Minister Husbands: Diversify services sector

Given the negative impact of the COVID-19 pandemic on the services sector in Barbados and by extension other regional countries, a call is being made for there to be some level of diversification in this sector.

The call came recently from Minister in the Ministry of Foreign Trade, Sandra Husbands, as she delivered the keynote address at the first virtual Services Go Global Certification Ceremony this week.

In her address, Minister Husbands acknowledged that given the pandemic, tourism dependent countries were hard hit by it, compared with non-tourism dependent economies, as countries across the world closed their borders to combat the spread of the virus.

Statistics from the Central Bank she said, revealed that for the period January to September 2020, Barbados experienced a 90 per cent fall in long stay visitors and additionally, Barbados’ hotel occupancy rates dropped to almost half the occupancy rates of 2019. This falloff in the tourism industry had a significantly negative impact on the economic growth of our country. The financial services sector was also sadly affected, she pointed out.

Husbands further stated, “The services sector in the Caribbean was not only affected by the COVID-19 pandemic, the services industry was also affected by the negative impact of blacklisting by the European union and the recent implementation of a 15 per cent corporate tax rate across the world.”

She stressed that in December 2017, a list was published of countries that did not do enough to curb international tax evasion and to tackle unfair tax practices. The EU’s backlist consisted of small economies like those in the Caribbean, which are mostly known for attracting offshore businesses, international business and foreign direct investment. Then, in 2020, CARICOM member states were added to the blacklist of non-cooperative tax jurisdictions, who did not do enough to counter anti-money laundering and terrorism.

“This backlisting has significantly affected countries across the Caribbean. What it did, is it made our country less attractive due to our presence on the backlist. International businesses will therefore think long and carefully before they set up in our jurisdiction. So, our services industry is being put under more pressure, by the recent announcement now of a global minimum corporate tax and unfortunately, this agreement will further squeeze the Caribbean, as it struggles to (reduce) its debt burden. This means that with a 15 per cent global tax rate, larger multinational corporations will be limited in their desire to seek the Caribbean for our low tax attributes. So, the combination of these two things has signalled an urgent need to diversify the Caribbean’s services sector,” Husbands stated.

“It is important to note that I am not saying that we have to completely neglect tourism or the financial services sector. I am however a firm believer that there is more untapped potential for the services sector to generate more economic growth for our region’s economies,” Husbands maintained.

She stressed, “I strongly believe the regional governments and private sector must work to diversify the services sector, to areas such as information technology, education, culture and health and wellness services. This diversification into these service areas will decrease the Caribbean’s dependence on financial and tourism related services for economic growth.” (RSM)