The Tribune

By NEIL HARTNELL Tribune Business Editor THE FINANCIAL services industry's direct GDP contribution could grow to 22-23 per cent within five-seven years if the Bahamas was bold enough to break with the "status quo" position it has maintained for the past two decades, a leading QC told Tribune Business yesterday. Brian Moree, senior partner at McKinney, Bancroft & Hughes, said the country's second largest industry had effectively been "treading water" for 20 years with little to no growth, and the time had come for "a fundamental decision" to be taken on whether the Bahamas wanted to expand financial services and its GDP contribution. Arguing that the sector's direct gross domestic product (GDP) contribution had never exceeded the 15-18 per cent range, Mr Moree said this share could be increased by between five-eight percentage points if the Bahamas was "to get increasingly serious" and make reforms that would attract further high quality business. Pointing out that the global financial services industry was set for continued growth, Mr Moree urged the Bahamas "not to cede" the sector to rival jurisdictions, and instead invest the necessary resources to exploit the "enormous opportunities" provided by emerging markets such as Latin America and eastern Europe. "This is a vibrant, growing industry, contrary to what others may think," Mr Moree told Tribune Business, "and there's no reason why we should cede whole segments of it to other countries. It is realistic to increase the contribution from financial services to about 22-23 per cent over a period of five-seven years. "We can tweak the edges and tread water, as we have been doing for 20 years, or are we really going to break out of that range and get this 15-18 per cent contribution up to 20-23 per cent?" Describing the former percentage range as "the status quo" that the Bahamas appeared to have been comfortable with, Mr Moree added: "That's been that way for 20 years. To my knowledge, it's never hit 20 per cent, and never gone below 15 per cent, in that time. "It's been right in that range in terms of direct GDP contribution, but we've never in my view broken out of that. The challenge for is whether we're going to continue to tread water and stick around where we are, win a few, lose a few, continue to react to events around is and stay in the game. "That's better than a lot of countries, and we can do that, or are we in the next five-six years going to get up to the 20 per cents? That's my very deep conviction. We're going to hang around in the same neighbourhood, or we're going to get increasingly serious about this." The prominent QC added: "A fundamental decision needs to be made as to whether we maintain the status quo or make a concerted effort to expand the industry to increase its contribution to GDP. 'That decision needs to be a committed one, and if we're going to try to make a concerted effort, a number of issues have to be addressed otherwise we will maintain the status quo. It's not just going to happen." Mr Moree's policy prescriptions for revitalising and growing the Bahamian financial services industry are well known, and have been detailed in Tribune Business before. They include re-establishing the Ministry of Financial Services, or at the very least creating a dedicated financial services unit in the Ministry of Finance, headed by an official equivalent in standing to the Ministry of Tourism's director-general. However, he also told this newspaper that the Government should leverage the private sector's expertise by creating a Policy Advisory Council, featuring executives from the Bahamian financial services industry, which would make recommendations on the sector's development. Other ideas were similar to those previously articulated: A competitive cost base featuring private sector, government and licensing fees comparable to competitors; a dedicated commercial court "capable of addressing business disputes in a timeframe acceptable to the international community"; and improved services at all government departments and registries. "There has to be a complete commitment made by the Government across its agencies and departments to expand financial services," Mr Moree told Tribune Business. "What I think is critical if we're going to be committed to expanding the financial services industry is a dedicated, focused group of individuals who would be exclusively mandated to provide oversight of our financial services industry in the Bahamas, and who would be given specific, measurable objectives to be achieved in a definite time period. "You have to run this industry like a business is run in the private sector, and it needs a dedicated, sustained focus where persons do not have other commitments." Mr Moree said such a dedicated financial services unit would have committees responsible for issues such as product development, legislative drafting and market intelligence. It would also attempt to reduce the product development cycle, and seek to better market and launch the Bahamian financial services industry and its products. "This is not the time to tweak the edges, but to take bold initiatives to grow the industry," Mr Moree told Tribune Business. "We've been tweaking the edges in financial services for 20 years, maintaining the status quo and holding our position as an international financial centre, which is commendable. "It is not as if we have been doing nothing at all. We have held our own given the economic and regulatory challenges over the last 10 years, and that must be acknowledged and commended. "Given the size of the country and the limited resources we have, and given the economic challenges we have had to face, the Bahamas has performed extremely well. Our financial services industry has proven to be resilient beyond the expectations of many persons." Emphasising that he was not being critical, Mr Moree added: "There are untapped opportunities in this industry for the Bahamas, and we need to decide if we are prepared to do what is necessary to realise these new opportunities and frontiers, which could very significantly impact the quality of life for the average Bahamian, and increase the contribution of this industry to our GDP."