Due to its geographic location and network of tax and investment treaties with key markets such as Mexico, Colombia, Cuba and Panama, Barbados has promoted itself as a natural gateway into Latin America for multinational companies, mostly from Canada, who are looking for a springboard into that region. However, with shifting global dynamics, Barbados has a prime opportunity to position itself as a strategic partner for Chinese companies looking for a conduit into Latin America. As that Asian giant looks to embrace more of its role as a global economic power, bringing financial and infrastructure investment to more nations through its “One Belt, One Road” initiative launched in 2013, Barbados now has a prime opportunity to pick back up the ball after a more than five-year hiatus in on-the-ground engagement with Chinese service providers and business leaders.
One of the first indicators that the new Barbados government administration gave that it was interested in furthering its strategic relationship with China was the early announcement by Prime Minister Mottley that she had given the directive to the Ministry of Foreign Affairs to pursue an agreement with Chinese officials for the island to become part of what has become called the “Belt and Road Initiative”. As China pushes further into Africa, Caribbean and Latin America, Barbados has tax and investment treaties with over 30 nations across these regions that can be used to facilitate cross-border transactions in the areas of financial services, manufacturing and infrastructure investments, among others. Barbados continues to have some obvious advantages over other international financial services jurisdictions in the region in that the size and qualifications of our skilled professionals ensures that there is enough depth of talent to have Barbadian managed and staffed Chinese subsidiaries that can operate within this hemisphere with greater cultural familiarity. The Cave Hill Campus of the University of the West Indies in Barbados hosts a Confucius Institute which provides Chinese language and cultural training resources to Barbadians as well as facilitates cultural and educational exchanges. Historical linkages and cultural rapport between Barbados and the African nations with which we have treaties could also ease Chinese business expansion across that continent.
Barbados is also sitting on another significant financial services advantage as highlighted recently by Nancy Carroll, National Head of Insurance and Reinsurance Group of McCarthy Tetrault in Toronto, and that is in captive insurance. Carroll, who is also a Partner in the Financial Services Group of McCarthy Tetrault, pointed out at the 2018 International Business Week Conference in Barbados that, having been established as a captive insurance domicile since 1983, the island has the right level of expertise, risk-based regulatory environment, and skilled workforce to build on its tax treaty and strong diplomatic relations with China to promote Barbados’ significant advantages as a captive insurance jurisdiction for Chinese companies. There may also be a market to set up Barbados captive insurers for Chinese companies with subsidiaries in Canada and the US who may wish to reinsure the risks of their North American subsidiaries with Barbados captives and have the Barbados captives retrocede the risks to Chinese insurance companies. However, despite consistently ranking within the top 10 domiciles for captive insurance in the world, Carroll pointed out that Barbados is relatively unknown to Chinese investors. The Barbados government will hopefully take on board her suggestion to open dialogues between our financial regulators and the China Banking and Insurance Regulatory Commission leading to agreements that could pave the way for mutual assistance and the exchange of information that would facilitate such new business.
On the flip side, strengthening our international business relations with China could also increase Barbados’ attractiveness to multinational companies who are re-assessing the growth potential in Asia. One avenue previously explored by Barbados, but ultimately capitalised on by other regional jurisdictions, has been cross-border listing on the Hong Kong Stock Exchange (“HKXE”). This is an initiative that needs to be once again rekindled as the HKXE is one of the 6th largest stock exchanges in the world and, according to PricewaterhouseCoopers, has accelerated over the past five years as a key international capital market for emerging countries and leading global destination for Initial Public Offerings (“IPOs”). Tricor, headquartered in Hong Kong, is a leading share registrar in Hong Kong servicing over half of the total number of listed issuers on the HKXE. Barbados could have a role to play in this arena once the island fulfils the legal and regulatory requirements covering shareholder protection and articles of incorporation to ensure that they meet Hong Kong benchmarking standards. Also, China is the world’s second largest importer of goods and services and with the value of these imports set to exceed US$10 trillion in the next five years, the Barbados China Bilateral Investment Treaty and the Barbados China Double Taxation Agreement could be advantageous for multinational entities who want to sell on their products to China using Barbados as a conduit.
However, all of these opportunities can only be capitalised on if Barbados stops being the best kept secret for Chinese investors and citizens. Carroll noted that the Barbados government and service providers must re-engage with their counterparts in key Chinese cities such as Beijing, Shanghai and Hong Kong. She suggested more must be done to promote the mutual visa waiver policy between the two nations and our tax and investment treaties. As Barbados embarks on digital payments, Barbados could gain some insight from China, the global leader in mobile payments. Carroll noted that popular Chinese mobile payments apps, Alipay and WeChat Pay have enabled customers to go straight from cash to smartphone for payments. She also noted that in the US, almost as many merchants accept Alipay as accept Apple Pay. However, the primary target for Alipay in the US is not Americans; rather it is Chinese tourists and students in the US. Making it more attractive for Chinese tourists and students to travel to Barbados and to use Chinese mobile payment apps to pay for their experiences here could win Barbados a portion of the US$429 billion that Hong Kong-based market research firm CLSA projects that Chinese travellers will spend in 2021. It is also to be expected that an increase in travellers will increase the familiarisation of Chinese with Barbados and likely lead to further business opportunities.
At 1.38 billion people the population of China exceeds the combined population of the United States, Canada and Europe. Chinese tourists spend annually twice as much as travellers from the United States according to the United Nations World Tourism Organization. China is devoting approximately US$150 billion a year to infrastructure and investment expansions under the Belt and Road Initiative. As Barbados seeks new and creative solutions to pull itself out of its current economic quagmire, re-engagement with China must be one of our top priorities.