Int’l Business feeling the pressure
Barbados’ future depends on how it responds to the challenges that are being raised by what is considered the Fourth Industrial Revolution, so says Former Prime Minister of Barbados, Owen Arthur.
He suggested there is a need to adopt a smart approach to development central to which is the creation of smart communities. However, he also cautioned that in terms of Barbados’s future development that the country can no longer depend on unique tax benefits etc. but on the substantial matter of retaining the skills of its most highly trained citizens in order to drive this economy.
He was speaking yesterday at Innovate Conference 2017 at Lloyd Erskine Sandiford Centre facilated by the Barbados Investment & Development Corporation (BIDC) in an address entitled, ‘Smart Can Be Small’.
In terms of the International Business sector he explained, “Challenges have come to affect the International business and Financial sectors which over the past few decades have accounted for much of the economic growth and fiscal stability enjoyed by Barbados. This experience highlights the dangers of overspecialization, for almost 80 percent of the business conducted in this sector has been by Canadian companies largely as a result of the exempt surplus tax treatment afforded to foreign affiliates operating in Barbados because of the tax exchange agreement in our tax treaty with Canada. In 2007 Canada extended an exempt surplus tax treatment to foreign affiliates of all countries in the region that signed tax information exchange agreements. This has triggered a migration of some Canadian companies from Barbados and the Canadian government has also strengthened the provisions under the Foreign Accrual Property income regime to limit the erosion of its tax base thus reducing the benefits of forming holding companies in countries such as Barbados.”
“Other advanced countries have also instituted measures to ensure a higher level of tax compliance and to prevent the erosion of their tax base by companies operating in offshore financial centers. Indeed the challenges continue unabated …”
He also spoke with respect to derisking, “A recent study on derisking in the Barbadian context points to even further problems for Barbados in maintaining dynamism in its International Business Sector. Indeed its sites a decline in IBC formation in Barbados, due in part to the derisking trends globally and to the emergence of major challenges to IBC’s to establish and maintain banking relationships both here and abroad. In this regard the study sites a devastating decline in in Barbados International banking sector over the period 2012 to 2015 during which the number of registered International banks in Barbados have fallen from 45 to 26. Much of this is due to the added pressure ensued from the application of new anti-money laundering and customer requirements that have generated the derisking phenomena.”
Arthur also added, “Faced with such challenges in sustaining economic activity in both the traditional and the newer sector of the economy, Barbados has come to depend to extraordinary degree on the dynamism of its Tourism Industry to carry the burden of generation growth and development.”
The Former Prime Minister cited a study to indicate that the Tourism industry does not generate the range of skilled jobs opportunities that are commensurate with the requirement of a country which continues to make the kind of massive investment in tertiary education as Barbados does. The consequences that it is estimated that almost 80 percent of the tertiary graduates in Barbados have to seek employment abroad and this is a national dilemma.
He continued, “In a world governed by the Fourth Industrial revolution Barbados cannot afford not to continue to invest in the education of its people to generate the capacity for technological excellence necessary to function in the new global society.”
He reinforced there is a technological revolution taking placed and Barbados needs to be prepared for a different approach such as Smart Communities that will retain the skills of our talented people. (NB)