(CNS): Premier Alden McLaughlin has confirmed that the new ministry he promised at the start of this administration has been given the green light by the UK, and also that work to open the Cayman Islands Hong Kong office associated with the new government department has already begun. Speaking in the Legislative Assembly Monday, he said the Ministry of International Trade, Investment, Aviation and Maritime Affairs would have an initial annual budget of $3 million, which will go towards employing the necessary civil servants and the marketing required to promote Cayman overseas.
McLaughlin told his parliamentary colleagues that there are costs and, indeed, potential risks associated with the decision to come out of the shadows of the UK and pursue the Cayman Islands’ interests directly, with a push to increase trade and investment in Asia. But, he said, these are “extraordinary times”, given the constant threats to the offshore sector and Brexit.
“This represents a considerable investment when we are well aware of the other potential calls on government funding,” he said. “However, we believe the benefits I have outlined are significant enough to justify the investment; an investment in the future and prosperity of our people and our islands,” he added at the end of a statement outlining what he believes Cayman has to gain with the new ministry.
The premier did not say which of his Cabinet members will take over the new ministry, which will contain new areas relating to the direct promotion of Cayman globally, with the aim of opening more offices on a case-by-case basis, but would also include some elements currently under the commerce ministry headed by Joseph Hew, some from the financial services ministry headed by Tara Rivers, and some elements from the premier’s own ever-increasing portfolio.
Explaining what it will cover, he said the ministry will advance the economic and political interests of government, the people and the local business community, making it easier for potential overseas investors to do business here and help enhance Cayman’s reputation. It will also improve the coordination of the jurisdiction’s activities internationally across numerous areas.
The ministry will take over the direct responsibility for Cayman’s London office, the Department of Investment, the Shipping Registry of the Maritime Authority and the Aircraft Registry but not the regulatory functions of the Civil Aviation Authority or maritime regulation.
The ministry will, it is hoped, improve the reputation and promotion of Cayman with key opinion-formers in overseas governments and institutions and in the private sector. It is intended to increase inward investment, open up more opportunities for tourism and financial services, as well as place a renewed focus on growing the aircraft and shipping registries and helping with economic diversification.
The new ministry will also oversee the new Hong Kong office when it opens. McLaughlin said he had already received the letter of entrustment from the UK approving the venture, and he said the governor and the UK Consulate General in Hong Kong would provide advice and assistance to get the initiative going, including seeking approvals from the Hong Kong Government.
“While it is perhaps extra ordinary for an administration to create a new Ministry….these are indeed extra ordinary times,” the premier said as he explained why he believed the move was necessary.
“What we continue to see …is an ever-changing landscape as regards the required regulation of the
financial services sector, requirements that are no longer European Union-centric but are becoming the international standard – and so Cayman must move with the times if we are to maintain a vibrant Financial Services Industry,” he said.
“But the landscape will continue to change and the Cayman economic model will continue to face external threats, particularly as a result of the widespread misunderstanding of the Cayman Islands, our financial services industry and the regulatory regime that underpins it.”
With even Britian misunderstanding the offshore sector here as well as the uncertainty of Brexit and the challenges the UK will face after it leaves the EU, the premier said that the Cayman Islands “must do our bit to lessen their burden and at the same time …step out of the UK’s shadow and stand up for ourselves when it comes to matters of international trade”.
Generally, foreign policy or external affairs are functions reserved to the governor under Section 55 of the Constitution. “However, that section also recognises that in the discharge of their normal functions, key ministries will necessarily need to relate to overseas governments and institutions. The Constitution therefore provides that, in consultation with the premier, the governor may delegate responsibilities for external affairs to elected ministers, which then gives them freedom to act within certain prescribed limits.”
At present, he explained, this is piecemeal and not coordinated, making it difficult for people overseas to do business directly with the Cayman government. “Opportunities to present a coherent and consistent approach to other governments and to potential investors and partners are being missed. The new ministry will provide this coordinating function,” he added.
Over time, the government expects the new ministry to develop a network of international offices in locations where their establishment would enable it to better achieve its stated purpose. “Proposals for such offices will be brought forward on a case-by-case basis, and as I have mentioned previously, the first business case, for the establishment of an Asia Office in Hong Kong, has already been developed and approved.”
Hong Kong was chosen as the best location because of its existing links to Caymanian businesses and government as well as its position as a gateway to other Asian markets.
“Asia will create a focal point to promote all aspects of the jurisdiction in an increasingly significant market,” he said. “It will strengthen and deepen business ties and provide a gateway for future trade and investment in Asia. It will also facilitate the development of cultural ties between Asia and these islands.”
McLaughlin said the primary focus will be on economic benefits and supporting the economic pillars of tourism and financial services as well as the diversification of the Cayman economy.
“A physical presence on the ground in Hong Kong will mean that the office can provide certain real-time support services, such as certificates of good standing, dealing with immigration-related queries for Asian visitors, and potentially company incorporation and funds registration in a same day and time zone convenient manner. This will add tremendous value to the efforts of Cayman-based firms already operating in Asia, and in particular in Hong Kong,” he said.
Although previous attempts to establish a Hong Kong office were unsuccessful, he said times had changed and the new Asia Office would provide a springboard for improved business for Cayman. This time, he noted, the UK is “geared up to assist us to make it a success”.
He said the ministry and Hong Kong office would prepare Cayman for changes ahead, as international issues will become increasingly important to the well-being of the Cayman Islands.