured in dollars. On a recent morning at his compound near the Ellis Thomas Downs, he gestured up to the surrounding green hills. “You see how this is? I’d like to see Tortola remain the same so we can breathe the fresh air.” The businessman said he has several other ideas to help make that happen, but he was reluctant to share them for fear a potential competitor might be listening. He did volunteer, though, that he would like to start recycling tires. “When you shred them, you can put them in asphalt, or you can put them into concrete for roads,” he said. But he was quick to point out that he’ll need help. Support from the government, the private sector, and the community would be necessary in establishing such recycling programmes here, according to the businessman. Mr. Stoutt believes the result would benefit residents and tourists alike. “We want to make Tortola an equal island within, say, the next ten years,” he said. “We want to recycle everything.”

BUSINESS BVI 2010

GREEN BUSINESS

In the BVI In this territory, Mr. Stoutt is not alone: A handful of businesses offering green goods and services have started up here in recent years, and some established businesses have been moving in a similar direction. But many businesspeople are quick to add a caveat similar to Mr. Stoutt’s: They cannot do it alone. Without the support of government, the private sector and the community, they said, they will struggle to survive. Looking abroad, one can see their point. Much of the international green economy is fueled by pressure brought by concerned consumers, non-profit organisations and new legislation. For example, the European Union announced in March that €105 billion, 30 percent of its regional policy budget for 2007-2013, will be invested in the green economy: About half of that is designed to help member states comply with EU environmental legislation. And the US, which traditionally has lagged behind many of its European counterparts in green initiatives, recently announced $2.3 billion in tax credits for manufacturers of clean energy equipment as part of President Obama’s stimulus package. Non-profit help In the BVI, there is plenty of untapped potential in the green economy, said Charlotte McDevitt, the executive director of Green VI, a non-profit organisation formed earlier this year. Ms. McDevitt, who recently completed a Master’s thesis on waste management in the BVI, believes that much of the territory’s trash can be saved from the incinerator and transformed into viable products. The benefits would be two-fold: In addition to stimulating the economy, such initiatives would help the BVI deal with an overwhelming profusion of solid waste. To jumpstart such ideas, Ms. McDevitt and other Green BVI board members, most of whom are Virgin Islanders, hope to promote green businesses here. For starters, the group is planning a glass furnace in Trellis Bay, which would be used to turn recycled glass into vases, dishes and other art. The project would not make anyone rich: Ms. McDevitt said it would aim for self-sufficiency, with profits supporting the furnace’s operations, an apprenticeship programme and other community programmes. Green BVI also hopes to work with the Small Business Bureau to help other green companies get off the ground. “There are numerous projects that you can convert using paper as a resource, and quite a few applications for tires as well,” Ms. McDevitt said. “A lot of what we throw away is not waste at all. It’s very useful stuff.”

BUSINESS BVI 2010

Freeman Rogers

Global trend The so-called “green economy” has flourished internationally in recent years as consumers, businesses and governments have become increasingly concerned with protecting the environment. Green businesses like BVI Recycling are popping up in record numbers. Typically, they aim not just to make the world a better place, but to make a profit while they’re at it. Some leaders and commentators have gone so far as to suggest that the sector is the answer to the global economic crisis. While touting a clean energy bill in June, United States President Barack Obama proclaimed, “The nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy.” United Kingdom Prime Minister Gordon Brown struck a similar note in his budget address this year, calling for a global “green new deal” to stimulate economic growth around the world. In the international business community, yesterday’s fad has become mainstream: The New York Times now publishes a regular blog called Green Inc., and “green banks” designed to aid eco-friendly businesses and consumers are now popular in the United States and Europe. Meanwhile, billionaire businessman Sir Richard Branson, the owner of Necker and Mosquito Islands in the BVI, recently unveiled the £240 million Virgin Green Fund to invest in eco-friendly projects. With characteristic optimism, Sir Richard is predicting a 30 percent return on the fund’s investments.

Recycling Courtney Tomlingson and his wife Lorraine Wheatley couldn’t agree more. About three years ago, they started collecting glass bottles in hopes of selling them to an overseas recycling company for a profit. Today, they’re still at it, but they have yet to make a sale. Since the formation of their company, BVI Recycling, negotiations with several potential customers have fallen through. “Every time we had a shipment, we had a setback,” Ms. Wheatley said recently. Now, about 600 tonnes of crushed glass are piled up at a site near the Ellis Thomas Downs, in mountains of colourful shards that reach several feet high. Ms. Wheatley, who is also co-owner of the Anegada Reef Hotel, said she and her husband have high hopes that a Florida company will buy the glass in the near future. And, if that proves profitable, they plan to start recycling aluminium and plastic, too.

The Earth Collection at Prospect Reef.

Solar power Alternative energy is another rapidly growing facet of the green economy worldwide. Here, a small company called Alternative Energy Systems opened in 2004. Since then, the business has grown slowly but steadily, engineer Jacco Bos said on a recent afternoon in the company’s warehouse office in Purcell. Even though AES is feeling the pinch of the recession economy, Mr. Bos said, “Business is still good enough that it’s proving successful.” To date, he estimates that AES has sold 50-75 solar-powered back-up power systems, which are often used in lieu of generators, and more than 100 solar hot water systems. Currently, much of the company’s business depends on customers who are willing to make an investment up front in hopes of earning their money back in the long term through reduced electricity or gas bills. “Economically, solar hot water is a great option in the Caribbean,” Mr. Bos said, adding that the systems typically pay for themselves in four to five years. The company does its best to educate potential customers about such benefits, but ecofriendly government policies also would help bolster the alternative energy sector here, Mr. Bos said. Currently, for instance, the company pays a 10-20 percent duty on solar panels and other equipment it imports. Reducing or eliminating such duties on eco-friendly merchandise would lower the cost for consumers who wish to go green. Other options are more complex. When Mr. Bos, a Canadian, talks about Ontario, Canada, his eyes light up. The city, he explained, has started using a “grid-tie” system where residents with solar panels are paid to produce and share electricity. On Ontario’s hottest days, power consumption is very high; but, on those same days, private solar panels draw energy from the sun and put it back into the grid, balancing out the drain. A similar system in the BVI, Mr. Bos believes, could help augment the power supplied by the BVI Electricity Corporation. Green buildings Some BVI businesses see going green as a necessity. Steve Fox, the managing director of the OBM International’s VI office, said the architecture firm is increasingly feeling pressure to provide environmentally friendly services. “I’ve always said that we have to do it; otherwise we’ll be a dinosaur,” Mr. Fox, a board member of Green BVI, said recently. “It’s not just good for business. We have to do it. We’re not doing it to be an innovator. We’re just trying to keep up.” Today, homeowners and commercial developers around the world want their buildings to have green features. “In more cases than not, they’ll actually be looking for that these days,” Mr. Fox said. “Whether it’s for marketing purposes or they actually want do it right.” One reason for that trend is the US-based Green Building Council. In 1998, the nonprofit organisation developed the Leadership in Energy and Environmental Design (LEED) certification programme. To receive the LEED label, buildings must earn points based on energy efficiency, water conservation, proximity to public transportation, use of environmentally friendly materials and other factors. “By creating measurable green standards,

BUSINESS BVI 2010

the LEED programme has done an incredible job of transforming the construction industry in the United States,” Mr. Fox said. That transformation might soon touch these islands. Hanging on a wall in a conference room at OBMI’s Road Reef office is a sketch depicting what Mr. Fox hopes will be the territory’s first LEED-certified building. Designed for JOMA Properties, the 60,000-square-foot commercial building would be constructed on the waterfront in Purcell if the developer decides to proceed. And, though LEED won’t certify homes here, OBMI is working with the St. John-based Island Green Builders Association in hopes of making local certification available soon. The future The sheer variety of new eco-friendly businesses here suggests that the territory’s green economy will continue to grow. Patrick Mitchell, a former employee of the Water and Sewerage Department, operates BioSafe out of a small shop in Road Town. In addition to installing conventional wastewater treatment systems, the company, which opened about two years ago, offers several green products. The SludgeHammer system, which can be installed in lieu of a septic tank, converts sewage into water that can be used to irrigate a garden or a yard. Such technology is badly needed in the BVI, where many property owners improperly dispose of their wastewater, according to Mr. Mitchell. Mr. Mitchell also sells grease interceptors that hook up to sinks to collect grease that might otherwise clog pipes or wash directly into the ocean. And, in the future, he hopes to start selling composting toilets. “The whole point is trying to change the way we think of wastewater,” Mr. Mitchell said. “Most of all, we need to protect the environment.” Even the BVI fashion industry has started going green. Last December, Jenefer McSheene, a night manager at Peter Island Resort, opened a small store at Prospect Reef that sells eco-friendly clothes made by a company called The Earth Collection. Spun from cotton and silk, the dye-free shirts, pants and skirts are made from natural materials through processes that don’t harm the environment, Ms. McSheene said. So far, business has been slow in the quiet shop, but she has high hopes for the future. Meanwhile, Premier Ralph O’Neal’s daughter Abby is seeing green everywhere she looks. In the spring, she plans to open a Road Town restaurant that she said will sell exclusively locally grown, organic food. Ms. O’Neal, another Green BVI board member, also is considering a business that will specialise in “green conversions,” such as retrofitting existing buildings with solar panels and other eco-friendly features. “I saw on an episode of Oprah once that you could reduce your energy bill just by putting little things in sockets,” she said. Ms. O’Neal expects that these and other businesses will succeed: Given the chance to go green without too much hassle, most BVI residents would eagerly jump on board, she predicted. “I really believe that the BVI could be the most green country on the planet,” she said. “Because we’re so small, we can push legislation through. We can set an example on a global scale.”

