Published On: Tue, Oct 22nd, 2013

Curaçao’s Future As A Financial Center Of Excellence: Can We Maintain This Long Term?

Alex Rosaria's Rotaract Speech -Santa Barbara Resort, 19 October 2013.

WillemstadWILLEMSTAD -- What do you do when in less than 15 years, from 1499 to 1513, your island is downgraded from “Isla de los Gigantes” (Island of Giants) to “Isla Inutil” (Useless Island) by one of the most powerful empires at the time?

You ignore it.

The Spaniards were not even good seamen, thinking they had arrived in India, let alone passing judgment on the original inhabitants of Curaçao! But most importantly you prove everyone wrong that not having gold and other precious metals does not determine your success.

Long term success is achieved by being creative with the resources you have, by being daring and especially realizing that our greatest potential lies in developing links to the rest of the world.

That has been the secret of our success throughout the years.

When in the early 1800 England took our island from the Dutch, twice, we opted to have both the English legal system as the Dutch one. It was considered good for business. And it was.

At the beginning of the 19th century, Curaçao had established trade agreements with all important places in the region , vessels from all parts of the world were seen in our harbor, and before we established a monetary law, currencies of more than twenty countries were being legally used on our island. In 1826 Willemstad was for the second time proclaimed a free port. Just to drive the point home, just recall the more than 200 hunderd years old song we all sang as children: Nos ta bai Ulanda, den bapor Franses (we are off to Holland in a French steamer). What a bustling cosmopolitan scene it must have been in Willemstad a few centuries ago!

The commercial activities of the port were however soon restricted to a powerful group of merchants, mostly the Dutch who had a wall constructed around Punda to keep competitors, mostly Jews, outside. In 1861 the decision was taken by the Government to eliminate this type of protection, figuratively and literally, as the wall was demolished and other groups moved in to get a piece of the economic pie.

This may have seemed like a short history lesson. The point I want to make however is that our island has prospered when it opened itself to the world, when it stimulated competition and when the private sector, the population in general dared to dream big things, took risks and especially never settled for complacency.

It does not mean that we never had setbacks, or even, mayor setbacks. It means however that when we are looking towards the future we do not need to look at what have been popularized by consultants and adopted by many, namely the Barbados Model or even the more exotic Singapore Model. Tonight I am, when discussing our International Financial Services Sector (IFS), going to take a fresh look at the Curaçao Model for inspiration.

We Need To Stop Complaining And The Passing The Buck

We complain, we whine too much. We say that the Netherlands “stole our offshore” and that those big nasty rich countries are making our lives difficult with all kind of new rules. First of all, the Netherlands is our competitor. That’s it. Just treat it like a competitor. It has every right to compete.

We also seem to be suggesting that the reason we are not performing well is because of the tons of rules and regulations by OECD, FATF, CFATF, Egmont, the European Unions and what not. Guess what. These rules also apply to our competitors as well. Competitors like Barbados, Cayman Islands and Anguilla are either outperforming us or are about to catch up with us.

It should be obvious that if we want to be an IFS sector of excellence, we have to start looking at home and not trying to find the culprit of our shortcomings somewhere else. We should stop playing the victim and be owners of our own destiny (as much as possible in any case).

We Need To Leave The Old Offshore Behind

One of the reasons we tend to struggle in this area is the fact that not all actors in the IFS sector on the island are convinced that the old off shore days and the outdated models attached to it, are definitely gone. Nowhere has this been more obvious than the discussions in the sector between a group that wants to hold on to the good old days and not signing the Double Taxation Agreement (DTA) with Venezuela and the other group that wants to explore new avenues provided by that same DTA.

If want to go forward we need to leave this period behind. As a matter of fact, I think that we should not wait until 2019 to eliminate the old offshore and we should do it by 2015, at the latest. Naturally such a step will have to be taken not by government alone but in coordination with relevant actors. This I believe will also liberate us from that part of our history that will never come back and which make it possible to move forward, in one direction.

