Will St Lucia’s CIP Stay Competitive in 2020?

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IN THIS EDITION OF

WILL ST LUCIA’S CIP STAY COMPETITIVE IN 2020?

Saint Lucia has seen modest economic growth in many areas throughout 2019. While its Citizenship by Investment Programme (CIP) remains relatively new, it’s regarded as an increasingly important part of the nation’s revenue.

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT Continued on page 4

SBW THE STAR BUSINESSWEEK

Leveraging Citizen Data: Potential or Peril?

The relationship between government and the average citizen is always ripe for ongoing reflection. Even in societies featuring liberal democracies, where there are strong barriers in place to guard against government intrusion, the digitisation and globalisation of our daily work and lives has driven change.

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US lends support as Caribbean battles de-risking CIBC announced in November that it would offload its majority share in CIBC FirstCaribbean in a deal worth just under US$ 800mn. The announcement came on the heels of a similar withdrawal by Bank of Nova Scotia which has now closed the sale of its banking operations in seven Caribbean markets, including Saint Lucia.

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Which CIP passports are set to challenge Saint Lucia’s in the next 12 months?

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10 ISSUES SET TO SHAPE THE EASTERN CARIBBEAN IN 2020

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

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ingering issues, new challenges and global uncertainty – the coming year is set to bring both change and opportunity for the Eastern Caribbean. STAR Businessweek shares its predictions for what lies ahead.

(1) GREEN AND BLUE GROWTH Eastern Caribbean states will play to their strengths in 2020 with a renewed emphasis on the economic power of their natural resources. Blessed with an expansive and rich marine environment, stakeholders are looking to tap into blue exports, with the OECS, United Nations and Caribbean Natural Resources Institute drawing up plans to harness the blue and green economies. The OECS strategy will run until 2024 and focus on exports of queen conch and algae-based products.

(2) THE RISE OF RENEWABLES The mounting problems of climate concerns and soaring energy costs will continue into next year, driving even more impetus behind renewable energy sources. This is an area where the Eastern Caribbean states can thrive, with plenty of potential for solar and geothermal power. More renewable

projects are set to come onstream in 2020, such as Dominica’s stalled geothermal generation bid which was revived with World Bank financing earlier in 2019, and these will further spur FDI and increase states’ resilience to natural disasters and other shocks.

(3) TOURISM TRENDS Tourism continues to be the biggest money-maker for the Eastern Caribbean, but that doesn’t mean it is a static industry. Continually evolving, the break-out trends of 2020 will be ‘authentic tourism’, with an emphasis on community and social benefit, and ‘achievement tourism’ whereby travellers are looking to tick items off their bucket lists. For Caribbean visitors this could mean hiking the Pitons, gaining a diving certification, learning to sail or taking a Caribbean cookery course.

The cruise industry is also set to soar in 2020 and market leaders, Royal Caribbean and Carnival, will both be adding to their fleets and route networks.

To accommodate expansion in this sector, Saint Lucia recently signed an MoU with the cruise companies to redevelop the Castries terminal and develop a new cruise port in the south of the island.

Continued on page 6

DATA PRIVACY

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DECEMBER 14, 2019

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LEVERAGING CITIZEN DATA: Potential or Peril?

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

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he relationship between government and the average citizen is always ripe for ongoing reflection. Even in societies featuring liberal democracies, where there are strong barriers in place to guard against government intrusion, the digitisation and globalisation of our daily work and lives has driven change. Now governments make a case for greater access to information about citizens, arguing that the traditional right to privacy must not supplant the ability to effectively combat threats like terrorism.

We are indeed confronted by new dangers but there are new opportunities as well. Chief among them is the way in which the wheels of government can become more effective and beneficial. But travelling these new pathways requires a revisitation of the right to privacy.

APPLYING THE INFORMATION No government within the international community has as big a challenge in properly managing population data as does India. It’s not the only nation of over a billion people to take a keen interest in using more citizen data but, as the world’s largest democracy, the work of governing from New Delhi a country of 1.3 billion people is truly colossal in scale. This reality underwrites why the Indian government has brought about the Aadhaar system.

First launched in 2009, today the Aadhaar system takes biometric data (fingerprints and eye scans) of an Indian, assigns a unique 12-digit number to them, and issues the individual with an ID card. It’s been projected that over 99% of the adult population is enrolled in the system.

