Barbados remains a paragon of stability offering solid growth prospects, a stable low-tax regime and a business-friendly environment
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This is a golden island fit to adorn any postcard, but it’s also a working democracy, populated by highly educated white- and blue-collar workers, and overseen by judicious regulators and the world’s third-oldest working parliament. Moreover, the Barbadian business model, based on financial transparency and a low-tax environment acceptable to corporates, investors and regulators across the developed and developing world, is one that clearly works.
Throughout the financial crisis, and the turmoil unsettling many emerging markets across the globe, which includes several Caribbean islands, Barbados has remained a paragon of stability offering solid growth prospects, a stable low-tax regime and a consistently business-friendly environment.
Sense of purpose
Barbados hums with a sense of purpose and drive, evident as soon as you land at Grantley Adams International Airport, one of the region’s busiest terminals, and the recent recipient of a $100 million upgrade. Flights call in every day, most arriving direct from London, New York, Miami and Toronto, but also increasingly from Latin America and continental Europe, as Barbados looks to sign double-taxation and bilateral investment treaties with nations from China to Croatia and Singapore to Switzerland.
From the airport to the bright sunlight outside, and to the next pleasant surprise: infrastructure. Barbados’s roads are excellent, notably the multi-lane highway linking the airport in the southeast with Bridgetown in the west, and the new housing developments and business districts of the island’s central and northern reaches. Traffic slows in rush hour but never jams, further indicators of a healthy, working economy.
Barbados’s infrastructure, says Jeremy Stephens, president of the Barbados Economic Society, is "the best anywhere in the Caribbean, and far better than any of the region’s other small island states". The telecommunications grid rarely falters: wireless speeds are universally high, even out on the remote eastern coastline, and 4G mobile services are provided by a select group of mobile providers, notably Digicel and LIME. Utilities are another high point: Barbados rarely if ever suffers energy brownouts, while tap water is as potable as it is in any European city.
"We have world-class physical and social infrastructure, and thanks to our first-class telecommunications system, we are superbly well connected both domestically and with the wider world," says DeLisle Worrell, governor of the Central Bank of Barbados. "These are hard-won and clear advantages that have given us the opportunity to build out the Barbados brand, and which provide solid economic foundations that we continue to invest in and build on."
All of this sweat, toil and investment feeds into a brace of interlinked and aspirational factors. First, the betterment of the Barbadian people. And second, the twin sectors that have successfully provided impetus, direction and focus to the economy since independence from Britain in 1966: tourism, and a wide range of world-class business and financial services.
Investing in the future
In December 2013, Euromoney Country Risk (ECR) data gave Barbados a structural risk score of 54, far above any other nation in the eastern or central Caribbean, and nearly seven full points ahead of near-neighbour Trinidad. That Barbados was able to outshine a far larger economy blessed with significant natural resources is testament to its leaders, past and present, and to its willingness to invest in its people and in its future.
Euromoney’s structural risk rankings comprise four factors, each debated by a pool of respected global economists and financial sector leaders: hard and soft infrastructure, demographics and labour relations. Barbados excels in every metric.
Its hard and soft infrastructure is excellent, of course. But it also boasts a young, aspirational, hard-working population, and a labour-relations system based on stability and consensus that would put to shame many European and North American states. The government is in regular contact with other key pillars of the economy. Decisions to raise or lower interest rates, push through business-friendly legislation or slim down and streamline government – such as the February 2014 decision to dismiss 300 employees of the National Housing Corporation, a brave but necessary move toward a balanced budget – are only taken after extensive communication with business leaders and trades unions. Strikes are almost unheard of, in contrast to other parts of the Caribbean.
Oasis of stability
Indeed, in a world riven by poor industrial relations, political upheaval and market turmoil, the low-tax, low-corruption and pro-business island of Barbados has for decades remained an oasis of stability. "Anyone doing business here knows they won’t be hit one day by a new piece of tax legislation, and can rest easy in the knowledge that the ruling party will not be suddenly ousted," says Glyne Harrison, chief executive officer (CEO) of First Citizens Bank (Barbados), a leading pan-regional lender. "There is a very strong link between the legal, political, social and corporate communities here, and these close-knit bonds play a big part in explaining why companies and investors invest here and stay here."
"From the first day of independence, we recognized that we were a small jurisdiction with limited natural resources, so we always focused on developing our human capital and the rule of law," says Carmichael. He motions out of the window of his offices in central Bridgetown, filled with antique paintings of bygone Caribbean days, to the handsome brick building opposite. Barbados’s parliament turns 375 this year and Sir Trevor, one of 21 senators in the upper house, will have a front-row seat for the celebrations.
This determination to invest sustainably in its people and its economy has long proven a success. Barbados has one the Caribbean’s best education systems, along with Trinidad, and by far its best healthcare service. Free schooling is provided to all citizens up to the age of 16 – around one-fifth of the entire budget is allotted to education - and an outsized measure of the population goes on to gain bachelors and masters degrees, as well as doctorates.
You can see this drive for personal advancement at every level. Marlon Yarde, chief executive officer and general manager of the Barbados Stock Exchange recently finished his Master of Letters degree via an online course with the UK’s University of Huddersfield. Central bank chief Worrell holds degrees in economics from the University of the West Indies and Canada’s McGill University, and research fellowships at the Smithsonian Institution and the Federal Reserve Board in Washington.
This striving for personal improvement, aided by a government that regularly pays full scholarships to individuals seeking to pursue higher education overseas, pays clear dividends. Rarely, notes Connie Smith, managing director at Tricor Caribbean, a global provider of integrated business, corporate and investor services ultimately owned by Hong Kong-based Bank of East Asia, does she need to look beyond the island to find highly-qualified accountants, auditors, lawyers or tax advisors.
Quality of life
Smith points to positive factors beyond roads, reading and arithmetic. "Barbados offers an unusual combination of a high quality of life and a high level of infrastructure that’s always being enhanced and improved. The year is crammed with great sporting and cultural events. A high level of political stability, a large middle-class and our super-low crime rates also make this a very safe place to raise your family." Adds Henderson B Holmes, executive director at the Barbados International Business Association: "Our lifestyle makes this a great place to invest. Everyone wants to invest in a safe place, but you also want to travel and live somewhere you feel safe. Barbados provides both.
Moreover, this middle class works across a burgeoning service sector, from tourism and transport to providing cost-efficient, world-class business, accounting and taxation advice to global corporates and investors.
These clear advantages also increasingly draw in best-in-class workers from outside the country, particularly those with young families or nearing retirement age, drawn to the island’s wealth, security and stability. Dustin Delany, managing partner at Delany Finisterre, a Barbados-based international law firm, describes the clear advantages of being based on such a golden island. He moved from Brickell Avenue in downtown Miami five years ago and has never looked back.
"Time-zone wise," he notes, "it’s ideally situated for anyone based in North and South America and much of Europe. It’s a great place to raise a family, with a literacy rate of 99% and students who regularly make their way into the world’s top colleges. And I get to see my son grow up rather than spending two hours every day on weekdays gridlocked on the I-95 freeway in south Florida."
Delaney’s story helps explain why so many investors, business leaders and tourists continue to flock to this gleaming gem of an island, blessed with world-class governance, political, social and economic stability, regional best-in-class hard and soft infrastructure, and with impeccable financial, communication and transport links to the outside world.
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