When Premier Alden McLaughlin announced the creation of a new trade and investment ministry last year, together with a regional office in Hong Kong, he justified the unusual mid-term move with the ever-changing international regulatory landscape for the financial services sector.
As a result, Cayman’s economic model will continue to face external threats, largely because of a widespread misunderstanding of the Cayman Islands and its regulatory regime, he said.
“Cayman must move with the times,” the premier said, “if we are to maintain a vibrant financial services Industry.”
To that end, the trade and investment ministry is tasked with improving the reputation and promotion of Cayman with key opinion formers abroad and attracting investments, not only from a wider pool of investors in new markets but also among an increasingly diverse range of businesses.
The new Ministry of International Trade, Investment, Aviation and Maritime Affairs is also a step of emancipation from the United Kingdom, which is preoccupied with its own challenges of exiting the European Union and whose lawmakers have repeatedly lashed out against British Overseas Territories.
Eric Bush, who will lead the new ministry as chief officer, once he returns in July from his current assignment as Cayman Islands’ Representative in the U.K. and Europe, agrees that the initiative is in part in reaction to the Sanctions and Anti-Money Laundering Bill in the understanding that Cayman needs to speak for itself in international forums.
He believes it is also a result of the positive impression that Cayman has made when a delegation attended the Great Festival of Innovation in Hong Kong in March 2018.
The Cayman Islands government used the festival, which was part of the U.K. Department of International Trade’s effort to promote British businesses and industries, to showcase local businesses, particularly in the financial services industry.
Cayman hosted a reception on the night after HSBC hosted a similar event. “What Cayman had to showcase, and the quality of speakers showed that Cayman was on par, if not better,” says Bush.
“If you will, that was evidence that showed the premier and others that Cayman can participate and succeed on the world stage. So why not create a core ministry that is responsible for advancing that, seeking to coordinate and facilitate other ministries that naturally focus on external markets.”
Equipped with an initial budget of $3 million for the new ministry and the establishment of an Asia office, the ministry’s first year will not focus on creating new products but look at the successes of the various ministries and industry initiatives “with a new lens on.”
This will encompass not just financial services, tourism, aviation or shipping but “Brand Cayman” – the Cayman Islands as a target for investments more generally.
The new chief officer says the trade and investment ministry will not be able to achieve this goal in isolation. “For this ministry to work effectively and to do its job, we need to work hand-in-hand with the private sector,” he says. “This is not a government that is there to do it all. It is there to supplement and enhance efforts that have already been made, and that are ongoing.”
In this context, Cayman can also learn from the successes of other jurisdictions and better capitalize on some of the work that it has already done for years.
Bush cites Monaco as a prime example. The independent city-state in the Mediterranean has been very successful at attracting the world’s billionaires.
The small principality has an entire calendar of events and initiatives to attract and maintain a high-end clientele to live and invest there, Bush says. “That is something that Cayman can learn from.”
Monaco is also host to the world’s premier luxury yacht show at the end of each September. The event has been attended by the Cayman Islands Shipping Registry for several years.
If one considers that of the 600 to 700 luxury yachts on show, 70 percent have a Cayman flag, Bush says, that “is a huge platform to build on.”
“That is the success the shipping registry has achieved over years but the Cayman Islands – both public and private sector – we have not tried to explore and exploit that success in Monaco.”
Given that there is a plethora of shipping industry service providers and manufacturers present at the event, Cayman should try to leverage the success it has already, to “see what avenues for opportunities there are for other aspects of Cayman,” Bush says.
The first year of the ministry’s operation will be about planning and carrying out an audit of all external relations and promotional initiatives in both government and private sectors.
“What I believe we may find is that there are synergies to be identified between what the private sector does in certain industries and what the public sector does,” says Bush.
The question is “can we add another dimension to that by talking about the stock exchange, or not only our tourism product but also our aviation registry?” he says.
The new ministry will also have responsibility for a string of regional offices that government plans to establish over time. The first office in Hong Kong is expected to be set up in the third quarter of 2019.
At the same time, government will go through a business case analysis to evaluate the merits of opening a Cayman Islands office in the U.S. to address the North American market.
“Similarly, we will do this around the world as and when a business case or a business need calls for it,” Bush says.
Because of its constitutional relationship with the U.K. and its role as a center of political influence, Cayman will need to maintain a presence in London.
“However, as we look to expand and even maintain our market share in financial services or luxury tourism, then the business need becomes more relevant to have a government office in a particular jurisdiction,” Bush says.
This will be informed by the desire to maintain and increase market share in specific jurisdictions.
“Change is constant,” Bush says. “The only way we can keep pace with the change is to have relevant and appropriate boots on the ground to tell us what we should be doing, what products we should be creating, what legislative framework we should have to make sure that we can service the clients now and into the future.”