According to the latest ESO report, the Financial Services
industry directly contributes 41.9% of the economy of the Cayman
Islands, followed by Professional, Scientific & Technical
Activities at 13.8% (which includes the accounting and legal
professions) and Real Estate at 8.8%. Hotels and Restaurants
directly account for only 5.6%.
Now, imagine for a moment that most of the financial sector
disappears – leaving only one or two banks and insurers that
service the local population as is the case in many of our
neighbour islands. How many restaurants and professional
services companies would still be in business? Would we need more
hotels? Would there be a sizeable real estate industry?
The truth is that the lifeline of the Cayman economy is the
Financial Services industry, and while efforts to diversify the
economy are needed and welcomed, we need to ensure that we keep the
heart of our economy strong. Are we currently doing
Between 2007 and 2011 our economy has lost 221 million
dollars. It is the impact of the global financial crisis on
the direct output of our core industry that explains this decline
in our economy.
While the industry has contracted, the fiscal constrains of the
Government have lead to increased fees, not only increasing the
average "tax" levied on the industry, but its total
amount and its contribution to overall revenues on an industry that
already contributes well above its GDP share. According to the ESO
report for the first quarter of 2013, financial services direct
fees have increased 25% vs. the same period in 2012 despite a flat
level of business.
So if we have no option but to continue to squeeze our
"goose that lays the golden egg" – because
there is no room for running fiscal deficits as imposed by the PMFL
law – are there other things we can do to promote the
health of our special "goose"?
A quick look at our key competitors may give us a clue.
Jersey, Bahamas and Bermuda have all institutionalized a true
public/private partnership to ensure there is open dialogue and
effective promotion of the industry as a whole, instead of
the promotion of individual interests through informal advice or
company marketing efforts.
All these jurisdictions have recognized the need for these
efforts and have concluded that the private or public sector alone
cannot perform these functions – instead combining
significant financial resources from both sectors to achieve these
While we continue to spend significant resources on promoting
our tourism industry, we only dedicate a tiny fraction of these
public resources to the financial services industry and those
activities have failed to achieve significant results, as
coordination with the private sector has proved ineffective.
Concrete action is needed now.
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