Sen. The Hon. James H. Smith, C.B.E.
Minister of State for Finance
Rapid changes in technology, trade patterns, global socio-economic relations and international regulatory standards all present formidable challenges that make it essential for the Bahamas to define the role of financial services – *”at this time and well into the future.”* Minister of State for Finance James Smith says this is especially so if The Bahamas continues to look to the financial services sector to make its historic contribution to the nation’s economic growth and development.
According to the Minister, there is a need to define and prioritise strategic responses to continuing international threats. These threats originated with initiatives by various international agencies, with international concerns about terrorism also cementing the resolve of the world community to insist on higher prudential standards in the conduct of trade in services — particularly trade in international financial services.
The Minister has outlined seven points considered necessary for the growth of the financial services sector in 2003 and beyond. He said The Bahamas should:
– accept that there will be no retreat from the need to adhere to de minimis international standards as regards transparency, exchange of information and KYC requirements in the conduct of both onshore and offshore financial services activities;
– determine, in advance, the likely impact of tax information exchange agreements with respect to both criminal and, later, civil matters; and what its “precise” response ought to be;
– ensure that its laws and practices are consistent with the threshold requirements of the World Trade Organisation (WTO) and the Free Trade Area of the Americas (FTAA), in the context of the principles regarding non-discrimination, most-favoured nation, national treatment and transparency issues;
– expand its capacity to provide technologically advanced services to its client base, consistent with modern methods and modalities. Specifically, it must move speedily to facilitate the development of e-commerce by providing the appropriate legislative regime; the necessary physical infrastructure and, above all, the educational and cultural impetus to transform the country to a digital economy;
– introduce a national programme to continuously upgrade its human resource pool by the expansion of formal, informal and on-the-job training facilities to ensure that its work force is competent to meet the challenges of international competition;
– “fast forward” the process for approving new products and services for use in its financial services sector. Specifically, special legislation requested by local financial service practitioners;
– institutionalise the process of efficient and effective dialogue between the practitioners and the policy makers to ensure that they work in harmony towards the common good; that is, towards the orderly growth and development of its economy in general and its financial services sector in particular.
Commenting on the historic success of The Bahamas in providing offshore financial services in a very competitive way, the Minister credits this success with creating an economic model for international financial institutions to recommend to others. The tax policies of the developed countries in the nineteen fifties and sixties were principally responsible for the economic growth of the financial services sector in The Bahamas. Minister Smith says, however, the nation can no longer rely on the tax policies of other countries, particularly the developed countries, to provide the basis for the growth of its financial services industry. *”We must not only recognise the changing world order; we must embrace it. We must reform, restructure and if necessary retool our financial services industry from within and in so doing, position ourselves to meet the realities of a changing world, a world which we hope would accept The Bahamas’ participation on the basis of its own national efforts and with full respect to its own sovereignty.”* concludes the Minister.