BUSINESS BVI 2010

Freeman Rogers

GREEN BUSINESS

Patrick Mitchell at his Biosafe shop in Road Town.

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Greening the

business Corporate citizens around the world are accepting the importance of conducting business in an environmentally responsible manner. They are taking steps to reduce their carbon footprint and it is no different for ventures dealing in oil. So how does a petroleum distribution company in the Caribbean green its business? One case study is the Sol Group, an organization that supplies fuels, lubricants, bitumen and LPG in the Eastern Caribbean, Guyana, Suriname, Belize and Puerto Rico. The company implements multiple strategies to offset its carbon emissions. These policies are designed to redress the balance between the current need for oil-based fuels in our daily lives and the call for a greener environment. Commercially, Sol has introduced a cleaner V-Power® fuel, a high-octane, nitrogen enriched premium gasoline that actively cleans a vehicle’s engine while it’s being driven. The innovative formulation of the fuel has five times the amount of cleaning agents required by Federal government standards. This helps to remove the build up of carbon deposits that can accumulate on the intake valves and fuel injectors. The process of removal of this ‘gunk’ helps to improve engine performance and fuel efficiency and perhaps most importantly, it helps to reduce carbon emissions into the atmosphere. As Sol strives to play an active role in environmental preservation, the company has launched a number of campaigns, encouraging drivers to use its cleaner fuel. As a supplier of LPG (liquid propane gas), Sol has introduced an improved formula of 50% propane and 50% butane. The balance ensures that the gas burns cleaner whilst retaining properties that will make it last longer and emit the smell associated with gas to help identify leaks and installation issues. Internally, Sol has a Health Safety Security and Environment (HSE) Policy, which commits the company and its contractors to protecting the environment and its biodiversity. In keeping with this policy, the operating team is trained to use materials and energy efficiently. This means contacting clients prior to mobilizing a truck or tanker for a specific request and working out the delivery logistics to incorporate as many clients as possible on a given route. This energy efficiency drive also applies to barge deliveries to the other Virgin Islands. A significant aspect of this HSE policy is the risk management element. Here in the BVI, Sol targets its marine clients with an annual marine oil spill training day. Marine operators are invited to attend a seminar that incorporates practical exercises. Attendees are instructed on the importance and deployment of oil spill booms designed to contain the fuel and the use of oil absorbent pads to soak up any oil based spillages. Training sessions are also part of the Sol employees manifest. Once the staff completes the training, they are available to assist in the management of third party spills territory wide. Similar risk management training is also in place for the fuel retail station operators. The forecourt attendants are required to undergo instruction on health and safety responsibilities along with step-by-step guidance on the clean up of spills and its safe disposal. As the distributor to the local Shell retailers, Sol requires its contractors to carry out wet stock reconciliation in the morning and the evening. This exercise checks for potential leaks and minimizes the inherent dangers of oil based fuels. In the event that asset integrity is challenged, Sol examines the cause and will assist in the necessary repairs. The Sol HSE policy encourages participation in improving and setting industry standards. In keeping with this, Sol provides client specific assistance. Sol is working with the BVI Electricity Board, the largest fuel consumer in the country, on a waste oil recycling and disposal system. For decades, waste oil (used engine oil) and slops (oil and incidental gas run-off) which are the by-products of the electricity generation plants, were stored on site with no viable alternative for their safe disposal. Sol has been able to offer a safer and more acceptable solution to this problem: Through the installation of an 8,000 gallon holding tank, the waste oil and slops now are contained securely on site prior to being sealed, removed from the property and shipped off- Island to recycling plants. The recycled waste oil and slops are converted into fuel for heavy engines such as those that run cement kilns or smelters. Sol has committed to helping the BVI Electricity Board with the removal and clean up of 60,000 gallons of waste fuel currently stored on-site. Along with making inroads in delivering cleaner and more environmentally sound domestic and commercial products and services, the Sol office in the BVI has partnered with a number of entities and projects that are

BUSINESS BVI 2010

GREEN BUSINESS

advertorial focused on greening the Island way of life. One such body is Green VI, a not-forprofit organization in the BVI, and its proposed Glass Project. Green VI focuses on sustainability issues, waste reduction and resource management. The Glass Project has been designed by Green VI to help address the issue of glass in the waste stream of the BVI. This glass is destined for the incinerator where it poses health issues for the workers and affects the efficiency and lifespan of the machinery itself. The project proposes to separate and collect glass from the waste stream and manage this resource to create a viable business. The Glass Project will see the installation of a glass furnace to burn the collected glass which will then be recycled into reusable items such as tiles, household goods, gifts and the like. The project will also seek to provide training and employment for glass blowers. Sol has agreed to partner with this initiative by donating the LPG required to fuel the furnace. The annual cost of LPG necessary to run the furnace is estimated at $54,000. Another recent and environmentally relevant initiative that Sol supported is the Clean Regatta Program to which the St Martin Regatta and BVI Spring Regatta are signed up. The program, which is an initiative of Sailors for the Sea, encourages yacht clubs and sailing regattas to make voluntary efforts to improve their interaction with the water environment. As sponsors of both regattas, Sol agreed to provide each participating vessel with marine absorbent pads. In the event of an incidental or accidental oil-based spill, a pad is placed on top of the spill to soak it up. If the spill is on the water, the pad will float and absorb just the oil or petroleum. Once saturated the pad can be removed and disposed of in accordance with local regulations.

BUSINESS BVI 2010

A court for the environment

The potential impact on the bvi and the caribbean ominike robinson-pickering

“Every person has the right to an environment that is generally not harmful to his or her health or well-being and to have the environment protected, for the benefit of present and future generations, through such laws as may be enacted by the Legislature including laws to a) prevent pollution and ecological degradation; b) promote conservation; and c) secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.” - Article 29 of the BVI Constitution.

Although the BVI Constitution provides the Legislature with wide powers to enact laws to protect the environment, the Judiciary has just handed down its first judgment in an environmental case, Virgin Islands Environmental Council v Attorney General and another (the VIEC case) which has sparked the ignition of discussions locally surrounding whether there is a need for an International Court of the Environment (ICE) and its possible impact on the BVI. Calls for an ICE are far from new and have been aired on numerous occasions spanning over a decade. The mandate of the ICE is to include “enforcing the right to a healthy environment” and “imposing fines on countries or companies that fail to protect endangered species or degrade the natural environment”. Whilst the arguments for the creation of such an international court have proved deserving of consideration, the difficulties and hindrances that will be encountered in the creation of such a court must be simultaneously acknowledged. The judgment in the VIEC case demonstrates that such issues are not reserved to the shores of developed countries arguing about the effects of climate change, such as the G-20 and their allies. The arguments for and against the establishment of such a Court and more specifically its impact on the BVI need to be thrashed out in advance of being faced with the decision. The dispute in the VIEC case involved a challenge of the approval given by the former Chief Minister and Minister of Planning for the construction of a five-star Resort, Marina and Signature Golf Course on the currently sparsely populated Beef Island. Although many grounds were proffered by the VIEC for the revocation of the approval, the only argument that found force with Justice Indra Hariprashad-Charles was that the proposed development would severely affect one of the mangroves, Hans Creek Fisheries as it was a “marine protected area”. Justice Hariprashad-Charles stated that the decision of the Minister was illegal because it was made in contravention of regulation 51(5) of the Fisheries Regulations read in conjunction with the applicable statutory provisions. The High Court Judge was careful to note that the VIEC had not asked the court to adjudicate upon the merits of the Beef Island Project or whether it may result in adverse environmental impacts. However, she seemed to suggest that she would be in favour of a decision to allow the Beef Island Project not to be quashed in its entirety but rather, that the aspects of the development such as the hotel, inner marina, residential development, commercial development and infrastructural development which may not give rise to illegality should be preserved by the decision-maker. This is understandable as the Beef Island Project is intended to boost tourism, one of the mainstays of the BVI economy.

the mandate of the international court for the environment is to include “enforcing the right of a healthy environment” and “imposing fines on countries or companies that fail to protect endangered species or degrade the natural environment” If the ICE actually comes into being, the deciding factor would be whether the BVI should become a Signatory State. Notwithstanding a population of 30,000 and growing, with 435,679 active companies on the Companies Register as of 31 March 2009, this is not a question that can be answered lightly as the decision will affect not only the citizens and residents of the BVI but also all companies incorporated under the Business Companies Act, 2004. This is because the ICE would have jurisdiction over the territories of Signatory States as well as private individuals (including corporate individuals) resident/ incorporated/domiciled in a Signatory State. In addition, there is the possibility of jurisdiction in relation to non-Signatory States through corporations domiciled or incorporated in Signatory States with operations in non-Signatory States. The sanctions imposed by the ICE would include fines and orders to restore and rehabilitate damaged habitats. Although rulings would not be binding, in the case of a small countries like the BVI, international political considerations will undoubtedly be brought to bare. Furthermore, an ICE might have far reaching impacts on the economic survival of the BVI because of the limited diversification of our economy thus far. It is no secret that the BVI relies heavily on tourism and financial services for its economic sustenance but, just one “adverse” ICE judgment may severely impair either or both of the twin pillars. International environmental law is not consistent with the polluter pays principle; neither is it consistent with the common but differentiated responsibilities and respective capabilities of small island States such as the BVI. While small island nations emit less than one percent of global greenhouse gas emissions, their geographic and economic characteristics put them at risk to experience the effects of climate change with more immediacy and severity than anywhere else in the world. The BVI and its other Caribbean counterparts do not have the resources and the capacities to participate in international fora where environmental standards are set and enforcement would require the enactment of national legislation, BUSINESS BVI 2010

