Cayman Economy Development and Special Economic Zone Framework
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The document discusses the Cayman Islands' economy and the potential for developing special economic zones (SEZs) to diversify the economy. It notes that the financial services industry currently dominates the economy, accounting for 55-65% of GDP. To diversify, the document suggests considering new industries like IT, healthcare, and professional services. It outlines best practices for SEZ frameworks, including streamlined approvals processes and foreign exchange access. Developing the existing financial services sector as an SEZ or establishing new SEZs could help attract new businesses and drive economic growth through jobs, entrepreneurship, and tourism.
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Cayman Economy Development and Special Economic Zone Framework
- 1. Development of the Cayman Economy The Special Economic Zone Framework Presented by Dr. Dax Basdeo, Chief Officer Ministry of Finance (Financial Services)
- 2. What drives economic development? http://www2.dsu.nodak.edu/users/fernando/office/courses/ONLINE/circular_flow/Circular_Flow.gif
- 3. How do jurisdictions attract business interest? • Availability of skilled personnel • Regulatory environment • Access to international financial markets • Availability of business infrastructure • Access to customers • Stability of business environment • Government responsiveness • Corporate tax regime • Operational cost • Quality of life 3
- 4. Cayman Economy Construction & Real Estate Tourism Financial Service 4
- 5. Cayman‟s International Financial Services Industry • Sectors: banking, insurance, legal services, trusts, company management, funds, accountancy • 55% - 65% of GDP • CI$1.2 - $1.5 billion • >3,200 persons employed (70% Caymanian) • 40% of Government revenue • 31,000 business travelers 5
- 6. Cayman‟s Strengths as an IFC • People o Diversity of workforce • Product o Stability o Tax neutrality • Responsiveness of Government o International Standards o Innovation facilitation 6
- 7. - 200 300 400 600 700 100 500 1975 1976 1977 1978 1979 Bank Regs Bank Laws 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Banks & Trust Companies 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 1 2 3 4 7
- 8. 200 300 400 500 600 700 800 900 100 0 1975 1976 1977 1978 1979 1980 Insurance Law 1981 Insurance Regs 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Offshore Insurance 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 1 2 3 8
- 9. 10000 12000 2000 4000 6000 8000 0 1975 1976 1977 1978 MF Law MF Regs 1979 1980 1981 1982 1983 1984 1985 Mutual Funds 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 1 2 3 9
- 10. Companies 100,000 5 Companies Law 90,000 Companies Regs 80,000 4 70,000 60,000 3 50,000 40,000 2 30,000 20,000 1 10,000 - 0 2005 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2007 2009 10
- 11. -4 -2 0 2 4 6 8 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 World 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Latin America and the Caribbean 2010 2011 2012 2013 Vulnerability to the Global Economy 2014 2015 2016 11
- 12. Opportunities for Diversification • Global trends (Demand) o Market needs o Source & destination of investment flows • The Cayman „offer‟ (Supply) o Resources o Infrastructure o Competitive advantages 12
- 13. Potential New Industries • IT & Software • Environmental technologies • Healthcare • Training & Education • Creative industries • Professional services • Transportation & Logistics 13
- 14. But how do we diversify? • Do we have the right People? • Do we have the right framework for the Product? o Bureaucracy o Regulatory Creep 14
- 15. 10 12 0 2 4 6 8 1975 1976 1977 1978 1979 Regs Laws 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Immigration & Labour Laws 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 15
- 16. Current Projects • Cayman Enterprise City • Narayana Health City 16
- 17. Special Economic Zones • Geographically delimited areas • „extraterritoriality‟ • Characteristics o Administered by a single body o Offering incentives o Business physically located within zone o International business • There are roughly 3,000 zones in 120 countries around the world 17
- 18. SEZ Best-Practice Framework • Co-location within zone • Private rather than public development • Appropriate legal, regulatory, and institutional framework o Simplification of approvals o Foreign exchange access o No ownership restrictions 18
- 19. Cayman Financial Services as a SEZ? • Resident vs. Exempt companies • Cayman Islands Monetary Authority • Immigration practice directions • International Standards • „Offshore‟ 19
- 20. Is the SEZ approach the right Framework? • Direct Effects o Jobs o Entrepreneurial opportunities o Sale of goods and services • Indirect Effects o Increase in the number of households o Training & technology transfer • Induced Effects o Greater business travel tourism 20
- 21. Cayman‟s Economic Growth* 7,000 20% 6,000 15% 5,000 10% 4,000 5% 3,000 0% 2,000 Nominal GDP -5% 1,000 Growth 0 -10% 1998 2006 1999 2000 2001 2002 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 21 * Rough estimates
- 22. “...when men live by trade... it is the best product that wins, the best performance, the man of best judgment and highest ability...” — Francisco d'Anconia, Atlas Shrugged by Ayn Rand 22