President of the Caribbean Development Bank (CDB) Dr. Warren Smith is advocating a private sector-led, regionally coordinated initiative to help the Caribbean optimize its benefits from the international business and financial services (IBFS) sector.
Speaking at Barbados’ International Business Week 2019 Conference earlier this week Dr. Smith pointed to what he said was the growing attractiveness of the Caribbean as an offshore centre, a circumstance which he said had won the region closer international attention. Smith drew attention to a recent OECD report which alluded to the fact that since 2010 developing countries had accounted for a larger intake of foreign direct investments than their more developed counterparts, though he noted that the growing attractiveness of these countries had come at a price insofar as it had afforded them enhanced global visibility and brought them under greater scrutiny.
Accordingly, the CDB President alluded to the marked increase in regulatory requirements, not least the passage of the United States’ Foreign Account Tax Compliance Act (FATCA) as well as the Organization for Economic Cooperation and Development’s (OECD) Common Reporting Standard. Smith notes that the requirement of complying with these various rules “places a bureaucratic burden on governments and institutions” in developing countries.
To add to their woes, Smith said, countries that neglected to comply with the new rules and to adjust their regulatory frameworks accordingly faced the threat of loss of correspondent banking relationships and of being blacklisted. What the recent threats had done, according to the CDB President was to make “many Caribbean countries even more aware of the international pressures that the international community can exert on the international business and financial services sector.”
Accordingly, Smith is calling for a regional approach to protecting the Caribbean’s financial sector and to establishing the region as a “zone of excellence” for financial services. “We should embrace a regional approach that supports regulatory convergence and the adoption of common principles among CARICOM countries,” Smith is quoted as saying.
Asserting that a threat to the reputation of one Caribbean country was a threat to all, Dr. Smith stated that “In this business, what we trade on is our good name. The blacklisting of any one Caribbean country will have an immediate negative effect on the reputation of the entire region, he added.
The challenging backdrop notwithstanding, the CDB President sounded an optimistic note, positing that digitalization and other prevalent global trends promised significant benefits for the Caribbean’s IBFS sector. Accordingly, he recommended the deployment of digital technology to address challenges in key area including domestic payment systems and data collection.
The CDB President is also advocating the enhanced involvement by the regional private sector in shaping the direction of the IBFS, asserting that the private sector had a role to play in policy and strategy development. “There is untapped potential in the Caribbean for sustainable and inclusive growth through greater private sector involvement. The engagement of the various private sector actors is not limited to the provision of financing.
Rather, the private sector brings to the table valuable knowledge and insights that can help shape better policies and build proactive strategies based on regional and international exposure and experience, Smith said.