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establishment of specific enabling administrative/institutional arrangements, public awareness and education, environmental management measures, and regulation and enforcement. The question is-Who is going to finance this? It can be predicted that most of the environmental disputes in the BVI’s future will involve the need to strike a balance between economical development and environmental preservation. As British Virgin Islanders strive to maintain the standard of living to which they have become so accustomed, the call for development and enhancement of what has been thus far relatively low key development in the hotel sector is becoming ever more persistent. On one hand because the BVI is dependent on tourism and financial services, a strong argument could be made that those economic bastions supersede the need for the ICE. If the BVI is a Signatory, the tenets of the ICE may indirectly impose such severe restrictions on development that it might actually stagnate our tourism sector as well as repel companies which might otherwise have incorporated in the BVI due to fears of being subject to the jurisdiction of the ICE by being incorporated in a Signatory State even though their main operations take place in non-Signatory States. This will no doubt negatively impact on the overall economic viability of the financial services industry. There is no guarantee that global interference would produce any real merits or at the very least, benefits that cannot be derived by sovereign adjudication. To address serious international environmental harms, the introduction of an ICE may prove more difficult than the current courts and tribunals. International environmental law is a particularly broad subject matter that affects many fields, such as labor, trade, energy, sovereignty, international fisheries law, health, international treaty law, and human rights. While existing courts and tribunals may not deal effectively with serious international environmental problems, the establishment of this new court arguably will lead to inconsistent judgments among the many courts able to adjudicate the same environmental problems, as well as a fragmentation of international environmental law. The converse is that if the BVI refuses to become a Signatory State, then it may have no redress when “accidents” which occur in far off jurisdictions impact the BVI. It has been surmised that Chernobyl and other environmental disasters have shown that pollution does not respect national borders, so defence of the earth cannot just be left to individual states. Activists for the ICE advance this argument by stating that the system at present provides inadequate legal avenues to seek redress for environmental disasters that cross boundaries. A suggestion which at first blush seems to marry the concerns of both sides of the arguments is the promotion of the BVI as an ecotourism destination. Ecotourism would provide funds for conservation and directly benefits the economic development and political empowerment of communities all the while minimising the negative aspects of conventional tourism. Sir Richard Branson is already on this train, having recently purchased Mosquito Island with the intention of developing it as an eco-resort. It has been reported that plans for the resort include energy power from wind turbines and solar panels, with the buildings designed to utilize local wind patterns which would avoid the need for air conditioning. It is proposed that all the food will come from local, organic sources and all motorized transport will be powered by bio fuels. If this type of operation is in the pipeline, do we really need an ICE to help with the laws that dictate how we manipulate our environmental resources particularly at the risk of irreparably damaging our economic stability? As a Signatory State to the ICE it would be expected that basic regulations in relation to pollution limits, proper garbage disposal mechanisms, recycling and littering restrictions would be adhered to. Air standards would also be implemented and this may lead to calls for an increased use of hybrid vehicles as well as limitations on the number of vehicles per household or per capita. Are these restrictions ones which BVIslanders are ready and willing to adopt? Can we adapt to the changes which being an environmentally conscious society will bring? Changes in consumption and the composition of our waste. 96

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“for many of our caribbean people, the ocean is the life-support of our planet: it provides much of the food we eat, the air we breathe, and drives the climate we need to survive.” As it now stands, the BVI has one of the highest levels of waste production per capita and this problem is compounded by the lack of sufficient garbage disposal mechanisms and no island-wide recycling. In order to meet the stipulated regulations massive upgrades would have to take place and this would be no inexpensive feat. The strain on the economy to implement international standards will weigh heavily both upon financial and human resources and may well outweigh the economic benefits to be obtained from such output. However, adherence to the regulations might be just the catalyst the BVI needs to get its waste disposal act in order. Currently, there is a proposal by GreenVI, a non-profit organisation, to start with bottle recycling and have the disposed bottled re-used to make bottle blown art work. Submitting to the jurisdiction of the ICE would make projects like these more attractive to organisations that may otherwise be reluctant to provide the funding necessary for these types of upgrades particularly since, as mentioned previously, companies incorporated in the BVI would be subject to the ICE. Justice Hariprashad-Charles aptly stated that, “For many of our Caribbean people, the ocean is the life-support of our planet: it provides much of the food we eat, the air we breathe and drives the climate we need to survive.” Thus, although it is acknowledged that it is the sovereign right of every country to utilise their natural resources in the way that they see fit, it is similarly acknowledged that environmental issues are not restricted to territorial and sovereign boundaries as such issues and concerns have nothing less than a contagion effect on neighbouring islands, States and Territories and on a grander scale, universally. It is the result of this consequence that weighs heavily in the corner of the establishment of an International Court of the Environment. The proponents believe that the principal causes and effects of the world’s major environmental problems are, as a result of this contagion effect, international in nature and thus require solutions which are also international. Hopefully, the magnitude of the disputes that the BVI is likely to encounter in the near future will not require international intervention. The fact is that without the ICE there is no redress if a company comes onto the shores of the BVI and does whatever it wants. There is however, no certainty that having one regulator enforcing worldwide compliance would make much of a difference. It is understood that there are no borders to environmental breaches and therefore neighbouring and distant countries may do things which affect our shores and if do not become Signatories we have no redress. It is undeniable that the concerns which are raised engender the need for the BVI to take a look at its local environmental practices before it can seriously consider submitting to the mandate of the international community. In any event, whether we actually have to begin addressing our minds to the question of the help or hindrance of an International Court of the Environment is left to be seen as a draft Statute of the International Environmental Agency and the International Court of the Environment was presented at the UNCED Conference in Rio de Janeiro since June 1992 and there has been no tangible progress in relation to ICE. Whether or not the court becomes an immediate reality, the BVI has a responsibility to future generations to take a serious look at the way its current environmental practices will impact the long term health of the land and sea that has been providing us with serenity that we want to maintain as Nature’s Little Secrets.

newsfromaroundtheregion

BUSINESS BVI 2010

GIS

AROUND THE REGION

Address to the 49th Meeting of the OECS by Dr. Len Ishmael

May 2009

Prepare for the effects of globalization Len Ishmael Director General of the OECS Your Excellency, the Governor of the British Virgin Islands, Honorable Premier and Members of the Legislature, Honorable Prime Ministers, Chief Ministers, Members of Government, Heads of Delegations, Members of the Media, Ladies and Gentlemen. It is for me a real pleasure to welcome you to the 49th Meeting of the OECS, here in the beautiful country of the BVI which encompasses – with the islands of St. Vincent & the Grenadines and Grenada arguably the most scenic and best sailing waters in the world. Having explored every nook and cranny of these beautiful islands by boat I can attest that few are as varied or as beautiful : from the carefree, barefoot abandon of Jost Van Dyke and Foxy’s, to the high end luxury of Bitter End and Peter Island the BVI spells paradise. I feel privileged to be back. Permit me the opportunity, before going any further, to extend a warm welcome to two special guests to these Meetings: His Exellency the Governor of the United States Virgin Islands and His Exellency the Ambassador of the Kingdom of Spain to the OECS who are attending a Meeting of the OECS Authority for the very first time. Welcome to both of you. It is also my pleasure to extend congratulations to Prime Minister Baldwin Spencer on his recent victory at the polls in Antigua and Barbuda, and to Chief Minister Lowell Lewis on his assumption, for the first time, of the Chairmanship of the Authority. This Meeting takes place during turbulent times – a turbulence from which this region has not escaped. There were many who had viewed the current collapse of the global financial market as one which would not affect us directly. Indeed, the factors which precipitated this crisis were rooted not in poor regulatory conditions in the developing world, but rather in lax conditions in the developed world. But the global capital market is truly integrated and we too have been caught in the vortex. While we did expect some damage to real sectors – tourism and construction for example – we were unprepared for the fact that major insurance and banking concerns in our part of the world also held significant investments 98

