The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas Financial Services Board's (BFSB) immediate past chairman yesterday urged the Bahamas to look beyond financial services when seeking to attract Asian and Brazilian investors to these shores, after the 2012 World Wealth Report identified both regions as the fastest growing market for high net worth individuals.

The report, produced by consulting firm Capgemini in conjunction with Royal Bank of Canada (RBC's) wealth management arm, effectively vindicated the Bahamas' strategy of targeting Asia (chiefly China and India) and Brazil as key markets for its financial services industry to move into.

Of the 12 countries with the largest high net worth individual markets, defined as persons with more than $1 million in disposable income, the World Wealth Report said Brazil saw the largest growth in 2011 of 6.2 per cent. As for the Asia-Pacific region, the number of high net worth individuals expanded by 1.6 per cent in 2011 to 3.37 million, leapfrogging the US for the first time to make it the largest source market.

But Craig A. (Tony) Gomez, the Baker Tilly Gomez accountant and partner, urged the Bahamas to "look outside" financial services when targeting them for inward investment, tapping into their manufacturing/commodity bases and promoting the benefits of facilities such as Freeport's port and free trade zone to their businesses.

Given the Bahamas' location, combined with its lifestyle and climate, Mr Gomez said this nation needed to attract these high net worth individuals to make this nation either their primary domicile or second home residence, boosting real estate development.

While the Bahamas would not attract Fortune 500 companies to its shores, their directors and management teams were "very much" the type of clients this nation needed to reach out to, Mr Gomez said.

And, when it came to attracting companies to this nation, Mr Gomez told Tribune Business the Bahamas needed to go after its International Business Companies (IBCs), engaged in 'real business' such as research and development activities, to establish operations and a physical presence here.

Describing Asia and Brazil as the two regions that had enjoyed economic growth despite the recession, Mr Gomez said: "Those are the two prime regions, Brazil and China, that should be a target market for the Bahamas.

"Whether its from the international financial centre perspective, or a place to do some level of industrial business, we ought to be attracting investment from those two areas. They are the growth areas in much the same way over the years we have tried to attract US persons to do business in the Bahamas."

Pointing out that Brazil and China were "huge" in light manufacturing, Mr Gomez added: "Why are we not focused on attracting them to the Bahamas?"

Acknowledging that many jurisdictions in the financial services business were "unsure of the products they want to offer" as a result of continued global market volatility, Mr Gomez said the Bahamas needed to build on China's involvement as Baha Mar's principal financier and contractor, Hutchison Whampoa's presence in Freeport and its possible investment in the World Mart project.

"With Brazil, as a top performer in manufacturing and non-financial services products, and the Bahamas sitting geographically where it is, with a quality facility in Freeport and new port in Nassau, could become attractive in so many ways," Mr Gomez told Tribune Business.

"It's not about the development of financial services in the Bahamas any more. A number of those jurisdictions performing well are doing so outside financial services.

"As a jurisdiction, we have to develop a marketing and strategic team to visit these areas, convene with them and attract them to do business in the Bahamas, not only in financial services but any other type of industrial sector we want to develop."

Given that the main concern most outsiders had was the "high cost of doing business" in the Bahamas, Mr Gomez told Tribune Business: "We have to find a model to attract all the Asian business, the Brazilian business and get our people employed."

Meanwhile, the launch of Baha Mar's 300 luxury Residences units in London last week had reaffirmed that the Bahamas was "still seen as a very attractive place to have second homes". With Asian interest in this sector increasing, Mr Gomez added: "We have to find a way to get that interest expressed via the purchase of a second home or real estate development in the Bahamas."

And he also called on the Bahamas to "convert" IBCs doing real business into onshore companies in this jurisdiction, interesting them in doing business here.

"We have to convert interest in having entities establish the operational side of their business, or a physical presence, in the Bahamas," Mr Gomez told Tribune Business.

"The Bahamas is also not going to attract a Fortune 500 company, but what it's going to attract is all the directors, who are high net worth individuals.

"They are going to be looking to come to the Bahamas for second homes or vacation ventures. Places like the Bahamas are where they want to come. These are people we need to reach out to."

The 2012 World Wealth Report found that the overall financial wealth of high net worth individuals (HNWI) declined across all regions in 2011, with the exception of the Middle East, falling 1.7 per cent. That is the first decline since the 2008 world economic crisis, a year in which HNWI global wealth declined by 19.5 per cent.

"North America remained the largest region for HNWI wealth at S11.4 trillion, compared to $10.7 trillion in the Asia-Pacific region," the report said.

"After witnessing robust growth of 8.3 per cent in 2010, the global HNWI population grew marginally by 0.8 per cent to 11 million in 2011. Most of this growth can be attributed to HNWIs in the $1-5 million wealth band, which grew 1.1 per cent and represents 90 per cent of the global HNWI population.

"In contrast, global HNWI wealth in 2011 fell by 1.7 per cent to $42.0 trillion (compared with 9.7 per cent growth to $42.7 trillion in 2010). The global population of Ultra-HNWIs declined by 2.5 per cent in 2011, and its wealth declined by 4.9 per cent after increasing by 10.2 per cent and 11.5 per cent respectively in 2010.

"The HNWI population country ranking saw South Korea replace India for the 12th position, while the top three countries, US, Japan and Germany, retained 53.3 per cent of the total share of HNWIs, slightly up from 53.1 per cent in 2010. Of the top 12 countries by population, Brazil saw the greatest percentage rise (6.2 per cent) in the number of HNWIs."