The Opportunities Ahead
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BAHAMAS FINANCIAL SERVICES REVIEW 2009, VOLUME 11 | A BFSB PUBLICATION | BFSB-BAHAMAS.COM/REVIEW Th e Opportunities Ahead. Business Development & Industry Sector Focus Jurisdiction & Industry Updates Regulatory & Legislative Developments BAHAMAS FINANCIAL SERVICES REVIEW MESSAGE FROM THE CHAIRMAN CRAIG (TONY) GOMEZ 2009 has been a very busy and productive time for BFSB. I take the opportunity to thank members for the continued support this organization continues to enjoy; we benefi t tremendously from the expertise and willingness of a broad spectrum of professionals to actively participate in the work we set out to do. Our open door policy with The insistence of the Bahamas An ongoing challenge for BFSB is respect to hearing the needs of Government on clarity and the task of ensuring that investors members - all members - has unequivocal language with and intermediaries outside The resulted in a prodigious amount respect to a level playing fi eld Bahamas know the jurisdiction, of communication with the was strongly supported by and know the fi nancial services membership. I believe that we are industry in 2002. Likewise, the products and services on offer. We a well run group - supported by industry this year supported the have to continue to let the world a proactive Board of Directors, decision of the government, in know who we are. Going forward, prolifi c roster of working groups conjunction with the governments we will continue to collaborate and committees, and an excellent of other major fi nancial centres, with the government on a Strategic offi ce team - that actively responds to endorse international standards Plan for the development of the to the needs of all participating on transparency and effective sector. We need the ongoing members; large and small, exchange of information through and increased support of all our international and domestic. defi ned and agreed protocols. stakeholders, who must join hands to create the kind of preferred We live in a challenging time for In addition to its ongoing industry that we would like to see. fi nancial services. The effects promotional initiatives BFSB of Wall Street’s turmoil and the also has had to address the The Bahamas Financial Services resulting probe of major U.S. various issues that faced our Review (BFSR) provides industry fi nancial institutions, coupled fi nancial services industry. updates written by industry with the continued changes in This has occasioned countless participants, and also serves regulation across many borders, meetings with the Government to communicate information have dovetailed into grey lists and and Regulators, and with industry about BFSB and its activities. blacklists. participants. Nevertheless, in these We extend our appreciation to times this organization’s mandate member fi rms and others who have The Bahamas has demonstrated has not changed. We must continue contributed to the production of that as a sovereign nation it is an to promote The Bahamas as a Vol. 11, through editorial input and active contributor to the discussion place to do business; and, we must advertising support. We invite you on a range of global matters and continue to line up our promotion to visit www.bfsb-bahamas.com that it is determined to act in a with the facts. for information on other BFSB responsible manner. publications. Contents TABLE OF CONTENTS BAHAMAS FINANCIAL SERVICES REVIEW VOLUME 11 NOVEMBER 2009 BUSINESS DEVELOPMENT Doing Business in The Bahamas 2 Insurance & Reinsurance in The Bahamas - FAQs 5 INDUSTRY SECTOR PROFILES Arbitration in The Bahamas 13 Risk Management & Compliance 15 Bahamas External Insurance Act 2009 17 Private Placement Life Insurance 19 JURISDICTION & INDUSTRY UPDATES The Qualified Intermediary Program - A Moving Target 22 The Communications Act 24 Lynden Pindling International Airport Redevelopment Project 26 REGULATORY UPDATES Update on AML/CFT Legislative Developments In The Bahamas 29 Investment Funds and Securities Sector 31 LEGISLATIVE UPDATES The Bahamas SMART Fund Programme 35 Real Property Tax 36 BUSINESS DEVELOPMENT - Doing Business DOING BUSINESS IN THE BAHAMAS MICHAEL ALLEN In a challenging global economy The Bahamas continues to be a jewel of opportunity. A dynamic public private partnership involving industry, government and key regulators continues to support a vibrant, attractive and potentially profi table investment environment. This coupled with an endowment of Services Board sponsored symposium, The offered in connection with the hotel and geographical advantages and retained Government of The Bahamas in partnership include golf courses, harbours, marinas, traditions, sustains The Bahamas in its leading with industry is poised to demonstrate its new roads and