27 Feb 2008, George Town, Grand Cayman, Cayman Islands --- Aerial Photo of George Town --- Image by © Stephen Frink/Corbis
Home to more than 9,800 hedge fund companies, the crisis affected the tax haven of Cayman Island's financial and tourism revenues.

Cayman Islands still open for business



The Caribbean territory of the Cayman Islands has perhaps been hit harder by the economic downturn than any other spot on the globe. Home to more than 9,800 hedge fund companies, the crisis affected the tax haven's financial and tourism revenues, sending its budget to a US$100 million (Dh367.2m) deficit.

A recent World Bank report estimated that financial services account for almost 45 per cent of the territory's GDP. After the fiscal hurricane died down, the archipelago's budgetary shortfall led some commentators to ask if it was time for the Cayman Islands to finally begin taxing the institutions that helped make it the offshore financial capital of the world. But the territory appears ready to rebuild itself and its global reputation. Fresh from a visit to the UK, McKeeva Bush, the newly elected premier of the Cayman Islands, landed in the UAE to speak to government officials, meet with potential investment partners and sign regulatory agreements with the Dubai International Financial Centre (DIFC).

Before Mr Bush's visit to the UAE, the Cayman Islands raised $312m through a 10-year bond issue and was placed on the Organisation for Economic Co-operation and Development's (OECD) global "white list" of countries using internationally recognised tax standards. Mr Bush spoke to the The National. q What exactly are your plans in the UAE? a We're setting up an investment office based in Dubai for the entire Emirates to help direct investments for the Cayman Islands. We have been here before so now we're trying to formulate and set up the offices. As well, we're taking this opportunity to talk to various business entities and people that are in similar businesses in the Cayman Islands. Cayman Islands is, I would think, one of the best regulated offshore international business centres. In that regard our financial services, we believe, have tremendous stability and are well-known in the industry. The business environment in both cities, as well as Qatar and the region in general, makes it reasonable for us to be based here.

When do you think the investment office will be opened? We're looking at January or February in the earliest. Can you provide an update for the Cayman Islands' plans to secure enough funds to avoid the threat of a fiscal deficit or the pressures of being forced to break its tax-free policies? There's no problem with that aspect. We have raised our bond through HSBC and it was four times subscribed. There is no problem at this time. Going through the international crisis like anybody else, yes, we've had our challenges. But I think we've done a good job of facing them. We haven't lost any business to speak of. I think businesses are taking this time to have an inside look at themselves and trim where they have to. There is no plan for direct taxation, no income tax, no property tax, no capital gains tax - none of the taxes you'll find in any other jurisdiction. We're not going to do so, either. Our main thrust is in inward investment. We have developed the country in the past 40 years based on inward investment and we believe it is the right way to go. It is part of the reason we are in this region. We believe that there are synergies between the Emirates and ourselves.

What is your opinion on the OECD's plan to force tax havens around the world to become more transparent and open with their accounts? I speak from a personal point - in today's world of international finance, there has to be well-regulated jurisdictions to give confidence and protection to investment. That's what Cayman is about. We are regulated by the Alternative Investment Management Association, the Cayman Islands Finance Administrators Society and the Society of Trust and Estate Practitioners. I have no problem with those places but I do have a problem with a country that [says] I must institute any kind of financial position, any income tax, any property tax. I have a problem with that.

Are there any similar financial agreements you are looking to sign with UAE officials? What we are seeking is a memorandum of understanding between ourselves and the DIFC. This memorandum would allow the two jurisdictions to be recognised independently of the other. In terms of regulation, as a regulated entity, this would help the development of new product or vehicle in Cayman that could be recognised and regulated here within the UAE. It's a matter of structuring the fund domicile as well as how the two jurisdictions can work together.

You have gone on the record saying that you are seeking up to $3.5 billion in investment over the next three years for domestic development. Are you planning on acquiring those funds here and what will those investments go towards? Yes. Apart from our bond, we're doing a continued search for inward investment but we also are here looking for a longer-term relationship with the Emirates. We believe it holds a lot of opportunity for safe, regulated, open and transparent transactions. We are open for hotel development, condos [condominiums] in particular, conference centre and golf facilities. We are also looking for an oil refinery to based in the country.

Can you provide an update to the freeze on the assets of Saudi Arabia's Saad Investment Company? A Cayman Islands court in July froze $9.2bn of assets belonging to the Saad Group. No, I wouldn't know. We don't control the courts. There is a separation between the executive and the judiciary. We are regulated by British common law and therefore there is no interference from my office.

Taking a step back, how do you think the freeze on the Saad Group assets will affect the financial relationships between the Cayman Islands and the GCC countries? I don't think it will have a negative effect. I don't see that would be any hindrance to us. In fact, I think it would be a plus to huge companies that want to use our jurisdiction for arbitration. Given the past year in terms of the financial regulatory environment and global recession, are we beginning to see the end of all these exotic tax havens around the world?

No, because like water, good money finds its own level. It's going to go where it's best regulated, where it feels it's the safest and where it is open and in well-protected regimes. The Cayman Islands is just that. I have no worry about what any government is going to say. We will survive and we have survived for so many years simply because there is so much bad management in all these metropolitan countries. Good money is going to go where it feels it is best protected.

Is the Cayman Islands solvent? That's right. We can't produce budget unless that budget is balanced. That is by our own law, which the UK has to ratify. This is something that we have to work towards being prudent financial managers. @Email:dgeorgecosh@thenational.ae

Prop idols

Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.

Sophie Shams (Dubai Exiles mini, England sevens international)

An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.

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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)

Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.

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Erin King (Dubai Hurricanes mini, Ireland sevens international)

Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.

The biog

Name: Timothy Husband

Nationality: New Zealand

Education: Degree in zoology at The University of Sydney

Favourite book: Lemurs of Madagascar by Russell A Mittermeier

Favourite music: Billy Joel

Weekends and holidays: Talking about animals or visiting his farm in Australia

Defined benefit and defined contribution schemes explained

Defined Benefit Plan (DB)

A defined benefit plan is where the benefit is defined by a formula, typically length of service to and salary at date of leaving.

Defined Contribution Plan (DC) 

A defined contribution plan is where the benefit depends on the amount of money put into the plan for an employee, and how much investment return is earned on those contributions.

THE SPECS

GMC Sierra Denali 1500

Engine: 6.2-litre V8

Transmission: 10-speed automatic

Power: 420hp

Torque: 623Nm

Price: Dh232,500

MEDIEVIL (1998)

Developer: SCE Studio Cambridge
Publisher: Sony Computer Entertainment
Console: PlayStation, PlayStation 4 and 5
Rating: 3.5/5

Company Profile

Company name: Hoopla
Date started: March 2023
Founder: Jacqueline Perrottet
Based: Dubai
Number of staff: 10
Investment stage: Pre-seed
Investment required: $500,000

Walls

Louis Tomlinson

3 out of 5 stars

(Syco Music/Arista Records)

The Baghdad Clock

Shahad Al Rawi, Oneworld