The benefits of this centralised system have provided the Indian government with an ‘all-in-one’ database that does away with the previous confusing system where a

Estonia has shown it doesn’t have to be this way. By utilising a progressive approach to data management. that relies heavily on blockchain technology that offers accessibility with data integrity, an Estonian can navigate regular tasks of civic life, like filing taxes and registering a vehicle online, from the comfort of their own home, doing so with peace of mind surrounding their privacy. The experience of this Eastern European nation shows that it’s ultimately not the technology but those who implement and administrate it that are responsible for its morality.

Recent use of citizen data by governments has sometimes been fantastic, and at other times horrifying

jumble of birth certificates and other documents served as proof of identity.

Without proof of identity documents, many Indians, especially those from a rural or disadvantaged background, struggled to access social services such as welfare payments but Aadhaar now makes it easy. It’s also given the government an avenue to more effectively tackle waste, fraud and other crimes.

With the Aadhaar system, proof of identity is stored in the database and, if the ID card is lost, it’s possible to get a replacement by filling out a form on an Indian government website, similar to the two-factor authentication commonly used by Google and other tech companies.

WHO WATCHES THE WATCHERS? Although the Aadhaar system has won praise, critics have noted a sharp difference between concept and application. In 2013 the Indian Supreme Court amplified critics’ voices, ruling that no longer would private companies

be able to insist on citizens providing their Aadhaar details as a condition of service.

For those with reservations about India’s Aadhaar system, a look across its border into China will only reinforce concern surrounding greater government use of citizen data. While China’s social credit system is complex in its nature, no matter how the Chinese government may try to market it, the end result is a system of mass monitoring. It is capable of grading a citizen’s daily activities, with downgrades guaranteed for participating in any activity the government deems a threat to it.

As in China, the experience of Venezuela shows that a key challenge with implementing the effective use of citizen data is avoiding politicisation of it. Thanks to the assistance of the Chinese telecom giant ZTE, Venezuela now has a ‘fatherland card’ that already tracks voting. Human rights advocates are fearful that the Maduro regime can use it for broad surveillance of the population and as an avenue to preference loyalists with the provision of the nation’s currently limited resources.

WHAT THE DATA SAYS When it comes to consideration of utilising more citizen data in future, the Caribbean is well-suited.

This is the case for both individual nations and sub-regional blocs like the Organisation of Eastern Caribbean States.

Generally speaking, Caribbean nations have comparatively small, homogenous populations when viewed alongside countries throughout the Americas, making them ideal markets to incubate new technologies and solutions. The ongoing threat of natural disasters and the spread of the Caribbean diaspora outside the region – estimated to number almost 8 million in the US alone – mean that if governments were to have deeper, more secure and more easily accessible information regarding citizens, it could bring numerous benefits to those at home and abroad.

If such a road is to be travelled, it first requires recognition of the experience of other nations that have started down this path, for better or worse. Also, that increasing access must be done cautiously. The ideal would be incrementally, within a narrow scope, and subject to purposefit regulation designed to ensure that the desired outcomes of collecting and managing citizens’ private data is utilized to the benefit of the SBW population, not to its detriment.

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CITIZENSHIP BY INVESTMENT

WILL ST LUCIA’S CIP STAY COMPETITIVE IN 2020?

Continued from page 1

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earing the end of this decade, now is a good time to review how the country’s CIP has performed since its inception and which nations are emerging as strong competitors for Saint Lucia’s share of the CIP audience.

AN OVERVIEW OF SAINT LUCIA’S CIP In comparison to a CIP like that of St Kitts and Nevis, with decades of operation behind it, Saint Lucia’s CIP is young, having been introduced just a few years ago, in 2015. The brevity of this timeframe notwithstanding, Saint Lucia’s experience with its CIP offering has been eventful.

In 2018 CEO of Saint Lucia’s Citizenship by Investment Unit, Nestor Alfred, dished up a big headline. As reported in IMI Daily, an industry trade publication, Mr Nestor declared that some CIP applications had “been pending for as much as 260 days”. That a Saint Lucian CIP could take some nine months to obtain, represented a clear gulf from other regional CIPs where it’s held they can be in-hand within just a few weeks of filing the paperwork.

Mr Alfred underscored that this approach was deliberate and was in place to specifically guard against the risk of approving someone for a CIP who may not be of good character. While this announcement perhaps deterred some applicants keen on a regional CIP with a speedy approval, the 2017-2018 fiscal year overall did not see demand diminish.

In fact it saw a ten-fold increase with the lodging of 345 applications, whereas the previous fiscal year had brought just 36.

