The following document was released to the press and is reproduced here with four minor changes. Links to the Bermuda and Cayman Government web sites have been added instead of the attachments and two other attachments are not included so the reference to the attachment has been removed.
FINANCIAL SERVICES CONSULTATIVE FORUM IMMIGRATION SUB-COMMITTEE REPORT 23rd December 2003
The BFSS is competing directly with a number of sophisticated financial centers such as London, New York, Switzerland and other European Centers, Singapore, other Far Eastern centers, Bermuda and Cayman. FSP's have the flexibility and economic ability to move to jurisdictions where the legislation and policies meet their immediate and long-term needs. As evidenced by the retrenchment of the BFSS industry after t 2000, they have the ability to rapidly decamp and consolidate into other regional offices or simply relocate elsewhere. The BFSS is mainly comprised of foreign-based organizations that have selected the Bahamas to conduct their operations. These FSP's require certain key management and other personnel, and unless they are confident that this requirement will be met in a timely and efficient manner, they will move to jurisdictions that meet this vital need. In addition, there are a number of Bahamian owned FSP's that have an equal or greater need for expatriate expertise in order to grow and compete in the global marketplace.
The global Financial Services Sector is going through a period of rapid change prompted by (inter alia) supra national initiatives and competitive pressures from long established major financial centers. The concept of bank secrecy that has long distinguished The Bahamas from its competitors has been eroded. The Bahamas must as a matter of extreme urgency enact progressive FS legislation and reduce the red tape and bureaucracy that stymies new investors and existing businesses. It must be innovative in the creation of a business environment that both retains existing FSP's and attracts new ones. This Committee regards a progressive Immigration policy as a fundamental part of an attractive business environment, and one that demands urgent attention.
The Bahamas does not have ready access to a "think tank" of academic institutions and non-governmental forums, or the benefit of extensive informed and sophisticated public debate on public policy, or local and international business trends. The FSS is a fast changing and dynamic industry. Expatriate expertise is vital in an industry that is fueled by new products and innovative strategies, in order to achieve a competitive advantage.
Further a considerable amount of business in the FSS is based on the comfort and confidence intrinsic in personal relationships, and there is considerable evidence that business is loyal to, and follows these relationships. Industry participants pointed to the success of the Caymanian FSS and were of the view that a significant factor that has contributed to this success is that business has followed the attorneys that have moved from " blue chip" UK law firms to work in Cayman law firms. We were also made aware that when delegations from the Bahamas have traveled to other FSS's they are frequently told by FSS professionals that they are not familiar with their counterparts in the Bahamas, and that their personal relationships and consequential comfort level with advisors in other jurisdictions had lead them to choose such other locations over the Bahamas.
The Bahamas must have Immigration policies that balance the FSS need for expatriate expertise with the inherent rights of the national workforce. The widely accepted definition of Bahamianisation that, qualified Bahamians should receive preferential treatment over qualified expatriates, was an integral part of the growth of a qualified Bahamian work force in the 1970's and an essential component of a national policy in the newly independent Bahamas. However, while the essence of Bahamianisation is still relevant, it must only be one aspect of an Immigration Policy that cannot discourage expatriate hires in the hope that this will preserve jobs for Bahamians.
While we found no evidence that the DOI has an expressed "anti expatriate policy", the lack of a clear DOI policy and the delays and inefficiencies experienced at all levels has created the perception that foreign participation in the BFSS is not really welcomed or encouraged. While it is impossible to quantify the institutions that may have rejected the Bahamas as a result of its Immigration policies, the overall Immigration regime appears to have had a negative effect on the business development plans of existing FSP's. FSP's advise that they have sent work to other jurisdictions because they do not have on staff the available expertise and refuse to subject applicants to the DOI procedure. In addition, Bahamian Financial Service Providers frequently do not use the Bahamas, but use other competing jurisdictions for their corporate, mutual fund and other securitization structures as they are attracted by progressive legislation, the depth of professional advisors, and the greater efficiencies in the Company Registry and other governmental departments.
