The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “is as competitive as anyone else” in financial services, the deputy prime minister asserted yesterday, despite its latest fall in an annual survey of global financial hubs.

KP Turnquest told Tribune Business that he “personally has no concerns” even though The Bahamas fell 18 spots, dropping from 67th to 85th, in the Global Financial Centres Index just unveiled by London-based think-tank, Z/Yen Partners, in collaboration with the China Development Institute.

The index, which assessed 112 financial centres based on 133 criteria, and received 2,373 responses, showed that The Bahamas’ rating fell by only six points year-over-year - dropping from 591 in 2017 to 585 last year.

This indicates that while The Bahamas may have done little wrong, other financial centres continue to make sufficient reforms and improvements to bypass and leapfrog this nation. While it was ranked one spot below the Isle of Man, another major international financial centre (IFC), the likes of Glasgow, Warsaw, Budapest and Sofia were placed further ahead and The Bahamas was among the greatest fallers in terms of rankings.

The Bahamas was also rated eighth out of nine financial centres in the Latin American and Caribbean region, beating only Buenos Aires. And it was grouped among 15 financial centres said to be suffering from “the greatest reputational disadvantage”.

“This indicates that respondents’ perceptions of a centre are less favourable than the quantitative measures alone would suggest,” the Global Financial Centres Index added. Others falling into this group included the likes of Cyprus, Monaco, Glasgow, Nairobi, Riga, Sofia and Busan.

Still, Mr Turnquest told Tribune Business of the survey findings: “That’s all about perceptions and marketing and that kind of thing. From a competitiveness point of view, after all the rules changes and legislation passed over the past year we’re as competitive as anyone else.

“There’s perceptions, obviously, and the ease of business which we continue to work on, but in terms of efficiency in the international financial services industry we’re competitive although there are always things we can improve on.

“When it comes to the ease of doing business we know still it’s an issue. We’re working on those issues and making progress, and hopefully that will be reflected in the results going forward.”

James Smith, a former minister of state for finance and ex-Central Bank governor, yesterday expressed criticism about the Global Financial Centres index findings, arguing that it was “subjective” and appeared to be based “on a wide range of variables” that use unknown weightings.

Suggesting that rankings were largely determined by media coverage and perceptions, Mr Smith added that the index’s outcome was unlikely to impact The Bahamas’ international financial services business prospects.

“My feeling is that the real sophisticated investors, external asset managers and institutions do a much more thorough on-ground examination of a centre,” he told Tribune Business. “I don’t think there’s sufficient detail to influence people with good skin in the game.

“You’ve got to do a lot more than look at it. I don’t think it will affect business on the ground.... It’s [the index] not entirely useless, but nothing anyone should pay any special attention to.”

However, Paul Moss, head of Dominion Management Services, one of the few Bahamian-owned players in the international financial services industry, told Tribune Business that The Bahamas was “unlikely to be moving up on this index any time soon”.

He added: “This is where The Bahamas is at, and we have to be more strategic in how we respond to some of these issues like blacklists so we can put ourselves in a league of our own or put us in the right standing to be successful.

“This is about tax competition, and The Bahamas has to enter that world so we can be seen as very transparent in our dealings, and people who come to our shores know it’s a very transparent jurisdiction, everyone is rated and ranked, and taxes are collected and paid.

“That’s the way forward. We can run from it, dodge it, but we’re going to have to do it if we want to remain in this business,” Mr Moss continued. “There’s no question it’s about transparency and us being able to demonstrate that.

“Part of that is double taxation agreements so that everyone gets part of the taxes out there. That’s the way it’s got to be. I don’t think there’s any other way than that way. It’s been on the table since the late 1990s and we have pushed it off for 20 years, but have to get into it.”