Editorial for 01 July: The rightful role of regulatory boards

Regulatory boards no doubt have their place
– but they also need to know their place.

Their primary function is to oversee safety
and enforce standards of operation for businesses that fall under their
jurisdictions. It is not their role to determine which businesses are allowed
to do business in the Cayman Islands based on their own perception of
marketplace needs, protectionism, favouritism or cronyism.

A recent decision by the Liquor Licensing
Board to deny a licence to Cayman Distributors Group (a Dart Group company) to
offer mobile bar services puts these principles into sharp relief.

The Liquor Licensing Board’s decision
arguably was correctly based on technical, rather than commercial, reasons.
However, if the licence had been granted, it would have allowed Cayman
Distributors to compete with other licensees already providing these services.
One highly regarded catering company owner, and potential competitor, argued
forcefully against granting the licence.

This instance offers the Caymanian Compass
the opportunity to restate the importance of neutrality, transparency and
objectivity in the operation and conduct of Cayman’s regulatory authorities.
Board chairmen and their members must operate – and be seen to be operating –
without conflicts of interest or the appearance of personal gain from decisions
made by their panels. Such concerns have recently been raised regarding the
Cayman Islands Airports Authority board.

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Cayman is not – and never should be – a
jurisdiction where economic decisions are made by the state rather than by the
free interaction between consumers and businesses. A centrally planned economy
typically seeks to control what is produced, how much of it, and, in the worst
scenarios, how much products and services should cost (price controls). That’s
what socialist countries do.

Members who make up Cayman’s regulatory
boards must resist the notion that they are somehow endowed with greater wisdom
than the free market to determine not only “winners and losers” but also who
gets to compete in the first instance.

Fortunately, most businesses in Cayman can,
and do, participate in an economy based on supply, demand, pricing and customer
satisfaction without government control or interference. Such sound practice
has always been the underpinning of Cayman’s capitalistic success – and why it
must be zealously protected.

When businesses seek to expand or
entrepreneurs wish to start new enterprises, they do so with their own capital
and their own appreciation of the risks. In other words, they are playing with
their own money and, if they bet right, they win. If they bet wrong, they go
out of business.

But back to the Liquor Licensing Board. The
board needs to address the issue of varying opening times for bottle shops.
Some are allowed to open earlier and stay open later than others. Why? Clearly
the board is making economic decisions to the advantage of some retailers – and
the disadvantage of others.

Going forward, longtime Liquor Licensing
Board Chairman Mitchell Welds needs to re-examine the rightful, but limited,
responsibilities of his board in making such economically based decisions.


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  1. You seem to be all for capitalism and against socialism. But ever heard of fascism. Fascism is my worry – the worry that wealthy people end up having such a great influence on our government that through the money-talk they can get any thing they want over the small fish.

    I agree the regulatory board should be free from cronyism, favoritism, and protectionism. But price-control as well as a minimum wage law or enforcement of decent salaries, I think is needed for a very expensive society. There are some elements of socialism that are good.

  2. Whilst I agree with much of this Editorial regarding free market economics and the risk of the entrepreneur entering in to business. I at risk of going against my capitalist principles should say that without a monopolies act, we should have a mechanism to the prevent the superstore mentally of larger players entering in the market place of majority small businesses. And if the board is the only mechanism for this then that is what it is.

    For these large player have the bankroll to undermine the market will hugely discounted goods until the small player competition is driven out business only for these players to then raise their prices to recover the cost of doing business. We only have to look at the states to see the demise of the family owned farm, hardware and grocery stores in rural areas to be replaced my mega corporations who control the labour market and cost of goods in these area such as any socialist country who be proud of.

    Sadly it is normally too late when the regulators step in to control these large players and the family competition is all but destroyed and so the boards decision is a brave one for standing up for the small business in the advance of a larger aggressive player, where others may of just stepped aside for an easier life.