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in real estate and other instruments in the USA. When these collapsed, so too did a number of Pan Caribbean companies, creating a whirlwind which has not yet settled. The collapse of the Stanford offshore banking and investment empire added further injury. If that were not enough recent pronouncements by the G20 group of countries, of their intent to go after “Tax Havens“ are cause for alarm in these parts. The BVI for example, is home to one of the most lucrative offshore financial services sectors in the world. But, challenging times are accompanied by the proverbial silver lining and so it is that the current financial distress has forced the wider region to engage in discussions at the highest level on the articulation of a regional framework for sharing information, for the establishment of a regulatory and monitoring mechanism across the central banking systems, and for a greater emphasis on due diligence. The reemergence of the focus on so called “Tax Havens” also presents an opportunity for this region to review operations and respond to questions raised, and hopefully – finally – to put them to rest. In this way, the challenges of the times present opportunities for the integration of best practices into our operations. Challenging times also dictate that we use all opportunities presented, to our advantage. It is for this reason that Heads of Government will receive a report from the Secretariat at this Meeting, on a proposal to expand the remit of the OECS Toronto based Liaison office to fully exploit opportunities available to the region under the Canadian Guest Workers Program, which includes both seasonal farm workers as well as low skilled workers in an array of sectors, including the hospitality industry. While the OECS had previously focused on the farm workers program, with over 600 OECS citizens currently employed, we had not capitalized on the availability of placements in other sectors. Sending OECS tourism workers to Canada during the summer, which is the peak time for the industry in that country – can only be a win-win situation for us since their peak season coincides with our low season. The ability to place workers in construction and other jobs will also create a welcome boost to our economies at a time when it is much needed. We must be creative and dynamic in seizing opportunities as they come along. The recent times have not been only about challenges. There have been good times as well. One such episode was captured over the period 17th-19th April as we in this region were made proud by the Republic of Trinidad & Tobago. As the smallest country to ever host a Summit of the Americas, the Fifth Summit was an overwhelming success in many ways. As they hosted a meeting, which from begin to end delivered at the highest standards, Trinidad & Tobago was able to demonstrate, on a world stage, that small countries have big hearts and an abundance of talent, energy and creativity, The 5th Summit also provided an important opportunity for Leaders of the OECS to engage with others such as President Obama of the United States of America, on an array of issues of mutual concern, including that of Tax Havens. For some time now the OECS has been embarked on a multipronged approach to implementing activities geared to the identification, promotion and pursuit of its own strategic interests. Given the reality of changes in the geopolitical landscape over

the last 28 years since the establishment of the OECS, this multitiered approach has been underpinned by a keen sense of the need for the OECS, as a region, to be more progressive, articulate and purposeful in identifying and pursuing those strategic interests in the nontraditional fora and regions of the world. Central to this thinking have been initiatives carefully calibrated to reposition the OECS, enabling it to be more outward looking, and therefore better able to identify and pursue opportunities available in support of its developmental agenda, globally – even as it seeks to deepen and widen arrangements in pursuit of its domestic and regional agendas through initiatives such as the OECS Economic Union and CSME. The introduction of a geopolitical agenda specific to the OECS is felt to be of importance given the need for the OECS to pursue its own strategic interests either when the CARICOM framework is too limited in its application, or not compatible with the interests of the OECS. A tangible expression of the incompatibility to which I refer, resulted for example in the opening of a Technical Mission to the WTO in Geneva to spearhead the lobbying efforts required in that theatre in support of OECS sugar, bananas and other specific trade related interests and concerns. In addition, the world has changed dramatically since the Treaty of Basseterre gave birth to the OECS in 1981; traditional relationships while important politically, are no longer as important in the context of procuring financing and other resources for development. It is clear that SouthSouth collaboration is becoming increasingly important; that the BRIC’s (Brazil, Russia, India and China) are exerting increasing levels of influence on the world stage and that distinct possibilities exist, outside of the traditional, for the development of new partnerships at the regional level, in parts of Europe, South East Asia and other countries and regions of the world, all of which have the potential to result in new and untapped sources of developmental support for those regional initiatives which Member States consider to be important. If proof was required that the “outward orientation” of the OECS to embrace possibilities for new partnerships and the missions undertaken to tell the story of the OECS in different fora - where the region and its Organization had hitherto been unknown – have played an important role in enhancing the profile of the organization internationally - the years 2008/09 provide ample evidence. Over that period a number of benchmark events took place: Brazil opened a Mission to the OECS; Venezuela announced the establishment of a special Ambassadorial envoy to the OECS; Austria, Turkey and Finland have requested meetings to discuss the possibility of developing agreements to cooperate at the regional level; the two former have indicated an interest in engaging with the OECS on the subject of opportunities which may exist for developing an OECS presence in their countries. The Republic of Trinidad & Tobago spoke of “merging” its economy with that of the OECS Economic Union; Venezuela submitted a request to become a member of the OECS; the OECS launched the School of Diplomacy; a Cooperation Agreement was signed with Spain’s highly regarded Diplomatic Academy ; the Ambassador of Spain presented credentials to the OECS – the first time that such a presentation had been made; Mexico and Cuba have indicated an interest in presenting credentials at the regional level and France is considering a similar presentation the USVI has advanced an initiative to engage in a process of functional collaboration with

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AROUND THE REGION

it was instructive, for example, that singapore - a country the size of st. lucia but with multiples of the population at slightly under 5 million, was able to view the current financial crisis as an opportunity to review and upgrade its attention to service already legendary.

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the OECS and St Maarten has requested information on the OECS model; the Ibero-Amercian Secretariat has invited OECS Member States and the region’s Secretariat to consider closer ties; the European Union has signaled its willingness to sign a contribution agreement with the OECS Secretariat directly, for the first time; the World Bank disseminated a study documenting OECS institutional arrangements as a model for other Small Island Developing States; a Declaration of Intent was signed with the Government of Spain in April 2009; a Collaboration Agreement was executed between the University of Puerto and the OECS offering OECS nationals the opportunity to study at the University with the same status and privileges as Puerto Ricans – the first intake is expected this August. In the last fiscal year July 2008 – June 2009, the OECS Secretariat attracted $ 22m. in funds for regional development projects from development partners; in this fiscal year this number stands at almost $30m. This period under review has thus been a hallmark one, for many good reasons. While all of this is remarkable for this small region, it is important to keep in perspective several challenges which we must face. The first has to do with the nature of competition which exists in the world as we seek to carve out our niche in the arena of service provision. Allow me to elaborate. As part of the continuing effort to provide information on the OECS as a regional grouping, and to identify possible avenues for mobilizing resources in support of the implementation of activities under the OECS Economic Union Work Program, the Secretariat undertook a mission through 5 countries in South East Asia from 23rd-31st March. The countries visited included: Taiwan, Singapore, South Korea, Japan and Malaysia. The mission was sobering, if for no other reason than the fact that it held up, in stark relief the standards of excellence which characterize the delivery of services in the South East Asian context and by extension, the journey which we face if we wish to compete successfully in that arena. In the countries visited basic courtesies have been developed almost to an art form, and have become a signature feature of those societies. The promotion and maintenance of an uncompromising work ethic finds expression throughout the entire spectrum of society – the strict adherence to time schedules; the evident pride in work regardless of the occupation; contribution beyond what is required by the expressed scope of one’s job; and school attendance on weekends and during vacation periods which are almost 50% shorter than what obtains in other parts of the world. The focus on the excellence of service, the sense that it is an honour and a pleasure to be of service; the constant desire for perfection in work done; the focus on order and stability in society; on long term social benefit at the expense of immediate personal satisfaction; the basic role of saving and sacrifice in ensuring the prosperity of future generations; the focus on cleanliness, and beauty of the environment, the immense pride associated with preservation of cultural artifacts and the sense of community and common purpose were attributes and values in constant play, in every country visited. There can be no doubt that these societal traits stand front and center in the ability of those countries to have achieved some of the highest standards of living in the world. It was instructive for example, that Singapore – a country the size of St Lucia but with multiples of the population at slightly under 5 million, was able to view the current financial crisis as an opportunity to review and upgrade its attention to service – already legendary. Officials also pointed to the country’s policy of open borders as the main ingredient in its success: open skies, open ports, open land was the mantra. The country wanted to be associated with the best skills available – from anywhere in the world encompassing the most menial to the most sophisticated. Surely, within the context of the current discussions on contingent rights under the CSME, there are instructive and relevant lessons to be drawn from Singapore.

of this type are vital to the long term interests of the region. The caliber of persons engaged in representational activities, their skills, their expertise in the culture and art of negotiations, diplomacy and protocol, play a crucial role in shaping the impressions of others about the seriousness which countries attach to the process of engagement with others of the international community. It is in keeping with the thinking that the interests of the OECS, both as individual Member States and as a regional grouping will be well served by building a cadre of skilled foreign service personnel, that a comprehensive approach to building foreign service competence will be discussed, by the Authority, at this Meeting. In closing, despite the financial difficulties with which we are faced – and they are serious – the OECS is also at a remarkable juncture in its historical evolution and development. In the next 6 months we will celebrate the 50th meeting of the OECS Authority a stellar achievement under any terms. The region will form an Economic Union following its own homegrown model to integration which is already unique, worldwide. Recent events point unequivocally to the fact that the OECS’s decision to recalibrate its compass to one which is more outward looking and identify and pursue its strategic interest – is both good and vital for the long term interests of the region . Interest in the region is demonstrably at an all time high. The future which we want is in the making, but we must be purposeful and steadfast in staying the path. It will require a societal shift in our attitudes if we are to provide service of a type which is equated with excellence. The 600,000 people of the OECS can take their place among those who have achieved high standards of living it is all possible and firmly within our reach, but it requires that we work towards this goal among ourselves and strategically as well, through the development of alliances within the family of nations : those in the North and those in the South. Let us not lose what is possible by being faint hearted. We have come too far to turn back now.