This progress comes in complement to positive economic news generally for the nation, with the 2019 IMF Article IV report forecasting favourable conditions in the near term owing to a number of infrastructure investments, and strong tourism growth which has seen multiple records broken over the past two years.

So, although economic conditions are far from perfect, overall 2019 has been a positive economic chapter for the island.

It would be a mistake, however, to ignore the rapidly growing global competition from other CIPs. COMPARING THE COMPETITION Arguably 2019 has seen the biggest competition within the CIP industry emerge not in the Caribbean, but the Middle East North Africa (MENA) region. In recent months several CIPs within MENA have become big stories in their own right, and collectively represent a growing regional challenge to the booming business many Caribbean nations do as CIP providers.

Many people who envision daily life in the United Arab Emirates will commonly

Armand Arton (left), President of Arton Capital, with Nestor Alfred, Director of the Citizen by Investment Unit (CIU) of Saint Lucia

think of its famous metropolis Dubai, its towering Burj Khalifa and the nation’s popular identity for producing a number of globe-trotting business owners and professionals. The news earlier this year that the UAE would launch its ‘Golden Card’ affirmed the government’s longstanding efforts to attract foreigners and bolster the strong expat communities that already exist. In this regard, the Golden Card can be seen as a logical step forward.

It promises to be extremely profitable for the UAE, with the first group of investors numbering 6,800, and set to inject US$ 27bn.

Turkey launched a CIP in 2016 but the past year has seen a substantial spike in demand. A key factor is the reduction of the CIP’s cost, initially US$ 1mn and since reduced to a starting amount of US$ 250,000.

Although Turkey has experienced some notable flashpoints of civil unrest, the nation remains attractive to investors owing to its sizeable domestic market, easy access to the wider MENA region and the absence of barriers found elsewhere for FDI, among other benefits.

Then there’s Cyprus. Long held to offer one of the world’s most attractive CIPs, in August a new range of restrictions was announced by the Cypriot government. Among them,

anyone who is a defendant in a criminal investigation, even if not yet convicted, or who is subject to UN sanctions will not be eligible to apply. The tightening of controls comes after ongoing pressure from the European Union and at a time when the Cypriot government is seeking admission to the EU’s Schengen Area.

GLOBAL APPLICANTS, GLOBAL DEMAND The distance between the Caribbean and

In 2018 CEO of Saint Lucia’s Citizenship

by Investment Unit, Nestor Alfred, dished up a big headline. As reported in IMI Daily, an industry trade publication, Mr Nestor declared that some CIP applications had “been pending for as much as 260 days”

MENA is significant when it comes to someone deciding where to work, study or holiday. It’s not necessarily a key consideration for a High Net Worth Individual (HNWI) who can easily relocate or who may not even have any intentions of relocating in the first place. Bear in mind that most Caribbean CIPs do not require the applicant to have even visited the country.

A HNWI intent on a Caribbean CIP will no doubt consider Saint Lucia’s offering alongside others but someone seeking a CIP exclusively as a backup option may not fret over where in the world a CIP nation is located. This is why the growing competition of the MENA region in the CIP space needs to be keenly observed.

For now, Saint Lucia’s CIP is one of the world’s most inexpensive, at US$ 100,000 for a main applicant, and allows for dual citizenship, Although Mr Alfred’s comments indicate that anyone who applies should be prepared for a significant waiting time, the CIP has been advertised among multiple agents as having a processing time of around 90 days, suggesting those with simple applications that won’t complicate the vetting process can expect an outcome sooner.

CORRESPONDENT BANKING

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US LENDS SUPPORT AS CARIBBEAN BATTLES DE-RISKING

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

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IBC announced in November that it would offload its majority share in CIBC FirstCaribbean in a deal worth just under US$ 800mn. The announcement came on the heels of a similar withdrawal by Bank of Nova Scotia which has now closed the sale of its banking operations in seven Caribbean markets, including Saint Lucia.

Banks cutting back is not new to the Caribbean, which has had to adjust to a ‘new normal’ in banking following the global economic crisis and subsequent wave of de-risking, but a recent roundtable summit on the issue suggests that the region is charting a way forward, with the help of international private and public sector partners.

WHAT IS DE-RISKING AND WHY IS IT A PROBLEM? The Caribbean is home to many international banks who have a strong presence in the region but remain headquartered abroad, such as Royal Bank of Canada, CIBC FirstCaribbean and Bank of America.

De-risking occurs when these global banks decide to cut ties with their regional counterparts, either because of a lack of business, security concerns or simply retrenching to streamline their operations.

