It is fair to say that when our current administration, ably led by Prime Minister the Hon. Mia Amor Mottley, QC, was voted into power in May 2018, the business community generally welcomed the change in governance with a renewed sense of confidence and hope for the future.
Many Barbadians believed that the Government, the Labour Movement and the Private Sector had a golden opportunity to come together under the auspices of the Barbados Social Partnership and work hand in hand to reboot the economy, retool the workforce and transform the nation for the greater benefit of all. However, given the daunting scale and complexity of the many pivotal challenges that confronted the country, there remained a lingering groundswell of fear that we faced an extended period of economic decline. So, for many people, the big question was, ‘Will Barbados be able to deliver?’
It didn’t take long to find out.
One of the earliest, most publicly apparent indicators of a renewed national sense of purpose arose just weeks after the General Election, when the hitherto interminable plague of the compromised south coast sewerage system was tackled head-on with a degree of instant success. That was a good start.
A second positive indicator arose when the US-owned Ross University School of Medicine chose to relocate to Barbados, leaving local resources just 6-months to provide a suitable campus and accommodation for 1,500 students, plus faculty and staff. Thanks to a major collaborative effort by the Government and the Private Sector – notably Terra Caribbean Real Estate and Preconco Construction – the Lloyd Erskine Sandiford Centre was converted into a medical school with state-of-the-art clinical learning laboratories, and the Villages at Coverley was upgraded to provide on-campus housing. As a result, against all the odds, RUSM’s first semester began right on time in January 2019.
That kind of progressive Public-Private Sector cooperation and ‘beyond the call of duty’ commitment was even more evident – at a profoundly more meaningful level – when a national task force, involving volunteer professionals, was set up to dismantle the existing tax regimen and replace it with one that is better equipped to meet the requirements of the OECD, while still positioning Barbados as an attractive investment jurisdiction. The new one-tier system, where domestic and international business companies are subject to the same tax rates, demands that all entities wishing to operate in Barbados must demonstrate ‘economic substance‘. This more robust tax platform complements Barbados’ comprehensive suite of Double Taxation Agreements and Bilateral Investment Tax Treaties, thereby enabling businesses to operate globally from Barbados. With that in mind, the Government has already started engaging with potential new business partners from a more diverse range of countries around the world.
To facilitate the drive to encourage more investors to establish a physical presence in Barbados, the Special Entry and Reside Permit, SERP, allows non-nationals to live here for extended periods, or indefinitely in the case of anybody aged 60 or above. While not qualifying for citizenship, a SERP holder can benefit from the Barbados tax structure and treaties.
In the relatively short period since being elected, the Government has successfully implemented its IMF supported Barbados Economic Recovery and Transformation Programme, BERT, with a goal of ‘restoring macroeconomic stability and placing the economy on a path of strong, sustainable and inclusive growth, while safeguarding the financial and social sectors’. To date, Barbados has passed every single IMF test since entering the recovery programme. Along the way, the country has achieved a fiscal surplus, including a balance of payments surplus for the first time in many years; inflation is down to 2%; at the end of October 2019 foreign reserves have increased to US$600 million, which equates to about 15 weeks of import coverage; and the National Debt has been restructured, saving in excess of $500m in interest payments.
Against that backdrop of a vastly improved fiscal position, a variety of ground-breaking national initiatives have added further impetus to the country’s steadily growing economic momentum. Having been an early pioneer in solar water heating and the production of solar powered electricity for domestic and commercial use, Barbados is now also the Caribbean leader in carbon free transportation, with more than 500 zero emission, fully electric vehicles already on the road and 50 publicly accessible charge points island-wide. Springboarding from that solid platform, the Government has launched a revolutionary National Energy Policy 2019 – 2030, with a pledge to transform Barbados from a petroleum-based economy to the world’s first 100% renewable energy, carbon neutral island state in the world by 2030.
In a similar vein, Barbados is fully committed to delivering the digital transformation of the country into an advanced Smart Barbados, where the Public and Private Sectors embrace new technologies to streamline the way business is conducted, thereby
promoting greater efficiency in all areas. This quest to radically improve business facilitation in Barbados through the delivery of digital public services is already underway, initiated by the Government and guided by the same industry leaders responsible for the successful implementation of CivTech Scotland.
Having already earned global recognition in the FinTech domain, thanks to the successful pioneering efforts of several young Barbadian entrepreneurs and international companies based in the island, Barbados has now introduced a regulatory sandbox regime to enable FinTech firms to test their new products in a controlled environment, under the supervision of the Central Bank of Barbados and the Financial Services Commission. A Barbadian company has already made good use of this innovative regulatory framework to undertake a trial period with the Eastern Caribbean Central Bank, with the goal of launching the world’s first digitized fiat currency. More FinTech investors are sure to follow.
Other exciting possibilities for Barbados are currently being developed in hitherto under-utilized sectors such as the Blue Economy, which offers multiple investment opportunities in eco- business, maritime transportation, yachting services, a plethora of tourism activities, and the proposed construction of offshore islands to compensate for the limited amount of land available for high-end real estate and coastal recreational space.
Barbados is also well positioned to enter the rapidly emerging, multi-billion-dollar medicinal cannabis industry. With its mature, well-regulated international business sector, populated by a strong cadre of world-class professionals, and a longstanding relationship with Canada, Barbados could prove to be an attractive domain for Canadian companies in particular, several of which are global industry leaders. At the time of writing, the Government is drafting a bill for the legalization of medicinal cannabis, with a long-term aim of facilitating the provision of professional services, research, cultivation and manufacturing. While the inherent social challenges of legalizing medicinal cannabis will have to be stringently managed and regulated, entry into this highly lucrative sector could prove to be a game changer that underpins the Barbados economy for decades to come.
Given the early success of the measures undertaken by the Government to reboot the economy, it is no surprise that the real estate sector, a traditional barometer of the wellbeing of Barbados, has witnessed significantly increased activity during the last year. Potential investors have been particularly encouraged by the release of a new Bridgetown and South Coast Development Plan, the revised tax structure, the benefits of the SERP programme, the Government’s commitment to a gradual relaxation of foreign exchange controls, and an ongoing initiative to revise Town Planning, including new legislation to improve the efficiency and transparency of the application process.
The upsurge in major investments during the last 12-months has included Hilton Grand Vacations purchasing US$50 million worth of inventory at the Crane Resort, and Marriott International paying an estimated US$130 million to acquire the Barbados-based Elegant Hotels Group. With a number of large-scale projects currently due to break ground in and around Bridgetown, notably the $300 million Hyatt Hotel and the 400,000 square feet mixed- use Pierhead project, it is safe to assume that the resultant boom in construction will fuel the economy throughout 2020.
While weighing Barbados in the balance, prospective new investors can draw some confidence from those who have gone before them. In particular, it is worth noting that when the Apes Hill Golf and Residential Community was placed on the market in 2019, it was acquired by an internationally successful investor who has been operating a division of his global business out of the island for 20-years. He clearly has longstanding faith in Barbados. As does Paul Doyle, the Canadian-born owner and developer of The Crane Resort who, in a similarly powerful investor vote of confidence, is re-investing the proceeds from the Hilton deal back into several new resorts on the island.
Can Barbados deliver? Apparently it can.