GIS

All in all, the stark reality of the competition which the OECS faces internationally, as a region of service providers, was cause for real reflection. In every country visited, whether in an establishment or on the street, the mission team was exposed to the mental discipline, work ethic, and insistence on perfection that is required of the OECS citizenry if a primary objective of the OECS is international competitiveness. The translation of those qualities into the psyche or persona of our societies is perhaps one of the central and most pressing issues facing the OECS in its quest to confront the real challenges posed by this 21st Century. Yet face it, we must. As we work towards ratification of the Treaty which will result in the formation of an OECS Economic Union and continue along the path of vigorous pursuit of the region’s strategic interests, the OECS requires a cadre of persons with the skills necessary to both represent the region professionally, as well as negotiate the terms of such interests. It is to this end that the OECS Secretariat took the initiative to launch the OECS School of Diplomacy in March 2008. Over 180 persons from 4 Member States (particularly Senior Officials of the Ministries of Foreign Affairs) and the Secretariat have received training through this facility, with plans being made to provide training to professionals from the other Member States this year. In October 2008 the OECS and Spain’s Diplomatic Academy entered into a Cooperation Agreement under which the latter will provide technical support to the OECS School of Diplomacy in accreditation, development of curriculum and materials, and a work program for the establishment of the OECS School. The Diplomatic Academy has also offered scholarships to OECS persons. At the current time two OECS public officers (one each from St Vincent and the Grenadines and St Kitts and Nevis) are among the intake to the School’s Masters Program starting this year. While the OECS does not have a history, tradition or culture of career diplomats, as do many larger countries, initiatives

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Deal Paves Way for 2 Alternative Energy Plants Colorado-based Alpine Energy Group plans to invest $440 million in territory by Aldeth Lewin VI Daily News

Gov. John deJongh Jr., right, and Lt. Gov. Gregory Francis at Government House on St. Thomas alongside local and Alpine Energy Group officials. Daily News Photo by SEAN McCOY

the virgin islands government and Alpine Energy Group entered into a historic agreement Monday to construct two alternative power plants — one on St. Croix and one on St. Thomas — that will reduce the territory’s dependence on oil, lower energy costs for Virgin Islanders and solve the territory’s mounting waste problems. The day began with simultaneous board meetings of the V.I. Water and Power Authority and V.I. Waste Management Authority where each agency’s board approved their individual agreements with Colorado-based Alpine Energy Group. After the boards’ approvals, a press conference was held at Government House to sign the huge stack of documents finalizing the agreements between Alpine Energy Group and the V.I. government. Alpine Energy Group President James Beach said his company will invest $440 million in the territory, create 600 jobs during the peak construction period and 75 to 80 permanent jobs in each district to operate the facilities once they are completed. Two waste-to-energy facilities will be built, one on St. Thomas in Bovoni and one on St. Croix between the HOVENSA and Renaissance properties on the island’s south shore. The plants will burn garbage 102

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generated by the territory’s residents that would otherwise enter the landfills. To bolster the amount of energy Alpine will produce, the plants also will burn petroleum coke — a byproduct produced by the HOVENSA oil refinery. On Monday, WAPA signed two 20-year power purchase agreements — one for each plant. WAPA annually will receive a minimum of 33 megawatts from the St. Thomas plant and 16 megawatts from the St. Croix plant. WAPA Executive Director Hugo Hodge Jr. said the contract begins with WAPA paying Alpine approximately 14 cents per kilowatt hour and increases as the years progress. WAPA estaimates that the new power plants will save the average residential consumer, who uses 500 kilowatts a month, about $10 on their monthly bill. The $10 savings would fluctuate as the market prices for pet coke and fuel oil change. The amount of power WAPA will buy from Alpine equals about one third of the peak power generated for the territory and will save WAPA from buying 600,000 barrels of oil a year, Hodge said. The arrangement requires that WAPA upgrade its systems to safely carry the load and allow for interconnection between the new power plants and WAPA’s grid.

Artist’s renderings of the projects.

Hodge said $6 million will be spent on St. Thomas and $11 million will be spent on St. Croix to prepare for interconnection, but those costs will be reimbursed by Alpine. In addition, WAPA will use $6 to $8 million of its own money — which has not yet been identified — to perform additional upgrades to improve service to consumers. The upgrades include building a new substation on St. Croix in Estate Bethlehem to serve the west end of the island, upgrading the Richmond substation, burying cables and installing 69.5 kilovolt transmission circuits to handle the new influx of power into the grid on St. Croix. Alpine also signed a $20,000 annual lease agreement with WAPA for about 8 acres on St. Croix on which the power plant will be built. Alpine also will lease an additional piece of land adjacent to WAPA’s property that is owned by the V.I. Port Authority. That lease agreement must still be approved by the Port Authority board. On St. Thomas, Alpine Energy Group will lease land from the Department of Property and Procurement to construct their plant. That lease agreement must go to the Legislature for approval. The agreement allows Alpine to secure financing by guaranteeing that WAPA will buy the power the plant produces. “We’re going to invest $440 million, that’s our assumption,” Beach said. “We provide all the debt and the equity for that, but we’re able to raise that debt and put the equity in because of these contracts, because of their willingness to pay for the power.” Similarly, the Waste Management Authority signed two 20-year service contracts with Alpine Energy Group — one for each power plant. Waste Management will pay $10.2 million a year for Alpine to process the territory’s solid waste at the St. Croix plant and $7.8 million for the same thing on St. Thomas. The cost for the St. Croix plant is higher because a portion of the fee includes money to go toward repaying part of Alpine’s capital investment to build that plant. Waste Management Executive Director May Cornwall said the new power plants will burn a minimum of 73,000 tons of the territory’s solid waste every year, but the contract gives Alpine the capacity to take in 109,500 tons annually if the territory wants to provide it. Cornwall said the territory currently produces about 100,000 tons of waste a year on St. Croix and 80,000 tons on St. Thomas. Not all of the waste produced is usable, however. Metal and glass does not burn, so those items will be separated out first and returned to the Waste Management Authority to dispose of or recycle. The agreements with Alpine Energy Group also ensure that the territory will be able to manage its solid waste stream. Waste Management is under a deadline to close the Anguilla Landfill on St. Croix by Dec. 31 and plans to close the Bovoni Landfill in five to seven years in order to meet federal regulations and come into compliance with orders from the Environmental Protection Agency and the District Court. Beach said the power plants will also burn about 390 tons of petroleum coke a day on St. Thomas and 150 tons per day on St. Croix. One of the agreements signed Monday allows WAPA to negotiate with HOVENSA for the purchase of the pet coke. One of the problems WAPA faced in the past when trying lure alternative energy producers to the territory was that most companies wanted to produce far more power than WAPA wanted to buy. Beach said the power plants will produce a little more than the minimum guarantee outlined in the power purchase agreements, but only because he thinks WAPA may want to buy the extra power at some point.

“We think we will be their lowest cost producer,” Beach said. Hodge said the agreement allows WAPA to buy more than the guaranteed minimum at a discounted price. He said WAPA may need to do that if a unit goes down or there is higher demand than WAPA can or wants to provide using their oilfired generators. Monday’s agreement with Alpine Energy Group was the end result of a year and a half process. WAPA issued a request for proposals for an alternative power provider in December 2007 to help them create a more diverse energy portfolio for the territory. The RFP returned 14 proposals that were later narrowed down to six. In July 2008, WAPA launched negotiations with the six renewable energy providers, including Alpine Energy Group. The RFP for St. Thomas has been fulfilled and will be closed out, but WAPA will continue to negotiate with other power providers to purchase an additional 10 megawatts on St. Croix. The RFP had advertised up to 26 kilowatts for St. Croix, but the optimum plant size most likely to provide a return on Alpine’s investment is a 16-megawatt facility, Hodge said. At the same time, the Waste Management Authority was seeking proposals to help them address the amount of waste entering the territory’s landfills. Cornwall said she was “elated” when she received the call from Hodge inviting her to join the negotiations with a waste-to-energy power producer. “It’s probably the largest joint effort between two agencies that the government has seen to date,” WAPA Executive Director Hugo Hodge Jr. said. Gov. John deJongh Jr. acknowledged this cooperation at Monday’s press conference. “It has shown that two government agencies really can work together,” he said. Alpine is aiming to have both plants up and running by 2013. Beach said it will take nine months to a year to obtain the necessary permits. It will then take about 2Ã‚ years to complete the plants’ construction, he said. The V.I. Public Services Commission also must approve WAPA’s power purchase agreement before it is finalized. Alpine and WAPA will be applying for “green” tax credits available through the federal American Recovery and Reinvestment Act. One of the documents signed Monday structures the sharing of any federal tax benefits so that WAPA will receive 90 percent and Alpine will get 10 percent. Beach said Alpine Energy Group also will receive tax breaks from the Economic Development Commission, but details of the benefits package were not available by presstime. BUSINESS BVI 2010

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moving to the british virgin islands Many dream of living in paradise, waking up to the sound of breaking waves, relaxing on white-sand beaches and living in a place where both the sky and sea are blue and the people are friendly and laid-back . Once you have decided to make this dream a reality and just before you take the leap you need to consider the practicalities such as informing your loved ones of your decision (highlighting the benefits to them as you do so), researching the cost of living and finally securing a job that is going to enable you to make this life style change. The British Virgin Islands, a beautiful collection of 60 islands, cays and rocks in the north eastern Caribbean some 60 miles east of Puerto Rico offer what many expatriates are looking for. The strong economy, characterized by a growing tourism and financial services sector, a strong public sector and a growing private sector continues to draw people from virtually every country in the world. The process of emigration is fairly straight forward once you know what to expect and how to go about it.

