The Bahamas is more than sun sand and sea - it's a great offshore investment destination
WHAT-TO-DO - NASSAU, CABLE BEACH & PARADISE ISLAND - JAN 2003 EDITION
With its proximity to the United States, a strong economy rated as positive by Moody's Investors Service, and a well-regulated financial services industry, The Bahamas is more than sun, sea and sand. It's a great investment destination, offering innovative - and legal - investment vehicles in an offshore environment.
Happily, the inducements include an absence of taxes such as capital gains, sales, inheritance and personal income taxes. But investors are drawn by more than this - after all, lots of offshore jurisdictions have low- or no-tax economies.
Why The Bahamas?
They choose The Bahamas because it is a sophisticated financial services centre that offers investment opportunities with the same standards you'll find in London, New York, Singapore and other reputable "onshore" centres - but with a focus on red carpet treatment instead of red tape.
In fact, industry officials bristle at the use of the word "offshore" to describe the jurisdiction.
"The Bahamas is a financial services centre, not an offshore financial centre as some would describe us," Allyson Maynard Gibson, Minister of Financial Services and Investments, said in an address to the National Assembly, the equivalent of the US Congress. "We are blue chip."
Maynard Gibson's portfolio is a new one, created by the Progressive Liberal Party (PLP) government elected in May 2002, to recognize the importance of the financial services sector to the Bahamian economy.
Financial plan
Maynard Gibson has introduced a 10-point Financial Services Strategy aimed at strengthening and invigorating the sector, which contributes 15-20 per cent to the gross domestic product of The Bahamas.
The plan includes a new investment vehicle that's a combination of an International Business Company (IBC) and a mutual fund.
Called SMART (for Specific Mandate Alternative Regulatory Test fund), it will be licensed and supervised by the Securities Commission of The Bahamas. Some of its benefits include fast-track licensing and limited direct regulation.
Maynard Gibson's plan also includes law revisions aimed at encouraging foreign investment that is fully compliant with onshore tax laws, including changes to existing trust and foundations legislation, new legislation to encourage capital markets transactions, and a complete overhaul of e-commerce legislation.
New focus
In short, The Bahamas' financial plan recognizes that, in today's highly-regulated world, investors need innovative but compliant investment vehicles - in other words, a legitimate reason to take their money offshore.
To that end, the sector is developing a wide range of products where all three stages of the investment process are legitimate - the initial contribution, the period of the investment and then the payout on death or in a lifetime, says Hywel Jones, a financial expert with 25 years' experience and head of Britannia Consulting Group in Nassau.
It's this attention to the "back end" that marks The Bahamas as a "blue chip" financial centre.
The product mix includes mutual fund administration, money management, trusts, life insurance, captive insurance, asset protection, immigration planning, and e-business.
When it comes to trusts, says Jones, The Bahamas has more comprehensive and technically innovative laws than any other jurisdiction. It also boasts excellent life insurance legislation and competitive pricing for mutual fund administration. These are just some of the areas where The Bahamas is striving to distinguish itself.
Bank goes international
In another development, Bank of The Bahamas has opened a branch in Miami, FL. Relaunched as Bank of The Bahamas International, its plans include expanding business in the Caribbean and Latin America, and linking with another bank - yet to be named - that already has a presence in those areas.
"The bank recognizes the significant level of commerce between The Bahamas and North America and the need to provide innovative financial services to its growing customer base, so that commerce can be conducted in a more convenient, efficient and friendly manner," said Paul McWeeney, the bank's managing director. He said international activities now represent about 15 per cent of the bank's core business.
Focus on tourism
While the financial sector is a vital part of the economy, tourism is the No 1 industry, contributing 50-60 per cent to the gross domestic product.
Armed with a new marketing plan aimed at stimulating a tourism revival in the Out Islands, the government hopes to create between 16,000 and 18,000 new jobs and raise overall tourist spending to $3 billion a year.
The idea is to create a niche market for each of the islands and to show the diversity of The Bahamas. The step is important to more than just the economy. Since most Out Island resorts are built on an eco-friendly concept, it's a good move for the environment, helping to preserve the pristine beauty of The Bahamas while giving visitors vacation options vastly different from the glitz and glamour of Nassau.
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