A little more than a year after Premier McKeeva Bush announced he had signed a memorandum of understanding to establish a technology-based special economic zone, the first tenants moved into Cayman Enterprise City’s temporary zone offices at HSBC House on West Bay Road.
After months of anticipation, Cayman’s first company licensed by the Special Economic Zone Authority started operations here almost under the radar.
On Monday, 27 February, MCB Venture Consulting SEZC Ltd occupied space at HSBC House, one of four authorised gateway buildings for Cayman’s first special economic zone, Cayman Enterprise City.
It will be the first of a number of companies slated to move in over the next few months, said Hilary McKenzie-Cahill, Cayman Enterprise City’s vice president marketing and business development.
“Thirteen companies are going through various stages of the CEC processing and will shortly be moving into the Zone,” she said. “We now have over 50 companies who are in the pipeline to establish a presence in the CEC. This represents a tremendous proportion of the total of 300 companies that CEC expects to establish in Cayman in 2012.”
Cayman Enterprise City observed is official launch on 3 February with a cocktail function at the Royal Palms. Speaking at the event, Premier McKeeva Bush said Cayman Enterprise City would help create jobs and new vocational opportunities in knowledge-based industries in Cayman.
“I believe that today’s launch represents a new beginning, an added dimension to the Cayman Islands economy that will benefit our people for generations to come,” he said.
Moody’s Investor Services took notice of Cayman Enterprise City and in its Weekly Credit Outlook issued a comment in mid-February.
“On 3 February, the Cayman Islands government (Aa3 stable) launched Cayman Enterprise City, a technology-based special economic zone, an important and credit positive diversification opportunity for this small island economy,” the comment stated. “CEC will focus on several high-tech sectors, including biotech, and Internet and media ventures that will provide new sources of employment and growth for an economy almost wholly reliant on tourism and financial services.”
Moody’s noted that Cayman Enterprise City was designed to attract investment in Cayman’s non-traditional industries. It noted that CEC’s benefits to the local economy would be indirect.
“The effect on fiscal revenues will mainly depend on local spending by the new companies and employees boosting the local economy and the revenue base,” Moody’s stated. “Longer term, the increased economic diversification should help reduce economic volatility and increase growth, a significant credit positive.”
Jobs and praises
As new companies establish in Cayman Enterprise City, they will bring new people to the Island, helping to reverse the significant population decrease the Cayman Islands has experienced since the onset of the global recession in 2008. In addition, Cayman Enterprise City will create jobs for Caymanians and other residents.
CML Offshore Recruitment CEO Steve McIntosh said at the CEC launch event he had already been contacted by a company moving into Cayman Enterprise City on 1 April about finding 10 employees to work in the office here.
McKenzie-Cahill said many more people would be taking jobs for Cayman Enterprise City companies.
“We are looking at around 100 bodies by the end of April,” she said.
Cayman Enterprise City CEO Jason Blick said that to help Caymanians find jobs with the new companies moving in, it was setting up a Career Development Bureau, which was expected to be fully operational by this summer. This Bureau would act as similar to recruiting agency, but would just be for Caymanians wishing to work for CEC companies.
“We would accept CVs from local prospective employees and then endeavouring to match them up with companies within the zone,” he said.
In addition, the Bureau would facilitate the award of scholarships to Caymanians seeking higher education in order to obtain the requisite skills and expertise to secure employment with Cayman Enterprise City employers.
Companies establishing in Cayman Enterprise City will enjoy many of the benefits that offshore exempt companies already have, but the special economic zone companies will have a physical presence in the Cayman Islands.
Establishing in Cayman Enterprise City with a physical presence helps companies enjoy many of Cayman’s tax advantages without just being a nameplate on the wall of a law firm, a model that has become a focus of criticism for G-20 politicians and international regulatory bodies like the OECD.
Beyond that, CEC companies can use Cayman’s strategic location in between the Americas to conduct business between North American and the emerging markets in South America.
Another company moving into office space at HSBC House is Igility International SEZC Ltd., a company associated with IBM.
Igility’s Paul Gallagher said the company had already rented space in HSBC House and expected its final approvals from the Special Economic Zone Authority by the second week of March.
“As a member of the IBM family, we are excited about the possibilities establishing in CEC brings by allowing our firm to reach a wide audience within the Caribbean geography and beyond,” he said. “It’s a win-win for Cayman and those looking to do business in the region.”
Gina McBryan, director of MCB Venture Consulting SEZC Ltd., said her company was excited to be one of the first companies to move into the special economic zone.
“CEC’s Special Economic Zone is an ideal base for my technology consulting firm,” she said.
Cayman Enterprise City will have six sectors in its special economic zone – Cayman Internet Park, Cayman Media Park, Cayman Biotech Park, Cayman Commodities Park, Cayman International Academic Park and Cayman Outsource Park, which will eventually be located in one million square feet of class A office space on a 45-acre site in Savannah.
Construction on the campus is scheduled to commence in the second quarter off this year, with initial site works slated to start before the end of March.
While the first phase of the campus is under construction, four ‘gateway’ locations have been designated available for occupation by companies licensed by Cayman’s Special Economic Zone Authority. In addition to HSBC House, other locations include the building known as Breezy Castle near Owen Roberts International Airport, The Grand Pavilion on West Bay Road and The Mirco Centre in Industrial Park.
Initially, most new CEC companies will likely move into HSBC House, where Cayman Enterprise City has leased almost 8,000 square feet of office space.
Cayman Enterprise City Director of InvestmentCharles Kirkconnell said tenants can choose from office space to meet their needs.
“We have a flexible model,” he said. “If you want one desk or an entire floor, we’re able to offer it.”
Tenants can share a variety of amenities, including small and large conference rooms and office equipment.
At HSBC House, most of the desk are in cubicles with an open floor plan. However, private space requests can be accommodated. For instance, Cayman Enterprise City is partitioning part of the space at HSBC House to accommodate a company wanting to move in that wants two private offices plus space for three work stations.
Blick said HSBC House would most likely be used for companies that primarily will use the shared open space. Should a company wish to have a large number of private offices, they will be steered toward one of the other approved Special Economic Zone locations.
Cayman Enterprise City took a major step to establish Cayman’s special economic zone international with the signing of an agreement with the Dubai Multiple Commodities Centre.
The DMCC is a specialised free zone in Dubai that focuses on commodity trade, primarily the gold, diamond, pearl and tea markets.
Since it was established in 2002, the DMCC has built an international reputation in the commodities market with the diamond sector trading US$23.5 billion of rough cut diamonds in the first half of 2011, making the DMCC the second largest diamond trading hub in the world.
Blick said the agreement creates a tremendous opportunity for both CEC and the DMCC.
“We are looking at opportunities to allow companies to work fluidly between these two zones through the establishment of a corporate passport,” he said. “By enabling companies to establish in the DMCC and Cayman Enterprise City, we are creating a unique environment for the commodities sector in the Americas and the clients governed by DMCC that can allow the rapid opening of new markets and let companies manage those opportunities successfully.”
The agreement will help Cayman Enterprise City connect the Cayman Islands to established and emerging markets worldwide.
“Dubai is known for having the world’s most successful free zones,” said Blick. “They have completely transformed the local economy and are populated by blue-chip companies from across the globe. Connecting with Dubai was an integral part of our vision, to gain from their experience while also creating the flow of capital between the two countries.”