EDITORIAL – Foreign money vital

THE PRESENT state of the economy of our island is a major talking point, as Barbadians have begun to feel some of the chill from the metropolitan winters of economic contraction, and within the past fortnight there has been particular focus on what may or may not need to be done to make the wrongs right.The core of our economic platform is the need to earn foreign exchange, since we are more a nation of consumers of foreign goods and foods than we are visible exporters of anything except a little sugar. Tourism and international financial services constitute our main invisible exports and they have earned us significant amounts of foreign exchange, replacing sugar as the mainstay of our economy, as conditions in the international economy have changed.These two economic planks dovetail perfectly for us, because our tourism numbers are boosted by the need for international businessmen and women to travel here to hold company meetings and to consult with their local legal and accounting advisers. We earn substantial proportions of our corporate taxes from these international financial vehicles, and it is all in foreign currencies.We also rely heavily on foreign direct investment to boost our foreign reserves and to assist us in the management of the international aspect of our economy which in turn helps us to maintain the high standard of living to which our people have become accustomed since Independence. The challenge posed to our way of managing our affairs, by the closure or slowing down of the Four Seasons development and other projects of similar nature, is a real threat because the very people likely to purchase condominiums in those areas are the high net worth individuals who will incorporate international business companies or establish international trusts or in combination with their peers set up offshore banksFurther, in the past, we have garnered a major portion of our offshore business from Canada because of generous provisions in our double taxation treaty with it. This business has been affected by the recession, but is likely to be further reduced by the loss of our unique status with Canada because the provisions in the treaty are now being shared with other countries. Our regional competitors are getting very busy.  The Bahamas is currently legislating the Business Licence Bill 2010, aimed at making business licensing “easier, faster and more efficient”. Technocrats there are also working to streamline business application procedures, aimed at modernizing the way business is done.In St Lucia, that island’s Director of Finance Isaac Anthony spoke recently about complaints that getting an aliens landholding licence was considered to be inefficient by investors who had to interact with no fewer than four government departments. The government’s response is to establish a National Investment Office as a one-stop shop for investors, because getting enough foreign direct investment is a vital input.We are fortunate in that we have always attracted foreign direct investment, but these are changing times and we cannot rely only on our past reputation. A proactive approach to changes in the market place is the key to our continued competitiveness, and so also is the delivery of speedy efficient service. The Government’s proposed reforms of the Immigration procedures is a good start, but efficiency at all levels of Barbadian society is required. So too is increased public education of the importance of foreign investment and foreign investors.