Foreign investors needed

“Change has to come. Some people want us to stay the way we were, but we can’t. We’re losing our standard of living.”
– Premier McKeeva Bush

Premier McKeeva Bush has high hopes for an economic turnaround in the Cayman Islands in 2011.

Key to realising those hopes is getting a number of government infrastructure projects under way. However, with the government running a deficit budget already, Bush knows the government can’t afford to pay for the projects.

In the past, the government has borrowed to fund its infrastructure projects, but with the borrowing limit set out in the Public Management and Finance Law already surpassed and the United Kingdom limiting additional borrowings and closely monitoring budgeted spending, that can’t happen. Bush would like to see the PMFL revamped – “It’s causing far more problems than good” – to a system more like what is in place in Bermuda and Jersey, but right now he has limited options to funding the projects needed to stimulate the local economy.

“All of this is dependent on private sector partnerships with us – investors,” he said. “This is how we have to operate now. I just can’t spend money in any way, shape or form. The UK needs to approve.”

Bush said the government has discussed with financial advisors from PricewaterhouseCoopers the concept of entering into various public-private partnerships for the construction of needed infrastructure while at the same time keeping the arrangement off the country’s balance sheet.  Although that financial part can be complicated – as evidenced in the length of time it’s taken to reach a deal with investors on the cruise ship berthing facility – it could be the easiest part of the equation. Bush still has to sell the concept to the Caymanian public, some of which is very much against getting involved with foreign or so-called “paper Caymanian” investors.

The Dart Group
Bush spoke about the Dart Group, which is headed by Americans Bob and Ken Dart, both of whom received grants of Caymanian Status in 2003.

Despite all the charitable causes the Dart Group has supported, the public parks it has built, and the quality of its developments here, Bush acknowledges that some Caymanians just don’t like them.  He spoke about the importance of Camana Bay and the Dart Group to the Cayman Islands.

“If we never had Camana Bay, what would we have now?” he asked, noting that Camana Bay is not only a high-quality development, but it’s also added a good place on Grand Cayman for tourists and residents to visit.

Bush said if the Dart Group hadn’t bought and extensively remodelled the aging West Wind Building on Harbour Drive, it very well could be a decaying eyesore in central George Town right now.

“Instead, there are thriving businesses there now,” he said. “That’s the kind of thing Dart has done for Cayman.”

In addition, the Dart Group already employs almost 500 people, with about 60 per cent of them Caymanian, Bush said.

“The government is committed to facilitating them to reap the benefits of the project,” he said.

“I’m not saying they must own the country, but certainly government is going to put its best foot forward help them.”

Bush has heard the complaints from some Caymanians that the Dart Group owns too many businesses in Cayman, but he rejects those complaints.

“In a free market economy like ours, [the government] should not interfere to the point that they go and tell people to sell their businesses,” he said, adding that in most cases it was Caymanians who sold the businesses in the first place, and no one forced them to do that.

Bush said the Dart Group and Dr. Devi Shetty, a potential large investor in a university medical centre in Cayman, were actively being courted by other countries. He said the Dart Group and Shetty were offering good things for Cayman. He noted that the next phase of Camana Bay would represent an investment of $620 million over the next five years, with $100 million in 2011.

Over the five years, he said the Camana Bay project would generate an estimated $54 million of general government revenue and an additional $25 million in stamp duty on real estate sales.
“I’m not going to turn down anything that is good for the country.”

Bush called the Dart Group a “strategic partner” for Cayman.

“In any partnership relationship, there has to be a give and take that works for both sides and I think this is working for us,” he said.

Open for business
In his plan for sustainable economic success, Bush notes the need to create a better business climate in Cayman.  Part of that entails immigration reform to attract high-net-worth foreign investors.

Bush has announced three new Cayman residency options aimed at the foreign investor: a 25-year renewable residency certificate with the right to work for anyone who exercises substantial control over an approved company establishing a substantial business presence in the Cayman Islands; a 25-year renewable residency certificate without the right to work for people who invest $500,000 in developed real estate; and permanent residency for people investing $2.5 million or more in developed real estate.

Bush said that incentives such as these will allow the government to go overseas and sit at the table with potential investors and tell them “the Cayman Islands is open for business”.

He said he had no problem looking at investors from places like Eastern Europe, the United Arab Emirates, India and China, all countries from where a lot of investment hasn’t traditionally come to Cayman.

“The Cayman Islands will be open to any group that is legal and we can work with,” he said.

Bush said the tourism industry needs more hotel rooms, particularly high-end rooms managed by luxury brands.  He’s hoping to see at least two larger hotels built – one in the Eastern Districts and one in the Seven Mile Beach corridor – along with some boutique hotels.

He realises that new hotels and infrastructure investments will change Grand Cayman and that some Caymanians don’t want to see any change.

“Change has to come. Some people want us to stay the way we were, but we can’t,” he said. “We’re losing our standard of living.”

Bush also said he still intends to pursue the question of legalising gaming in the Cayman Islands by holding a vote.

Although he acknowledges that the last couple of years have been difficult, he believes the Cayman Islands can emerge from the economic crisis stronger than it was before with the right changes.

“We still have some pain to experience, I’m not going to say we don’t, but nevertheless, I think this is a turnaround time for the Cayman Islands.”