We believe that a sound legislative and business platform supported by a progressive Immigration policy will attract new FSS business to the Bahamas with a concomitant increase in job opportunities for Bahamians both locally and internationally. We submit that if a policy of Bahamianisation is practiced in a protectionist manner, the FSS and the Bahamian work force will suffer.
1. The Government must publish and make readily available, both electronically and otherwise, an immigration policy that is at the same time globally and nationally attractive and workable. Both Bermuda and Cayman have publicly available, clear Immigration policies and do not appear to suffer from the negative public perceptions attached to the DOI.
The Bahamian immigration policy should include the following: –
a. The mission statement of the DOI, that is, the importance of balancing the need for skilled Bahamians to have employment in this country with the need for skilled expatriate employees to support and grow a sophisticated FSS.
b. A clear statement of the categories of persons who will be considered for work permits. We would suggest that an actual list of the categories of persons in areas in which the Bahamas has identified shortages be produced and updated quarterly and we commend to the Government for its consideration the "Policy; General Statement of Work Permit Policy" of the Government of Bermuda ("Policy").
c. The application process and a definitive time line for such process. The present manner and time lines within which applications are handled are justifiably subject to widespread criticism and underpin the perception that the Bahamas is not seriously committed to the FSS.
(i) Key position work permits. A considerable number of the BFSS Work Permits will be for key positions, i.e., senior positions with a level of expertise and knowledge without which the organization will not relocate to or remain in the Bahamas, or, positions for which there are identified shortages of qualified Bahamians. There should be no requirement to advertise such positions with regard to the work permit or any renewals thereof. Such Work Permits and any renewals thereof should be issued within 15 working days from the receipt of the application. Any deficiencies in the application, or delays that the DOI believes will arise therefrom for any reason whatsoever should be promptly communicated to the applicant.
(ii) There will be positions for which FSP's request positions that should be advertised. The DOI should issue or deny the permit within 15 working days of the receipt of the relevant report from the applicant on the advertisement. The DOI and the Department of Labour should interface to ensure that positions are advertised quickly and applicants are promptly notified about candidates or issued with certificates of vacancy, as appropriate.
(iii) The DOI should formalize an "advisory procedure" whereby persons objecting to an application can bring their complaints to the attention of the DOI. Anonymous objections should not be considered, although in appropriate cases the DOI will not disclose the source of the complaint to the applicant. Substantive complaints should be brought to the attention of the applicant, preferably by telephone call to senior management, who should have the opportunity to respond. Experienced senior DOI personnel should deal with such matters promptly and sensitively.
d. The DOI should be prepared to grant any one permit for periods of up to 5 years for persons in key positions. When the DOI is prepared to grant a work permit, it should be pre-disposed to granting the permit for the period requested in order to facilitate long range planning and to minimize the uncertainty associated with renewals.
e. Given the importance of the business community to the BFSS, we recommend that the Government introduce an Electronic Pass for persons who frequently travel to the Bahamas for business purposes. The holder of an "E-Pass" would not require a short-term work permit. The Pass would be issued for a special fee and would facilitate travel for persons who frequently visit the Bahamas to do business with organizations that have a physical presence in the Bahamas, e.g. persons attending meetings, internal auditors etc. We envisage that the revenue from the E-Pass would cover the cost of providing the facility, which would likely be of greatest interest to large corporations. The DOI would create a special electronic entry area in the national airports to enable holders to fast track through Immigration by electronic means. Holders of Short Term work permits would be entitled to apply for the E-Pass at an additional cost. This would create a program similar to the successful "Cay Pass" program available in Cayman.
f. The policy procedure for obtaining Permanent Residence, Annual Residence and Home Owners Residence Cards should be clearly delineated and such applications dealt with in a designated period of time.
