PPC Forum Special: Business Opportunities

Naul Bodden, Chairman of the Advisory Board of the
Investment Bureau

Nancy Kirkconnell-Ewing and Jude Scott

Friday,  December 16, 2005

At a “Sustainable Living” Forum on Cayman Brac, Chairman of the Advisory Board of the Investment Bureau, Naul Bodden, discussed specific areas in financial services that could be developed in the Sister Islands.

Mr Bodden, whose business interests include owning NCB Consulting Ltd, a local financial consulting company, is also the Investment Manager of a Hedge Fund formed in April 2003, which, he said, could be managed from Cayman Brac.

Possible services that he listed were: corporate and financial services, registration of companies and maintenance of registered offices for ordinary residents and exempted companies, and back office services for mutual fund administration.

Other possibilities for Cayman Brac were: registration and administration of Class B restricted and unrestricted banks, and registration and management of captive insurance companies.

How to develop Financial Services on the Brac

Mr Bodden then outlines what needed to be done to develop these areas. Firstly, the Government has to make the decision to support such a venture for Cayman Brac and put in place any ancillary laws that govern this type of business, he said.

“Clearly, there would have to be provision within the law that addresses the subject of fees should one elect to incorporate and operate from the Brac. The next move would be to develop an infrastructure that facilitates the operation of an offshore financial centre.

“This would include office accommodation, staff accommodations, regular and reliable air service, good telecommunications services and the availability of good professional staff to service the industry.”

The development of these areas would have a positive impact on the Sister Islands in terms of job creation for Brackers, development of office accommodation, condominiums, and apartments.

Mr Bodden noted that development does not come without a price, but believed it possible to learn from mistakes that have been made in Cayman, which have put a tremendous strain on such areas as the environment, traffic, and schools.

“We have to accept that, with any substantial development in the Brac, some of these negative impacts will creep into the system. However, I believe that the positive far outweigh the negative if we stick to a well-planned and structured system,” he said.

Mitigating the risks

Mr Bodden also noted the potential negative impacts or risks that may have to be mitigated within the Cayman Islands as a whole.

“In order for the Brac to stick its toe into the offshore financial arena, it has to be accepted that it will have some form of negative impact on Grand Cayman,” he said.

“Although we continue to portray to the offshore sector that the Cayman Islands considers itself to be a Cadillac operation rather than offering discounted services such as the BVI, the BVI has nonetheless promoted itself as an offshore financial centre at prices substantially lower than the Cayman Islands.

“As a result, they have hundreds of thousands of companies registered and maintained there. We may have to consider offering similar rates in the Brac to attract the BVI type of clientele,” he said.

Mr Bodden pointed out that the traveling time from the US to BVI is an entire day, but travel from the US to Cayman Brac takes only a few hours.

“I believe if we offer a similar package to the BVI, clients will select the Brac over the BVI,” he stated.

“The conversations that I have had with some of my peers and Government over the years has raised some concerns for the Cayman Islands’ financial sector in initiating such a plan or programme for the Brac.

“I still believe that we all need to look seriously at what can be done to promote the Brac as an offshore financial centre and stop being selfish and consider not only what is good for Cayman, but rather to think about the Cayman Islands as a whole.

“We promote the Cayman Islands as a leading offshore financial centre. Why can’t the Brac be part of it?” asked Mr Bodden.

How to compete in the global market

Another Bracker, Jude Scott, a Partner with Ernst and Young for fourteen years, said that global business continues to grow, and this business will go to locations that understand and are prepared to meet its needs.

“Financial services business is based on global clients, global service, global communications, and globally recognized expertise. To be competitive globally and locally, we must focus on services, people and technology,” he said.

“The people of Cayman Brac have always stood for quality. To have sustainable growth, we must have a strategy around talent and knowledge retention.

“Areas that can assist with these are: economic opportunities, quality of life, globally transferable skills, readily accessible technology, development and opportunities.”

Government could assist in the growth of the Brac by demonstrating tangible support for growth in Cayman Brac by expanding services and operations in the Brac, suggested Mr Scott.

Government business that could be conducted on the Brac includes the Registrar of Companies, Land Registry, its own disaster recovery.

“The necessary ingredients to create an effective strategy around sustainable development in the financial services are the unrelenting desire of the people to have sustainable development, and a clear strategy for the Brac’s identity in the global market place.

“Let’s not have things for the sake of all things, but instead, let’s do all the things that we do well,” he concluded.

E-business and IT

Nancy Kirkconnell-Ewing, President of Brac Informatics Centre (BIC) outlined the potential market for e-business. BIC is a state-of-the-art disaster recovery, data storage and IT company located on Cayman Brac.

Ms Ewing divided the market into three categories: Firstly, end-user businesses, which include financial services, hospitality and entertainment, travel and transportation, retail and wholesale, professional services, Government, and healthcare.

The second category was e-business companies, which include service providers, software developers, content providers, systems integrators, and resellers.

The third category, the influencers, she described as firms that provide services to the end-user businesses, and include legal and accounting firms and consultants.

According to Ms Ewing, the ‘influencers’ also have the need for technology.  Easily available computer services (IT) allow them to be efficient and enhance the level of services they provide to the end-user businesses.

“The growth of the Cayman Islands depends crucially on foreign markets; hence strategies must be geared toward global competitiveness. In order to remain competitive, the Cayman Islands needs to develop a knowledge-based economy,” she said.

The areas in which the economy could grow on the Brac are disaster recovery and the informatics industry.

There has been much talk of the proposed Brac Huntington Medical School. However, Ms Ewing also suggested an IT institute as a possible direction for the Brac.

UpTown, a proposed Business Resilience Park that will be built on the Bluff in Cayman Brac is part of the e-business market strategy for the country.

“This is a key component of the ICT infrastructure that has the potential to differentiate the Cayman Islands as a jurisdiction,” she said.  

Ms Ewing displayed a plan of the proposed BIC building, which will go to planning at the appropriate time, she said.  

After the forum, Ms Ewing told Cayman Net News, “The goal was to openly share with the community at interim stages during the development of UpTown, since this is an initiative to enhance the economy of the Island as a whole. 

“Our goal is to share the vision of the Sister Islands to give all Caymanians an opportunity to be part of this planned development,” she said.

The Deloitte Private-Public Coordination Forum (PPC Forum) “Towards Sustainable Living for the Sister Islands” was held December 2, 2005 at Brac Reef Beach, sponsored by Deloitte, The Ministry of District Administration and the Cayman Islands Investment Bureau. Highlights from the PCC Forum will be serialized in The Bracker and Little Caymanian. For more details, visit www.investcayman.gov.ky/bracforum.cfm.

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