Fellow Caymanians and residents: I am grateful for the opportunity to speak to you tonight on a very important matter – measures to revitalise our economy. Like many other countries in the world community, the economic crisis which spread worldwide has created very difficult economic times, changes to the global landscape and the way business will be conducted in the future. Almost all of our citizens, residents and businesses are facing very challenging times.
Our Government is committed to its overriding policy of reviving the country’s economic activity by encouraging investment, creating jobs, enhancing opportunities for our people to participate in the revival of our economy and to create sustainable economic growth for our children and grandchildren. We inherited significant budget deficits, commitments for capital expenditure which were not properly provided for, outstanding unpaid debts, large recurring public expenditure to maintain the Civil Service, buildings and other commitments, a declining revenue base, and a world economy in turmoil, to name the most serious aspect of the challenges which the Government faced.
We have spent a significant amount of time in the last 16 months in an all out effort to stop the declines and to stabalise our economic situation. This has not been easy and many persons in our civil service and the private sector have come together and given their time and money in this effort. I personally have been in negotiations around the world on a regular basis to assist, with the signing of important agreements, and to promote our Cayman Islands. The message has always been that we welcome business.
Our History of Growth
As many of you appreciate, our Island’s economy is dependent upon two pillars which produce the majority of our economic activity, create jobs and earn revenue for the Government, they are our financial and our tourism industry. Most activity generates from those businesses. The revenue earned permits the Government to employ Civil Servants who provide services to our people, educate our children, provide medical care for our citizens and guests, and assist those who fall on hard times.
Not too long ago, in the late 50’s and 60’s our country was not able to create sufficient jobs and economic activity for our people to enjoy a reasonable standard of living and our Government was not able to provide the opportunities for education of our children on the level that we are able to do so today. Our fathers and brothers were forced to find work outside of the Islands, and to send money back for their families to be able to survive. We were truly an island that time had forgotten.
Through the foresight and hard work of our ancestors, they were able to create an economic atmosphere which encouraged foreign investment and the establishment of a financial industry which in a relative short period of time grew. The Cayman Islands is now still recognised as one of the world’s leading financial centres with a standard of living equal to or exceeding many G7 countries. We did not do this alone. Our country, although it has many attributes, does not enjoy the luxury of minerals which can be mined and exported, it does not enjoy a large population base which can produce goods in factories on a competitive basis for export, thereby creating economic activity, and earning us foreign exchange which is necessary to purchase food and goods and services.
For those of us that have forgotten, in very simple terms, our jobs and economic activity and revenue are earned in the following manner:
(a) Persons, companies and businesses who generate income, outside these Islands on a worldwide basis, service a part of that business through our financial industry. This financial industry is responsible for over 50% of our economic activity, creates jobs in all sectors, and earns the Government the majority of its revenue. People who work in this industry purchase houses, they rent apartments, they buy and rent cars, spend money in our shops, supermarkets and the restaurants and give to our service clubs other organizations and support our Churches. Opportunities are created for our people to work in all fields from landscaping, plumbing, electrical and professional jobs, right up and down the entire spectrum of jobs.
(b) Our tourist industry attracts people to the Island who earn money outside the Island, and spent their hard earned money enjoying vacations. This creates additional jobs in various categories and economic activity for everyone throughout the entire job market.
Caymanians have enjoyed the benefits. We Caymanians have enjoyed those benefits. Many of our people have their own businesses, live in some of the best homes, have been able to build apartments which are rented and sold to workers, open our own shops, create our own plumbing, landscaping, water sports and other small businesses. Government earns revenue, which it uses to pay Civil Servants, education, medical services, on roads networks. Our welcoming attitude, reasonable regulations and other amenities have created a community and a country, which is the envy of many. However, we did not do this alone, we encouraged others to join us in this effort, and our success has largely been one created together.
Now there is new global competition. Our policies in the past were created in a time which was significantly different to the present. Today, our competition is not only from financial centres in the Caribbean, but financial centres which have been established in the G20 countries; in the large countries. The failure to recognise the competition, not only in the financial industry but in our tourist industry and to adjust our internal policies to remain competitive, is one of the main causes of the severe economic conditions which we now face. In the past, we were able, by working together, to think outside of the box and to encourage businesses, foreign investment, and retired persons to come to our Island and to work with us to enhance our standard of living. We were at least in the top 10 places in the world which were being considered when companies, businesses or persons were considering doing business on an international basis. Recent independent studies have indicated we are no longer even on the radar by very important internationally recognized organizations.
