Updated definitive agreement gives greater flexibility
Government has renegotiated its definitive agreement with Cayman Enterprise City, paving the way for new technology-based activities in the special economic zone and projects such as Tech City, a proposed IT park associated with the developers of Health City Cayman Islands.
The amended and restated definitive agreement “gives government much greater flexibility which it did not have before in considering new technology-based proposals which may benefit the country greatly,” said Wayne Panton, minister of financial services and commerce.
“The new agreement accomplishes this by preserving CEC’s competitive advantage in terms of legislation concessions which had previously been given.”
Charlie Kirkconnell, chief executive of Cayman Enterprise City, said the primary goal of the amendment of the agreement was the introduction of the Cayman Maritime Services Park and the update of the Cayman Biotechnology Park, which has now become the Cayman Science and Technology Park.
The initial agreement was very narrowly focused on biotechnology, and the rigid description of the activities allowed in the park effectively restricted the ability of the Special Economic Zone Authority to grant licenses.
“As a knowledge and technology-focused special economic zone, we felt there was a gap in the types of technology companies that we could license,” Mr. Kirkconnell said.
He added that CEC is seeing significant interest from cutting-edge technology companies that do not fit into either the biotech or IT categories, and the amendment therefore allows a broader scope for the licensing of technology companies.
During the budget debate on Monday, Minister Panton thanked the owners and management of Cayman Enterprise City for engaging in the negotiations and agreeing to the changes.
He also criticized the original definitive agreement with CEC, signed by opposition leader McKeeva Bush during his time as premier, saying the contract would not have allowed government to talk to other potential zone operators.
“In all my years as a practicing commercial lawyer, I have never seen such a lopsided agreement that had been signed originally. It removed all flexibility from government. It even provided that government simply engaging in discussions with a potential party carrying out similar business to CEC was a breach of the agreement by government,” he said.
“On the other hand, the agreement contained absolutely no provisions to hold CEC accountable if there was a breach of the agreement on their part. There were no performance metrics or obligations which they were required to comply with. In fact, the agreement did not even contain an express termination provision, no matter how egregious the failure by either party,” Mr. Panton added.
The new agreement includes performance metrics and places obligations on Cayman Enterprise City in particular concerning the newly created Maritime Services Park operated by CEC.
The performance metrics relate to the number of companies operating in the park, as well as to the number of staff they employ. Other performance obligations relate to the development of the CEC campus, Mr. Kirkconnell confirmed.
Minister Panton said it was “particularly offensive” that the original agreement required Caymanian technology businesses that seek government concessions to effectively operate from within CEC.
“That is not something that government could accept as appropriate going forward.” However, all of these issues had now been addressed.
The new agreement also allows other special economic zone operators to enter the market. However, this would not have been possible under the agreement signed by Mr. Bush, Minister Panton said.
“I find it quite ironic that the leader of the opposition has spent some time in his debate talking about the proposal of Tech City, which he described as being affiliated with the Shetty Hospital project. He encouraged the support of that, but he did so seemingly completely oblivious to the fact that what he was proposing would not have been possible under the original definitive CEC agreement.”
“Notwithstanding this,” Mr. Panton added, “the Tech City [project] that has been discussed and described is certainly one that can be considered and supported by government as a result of the amendments to the agreement.”