Premier and Minister for Financial Services, Dr. the Honourable D. Orlando Smith, OBE explains to Global Island News the reasons behind the British Virgin Islands’ success and enduring appeal.
The British Virgin Islands (BVI) is an international finance centre which allows for legitimate risk management and financial planning and acts as an essential conduit for foreign direct investment (FDI) into developing regions of the world. Since the passing of its trailblazing IBC Act over 30 years ago, the BVI has worked in close consultation with the private sector at every turn to ensure its regulation and legislation are fit for purpose, therein lying the secret of the jurisdiction’s success and enduring appeal. In addition, the BVI has become the ‘go to’ IFC in China, thanks in part to its capacity to mitigate legal and financial challenges related to the successful management, ownership and control of investments into and out of that country.
Having taken a distinctly proactive stance in respect of compliance with the prevailing winds of the day, the BVI is leading by example and shining a light on the path for other IFCs to follow. It has also displayed a proven capacity to help facilitate highly skilled training and employment opportunities for locals, ensuring talent meets opportunity within the BVI and a brain drain is avoided.
Facilitating trade and growth
Premier and Minister for Financial Services, Dr. the Honourable D. Orlando Smith, OBE has a clear vision of the direction in which he wants to take the BVI and how he intends to perpetuate the jurisdiction’s pre-eminent global status. He is clear that the BVI’s financial services sector plays a significant role in the facilitation of global trade and economic growth by connecting markets and supporting investment and capital flow. This is in large part, Premier Smith points out, due to the 30 year success of its flagship product, the BVI International Business Company (IBC), which has provided an innovative legislative and regulatory structure based on English common law, and “allows companies to transact business across borders in an effective and efficient manner, while complying with international standards of transparency and regulation.” In addition, it has spawned a number of other products, such as BVI trusts, funds and captive insurance, which have further fuelled growth and development, both at home and abroad.
“The BVI places great importance on collaboration and cooperation in order to ensure the strength, integrity and transparency of the global financial system.”
Collaboration and cooperation
In accordance with its status as a financial centre of major global importance, Premier Smith stresses that “the BVI places great importance on collaboration and cooperation in order to ensure the strength, integrity and transparency of the global financial system.” He explains that the BVI cooperates with all jurisdictions, guided by the standards of bodies such as the International Monetary Fund (IMF), Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD). Both in respect of these activities and all others, it is a jurisdiction that has become synonymous with transparency, regulation, collaboration, enforcement and cooperation.
Going forward, Premier Smith explains that “the BVI will continue to lead in working with other IFCs to uphold the importance of IFCs as an integral part of a stable and trusted global financial system.” Addressing the issue of the potential danger of diluting the BVI’s competitive edge, the Minister for Financial Services points out that this can be avoided whilst still achieving great things, by cooperating and collaborating on non-competitive issues, such as ensuring a level-playing field for all finance centres, whether they are onshore or offshore.
Delivering on the home front
On the question of whether the 60% of BVI Government revenues, which the financial services sector contributes, are positively impacting BVIslanders’ and Belongers’ lives on the ground, Premier Smith explains that great efforts have been made to ensure that those who call BVI home can secure the requisite training to gain the skills required to access the specialised job opportunities that have come with the growth of the sector.
This is achieved by way of a strategy which promotes the use of scholarships, apprenticeships and other programmes that provide exposure, education and training to young persons.
With the financial services sector so central in driving the BVI’s socio-economic growth and infrastructural development, education and training have been placed centre stage. To this end, a BVI text to support the introduction of financial services at the secondary level has been provided. In addition, Premier Smith explains that “we have developed a strategic approach to increasing capacity within the industry through our Financial Services Institute (FSI), which is situated at our community college and delivers industry standard training provided by UK based training institutions.”
