The U.K. government has formally agreed to Cayman’s plans of establishing a new Ministry of International Trade, Investment, Aviation and Maritime Affairs, as well as a Cayman Islands Government Office in Hong Kong.
Premier Alden McLaughlin announced British consent and support in a statement in the Legislative Assembly on Monday.
Mr. McLaughlin said both endeavors come in response to a changing business and regulatory environment.
“While it is perhaps extraordinary for an administration to create a new ministry,” he said, “these are indeed extraordinary times.”
Both the threat of an EU blacklisting and potentially falling afoul of the Organisation for Economic Co-operation and Development’s Forum on Harmful Tax Practices are forcing Cayman to adapt.
“What we continue to see is an ever-changing landscape as regards the required regulation of the financial services sector; requirements that are no longer European Union-centric but are becoming the international standard – and so Cayman must move with the times if we are to maintain a vibrant financial services Industry,” he said.
The U.K. government had to approve the initiatives because, under the Cayman Islands constitution, foreign policy and external affairs are functions reserved to the governor. The governor may delegate responsibilities for external affairs to elected ministers, which then gives them freedom to act within certain prescribed limits in relation to overseas governments and institutions.
Mr. McLaughlin said that, at the political level, he as the premier was leading cross-governmental international exchanges but there was no one within the civil service charged with coordinating or leading these activities.
“Opportunities to present a coherent and consistent approach to other governments and to potential investors and partners are being missed. The new ministry will provide this coordinating function,” the premier said.
In addition, the new ministry would make it easier for potential overseas investors to do business in Cayman and help enhance the reputation of the Cayman Islands.
The new ministry will take direct responsibility for the Cayman Islands Government Office in London; the Department of Investment, which is going to be split off from the Department of Commerce and Investment; the Shipping Registry of the Maritime Authority; and the Aircraft Registry, but not the regulatory functions of the Civil Aviation Authority.
The ministry’s role will be limited to the promotion of the shipping and aircraft registries and does not affect the governor’s responsibilities over other areas of maritime and aviation affairs.
It is expected that, in addition to the Cayman Islands Government Offices in London, the ministry will develop a network of international offices, and proposals would be brought forward on a case-by-case basis.
The Hong Kong office is the first of these proposed offices and was chosen because of its existing links to Caymanian businesses and government entities and its location as a gateway to other Asian markets.
“The primary focus for the office will be in the realization of economic benefits,” Mr. McLaughlin said. “It will support the existing twin pillar industries of tourism and financial services and also serve to support the diversification of the Cayman economy through establishing links and promoting inward investment opportunities with Asia’s highly developed knowledge-based industrial sectors.”
The Hong Kong office will provide certain real-time support services, such as certificates of good standing, dealing with immigration-related queries for Asian visitors, and potentially company incorporation and funds registration on the same day and in the same time zone.
“This will add tremendous value to the efforts of Cayman-based firms already operating in Asia, and in particular in Hong Kong,” the premier said. Government plans to allocate an initial $3 million in its annual budget to staff the new ministry and Hong Kong office and for promotional activities.