15 Feb Guiding the country though the storm successfully
Roy McTaggart, Minister of Finance and Economic Development, Cayman Islands, highlights the necessity to find ways to recover from the devastating pandemic
What are some of the key projects you are focusing on as we kick off 2021, which you have recently laid out in the launched strategic plan 2021 to 2025?
As I look back on this year, the Cayman Islands is managing remarkably well to weather the storm of a lockdown and the ongoing pandemic. The Cayman Islands has been so successful in dealing with the COVID-19 pandemic, to the point that there is no community spread in our islands. The economy is able to operate almost as normal, even though we notice at a reduced level, particularly as it relates to tourism. That is a result of the really harsh measures that we implemented at the outset including closing our borders. Those harsh measures enabled us, once we got past July of last year, to a phased re-opening of the local economy. Since August, we have been operating at full tilt. Prior to lockdown, we had instituted a number of infrastructure and regulatory frameworks that have allowed the financial services industry to function at a very high level throughout the pandemic.
Heading toward a general election in three months’ time, it is difficult to speak for the longer term. Certainly this government, for the first half of 2021, is continuing to promote the policies that are geared toward increasing the velocity of money into the economy to promote economic activity. We have found that to be quite successful and we continue to evaluate regulations that implement policies to support the financial services industry. As I mentioned, the financial services industry has been particularly robust, operating at a high level of efficiency throughout the pandemic.
We continue to promote medical tourism as a third pillar of our economy. We have been working to achieve this for several years and have had success with the establishment of the Health City Cayman Islands facility. We have just signed an MoU with another group of investors for a second medical facility to be constructed here. We believe this will provide us with the critical mass in terms of building on this new industry, which will see more visitors come to Cayman’s shores for medical purposes.
We have some of the world’s leading blockchain and FinTech companies now located here. It would be fair to say that in the North American market, the proximity of the Cayman Islands creates the perfect platform to deliver these services. We are seeing some success and are getting quite a number of people living here as well as several companies being formed in the Tech Park we have created. We are seeing an increase in the number of people that have now moved in to Cayman and I believe that those changes are going to have a big impact on Cayman’s economy.
Finally, we have also extensively encouraged the return of the construction industry. We have taken many steps to facilitate the circumstances for such companies, in order to get a number of projects that were ongoing back on track. If we are here after the general election, we hope to see a continuation of these aspects that have been so successful for our country thus far.
What kind of financial incentives do you give someone working in tech or fintech to come to Cayman Islands and set up their business?
The primary incentive that we provide to assist them, we allow them, for a time period, to have reduced work permit fees. This sort of incentive makes it really attractive for them to make the decision to come here. They get a reduced fee for every staff member who needs to work here and that discount is set to last for a few years.
What are the competitive and comparative advantages that foreign investors might find in the Cayman Islands vis-à-vis other neighbouring island states?
We have a very open and diverse economy and population. We welcome foreign direct investments as well as expats and have over 130 nationalities living and working here in comparative harmony. The fact that we have a very stable government, that has conservatively managed its finances, facilitates this process. People know what they can expect to receive and what to do when they get here, which makes it so much easier for them.
In terms of infrastructure here, over the years, local infrastructure development has relied more and more on local financing rather than financing from external sources. That has somewhat had a mitigating effect on the reduction of foreign direct investments that many countries have experienced. Our inflows account for approximately one third of the total foreign direct investment in 2019, which was USD 837 million. This was primarily equity and debt investments in banks and insurance companies. Foreign direct investments have been quite stable, and at a very significant amount. We do not think that the worldwide reduction of foreign direct investments will be as impactful in the Cayman Islands as they may have been elsewhere.
What is your Ministry doing to attract investment and perhaps remote workers looking for new opportunities and an exciting new place to call home?
The Global Citizen programme is proving to be quite successful. We have had a number of applications, approaching 100. So far, 22 applications have been approved, which has resulted in about 100 people finding their way here and settling amongst us. This programme allows them to live and work from the Cayman Islands for up to 2 years without the need for them to obtain a work permit. There are restrictions, as they are not allowed to engage in any local employment activity, but we think that it is going to be extremely successful in the future. We only implemented it in December so it is still at a very early stage.
What is the significance of the Moody’ triple A rating for Cayman Islands, as well as the removal from the EU’s non-cooperative jurisdictions for tax purposes? Has the vote of confidence by these institutions, as well as the OECD, shown benefits towards the Cayman Islands’ economy and the welfare of its citizens?
Moody’s had some really positive things to say about the Cayman Islands’ economy. They also had a very stable outlook for the Cayman Islands, which, to me, was very reassuring, as it validates all the efforts that we had made thus far to continue positioning the country for strong economic growth and well-managed finances. We view the rating as an ‘ace in our pocket’ when we need to address external sources for borrowing. We believe that it can result in lower borrowing costs, if such need is to arise.
We just had a very important day, with the change of administration in the US. This will bring a plethora of new opportunities and investments in the Caribbean. What are some of the critical issues that you will be bringing to the table to discuss with your counterparts in the US in the future?
Our relationship with the United States has historically been very strong, cordial and problem-free. There are many reasons for us to maintain those strong relationships, because a large part of our economy is based and conducted with the United States. 80 percent of our tourism industry depends on the US market. 80 percent of our imports into the Cayman Islands come directly from the US market. The story is still the same when it comes to the financial services industry, with 75 to 80 percent originating from the US. What may change is the level of engagement with the US. We have strong relationships in terms of law enforcement and cooperation in cross-border matters, including financial or other types of crime. At this point, we do not anticipate any fundamental changes to the relationship. All of the key elements of our relationships are clearly in place and continue to function properly.
What would be your final message for our readers of Newsweek?
I think that the message is that the Cayman Islands is open for business. We continue to invite and welcome investors and visitors, to visit, live and work in our country. People can make investments or use the country as their base of international overseas investments. We are ready to receive people with all the necessary infrastructure in place. We operate a high level of compliance with all international standards and practices. We know that we have all of the right ingredients to make the Cayman Islands a very attractive destination.