By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- The government has been urged to implement an investor-citizenship program that would effectively allow high-net-worth individuals (HNWIs) to trade investment in The Bahamas for citizenship rights as a means of spurring growth in the economy.
Sean McWeeney QC, a partner with law firm Graham Thompson and Co., is advocating for The Bahamas to learn lessons from its past as it seeks to reposition the financial services industry for future growth. Among those lessons, he believes, is the need to attract “quality” HNWIs to live and work in the country, rather than taking a “mass market” approach to selling the country’s offerings.
This could be achieved, he suggested, by jumping on the “bandwagon” that has seen other competitor jurisdictions implement programs that give investors accelerated access to citizenship rights in return for meeting an investment threshold.
McWeeney, a close advisor of Prime Minister Perry Christie, was speaking on Tuesday morning at the Society of Trust and Estate Practitioners (STEP) Caribbean Conference 2014. McWeeney is a specialist in trusts and laws relating to the financial services industry.
“My own view is that we should (implement an investor-citizenship program) but it should be focused on high quality, rather than high quantity. Investment thresholds would therefore need to be rather high. It is moreover vitally important that we settle on one thing: The granting of citizenship on the basis that the recipient never has to step foot in your country is not a credible, sustainable approach; moreover, it’s a red flag to the OECD (Organization for Economic Cooperation and Development), as witnessed in the recent experience of Malta, which under pressure from the OECD had to introduce a longer qualifying residency period under its own investor citizenship program.
“A far more credible approach for investor citizenship would be to offer permanent residency, in the first instance, with a guarantee of citizenship once the required period of residence is met,” he added.
McWeeney noted that just a few wealthy individuals who are heavily committed to The Bahamas have had a transformative effect on the Bahamian economy over the years.
“Sir Harold Christie persuaded Sir Harry Oakes to move from Canada to The Bahamas, and in just a few short years, Oakes had almost singlehandedly transformed the Bahamian economy with his developments, just as other high-net-worth immigrants have done after him, all through the years, such as the likes of Sol Kerzner of South Africa, who created all that you see at Atlantis, and Joe Lewis of the United Kingdom, who is transforming the western end of Nassau with his magnificent Albany resort and residential community. It has always been a comparatively small number of movers and shakers who have had this economically transformative effect.
“This same high quality/low number paradigm may be what the financial services sector of The Bahamas in the 21st century needs to re-aspire to. Instead of the mass marketing of yesteryear, the emphasis must now be on the quality of the investors we attract and the added value that they bring with them for the economy of The Bahamas. That’s why we really do need to encourage the establishment of family offices in The Bahamas - a place where our clients can live and work, managing their investments...”
Such investor-citizenship or “economic citizen” programs have been introduced in recent years as a means of enticing HNWIs to invest and live in countries such as Malta, Portugal, St Kitts and Nevis, Antigua and Barbuda, Dominica and others.
Through those programs, investors can effectively “buy” citizenship in the target countries by bringing financial assets with them to the country.
In Portugal, this investment threshold presently stands at US$1.3 million, while in St Kitts and Nevis a real estate investment of US$400,000 could achieve the same goal. Each requires a differing amount of actual physical presence by the investor in the country in order to fulfil the requirements necessary to attain citizenship; St Kitts and Nevis requires no physical presence at all.
In The Bahamas, at present, anyone making an application to get citizenship must have been resident for at least seven years preceding his or her application, meaning that while major investors do at times gain citizenship, the process is not one that will attract new business to the country.
McWeeney said that if this type of business is to be attracted, a “recalibration” of immigration policies and how they are executed is necessary.
On this front, he congratulated the government for being dedicated to establishing a “special unit” in the immigration bureaucracy for the “expeditious treatment of residency and work permit applications for high-net-worth individuals and their families and for the key managerial personnel they may need to bring with them to manage their business”.
“Already the nucleus of this is operational and there is evidence it is producing positive results, but the government needs to do more - a lot more - and it needs to do it now. The special immigration unit needs to be expanded and properly equipped and applicants must be processed to finality in the shortest possible time and with the minimum amount of pain for the applicants. The unit also needs to be moved to more hospitable premises,” he added.
Guardian Business understands that such an investor-citizenship program has gained significant traction within the financial services industry, and plans are afoot to begin making the case to the public on the benefits of offering such a program, which could easily become a political lightning rod.
Commenting on the changing environment in which The Bahamas finds itself operating today, McWeeney told delegates at the STEP Caribbean Conference 2014 that the “world is an infinitely more complex place now, and we can’t reset to a bygone era”.
In addition to focusing on “quality not quantity” and “laying out the red carpet” for potential investors, he said The Bahamas must be innovative in developing new products to sell to them, and must ensure it markets itself enthusiastically but strategically, if it is to prosper in the current environment.
Referring to the need for Bahamians to also ensure they are equipped to attract new business, particularly when it comes to the language skills that will be needed, McWeeney added: “Excellence, not nationalist entitlement, must be our primary watchword”.
Republished with permission of the Nassau Guardian