Work Permit and Immigration Matters Once you have found your ideal job in the British Virgin Islands, if you are not a citizen of the BVI, you must obtain a work permit. This permit allows you to legally work in the Territory for a specific employer. Even if individuals plan to work for a few months, a Temporary Work Permit must be obtained. While work permits are being processed, perspective employees must reside outside of the BVI. Work permit applications are filed by the employer and not the employee. A new work permit application form must be filed with supporting documents, such as: • cover letter from employer • perspective employee’s resume • proof of qualifications for the job • copy of newspaper advertisement of the job • 1 passport sized photo of applicant Work permit applications are processed within 30 working days. Once the work permit is approved, the application if forwarded to the Immigration Department. Immigration then grants a clearance letter which will be used by the employee to enter the Territory. The employer will be given the clearance letter and a medical form to forward to the employee. A thorough medical must be done and a medical certificate granted before entering the BVI. Once the employee enters the Territory, the medical certificate must be approved by the BVI Health Services. If any additional vaccinations or test is needed to be done, this can be done by the Government’s health clinic. It is important to note that citizens of particular countries must obtain a visitor’s VISA to enter the British Virgin Islands. This can be obtained at the nearest British embassy in the applicant’s home or residing country. A full list of qualifying countries can be obtained from the Deputy Governor’s Office website at www.dgo.gov.vg. Additionally, while the need for passports to enter the BVI for United States and Canadian citizens have been extended; citizens of those countries are urged to obtain passports to enter the BVI. Upon entering the BVI, all expatriates must have a return ticket to their home country. Once in the BVI, the employee can receive their work permit by visiting the Labour Department. The Territory’s new work permit cards are a highly sophisticated holographic cards, that can also be used as a pictured identification card and are the size of a regular bank card. It is very important that work permit holders have their work permit cards on their person at all times. Once the card is received, employees must take the card and job letter to the

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

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

Social Security Social Security is a compulsory insurance plan to which employers, employees, self employed individuals must contribute. It is designed to protect insured persons from financial distress by providing partial income replacement when particular contingencies arise. Sickness, maternity, invalidity, age, funeral, survivor’s and employment injury benefits are paid to qualified persons. All working individuals between the ages of 15 and 65 years must register with the Social Security Board and obtain a BVI Social Security card. This is a one time registration. To register, persons must fill out an Employee’s Registration Form and submit proof of birth, i.e. birth certificate or passport. Forms may be collected and filed at the Board’s office in Road Town. Social Security payments are mandatory. Contributions for private employees and self-employed persons are 81/2 percent of insurable earnings. Employees contribute 4 percent of that total and 41/2 percent is contributed by employers. Civil servants contribute 71/2 percent; 31/2 percent by employee and 4 percent by Government. Social Security contributions can also be voluntary for persons who have worked in the Territory and are living abroad or for persons who no longer work but are not at the eligible age of 65 to collect benefits. This contribution is 7 percent of earnings established by the Board. Social Security Board 284 494 3418 Travelling to the British Virgin Islands The Terrance B. Lettsome International Airport is located on Beef Island. It is the Territory’s main airport with internationally recognised airport code, EIS. Some travellers fly into the United States Virgin Islands’ island of St. Thomas at the Cyril E. King International Airport, code STT. After arriving at this airport take a 5 minute taxi ride to the waterfront ferry terminal in Charlotte Amalie BUSINESS BVI 2010

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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.

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

Shipping to the BVI Shipping personal effects from home furniture, personal goods and even vehicles can easily be done through a shipping agent in the Territory. Once you have identified the agent you would like to use, that agent will inform you of the closest company to your address in your home country that you can have items delivered to or packed for pick up. As the sender, you must provide shipping agents with a list of items to be shipped as well as their estimated costs. Make certain you receive all documents and agreements pertaining to your shipment from the partnering agent in your home country in order to retrieve your goods once they have landed in the BVI. After that has been completed, items are then shipped to the Territory. Once they have arrived you will be notified by the local shipping agent who will sign release forms to be presented to port authority and Customs officials to clear your items. The cost of shipping items to the Territory varies widely. Ensure that you research estimates from companies before deciding on a final shipping agent. Once your items arrive in the Territory, you will only then be charged for the service. It is always recommended to insure items with the shipping agent. To declare goods with Customs you must have an itemised list of goods shipped and their costs. Government waves up to $1000 for new residents on goods imported. The following is a break down of duty charges for other items: • Vehicles 20% • Household goods/furniture 15% • Electronics/ computer hardware 15% • Clothing 10% • Reading materials 0% Her Majesty’s Customs

284 468 3701 ext. 6800/ 6802

Mail Though the Territory does not have home mail boxes, the mailing service is much like most postal services world wide. Without a private mail box, persons can collect mail sent to them at their community post office. Residents may apply for private mail boxes by submitting an application with the BVI Postal Service at the main Post Office in Road Town, Tortola. The annual cost for these mail box rentals is $35 for a letter size box. In 2006 the BVI launched its internationally recognised postal codes. These postal codes allow other mail services to have an exact and distinctive code for the Territory. This works just the same as zip codes in the United States and postal codes in the United Kingdom and Canada. This allows mailing companies 106

BUSINESS BVI 2010

284 468 3701 ext. 4996

Housing The real estate market in the BVI is growing steadily. At times it may seem difficult to find your right home in paradise, but with persistence and a good realtor, in no time you can be listening to the waves, watching the sun come up from the hill tops or living in a town that still has more greenery than most in other parts of the world. Unlike some countries, the British Virgin Islands does not have a Housing Authority. Prospective tenants and home owners are responsible for finding living arrangements and negotiating the best rent and lease. Many landlords offer short term lease to accommodate the Territory’s migrant labour force. The average starting rent of a two bedroom apartment in the BVI is approximately $800. Most land lords require two months rent as a refundable deposit along with proof of income - such as a job letter, before renting to new tenants. If you are in the market to purchase or build a home, all expatriates must obtain a Non-Belonger Land Holding Licence. The application process is managed by the Ministry of Natural Resources and Labour. To obtain this licence the following documents are needed with a completed application form: • a police certificate • four consecutive newspaper clippings of the property’s sale ad • a valuation report of the property • a financial statement showing one year of banking practices • two references • sale agreement for the property • proposed purpose of property • a detailed description and time table of any works to be done on the property. The Ministry of Natural Resources and Labour reserves the option to ask for additional supporting documents from applicants. A non refundable fee of $200 is required for processing of the application. For corporate groups the application fee is $500. The average processing time for a Non-Belonger Land Holding Licence is 12 to 14 weeks. Once a licence is granted, property owners must follow development agreements that were stated when applying for a licence. Failure to do so may result in a fine of 40 percent of the cost of the property of forfeiture of the property. Property taxes are payable annually to the Government’s Inland Revenue Department. If home owners are seeking to rent their property, non-belongers or persons that are not citizens of the BVI, must seek permission from the Ministry before undertaking such a venture. Ministry of Natural Resources & Labour

284 468 3701 ext. 2147/ 2137

Inland Revenue Department

284 468 3701 ext. 2155/ 3140

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

Driver’s Licence Visitors to the BVI may obtain a Temporary Driver’s Licence from the Licensing Department or car rental companies. For $10, drivers will get a temporary licence that is good for 3 months. If stopped by authorities, visitors must have this temporary licence along with their passport. If you plan to live and drive in the BVI for longer than 3 months, a BVI driver’s licence must be obtained. To obtain such a licence, once the temporary licence has expired, driver’s must file an application at the Vehicle Licensing Department, along with supporting documents; work permit, passport, BVI Social Security card, and temporary licence. Additionally, a written driver’s test must be taken. The written test is administered from 8:30 a.m. to 1:30 p.m. daily. Once a driver passes this test, a BVI licence will be granted. If a new resident is importing a vehicle into the Territory or purchasing a vehicle in the BVI, the vehicle must be registered and licensed in the BVI. Drivers may purchase licence plates from the Vehicle Licensing Department, then have the car insured and inspected before the car is registered and qualified to be driven in the BVI. Vehicle Licensing Department

284 468 3701 ext. 4938/ 4939

Banking The British Virgin Islands hosts a variety of private and public banks that are recognised internationally. Some of these institutions are: Banco Popular Scotia Bank First Bank First Caribbean VP Bank Presently the BVI does not host any credit unions. Once becoming a resident of the BVI, to obtain a bank account, persons are required to show proof of identification, passport as well as a social security card. Some banks allow residents to use a United States social security card when registering for an account. Account holders may then begin to build a financial identity within the BVI’s banking system. Persons may apply for credit cards, loans and mortgages and even consolidate accounts from their previous country of residence. Health Services Health care in the British Virgin Islands remains relatively inexpensive to consumers in comparison with other developing Territory’s. Peebles Hospital, the main hospital servicing the BVI is on the island of Tortola. Presently the hospital is being developed into a major health resource for the BVI. This includes renovations to the existing structure as well as building more rooms and improving the technology used at the facility. A number of private clinics also service residents of the BVI. These clinics have on staff senior medical professionals that are general doctors as well as practising physicians in a wide range of specialisations such as gynaecology and obstetrics, cardiology as well as dermatology. Supporting these clinics are various private pharmacies with competitive pricing for the latest medicines. Education There is a wide variety of child care facilities in the BVI. Day care centres accept children as young as 4 months old. The cost of this type of care ranges from $160 to $300 monthly. The average school year begins in early September and ends in late June. Children that will be at least 5 years old within the school year and up to 16 years old are required by law to attend some form of matriculating educational facility, this also includes home schooling by a child’s parent. If expatriate parents are travelling with children to take up residency in the BVI, the parents must seek permission from the Immigration Department to have the child in the BVI for the purpose of attending school. There is a separate application to have the child enrolled in the school system. When in the BVI, the Education Department will facilitate the processing of applications

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

284 468 3701 ext. 2036/ 2037

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

284 468 3701 ext. 4931/ 4932

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fast fact guide

Anegada

Jost Van Dyke Virgin Gorda Tortola

FACTS AT A GLANCE Social Demographics Population

28,213

Population Density

183.2 km2

Population Growth Rate

2.5%

Nationality Ratio

65.8%

Literacy Rate

98.2%

Life Expectancy at Birth

79.32

Major Religious Denominations

Methodist, Anglican, Roman Catholic

Climate and Geography Area

57.08 sq. miles

Rainfall

40”