airfi elds; position for international investment and and continued commitment to providing a • Industries Encouragement Act under business opportunities. safe, stable and profi table environment within which exporters are exempted from which to manage and sustain wealth. Against import duties on equipment and raw Perennial fundamentals which make up the the backdrop of existing policies and a materials and from paying business Bahamian investment environment persist in statutory regime crafted to provide incentives licence fees; attracting investment to The Bahamas. These by way of concessions to attract international • The Tariff Act declaring that include its status as a sovereign nation, its investment, there is a fresh commitment manufacturers are exempted from import strategic geographical proximity to North to confronting contemporary challenges to tariffs on capital equipment and raw America, the accessibility of The Bahamas economic growth. materials needed for cottage industries, vis a vis the major economies in the Western food processing, garment manufacturing Hemisphere and Europe, a stable government, Historically, The Bahamas has benefi tted and handicraft/souvenir items; and a skilled work force and a responsible from granting tax and other concessions to • The Time Share and Vacation Plans judiciary administering a jurisprudence the international investor. These involve Act providing duty free concessions on based on internationally respected common investment incentives under certain Acts building materials for construction of law traditions. Not the least, however, is of Parliament, including exemptions from time share facilities. the welcoming disposition of the Bahamian the payment of customs duties on building people. This also continues to endear to The materials, equipment and approved raw In appropriate cases investors may also Bahamas both the international investor as materials and real property tax exemption secure, on concessionary terms, publicly well as the vacation traveler. for periods up to twenty years. A sampling of owned lands for conducting approved incentives includes the following: developments. It should be noted that there is What ensures the future health of The no requirement for Bahamian participation in Bahamas’ investment milieu, however, is an • The Export Manufacturing Industries foreign investment enterprises. International acute awareness by major stakeholders of Encouragement Act under which a investors are however encouraged to establish the current challenges and the readiness to manufacturer who exports at least 95% joint ventures with Bahamian partners. respond to the challenges which confront local of manufactured products receives duty- and regional economies impacted by global free import of raw materials, building As a matter of policy the following areas variables. These variables are often outside supplies and equipment and duty-free of investment are particularly noted by the control or infl uence of any one player. export of the product; Government as desirable for foreign They are however a primary concern of all • The Freeport, Grand Bahama Act investment: stakeholders and The Bahamas has indicated of 1993 which affords investors an its appreciation for the fact that success as a exemption from payment of real property • Touristic Resorts jurisdiction can only be assured to the extent taxes extended to August 2015; • Upscale Condominium, Time Share and that industry and private sector stakeholders • The Hotels Encouragement Act whereby Second Home Developments are jointly committed with The Government hotel developers are exempted from • International Business Centers of The Bahamas to a shared strategy for paying customs duties on equipment and • Marinas growth and development. As refl ected in a raw materials imported for the purpose • Information And Data Processing recent address by the Minister of State for of construction, and are granted certain Services Finance and Pubic Service the Honourable exemptions from real property taxes. Zhivargo Laing at a Bahamas Financial Exemptions apply to all amenities Continued on page 3 2 | BAHAMAS FINANCIAL SERVICES REVIEW international business. This includes i) a DOING BUSINESS IN THE BAHAMAS commitment to streamlining immigration About The Author: Mr. Michael F. L. Continued from page 2 procedures to afford preferred investors Allen’s areas of professional expertise advantageous immigration status; ii) providing include commercial, corporate, real estate & development, wealth management and • Ship Repair And Other Services an environment from which capital investment fi nancial services law. He is a partner • Light Manufacturing For Export may be made into the major economies of in the law fi rm of Higgs & Johnson. For • Agro Industries North, Central