Our tourism product also faces stiff competition, not only from other Caribbean jurisdictions but from our major markets. Declining economic wealth, unemployment and other problems in Europe and the United States are impacting the ability of their residents and citizens to travel regularly and to spend freely. Other jurisdictions in the Caribbean through incentives and extraordinary welcoming changes, are now providing a product which is equal to, if not better, than our own products. We must not forget that we are not the only country with sun, sea and beaches. We need to explore new markets, and in this regard, I am recommending to Cabinet to remove all visa restrictions for China, and to review other visa restrictions for countries in Asia whose possible tourism base is larger than North America and Europe put together. Also the visa program to Jamaica will be changed to allow persons who have US Visas the benefit of travel here without a Cayman visa.
I am encouraging the Civil Aviation Authority, and those responsible, to advance the process of examining and constructing changes to our airport which will permit long haul flights a welcoming atmosphere. I will also be visiting China and other Asian destinations in the next week with the view to encouraging not only tourism but investment in our country. Hotels to accommodate and satisfy customers from Asia are essential to the long term growth of our tourist product.
Main Causes of Our Problems
Over the past number of years, we have failed to recognise the impact of globalisation. The impact of a changing world in which economic activity has shifted from the west to Asia. China is now the second largest economic power in the world and before long, it is anticipated that its economy will overtake that of America. Its rate of growth and industrialisation has never before been experienced in the history of the world. The achievements of China are unprecedented and failure to recognise and form relationships with a country growing at this rate with the largest base of possible wealthy tourists in the world, will be to our detriment.
We have failed to implement our immigration policies in a manner which allows the continuation of growth in our major industry. Our unfriendly over-nationalistic policies allows countries such as Canada, Ireland, Europe to encourage the movement of good jobs and economic activity created by our financial industry, which enjoys the registration of the majority of hedge funds in the world, the leading banks, insurance companies, and financial institutions in the world, to their countries. As you all understand, while the registration of mutual funds, banks, insurance companies, financial institutions, these generate tremendous income for the Government and our country, the majority of the benefits which are available to our economy and our Government are generated from these institutions doing business in Cayman, and creating economic activity in our country. They create jobs and in many instances, very well paying jobs for our people and our children. They create opportunities for our people to enlarge and enhance their experience with global financial institutions and in professional fields which would not be available to them if they were not located in Cayman. If our people had to go abroad and compete in Europe against 400 million people or in America against 300 odd million people or Asia with over a billion people, these opportunities would not be readily available to them.
The implementation of our immigration policy over the past couple of years was one which encouraged persons to leave our Island and was based on the mistaken belief that the jobs would remain in Cayman. Young Caymanians unfortunately were encouraged to believe that our country could do without foreigners and that money would continue to flow. This has proven to be a very serious and costly mistake. It has caused severe suffering among our people and our businesses. Our neighbours who made similar mistakes over 30 years ago are still recovering. Wise persons learn from the mistakes of others by having in the forefront of their minds and their decision process the history which created those mistakes. Our Government has no intention of carrying these mistakes forward.
The Way Forward
As I indicated earlier, the policy of our Government is to enhance and encourage economic growth and in order to do so, we must bear in mind the changing global conditions, our history which created our success, the mistakes of the past couple of years, and the suffering which this has caused to our people, and the dangers which our people face if this is not reversed.
Over the last 16 months, we have worked diligently to improve and correct our international image. Negotiated with the new Government in the United Kingdom to allow us the latitude to extend our credit facilities in order to work our way out of the economic problems which we encountered, made changes to the implementation of policies to assist businesses, negotiated for the start of the cruise ship dock, agreed for the establishment of a major medical tourism facility, restructured our loans, took steps to reverse the decline in our tourism industry despite difficult world economic conditions, encouraged foreign investment and sought to refinance by one method or the other the capital projects such as the schools and the Government buildings in order to release money into the Government which had been invested in these facilities, cut our budget, monitored our expenditure and did everything possible to limit the cuts to the jobs and salaries of civil servants.