Since the 2008 global economic crisis, regulators and watchdogs have become more wary of financial impropriety leading to a crackdown that has affected the worldwide banking infrastructure.

Compliance regulations are stronger than ever, and AML/CFT requirements are becoming ever more strict. In this punitive atmosphere, many banks have decided that their overseas counterparts in highrisk areas like the Caribbean are simply not worth the risk and/or the paperwork.

When financial institutions sever a Correspondent Banking Relationship (CBR), it has a ripple effect. Middle-class jobs are lost in the high-paying banking sector and cross-border trade is stifled.

It also hinders the flow of remittances, current and future investment is put at risk and it adds to the negative perception that the Caribbean is not just a bad place to do business but fiscally corrupt.

A 2017 survey of 12 Caribbean countries, published by the Caribbean Association of Banks, found that 21 out of 23 banks on those islands had lost at least one CBR, with the Eastern Caribbean particularly affected.

CARICOM reports that 25-75 per cent of the 50 banks operating across member states have either lost CBRs or faced restrictions on CBR services.

DE-RISKING DISCUSSIONS In November Prime Minister Chastanet and other CARICOM representatives attended a roundtable meeting with

that have been taken by US banks. Our domestic banks rely on correspondent banks to access international financial markets and overseas geographic regions.

Simply put, without correspondent banking our economies could grind to a halt. I could not underscore enough the serious ripple effect that kind of economic decline would have for individual countries, the region and the wider hemisphere.”

As a close and powerful neighbour, it is in the US’s interest that Caribbean banking thrives. At the peak of de-risking, the Caribbean Development Bank warned that continued loss of CBRs would drive people towards the shadow economy, potentially increasing serious crimes, from money-laundering to smuggling and terrorism. With an escalating security threat on their unofficial third border, it’s unsurprising that the US is pushing hard for a solution.

The November de-risking roundtable with the US House Committee on Financial Affairs brought together members of the US Congress, US banks and heads of Caribbean governments including Prime Minister Chastanet and Nigel Clarke, Finance Minister of Jamaica. (Photo courtesy CARICOM)

the US House Committee on Financial Affairs to examine the de-risking crisis.

The attendee list was a who’s who of influential and powerful figures including US Congresswoman Maxine Waters and senior bankers from six major US banks including Wells Fargo and Bank of America.

The CARICOM delegation, which included Jamaica’s Finance Minister Nigel Clarke and CARICOM SecretaryGeneral Irwin LaRocque, came out of the discussions expressing satisfaction with the commitment of US legislators and banks to work with the Caribbean.

Wells Fargo and Bank of America reportedly both reaffirmed their desire to maintain a presence in the region.

Chastanet commented: “As CARICOM, we thought it vital that we engage the US government and key industry players on actions to address decisively the actual and potential challenges posed to our economies by the de-risking actions

The Caribbean is home to many international banks who have a strong presence in the region but remain headquartered abroad, such as Royal Bank of Canada, CIBC FirstCaribbean and Bank of America.

FINDING SOLUTIONS To address the effects of de-risking, stakeholders have looked at a number of possible avenues. Last summer Antigua and Barbuda took a proactive approach, seeking to buy out all the Scotiabank operations in the country. While those negotiations ultimately fell apart, it signals a more hardline approach by Caribbean governments desperate to retain banking operations.

Antigua’s Prime Minister Gaston Browne has also called for the creation of a Caribbean bank that would fill the gap left by retreating foreign providers, telling local media: “There may even be the need for us to have a Caribbean bank; that is, a bank owned by various indigenous banks in the Caribbean and one that would have branches in the US diaspora, UK diaspora and Canadian disapora.”

While a Caribbean bank may be in the works, the focus in the short-term is on repairing and rebuilding the region’s reputation – damaged by years of repeated blacklisting and hyperbolic tax-haven style headlines. Caribbean countries, assisted by the CAB, have been heavily investing in training their banking professionals and strengthening their AML/CFT frameworks, putting compliance front and centre. The OECS is looking at creating a Single Compliance Department – a proposal that was discussed and approved at the Washington roundtable.

Having the US onboard will doubtless give some impetus to the region’s efforts to push back against de-risking but it will be a long road to recovery for the banking sector. As Prime Minister Chastanet told parliament in late November, fresh from the high-level talks: “There is considerable work left to be done if we are to halt and reverse the trend towards de-risking and ensure CBRs are reestablished.”

