VZCZCXRO2450
RR RUEHGR
DE RUEHWN #0661/01 2892122
ZNR UUUUU ZZH
R 162122Z OCT 09
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC 7901
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHDG/AMEMBASSY SANTO DOMINGO 5985

UNCLAS SECTION 01 OF 02 BRIDGETOWN 000661 
 
SIPDIS 
 
SANTO DOMINGO FOR FCS 
DEPT FOR WHA/CAR, EEB/CBA, EEB/IFD 
 
E.O. 12958: N/A 
TAGS: ECON BEXP ETRD XL
SUBJECT: INAUGURAL BARBADOS BUSINESS FORUM STRESSES 
REGULATION, DIVERSIFICATION 
 
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Summary 
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¶1. (U) Tougher regulations on international financial service 
providers, mainly to diminish criticism of their operations 
as so-called "tax havens," and diversification of the 
Caribbean market were two main themes of the Barbados 
International Business Association's first-ever conference on 
the investment climate.  Recognizing that the global economic 
crisis has forced many sectors to revisit their modus 
operandi, conference attendees agreed that building liquidity 
and opening new business opportunities such as renewable 
energy production would be essential for the sector to stay 
afloat.  Private sector entities signaled a willingness to 
evolve quickly, but they expressed doubts about regional 
governments' ability to follow suit. End Summary. 
 
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Out With the Old, In With the New 
--------------------------------- 
 
¶2. (U) The October 7 Barbados International Business 
Association (BIBA) conference covered a range of topics from 
the international banking system and asset management to 
maintaining competitiveness and the potential risks to 
offshore financial sectors.  Speakers and attendees alike 
focused on the perception that, if businesses and governments 
fail to seek new investment opportunities or to ensure proper 
legislation and regulations are in place to fight corruption, 
other regions will continue to outpace the Caribbean in the 
international business sector.  Some went so far as to insist 
that it may be too late, as Caribbean international financial 
centers have already been stigmatized by the G20, tarnishing 
the image of low tax Caribbean jurisdictions, and leading 
many investors and financial institutions to take their 
business elsewhere.  Others were concerned that, without 
moving into new investment areas such as green technology, 
including the production of biofuels, solar, and wind energy, 
the region could be left behind other, more innovative, 
countries.  Many cited Singapore as a nation that has 
exemplified how steady growth can be achieved through 
intelligent diversification and stringent regulation of its 
market. 
 
¶3. (U) Macroeconomic specialists pointed to the likelihood 
that consumption would continue to decline in the short term, 
as consumers opt to build liquidity and assets rather than 
invest or expend resources.  While favorable for asset 
management, such a trend was seen as a major disadvantage for 
tourism -- the Caribbean's main source of revenue.  As such, 
experts concurred that specialized niches within the tourism 
industry could be created to attract certain travelers.  From 
ecological to medical tourism, some Caribbean countries are 
already exploring such possibilities with measured success. 
A Forbes researcher told PolOff that his discussions with 
relevant Barbados ministries revealed that the government 
has, in fact, been concentrating on the development of niche 
enterprises, with medical tourism and mechanisms to attract 
non-domiciliary employers topping Barbados' agenda. 
 
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Moving the Beast 
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¶4. (U) While there was widespread agreement regarding the 
need to evolve and improve the seemingly stagnated regional 
investment climate, many were doubtful that regional 
governments would be able to move beyond the status quo, 
execute new business plans, and rid themselves of the legacy 
of colonial bureaucracy that still holds sway in the 
Caribbean.  Noting that serious losses in state revenue could 
be expected within the next few years, given declining 
consumption levels, experts unanimously agreed that the time 
was ripe to change practices.  Participants agreed that 
regional governments should move aggressively to establish 
double taxation agreements and bilateral investment treaties, 
and to develop more skill- and trade-based educational 
institutions -- possibly together with private sector 
partners.  Participants also agreed that governments needed 
to reform legislation and regulation of the offshore finance 
sector to get out of the OECD's "tax haven" crosshairs. 
 
¶5. (U) In his speech to the forum, Barbados Minister of 
Economic Affairs and Empowerment, Innovation, Trade, Industry 
and Commerce David Estwick announced that the government has 
drafted a two-year short- and medium-term action plan 
designed to support further expansion of the international 
 
BRIDGETOWN 00000661  002 OF 002 
 
 
business sector and preserve the island's reputation as an 
OECD "white-listed" low tax jurisdiction.  Estwick specified 
that the plan would also bolster diversification and product 
expansion, adding that, through the international business 
unit, the government also plans to widen the tax and treaty 
network and strengthen cooperation with the OECD on taxation 
information exchanges. 
 
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Comment 
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¶6. (U) This meeting of the minds was a welcome step for the 
Barbados business community -- and its expatriate community 
-- and one that could pay dividends as business leaders lobby 
regional governments to effect the types of changes needed to 
keep the Caribbean competitive.  It also served as an 
apparently useful educational tool for those in the public 
and private spheres who may not have been aware of the common 
concerns shared by the business community.  The criticism 
that governments here are slow to change is valid, but 
Barbados' government is at least making the right noises 
about the value of diversification and the importance of 
maintaining a clean business image internationally.  With its 
substantial head start in GDP per capita and its reputation 
as a safe investment destination -- it was the only Caribbean 
country to debut on the OECD white list -- Barbados is 
perhaps the best placed of any CARICOM country to develop the 
commercial agility needed to weather the recession and build 
for the future. 
 
HARDT