Crystal ball gazing is precarious at the best of times, but especially so in the current world economic environment. This does not stop people predicting the timing of the global economic recovery. We are now at least six months beyond the ‘economic’ experts original consensus prediction made in early 2009. Then again confusion reigns within consensus forecasts: are we out of recession, heading into a ‘double dip’ recession or still in recession? It leads me to assume the crystal ball is opaque.
All I know is that emotionally at least, people believe we are still in recession. I have a simple crystal ball view and that is that the ‘recovery is six months away’. When asked that will be my answer for the next year or more. At least I am consistent in my response!
The economic landscape is very challenging in virtually the whole world, a possible exception being Canada and a few of our friends on the other side of the globe. When we look at Cayman, we see our main industries suffering. Tourism has been a challenge for close on ten years in terms of generating growth. The recession has obviously impacted people’s discretionary spending in our main source markets, which when allied to the Caribbean competitive landscape for the tourist dollar, makes for a significant challenge for our Cayman tourism related businesses.
Corporate incentive group business disappeared from the Caribbean overnight in the latter half of 2008, thanks in part to bailed out AIG executives enjoying a high-end retreat at a spa and golf resort!
The tourism solution is relatively simple in that we need significant ongoing investment in terms of the airport, new hotels and continuing development of our high-end Bays, Camana and Dragon.
We also need more for our visitors to do, whether that is casinos or other attractions I will leave others to decide. However, none of this will benefit Caymanians and residents alike if we do not offer a region leading service offering from the arrival to the departure of our visitors. When it comes to service, we are inconsistent and come up short compared to many of our Caribbean neighbours. Oh and by the way, elimination of crimes against the person or property would also help tourism enormously.
Tourism is relatively simple to fix, financial services may not be so. The reason: so much is outside our control in the global financial services sector. In Cayman, we need financial services to be strong and growing as it is the primary driver of our economy, estimated to produce 50 to 60 per cent of gross domestic product. We cannot ignore such a ‘gorilla’, we must facilitate growth by reviewing and changing what we can control whilst promoting and representing ourselves in the international debate.
We can control the availability of work permits and related cost. Look at Cayman 20+ years ago when work permits for professionals, with experience, undoubted qualifications and a global network of business intermediaries were readily available with no ‘rollover’ threat. Ironically at that time the work permit board was called the ‘Caymanian Protection Board’.
While the name has changed, unfortunately the present decision making seems to have forgotten it is less about protection and more about economic growth to benefit all residents, particularly Caymanians obviously. Our focus needs to be on Caymanians getting opportunities to both develop themselves and create lasting, rewarding careers. Financial services are all about the quality of professional advice, the quality of professional execution and the quality of the legislative, political and regulatory environment.
In essence service, efficiency and effectiveness are the key to growth for Cayman’s financial services industry. We need to review and simplify the whole immigration process. Did you know there are over 300 work permit categories? We have left simple and effective behind us in the last century, it is time to bring it back today.
Financial services are very dependent on the quality of the public sector/private sector relationship. Historically, such a relationship was strong purely because both sectors were small and operated in a simple and effective manner. Not so for many years now, with the private sector having more associations than Marilyn Monroe had lovers.
The public sector became bigger and more complex and so what had been simple became complicated. Cayman Finance has taken up the challenge of pulling the private sector together with the stated goal of being the voice for the industry. Much progress has been made but much work is still to be done to get the public sector fully engaged. The end game has to be to simplify and become a more effective jurisdiction in the global financial services industry. Time is of the essence as globally the politicians, through the G20, the regulators through a myriad of bodies and others seek to diminish our role as enablers of legitimate capital flows for investment purposes into the G20 countries, especially the US and the UK.
These points are raised merely as examples of how we need to simplify the complexity we have unknowingly created within Cayman. It needs both the public sector and the private sector fully engaged to unravel the complexity and become a highly focused service driven and oriented economy which is the envy of the region and recognised globally.
To quote Leonardo Da Vinci, ‘Simplicity is the ultimate sophistication’.