A public-private partnership
For many years the BVI has ensured it has met the evolving needs of the private sector by consistently working in close concert with it to inform the direction its financial sector has taken. This public-private partnership is perhaps best evidenced in the evolution of the BVI’s legislative structure that supports the industry, with landmark legislation, such as the 2004 BVI Business Companies Act, advancing the IBC and further enhancing the BVI’s offer to international businesses. Premier Smith further remarks that “a full review into the existing legal and business framework of the jurisdiction is currently being finalised in collaboration with the private sector through a host of committees, to help diversify our offering and lay the foundation for sustainable growth into the future that is in line with the emerging market trends.”
The Premier is particularly enthused about the on-going consolidation of the jurisdiction’s relationship with Asia.
The BVI and Asia
The Premier is particularly enthused about the on-going consolidation of the jurisdiction’s relationship with Asia, which has seen it now become the second largest source of FDI into mainland China after Hong Kong. Thanks to the BVI’s status as a successful, transparent, trustworthy and well regulated business hub, he points out that BVI Companies are “behind many of the most important infrastructure investments and transactions that have helped shape modern day China.”
The BVI’s trusted and established relationship with China was further strengthened in September 2013 through the launch of an office in Hong Kong, thereby creating a hub for China and the wider Asia Pacific region. Premier Smith explains that this “physical presence in Asia has given a new dimension to the BVI, enabling the jurisdiction to be even more responsive to the needs of businesses in these markets.” In doing so it has led to the development of innovative new products, services and legislation.
Premier Smith is confident that the BVI will win the battle for hearts and minds in its quest for international validation, assuming regulation of the sector is global and on the principle of a level playing field. He explains that “setting the highest standards of transparency and regulation has always been and will always be a key part of the BVI’s plans for retaining its competitive edge.”
(The BVI) has created an enviable reputation for responsiveness to the business community and a comprehensive approach to legislation and regulation.
It is hard to argue with the evidence, the BVI having one of the most stringent anti-money laundering (AML) procedures to combat financial crime, as well as a clear and firm subscription to the initiatives of the OECD, FATF and United Nations. Moreover, in the process it has created an enviable reputation for responsiveness to the business community and a comprehensive approach to legislation and regulation. As the Minister for Financial Services puts it, the jurisdiction “currently meets and in most cases exceeds OECD standards and has a higher level of compliance than some OECD members.”
The BVI remains the international financial centre other jurisdictions aspire to be, not least because of its sound regulatory structure, compliance with international standards and consistent transparency practices, but how to sum up the secret of its success? Premier Smith puts it like this:
“The BVI offers a balance between a sound regulatory framework that meets and in most cases exceeds international standards, a business friendly operating environment, and a government committed to the development of innovative legislation and policies; all backed by an efficient and respected court structure based on the English law and a cadre of world-class professionals supporting the industry.”
Dr. the Honourable D. Orlando Smith, OBE is the Premier of the Virgin Islands.
As the leader of Government business, his portfolio includes the coordination of government policies, economic planning, investment promotion, tourism, immigration, gender affairs, e-commerce, regional affairs, information and public relations, among other key areas.
As the Minister of Finance, Honourable Smith is responsible for the overall financial management of the Territory, its budget reporting, treasury, tax, long-range planning and transparency.
As the leader of the Financial Services sector, Premier Smith is tasked with ensuring that the BVI is a top-tiered financial services centre, offering a range of services in investment and wealth management. Additionally, he is responsible for ensuring that the industry achieves effective implementation of, and compliance with, established financial standards, components he sees as critical to a robust legal, regulatory and enforcement machinery.
Before that, Premier Smith served as Chief Medical Officer, the leading medical position in the Territory and surgeon for 17 years from 1979-1995. In 2000, he was named in the Queen’s New Year’s Honours List and was awarded an Order of British Empire (OBE) for his years of outstanding and dedicated service to his BVI community.
He entered the political arena in 1998, forming the new National Democratic Party. Following the party’s first election, he served as Leader of the Opposition. In 2003, his team won a majority and he was sworn in as the Territory’s first Chief Minister to be elected by the people. In 2007, after his party was defeated in the general elections, Honourable Smith became the Leader of the Opposition. In the 2011 general elections, his team rebounded, and won an overall majority.
For more information, please visit www.bvifinance.vg.