Temperature

28°C

Time Zone

Atlantic Standard Time (AST)

Government Currency

United States Dollar

Capital City

Road Town

Dependency Status

British Overseas Territory

Judicial System

Common Law

Head of State

Queen Elizabeth II

(represented by the Governor)

Economy GDP

US$ 1.1 billion

GDP per Capita

US$ 38,820

Inflation Rate

2.3%

Unemployment Rate

3.1%

Labour Force

19,098

Major Industries

Tourism, Financial Services

Communication Country Phone Code

284

Zip Codes

VG1110, VG1111, VG1112

Telecommunication Providers

Source: BVI Development Planning Unit

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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. POPULATION AND LABOUR FORCE The population of the BVI is diverse and growing. Of the estimated 28,213 persons living in the BVI approximately 82 percent are of AfroCaribbean decent. The remaining population is Caucasian (7%); Mixed (6%); and East Indian (3%). Other minority ethnicities include Middle Eastern, Chinese and Portuguese. Between 1991 and 2001 (the date of the last census) the population increased by approximately 44 percent and based on projections it is expected to grow further (28 percent) reaching 30,000 by 2010 (the next census is 2010). The major force driving population growth has been immigration mainly to meet the shortage in local labour supply. Approximately 67% of the employed are foreigners thus accounting for a diverse and varied labour force. The Government sector is the major employer providing jobs for approximately 44% of the work force in 2006 followed by the tourism industry and the financial services sector. 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 to ensure that lower skilled workers would maintain a minimum standard of living. EDUCATION Publicly provided education is free at the primary, secondary and now territory levels thereby facilitating access to all children. Education is compulsory up to the age of 16. The Government’s Ministry of Education operates 17 primary schools and four secondary schools, including a 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. The College also offers specialty courses based on the needs of the labour market. Through affiliations with other tertiary institutions HLSCC also offers degree and master’s programmes. The Education Act, 2004 regulates all aspects of the Territory’s education system including Early Childhood Education.

HEALTH Government health services are provided free to certain groups including full-time school children, the elderly, the mentally ill, health workers etc. Currently, primary health care is provided by Peebles Hospital, with additional services provided by a small private hospital and several medical clinics. Patients requiring treatment services beyond the scope of Peebles Hospital are referred to Puerto Rico, the USVI, Jamaica, Barbados and mainland United States. The Government of the Virgin Islands has embarked on extensive development of the health care infrastructure and administration with the aim of improving primary health care services. In 2004 the Peebles Hospital annex was officially opened, and the construction of a new state-of-the art hospital is expected to be completed in 2010. In 2007, a helipad to facilitate the transfer of patients from the outer islands to Tortola was completed. The BVI Health Services Authority established under the BVI Health Services Authority Act, 2004 is responsible for managing the public health care service throughout the Territory including the general administration and functioning of the Peebles Hospital and the recruitment and training of health care professionals. ECONOMY The BVI economy has transformed from agriculture-based to servicebased over the last 50 years with two distinct economic pillars emerging, namely Tourism and Financial Services. The economy has grown significantly over the last 25 years mainly due to developments in the tourism and the financial services industries with spill-over effects in the construction sector, both private (residential and commercial) and public. For the majority of the past decade economic growth has been positive and increasing steadily. The GDP in 2008 was over US$ 1 billion with tourism and financial services being the main contributors. The economy is one of the strongest in the Caribbean and BVI has one of the highest GDP per capita incomes - over US$ 38,820. Prices in the BVI have increased moderately over the last five years with an average growth rate of 2-3% with the exception of 2008 where average prices increased by 7% mainly due to rising commodity prices and oil prices. Inflation is mainly “imported” from the United States. The BVI’s principal trading partner is the United States of America. 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 steady growth in government revenue is driven by financial services levies (which is the major contributor to government revenues) payroll taxes and import duties as well as prudent fiscal management. In order to ensure sustained growth the BVI government continues to implement measures aimed at increasing revenue collection and managing expenditure levels.

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. Water sports such as scuba diving, snorkelling, windsurfing, kite boarding and kayaking are extremely popular. Yearly scheduled activities which attract numerous visitors include: the Emancipation Festival in August, the BVI Music Fest in May, and the BVI Spring Regatta in April. The year round trade winds and numerous islands, inlets and cays has given the BVI the title of the ‘sailing capital of the world’. The charter boat industry has expanded rapidly and contributes significantly to the overall visitor spend. Within the last five years cruiseship tourism has increased dramatically and has prompted the development and improvement facilities to cater to the needs of the excursionist. As one of the major contributors to GDP and government revenue the tourism sector is extremely important to the economic growth of the BVI. The sustained growth in the sector can be attributed to the implementation of innovative marketing programmes (such as the “Jewels of the BVI” which promotes accommodations located on all the islands in the territory), the upgrading of tourist attractions and infrastructure (such as improvements to the port facilities) and strong growth in the global economy. The Government encourages investment in this sector and existing resorts are expanding and new ones are under development. In 2008 just over 930,000 tourists visited the BVI with the majority of them originating from North America. Cruiseship tourists accounted for 63 percent of this total while overnighters make up 37 percent of tourist arrivals in 2008. FINANCIAL SERVICES FINANCIAL SERVICES

2007

2008

(General)

103

106

(Restricted)

107

104

Company Managers

Registered Agents

117

118

Captives

392

319

Domestic

Managers

317

258

1,694

1,894

815

831

222

228

77,022

61,716

404,321

414,620

113

471

558

Banking and Fiduciary Banking Trust Trust

(General and Restricted)

Insurance

Mutual Funds Professional Professional

PRIMARY SECTORS TOURISM

(Cumulative Active)

Private Private

(Cumulative Active)

TOURIST ARRIVALS

2007

2008

Actual Change

% Change

Overnight

358,056

345,934

-12,122

-3.4%

Public

Managers and/or Administrators

Excursionist

590,369

588,234

-2,135

-0.36%

948,425

934,168

-14,257

-1.5%

408

113

-21.7%

(Cruiseships & Daytrippers)

TOTAL

Public (Cumulative Active)

Incorporations

Cruiseship Calls 521 Source: Development Planning Unit

BVI Business Companies BVI Business Companies

(Cumulative Active)

Partnerships

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.

Partnerships

(Cumulative Active)

Insolvency Practitioners Source: Financial Services Commission

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The growth of the financial services sector in the BVI was mainly due to the success of the International Business Company (IBC) (now known as the BVI Business Company subsequent to the enactment of new incorporation legislation – BVI Business Company Act, 2004) first unveiled in 1984. In later years the BVI secured business that was redirected from Panama during the Noriega regime and from Hong Kong when it was handed back to China in 1997. The Asian market thus accounts for a large portion of company incorporations in the Virgin Islands. 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 and more recently corporate restructuring, securitisation and insolvency have developed and prospered as a result. The industry is regulated by the Financial Services Commission which is an autonomous body responsible for the licensing, regulation, supervision and inspection of all financial services business. Marketing of the financial services sector is conducted by the International Finance Centre – a department within the portfolio of the Premier’s Office – which has organised various road shows in some of the major financial centres such as London, New York, Hong Kong, China, Dubai and Qatar. The Financial Investigation Agency 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 financial service industry is the major revenue contributor in the Virgin Islands accounting for more than half of government earnings, a significant share of GDP and employment. The major components of the BVI’s financial services sector are: Business Companies, Captive Insurance, Investment Business, Banking, Trustee and Company Management, Shipping and Trademarks. INSURANCE (CAPTIVE) The BVI captive insurance market is one of the fastest growing and the BVI boasts the fourth largest offshore captive insurance market in the world. At the end of 2008, 319 captive insurance companies were licensed with the majority of business originating from the United States. Other countries of origin include Guernsey, Taiwan, Switzerland, the Middle East and South America. In addition to this excellent geographic spread of business, there also has been a significant distribution of captives from an industry segment standpoint. The captives cover the following industries: finance and insurance (44%), construction (15%), health care (15%), retail trade (11%) and others (15%). The domestic insurance market is smaller in comparison. At the end of 2008 30 domestic insurance companies were licensed. The current insurance act also sets up the licensing regime for insurance managers and makes provision for segregated portfolio companies. The new Insurance Act will replace the 1994 Act and provides a modern structure for licensing, supervision and administration of insurance business in the Virgin Islands while simultaneously meeting international insurance standards. INVESTMENT BUSINESS The BVI is one of the premier jurisdictions for fund domiciliation. The number of funds recognised and registered stood at 339 at the end of 2008. The professional fund is the most popular; 64% of active funds are professional funds, 28% are private funds and 8% are public funds. The Mutual Funds Act of 1996 requires that all mutual funds must be either registered (public fund) or recognized (private and professional). Also any person who provides management or administrative services to a mutual fund must be licensed. A new Securities and Investment Business Act is in the pipeline and in addition to providing for the licensing, regulation and supervision of investment business, it will 110

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control offers of securities to the public in the BVI and provide a framework for dealing with insider trading and market abuses. Key advantages to registering or recognising a fund in the BVI include: Zero taxation on profits and capital gains; Registration in a wide variety of organisational forms – Business Company, Partnership, Unit Trust, Segregated Portfolio Company (this permits the differentiation and management of several distinct investment portfolios or asset classes within a fund); No minimum capital requirements or restrictions as to the type, denomination, number, classes and designation of rights of shares that can be created; No regulatory restrictions on investment policies or strategies, performance or fees; Fast track procedure for professional funds; No requirement for a local auditor to sign off on an account; Mutual funds do not have to be managed or administered from within the Virgin Islands. BANKING The Virgin Islands is characterised as a conservative banking jurisdiction. At the end of 2009 there were 9 banking institutions licensed to operate in and from within the BVI with total assets of approximately US$2.36 billion. The domestic market is serviced by six commercial banks which offer a wide range of competitive services: Scotia Bank (BVI) Limited, First Caribbean International Bank, First Bank Virgin Islands, Banco Popular de Puerto Rico, VP Bank (BVI) and the National Bank of the Virgin Islands. The banking sector is regulated by the Financial Services Commission under the Banking and Trust Companies Act, 1990 and subsequent amendments. INSOLVENCY The Virgin Islands boasts a modern comprehensive insolvency regime that meets the needs of the growing incorporation, investment and financial services activities in the BVI. The governing legislation, the Insolvency Act 2003, makes provisions for the licensing and regulation of insolvency practitioners a wide range of liquidation and rehabilitation alternatives, a director’s disqualification regime and the establishment of an Official Receiver’s office. To date (2007) 15 insolvency practitioners are licensed under the Act. TRUST MANAGEMENT Trust Management forms a major component of financial services activity in the Virgin Islands. 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 new legislation, together with the highly flexible BVI Business Company, has opened up wider markets for the BVI trust. The BVI trust sector has experienced moderate growth since 1995 growing on average at a rate of 4% annually. The majority of Virgin Island trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction.