2. We are of the view that it will be impossible for the BFSS to maintain its present position in the international FSS or grow beyond its present level if the Bahamian Attorneys/Law Firms are unable to hire foreign lawyers who are capable of offering greater depth of legal expertise to the FSS than is presently available. The Bahamas must have a pool of lawyers with the expertise and depth in financial instruments and products in order to rapidly respond to the needs of the time sensitive FSS. At this time, the BFSS sector is served by a relatively small number of attorneys with the necessary skills. The fact that both Cayman and Bermuda permit foreign attorneys to practice in those jurisdictions has significantly contributed to their ability to surpass the Bahamas and attract and serve robust capital and financial sectors. We are of the view that the expertise that foreign attorneys will bring to the Bahamas will inure to the benefit of the entire Bahamian legal community. Foreign attorneys will bring spin off business and vital networking capability with other international FSS professionals. The Interviewees and this Committee are of the view that the resultant increase in business to the sector will increase the local training and exposure of local attorneys and also create reciprocal training opportunities for Bahamian attorneys overseas. Further we are of the view that foreign attorneys will not be competing with local attorneys, but will be instrumental in stimulating the growth of a sector to the benefit of all Bahamians.
3. We recommend the immediate establishment of a Unit to deal exclusively with FSS work permit applications and residency applications related to, or emanating from the FSS. The FSS is a sophisticated and multi faceted industry. It is vital that this Unit be adequately staffed with individuals with the educational background and training to be able to understand the needs of the sector, and that the Unit have the ability to communicate with applicants by email/telephone/facsimile. In addition, the Unit should be appropriately furnished and appointed in order to facilitate interviews and meetings with FSS personnel and their high net worth clientele. This Unit will monitor the employment practices of FSP's to ensure that training opportunities are afforded to Bahamians with the appropriate skill sets.
4. We recommend the creation of an Advisory Council, chaired by the Director of Immigration, comprised of private sector representatives. We are of the view that it is vital to have private sector involvement at this stage in the applications for work permits within the BFSS as the same will bring the knowledge of the sector to the DOI and will assist in identifying sector needs. The Council would review and make recommendations to the Director or the Board on FSS applications to the DOI. It would not have statutory authority, but would serve in an advisory role to assist in the disposition of FSS applications by the Immigration Board. The private sector representatives would be governed by high standard internationally accepted rules of conflict. It is vital that the Immigration Board meet on a weekly basis (as in Bermuda) in order to avoid application-processing delays.
5. We have considered the numerous complaints from professional advisors and FSP's concerning the time that it takes for decisions on applications for Permanent Residency to be rendered. We are aware of the gravity with which the Bahamas Government, particularly in light of the public relations and legal difficulties involved in revoking permits, views residency applications. We do however see an urgent need to significantly improve the turn around time, service and general responsiveness in connection with all residency applications involving high net worth individuals. The inefficiencies and frustrations in this area lie at the root of the low comfort level that some high net worth individuals and expatriate personnel have with this jurisdiction.
6. The DOI should accept cheques from all regulated entities and should have in place sufficient safeguards to deal with those cheques that are not honored. Cash should not be accepted at any time. Pro-rated refunds of work permit fees should be issued in a timely fashion to applicants who surrender permits before their expiration.
7. We recommend that the DOI become fully computerized. DOI policy and all application forms should be available on the Internet. Work permits should be issued in electronic form and the appropriate scanning equipment should be available at all ports of entry.
8. We regard it as fundamental to the growth of the BFSS that the general Bahamian populace should be better informed and educated about the importance of the FSS, the career opportunities available in the sector both in the Bahamas and globally and the importance of Bahamians seeking international experience in the industry. In addition we believe that it is crucial that the Government of the Bahamas take a proactive role in providing education and training programs with the intent that Bahamians are well trained and available to work at all levels of the industry.
9. Any changes in the law or procedure of the DOI should be well publicized both locally and internationally to ensure that the public is aware of such changes. This will assist in minimizing the negative perception which frequently accompanies unilateral changes in policy.
10. We suggest that all of the DOI application forms be revised.
This Report was prepared and submitted by the Committee on the 23rd December 2003.
Dated the 23rd December, 2003
Brian M. Moree
Financial Services Consultative Forum