We must now turn our attention to new policies to restimulate growth and jobs. This is now urgent and essential, and our Government and its representatives will be holding a series of meetings over the next couple of weeks to further explain the country’s current situation, to obtain input and solutions from the people and to implement, in a rigorous and efficient manner, the accepted solutions in order to grow our economy and enhance the lives of our people and to save their businesses.
In this regard, the Government will be discussing the following broad issues:
1. Ways in which we can encourage new businesses to be established in the Island which will create jobs.
2. Strengthened Incentives which will encourage persons relocating from other major countries to consider the Cayman Islands as an acceptable place to establish and maintain their businesses. We need to be competitive and to encourage these businesses to come to our country instead of Switzerland, Ireland, other parts of Europe, Canada, Singapore, and China which is now in the process of creating an international outsourcing financial centre.
3. Incentives to encourage retired persons to come to Cayman with their families and to become part of our community as permanent residents.
4. To examine our current immigration policies and to implement procedures which will create fast, efficient, business friendly services for our Caymanian and foreign businesses while ensuring that when our people are qualified and willing to work that they be given first opportunity and priority for jobs. (We have already implemented policies which will speed up the grant and notification of such grants to employers).
5. To ensure that our welcoming process at the airport is the most friendly and most efficient in the world. As an example, one of our senior Caymanians while in Singapore a couple of weeks ago on an important Government mission was taken aside by the authorities and asked how long had it taken to come through customs and immigration. He replied, 10 minutes. The Government official apologised and indicated that that was far too long, and on his next visit he did not expect there to be a wait of more than 5-7 minutes. This is the type of competition which we face.
6. To examine how best to assist small businesses and others to weather the present economic slow down while we encourage more persons to move to the Island.
7. To find ways in which our regulatory agencies can deliver fast efficient licensing where this is necessary while maintaining our international reputation of a sensibly and efficiently regulated jurisdiction.
8. Meetings will also be held with Cayman Finance and other organisations which represent the financial industry and a list of measures which in their opinion will attract business to Cayman and return it to its position of a leading financial centre will be discussed, obtained and implemented as soon as possible.
9. There will be meetings with the Chamber of Commerce, officials in the tourism industry, and small business associations to discuss the removal of red tape and bureaucracy of Government and enhancement measures which will assist them.
10. Any other matters of importance to businesses and our people.
11. We also intend to support continued dock development in Cayman Brac and the development of cruise facility in Cayman Brac.
It is my firm belief that one of the most important matters which needs to be immediately addressed is how to encourage persons and businesses to relocate to Cayman and to conduct their business on the ground in our country. Our present immigration policy encourages most of the money which is earned in the Cayman Islands to be sent abroad. Economists refer to this as exporting our GDP. It is a proven fact that any country which exports the majority of its Gross Domestic Product is doomed to failure. We are now experiencing a part of this failure. This will require thinking outside of the box and initiatives and incentives which will be immediately attractive to the outside world. These initiatives can be achieved without the necessity of granting Cayman status. What is needed is for all to examine how best to achieve this while creating jobs and upward mobility for Caymanians, and to implement immediately. We have legal advice from the United Kingdom that says that we can make the Rollover time as limited as we want to in our legislation.
At the end of the process, I will deliver another public speech with the proposals of the Government, and these proposals will be implemented in a fast, efficient manner. Whatever proposals are acceptable, will be monitored on a weekly basis and any necessary changes will be implemented, we have contracted Mr. Jude Scott et.al to oversee the implementation of the various projects and initiatives. In this regard, various heads of departments in Government will be required from next Monday to deliver certain statistics and information to the Ministry of Finance which will assist the Ministry in the monitoring of economic activity.
Boards appointed by the Government who are either unable, incapable or unwilling to carry out the policies of enhancing economic growth, for the benefit of our people, will be changed!