There is a large and sophisticated community of professional advisers on trust matters in the Virgin Islands. Companies offering trust services must be licensed under the Banks and Trust Companies Act, 1990. SHIPPING As the sailing capital of the Caribbean and an esteemed corporate domicile, the Virgin Islands is also a popular jurisdiction for the registration of ships. In 2008 ships 357 ships were registered and to date over 3,000 vessels have been registered in the BVI with the majority being pleasure vessels As a Category One Register, within the Red Ensign Group, large vessels of unlimited tonnage and mega yachts of up to 3,000 gross tons can be registered in the Territory. In both instances, the owners must be a Virgin Islands citizen, British citizen, British Overseas Territories Citizen, British subject, a British national under the Hong Kong Order 1986, a national of a European Union member state, or a body corporate incorporated in a member state of the European Union or a British possession, including the Virgin Islands. If you do not meet the nationality requirement, you may register a company in the Virgin Islands in order to register a vessel. Registration procedure also requires the de-registration of the vessel from its current registry, a survey of the vessel and the submission of ownership documents to the Registrar of Shipping. The registration fee is $550, and an annual fee of $100 is payable to maintain registration. In addition, there will be legal fees charged by the firm you choose to assist you with registration. TAX INFORMATION EXCHANGE AGREEMENTS The purpose of Tax Information Exchange Agreements (TIEAs) is to promote international co-operation in tax matters through exchange of information. TIEAs grew out of the work undertaken by the Organisation for Economic Cooperation and Development (OECD) to address the lack of effective exchange of information among financial centres. Information exchange is based on requests relating to specific criminal or civil tax matters that are under investigation. The BVI has a long tradition of providing legal assistance to foreign regulatory and law enforcement authorities and continues to be committed to the OECD’s principles of transparency and effective exchange of information. Under the guidelines provided by the OECD and the new international tax standard emanating from the G-20 Summit in April 2009, jurisdictions are required to sign at least 12 TIEAs. To date the BVI has signed 15 TIEA’s securing a spot on the “white list” of those countries including the United States, United Kingdom and Canada which have substantially implemented the internationally agreed tax standard as set by the (OECD). In addition to the United States, the BVI has agreements with the United Kingdom, Australia, France, the Netherlands, the Netherland Antilles, New Zealand, Greenland, the Faroes, Aruba and the Nordic group of countries including Denmark, Finland, Iceland, Norway and Sweden. REAL ESTATE Foreigners planning to purchase property in the British Virgin Islands require a Non-Belonger Land Holding License. Agreements to purchase property are therefore made contingent upon such a license being obtained by the purchaser. Application for a Non-Belonger Land Holding License is made to the Government of the British Virgin Islands, Ministry of Natural Resources and Labour. If the application for a license relates to undeveloped or partly developed land, the applicant will be required to make a commitment to the Government of the British Virgin Islands to expend a specified sum on development within a specified time period. The purchase of property by all persons including citizens and foreigners is subject to a Government stamp duty subsequent to transference of the property. The rate of 12% of the purchase price or appraised value whichever is higher, is payable by any foreigner and citizens are required to pay a 4%. The stamp duty on leaseholds is lower. Other costs associated with the purchasing of property in the BVI include:

legal fee (usually between 1.5% to 2% of the purchase price), bank fees, 10% deposit to the seller’s agent to be held in escrow on the signing of the purchase agreement. pending acceptance and completion. There are no restrictions on an overseas investor re-selling a developed property. The property must however, be advertised for four weeks in the local press to give any local person the opportunity to purchase the property on the same terms. INFRASTRUCTURE ELECTRICITY Electricity in the BVI is 110/220 voltage. This Power is generated by the BVI Electricity Corporation, which is owned by the BVI Government. Water The BVI Water and Sewerage Department, provides potable water throughout Tortola, Virgin Gorda, Jost Van Dyke and Anegada. Most of the water sold by the Water and Sewerage Department is desalinated sea water, treated through the process of reverse-osmosis. In addition, most buildings and homes are constructed with cisterns (Water Tank). Rainwater is collected in these cisterns from the roof of the buildings or homes and flows into the cisterns through a guttering system. This water is safe for domestic use. There are also several local water companies which sell purified drinking water. Telecommunications The BVI has a modern and high-quality telecommunications infrastructure. This existed since the 1960’s. In 2006, the Government passed a new Telecommunications Act, which provides for gradual liberalization of the telecommunications sector. Because of this, there are now two companies offering mobile telephone services, with pending competition in other service areas. The area code is 284 and available services include long-distance and local land-line communication, wireless connectivity, high-speed Internet, and cable television. Transportation It is easy to get around the BVI. Vehicles such as cars, buses, taxis etc., private and commercial boat services, and airplanes are among the most frequently used means of transportation in the BVI. The Territory has a road network of approximately 200 miles, of which 160 miles are paved. These include main roads, primary, secondary, collector, and access roads, as well as agricultural feeder roads. The Public Works Department is the department charged with the periodic maintenance of this road system. This department also spearheads plans for road expansion. There are four official passenger sea ports in the BVI: Road Town and West End on Tortola; Great Harbour on Jost Van Dyke; and Spanish Town on Virgin Gorda. Port Purcell, near Road Town, hosts the principal cargo port in the Territory. The BVI Ports Authority manages the port facilities at the various locations, as well as the Cruise Ship Pier in Road Town. Airports The BVI Airports Authority is the administration that oversees the airports. The Terrance B. Lettsome International Airport (code: EIS), is the main airport in the BVI; and is located on Beef Island which is joined to Tortola by a short bridge. There are daily flights to and from Puerto Rico, Antigua, St. Martin and other Caribbean Islands. The Government operates a helipad in Road Town and a number of private islands also maintain helipads. Entry and Immigration Visitors to the BVI may be granted entry for up to one month at the ports of entry, providing they have return or ongoing travel arrangements, accommodations while in the Territory, and proof of sufficient means of support. Visitors wishing to stay longer must apply in person at the Department of Immigration in Road Town, or the Valley, Virgin Gorda. BUSINESS BVI 2010

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

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

GOVERNMENT LISTINGS

Statutory Bodies/Associated Agencies

Government Ministries

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

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BVI International Finance Centre Haycraft Building, Pasea Estate Road Town, Tortola Tel: (284) 494-4335 Fax: (284) 468-1002 info@bviifc.gov.vg www.bviifc.gov.vg BVI Tourist Board 2nd Floor, Akara Building De Castro Street Road Town, Tortola Tel: (284) 494-3134 Fax: (284) 494-3866 info@bvitourism.com www.bvitourism.com Financial Investigations Agency Haycraft Building, Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 fia@bvifia.org www.bvifia.org Financial Services Commission Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 webmaster@bvifsc.vg www.bvifsc.vg Telecommunications Regulatory Commission Fishlock Road Road Town, Tortola Tel: (284) 494-6786 Fax: (284) 494-6786 www.trc.vg

Lebanon Liberia Libya Macedonia Madagasgar Mali Mauritania Maldova Mongolia Morocco Mozambique Myanmar Nepal Niger Nigeria Oman Pakistan Peru Philippines Qatar Russian Republic Rwanda

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

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

New York 1 West 34th Street Suite 302 New York, NY 10001 Tel: 800-835-8530 / 212-563-3117 Fax: 212-563-2263 info@bvitourism.com

Government Overseas Offices

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

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

BVI Tourism Offices

Immigration/Labour Information

Italy Aigo Communicazione Pizza Caiazzo 3 20124 Milano, Italy Tel: 39-02-667-14374 Fax: 39-02-669-2648 staff@aigo.it

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

Germany Schwarzbachstr, 32 D-40822 Mettmann Bei Düsseldorf Germany Tel: 49-2104-28-66-71 Fax: 49-2104-91-26-73 g.romberg@travelmarketing.de

Emergency Numbers

United Kingdom 15 Upper Grosvenor St. London W1K 7PJ Tel: + 44-207-355-9585 Fax: + 44-207-355-9587 coliver@bvi.org.uk

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

oyster perpetual yacht-master rolex.com

Official Rolex Retailer

St. Thomas, U.S. Virgin Islands, Road Town, Tortola, British Virgin Islands