Community Support

One of the most important but yet the most ignored factors that separate the good IFS jurisdictions from the excellent ones, is the amount of support you have at home. I am not talking of government support mind you. Deloitte evaluated the IFS Sector of Ireland and found out that the jurisdictions with the most success were the ones who had ample support of their people at home. We tend however, when we talk about this sector in Curaçao, to focus on tax and regulations.

When I visited the Isle of Man a few years I was struck by a street sign that said “International Financial Services works for me”.

The IFS here is still considered as a far-from-my-bed-show for the great majority. This needs to be changed. More should be done in order to raise awareness. More should be done by the individual IFS companies by being more visible, vocal, recognizable and committed to the community.

We Need To Open Up To The World

I strongly believe that the attitude, not just immigration laws, needs to change about foreigners. It should become obvious to us that we have to have more people on the island, more people from different nationalities. First of all I am a firm believer that when people from different nationalities, insights and customs come together, this will automatically lead to new and creative energy. We need to stop fearing people from the outside. We need to stop fearing change.

Just the other day I received an email from someone who voted for our party saying that we need to think again about the Government’s decision to relax the visa requirements for Colombians because ‘we will end up with many Colombian illegals’.

I think I may have lost a vote when I told him that I dream of a Curacao of 300,000 inhabitants; a Punda buzzing with cafés and restaurants where you can not only find ròm bèrdè and sòpi mondongo, but also garbanzo, nacatamal and chimichurri. Point is that letting more people in to our country, in an orderly fashion, is good for our country, for our innovative spirit and especially for our IFS sector.

We Need To Dare More

The IFS sector is also about doing things just a little bit different in order to create your own niche. Product development needs to be a priority. Companies should invest more in research and development, and not just people we are on the clock. Islamic Finance, something the banking sector was almost unwilling to talk about when I was Secretary of Finance, needs to be reconsidered. The Asia market is also full of potential while there are opportunities via the tax treaties we have in place with Australia and New Zeeland being left untouched – I have been told by experts.

We also need to frequently question and second guess the way things are done. Should we stay forever pegged on the US Dollar? Or given the fact that the importance of the US currency has fallen considerably compared to the 1980s it may be worthwhile to investigate whether we should opt to be pegged to a ‘currency basket’ consisting of not only the US Dollar but also the Euro?

Should we create more possibilities in our civil law legal framework to allow more elements of the Anglo-Saxon common law system?

Should we continue having inefficient government bureaucracies handling all the permits and immigration papers, or should we delegate this to a sector like we have delegated former government responsibilities to public notaries?

Are we going to dare to allow the English language to play a more prominent role in our schools?

Do More

Finally we need to do more. It is a shame that there is no single branding of the Curaçao IFS sector. Heck, there is not even a website. We have been doing things separately, every company on its own and it has not been paying off. The government is failing in keeping up with the changes necessary to revamp our IFS sector. I could mention red tape as one of the leading factors, but I won’t dwell on those again. I believe it is time for the Government to delegate some of its tasks to private organization and have an ex-post control. Not everything can be delegated, but I am a firm believer that we can do it regarding permits.

We also need the private sector to be complacent. The IFS sector is in dire need of a new breed of players who dare to dream and rock the boat. We are in need of a more vibrant and risk taking private sector that is willing to invest not only in consumptive business. We need these more people who are willing to travel the world and start working on new networks.

Ladies and Gentlemen,

I started in 1499. I conclude that in order to create a prominent cosmopolitan center of trade and services, able to attract foreigners from the Western Hemisphere and beyond, we have to look at the Curacao model which has made wonders for Curaçao.

As our history has shown us over and over again, our success lies in how serious we are in the redevelopment of our role as link to the rest of the world. Whether we can achieve this remains a matter of diligence, hard work, creativity and responsibility, characteristic of the past centuries of success.

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