Persons visiting Cayman for short term business such as meetings and possible investment opportunities should be welcomed by our authorities. Permits for such meetings should no longer be required or insisted upon. This is counter productive. We should understand that we are all in this together and if our economy does not expand, that Cayman and its people cannot continue to enjoy the standard of living which they have become accustomed to. The Government will be unable to provide the services to its people to employ Civil Servants, provide them with pension and medical care, and businesses will not be able to sustain viable economic activity. A country’s best assets are its people and its work force. We do not have a population big enough to sustain viable economic activity and unless this is reversed, the consequences will be very serious to all of us, to our children and to our grandchildren.
I will be travelling to Asia and to other countries next week in order to promote Cayman, its tourism industry, its financial industry, and the country as a whole as a business friendly, sensibly regulated jurisdiction. The window of opportunity is short as there are numerous businesses considering moving some of their activities to other jurisdictions of which we wish to be one and at the same time, there are numerous businesses in Cayman considering other locations. The main reason for which, is our inability to offer fast, efficient service and long term residence for their employees today. Our economy is like a bicycle wheel. If one of its spokes are out of alignment or missing, its trajectory is no longer straight but wobbly. When spokes are missing, it begins to shake and if enough spokes become missing, the wheel collapses. Spokes are missing today and despite numerous efforts on our part, various speeches by myself encouraging changes of attitude and efficiency levels, there are many in our society who have ignored the same. Those who do so are creating hardship, suffering and jeopardising our children’s future. We must all work together, to remedy this situation and those who insist for personal, political or other reasons, not to join all of us in this effort and who work for the Government, I will be requesting the Governor to do something about that particular situation. As Premier, I cannot and will not allow our country to suffer at the hands of a few.
I am confident that together we can think outside of the box, compete with other larger jurisdictions and return our country to prosperity. Working together and embracing the benefits of having guests and foreign workers is an essential part of this process. It was one of our formulas for success and as everyone should have now become aware, when we had a bigger population, we had no unemployment and our businesses were doing well. Our people rented rooms, houses, small apartments, set up shops, and were able to find jobs with very little difficulty. Today, that has changed. Tomorrow, if we do not move quickly to implement intelligent, and necessary measures, more businesses will fail, more of our people will become unemployed, our educated people will join the unemployed list, our children will not be able to receive an education to allow them to compete in a more globalised world, the Government will not have enough revenue to support our hardworking Civil Servants to pay their pensions and their medical expenses.
After the meetings with our people and within 30 days, as Premier, I will be putting forward specific measures to remedy the current situation and I am confident that within 90 days of today, Cayman will be back on the path which created its success. It will not be complete, no, but we will be moving forward. Working together, we can do it. The Government cannot achieve this without a clear understanding of our people as to what is needed and an effort on their part to participate and join in. This is essential, urgent and I am sure that most of us recognise our problems, what hurts us now, and will work with us to implement the solutions.
Now, in keeping with our Nation Building efforts as many of you know over the years I have spearheaded the recognition of Caymanians who through service to these Islands and its people deserve to be recognized as persons of distinction or become national heroes. Now as Premier I have the pleasant duty to again give such recognition to individuals who made significant contributions in building these islands. Without these great men and women, where would the good ship Cayman be today? They set the foundation for what we have.
Accordingly we perused the names of many notable individuals and have agreed with the committee in selecting the following persons for recognition as National Heroes of these Cayman Islands:
• Mr. T. William Farrington, CBE, now deceased, former legislator and father of the House
• Mr. Desmond V. Watler, CBE, deceased, long serving civil servant and Cayman’s first chief secretary, and nation builder.
• Mr. Ormond L. Panton, OBE, now deceased, former legislator, politician and nation builder.
• Ms. Evelyn Wood: First female Legislator and Advocate for Women’s Suffrage, Community Worker and Nurse
• Mrs. Joyce Hylton, MBE, now deceased, former civil servant, social development pioneer
These will be installed at the January Heroes Day Celebration.
In addition in keeping with our nation building program we have agreed that all primary schools be given a name in honour of Caymanians who have made great and valued contributions to our communities.
To begin this naming exercise, the Bodden Town Primary School will be known as the Theoline McCoy Primary School and the Savannah Primary School will be known as the Edna Jackson Primary School.
Whatever I do is for the good of all the people of these islands, and I ask for your understanding, your support and your prayers. Let us work together. The negativity in this country is far too severe for all the good that is being done.
Good night and God bless the Cayman Islands.