Tourism has been the bread and butter of our economy for a number of years, bringing in an influx of foreign exchange (FX) to the country via various vehicles of services such as transportation, consumer business, entertainment and professional financial services. Due to Covid, the FX influx from tourism has been reduced, however there is a silver lining. Other industries with the ability to generate FX previously existed, and continue to exist, that were mostly hidden by the dominance of tourism, now have the opportunity to show themselves and grow. Although these industries and services cover a wide range of areas, the focus of this article will be on the regulatory and professional financial services.
The Barbados Corporate Registry, better known as CAIPO, went digital in November 2021. The Online Registry is responsible for fostering the registration of business names and charities, incorporating companies, and providing services that allow persons to make inquiries and reports about entities.
This full digitalization enables customers to pay for and have their applications processed online through a web portal from anywhere. The new system will also feature a high level of automation and artificial intelligence (AI), allowing for the immediate registration of some filings of corporate documents. This will eliminate the need to book an appointment to go to CAIPO to submit these documents or to verify their completion.
This would represent a significant advancement for Barbados, making it more attractive to international persons who are seeking foreign investment opportunities, making us a domicile in which the possibility to conduct business is effective and efficient.
Professional Financial Services
Barbados is host to some of the largest global professional financial service firms. Apart from the well-known ‘Big Four’ (Deloitte, PWC, EY & KPMG), Grant Thornton and BDO are also represented. With local roots and global branches, these firms have found various ways to bring FX to our shores, thereby providing a boost to our national reserves. This capacity is mainly due to the high education level and business experience of the persons making up these firms, who export their expertise to all corners of the globe. The provision of audit/ assurance services is a prime example of how this is accomplished.
Barbados is host to some of the largest global professional financial service firms.
Generally, audit/assurance services are restricted to firms and personnel being resident in the relevant jurisdiction. However, depending on the size, type and nature of the entity requiring the service, the persons with the necessary qualifications can and do perform the work from Barbados. The list of countries represented by such clients ranges from as far flung as the United Kingdom and the United States to as close as the ABC islands in the Caribbean.
The why in this scenario is typically driven by resource constraints from the firms in the other jurisdictions, along with smaller margins. In the more developed economies like the United Kingdom, these firms are focused on the larger, listed, more heavily regulated entities with significant amounts of funds to spend for resources. The smaller, less regulated entities do not always make economic sense to them. But, to us, these less complicated and smaller entities attract larger margins with the benefit of significant foreign exchange for a small open economy like Barbados with just 275k people. This arrangement is also possible when a resident auditor (within the same global firm) has the Barbados entity performing the work, and the resident auditor in the foreign jurisdiction conducting the formal reporting or ‘sign-off’, thereby reducing the cost to the client but maintaining the quality and integrity of the audit.
There is some aspect of this currently being done by firms using low-cost jurisdictions such as India, however this is lot more expansive and only works if you have the persons in-house with the necessary skills and expertise to perform the work, which we do in Barbados.
Apart from accounting and auditing, Barbados is also home to some of the larger insurance broker/captive managers in the world. With market leading names such as AON, Marsh and most recently SRS, we can and have delivered quality and expertise to various international organizations. One of the areas that I believe is ripe for further development, is these firms providing large scale back-office functionality for their global parent entities. This is very similar to the before mentioned situation with the audit firms, however at the more basic level. The difference in this case is due to the highly specialized and esoteric nature of captive management, where it is difficult to acquire expertise. Hence, it is not suited for the typical low-cost jurisdictions, but rather one such as Barbados that has the relevant expertise.
There has been a lot of justified concern as to the economic impact of COVID on many countries. In Barbados, where it has heavily impacted our main FX earner, the question that is being asked in some circles is where do we go from here? I believe we already have numerous systems and processes in place, and various innovative ideas have been conceived (e.g. the Welcome Stamp) that demonstrate the resilience, fortitude, and forward-thinking nature of our people.