New exempted company registrations fell 17 per cent in 2008, while ordinary resident company registrations fell 4 per cent during the year.
The statistics were contained in the 2008 annual economic report from the Economics and Statistics Office, which was presented in the Legislative Assembly on Monday.
While overall company registrations rose 7.6 per cent over 2007, from 87,109 to 93,693, the story was not the same for new company registrations. In 2007, 14,238 new companies were registered but only 11,861 new companies were registered in 2008.
Of those, ordinary resident company registrations fell 4 per cent, while exempted company registrations fell 17 per cent.
Nick Rogers, partner at Walkers law firm is pragmatic about the situation, noting Cayman is doing well considering the circumstances.
‘Before the current recession, we became used to a steady upward trend for new company registrations,’ he said. ‘But Cayman’s key position in the global financial markets means that it is simply not possible for the Islands to come through such turbulent times unscathed. The figures could actually have been a lot worse.
Mr. Rogers said it was possible to read too much into the figures.
‘The volatility in 2007 and 2008 and the sheer scale of the declines on a month-by-month basis mean that trying to set one calendar year against another in the hope of detecting some sort of trend is of limited value.’
He points out that 2007 was rosy until the sub-prime crisis in the late summer, but even then the Dow Jones was able to reach a peak of over 14,000 in October. In turn, 2008 started with many regarding the market declines as a buying opportunity, but by the time Lehman Brothers went under in September, the environment was entirely different.
“The more important figures are for the current year,’ Mr. Rogers said. ‘The first quarter of 2009 showed significant declines, but there has been a visible pick-up in activity in the last month or so.
‘Nobody in the financial services industry should want to make bold predictions after the wild ride of 2007 and 2008, but it is fair to say that many of our clients appear more optimistic than they have for some time. This is a critical time for the financial services industry.”
Charles Jennings, managing director of Maples and Calder is not as optimistic about sector.
‘It’s not getting any better: in fact so far 2009 has seen an even larger percentage fall,’ he said.
His concern lies with the way the financial services sector as whole may fare down the road.
‘At a higher level, everything must be done to ensure that the financial industry has the tools it needs to combat this recession,’ he said. ‘Like it or not, it provides the life-blood of our economy.’
Mr. Jennings said the industry should be allowed to prepare specialist legislation to keep Cayman at the forefront of the offshore financial industry.
‘If it convinces Government of the need for it, then Government should pass it and pass it fast so we can maintain our agility in the market,’ he said.
‘Any Government action that helps attract new financial business to Cayman should be strongly encouraged, even to the point of helping overseas businesses to establish themselves here. They will create jobs and thus wealth, not only in themselves but eventually throughout the economy.’