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10 ISSUES SET TO SHAPE THE EASTERN CARIBBEAN IN 2020 Continued from page 2

The Caribbean’s economic recovery will continue to be sluggish in 2020, according to the International Monetary Fund which predicts real GDP growth of just 1.9 per cent in tourism-dependent states in 2020.

2022 and use mapping, data collection, computer-assisted interviewing and other tools to determine any development gaps and how close states are to achieving their Sustainable Development Goals.

The cruise industry is expected to soar next year. (Photo courtesy pixabay.com)

(4) GREATER CBI COMPETITION Several Eastern States have thriving Citizenship by Investment (CBI) programmes that regularly take the top spots in the annual CBI report. St Kitts and Nevis, Dominica, Grenada and Saint Lucia will all face more global competition in the coming years as Greece launches its own CBI programme and other jurisdictions eye this lucrative market. Plans are underway to supplement the existing CARICOM Joint Regional Communications Centre with an OECS-only initiative on CBI that would establish uniform legislation and an oversight committee.

(5) SHIFTING GEOPOLITICS Many long-awaited and impactful events will finally be realised in 2020, such as Britain’s eventual exit from the European Union and the already-divisive US elections scheduled for November. Also creating waves is the continuing rise of the Middle East, evidenced by Expo2020, which will bring almost 200 countries to Dubai in October and is the first world fair to be held in the Arab world. These factors will have far-reaching implications for Caribbean trade, diplomacy and FDI. (6) REGIONAL UNITY As world politics destabilise in 2020, regional unity will become even more important for Caribbean states, both in terms of CARICOM and the sub-region

of the OECS. When Guadeloupe joined the OECS in early 2019, several areas of co-operation and integration were identified including transportation, sports, trade, agriculture and tourism. Progress in these areas in 2020 will help the Eastern Caribbean strengthen its economic resilience to external shocks.

(7) ECONOMIC SLUMP The Caribbean’s economic recovery will continue to be sluggish in 2020, according to the International Monetary Fund which predicts real GDP growth of just 1.9 per cent in tourism-dependent states in 2020.

This in line with the Fund’s gloomy global forecast which puts world GDP growth at a moderate 3.4 per cent in the coming year. To mitigate the slowdown, the Caribbean will need to practise better fiscal responsibility and renew its focus on economic diversification.

(8) NEW WAYS TO MANAGE DEBT By 2020, nearly 75 per cent of small states with unsustainable debt will be Caribbean countries, according to the Organisation for Economic Co-operation and Development.

The ongoing Caribbean debt crisis will force governments to look at new ways of balancing their budgets in 2020. In this vein, Saint Lucia will be the first in the region to trial the World Economic Forum’s Country Financing Roadmap,

which aims to make development financing more holistic by creating the right enabling environment to attract high-quality investment and private capital.

(9) TRACKING THE NUMBERS Ensuring the public purse is spent wisely means monitoring populations and their needs. In 2020 CARICOM will embark on a region-wide population and housing census. The 2020 Census will run until

(10) HEALTH AFTER HURRICANES Every year brings new devastation to the Caribbean as hurricanes intensify. While there was considerable focus on building economic and infrastructural resilience during the 2019 hurricane season, next year will see more work being done to address the impact on public health.

In late 2019 the World Bank approved a US$ 30.6mn regional health project to improve co-ordination for public health emergencies in the OECS. The initiative is intended to boost the capacity of health facilities in Dominica, Grenada, Saint Lucia and Saint Vincent and the Grenadines, ensure continuity of services in the wake of a natural disaster and improve disease surveillance systems.

The Saint Lucia Registry of Companies & Intellectual Property Company Incorporations Name: The Ubuntu Treasure Inc.

Name: HLC Roofing Contracting Limited

Description: Retail of accessories, arts, books and

Description: Roofing contracting,

clothing (afrocentric)

General construction services

Directors: Ronda Itopia Archer, Kay Leonce

Directors: Hayd Constable

Date Incorporated: 03/12/2019

Date Incorporated: 04/12/2019

Chamber: SEDU

Chamber: Self-incorporated

Name: S.W.A.T. Ltd.

Name: Advanced Company Group Inc.

Description: Security Services

Description: Holding company

Directors: Aaron Henry, Girma Henry, Gertrude Slick

Directors: Darnell Charles, Kerchelle Charles-Hodge

Date Incorporated: 04/12/2019

Date Incorporated: 04/12/2019

Chamber: Messrs. Peter I. Foster & Associates

Chamber: TM Antoine Partners

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