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CURAÇAO’S FUTURE AS A FINANCIAL CENTER OFEXCELLENCE: CAN WE MAINTAIN THIS LONG TERM?  

 Alex D. Rosaria

Santa Barbara Resort, 19 October 2013 ________________________________________________________________  

What do you do when in less than 15 years, from 1499 to 1513, your island is

downgraded from “Isla de los Gigantes” (Island of Giants) to “Isla Inutil” (UselessIsland) by one of the most powerful empires at the time?

You ignore it. The Spaniards were not even good seamen, thinking they had arrived in

India, let alone passing judgment on the original inhabitants of Curaçao! But mostimportantly you prove everyone wrong that not having gold and other precious metals

does not determine your success.

Long term success is achieved by being creative with the resources you have, by beingdaring and especially realizing that our greatest potential lies in developing links to the

rest of the world.

That has been the secret of our success throughout the years.

When in the early 1800 England took our island from the Dutch, twice, we opted to have both the English legal system as the Dutch one. It was considered good for business. And

it was.At the beginning of the 19

th century, Curaçao had established trade agreements with all

important places in the regioni, vessels from all parts of the world were seen in our

harbor, and before we established a monetary law, currencies of more than twenty

countries were being legally used on our island. In 1826 Willemstad was for the secondtime proclaimed a free port. Just to drive the point home, just recall the more than 200

hunderd years old song we all sang as children:  Nos ta bai Ulanda, den bapor Franses (we are off to Holland in a French steamer). What a bustling cosmopolitan scene it must

have been in Willemstad a few centuries ago!

The commercial activities of the port were however soon restricted to a powerful groupof merchants, mostly the Dutch who had a wall constructed around Punda to keep

competitors, mostly Jews, outside. In 1861 the decision was taken by the Government toeliminate this type of protection, figuratively and literally, as the wall was demolished

and other groups moved in to get a piece of the economic pie.

This may have seemed like a short history lesson. The point I want to make however isthat our island has prospered when it opened itself to the world, when it stimulated

competition and when the private sector, the population in general dared to dream bigthings, took risks and especially never settled for complacency.

 

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It does not mean that we never had setbacks, or even, mayor setbacks. It means howeverthat when we are looking towards the future we do not need to look at what have been

 popularized by consultants and adopted by many, namely the Barbados Model or eventhe more exotic Singapore Model. Tonight I am, when discussing our International

Financial Services Sector (IFS), going to take a fresh look at the Curaçao Model forinspiration.

We need to stop complaining and the passing the buck. 

We complain, we whine too much. We say that the Netherlands “stole our offshore” and

that those big nasty rich countries are making our lives difficult with all kind of newrules. First of all, the Netherlands is our competitor. That’s it. Just treat it like a

competitor. It has every right to compete.

We also seem to be suggesting that the reason we are not performing well is because ofthe tons of rules and regulations by OECD, FATF, CFATF, Egmont, the European

Unions and what not. Guess what. These rules also apply to our competitors as well.Competitors like Barbados, Cayman Islands and Anguilla are either outperforming us or

are about to catch up with us.

It should be obvious that if we want to be an IFS sector of excellence, we have to startlooking at home and not trying to find the culprit of our shortcomings somewhere else.

We should stop playing the victim and be owners of our own destiny (as much as possible in any case).

We need to leave the old offshore behind  

One of the reasons we tend to struggle in this area is the fact that not all actors in the IFS

sector on the island are convinced that the old off shore days and the outdated modelsattached to it, are definitely gone. Nowhere has this been more obvious than the

discussions in the sector between a group that wants to hold on to the good old days andnot signing the Double Taxation Agreement (DTA) with Venezuela and the other group

that wants to explore new avenues provided by that same DTA.

If want to go forward we need to leave this period behind. As a matter of fact, I think thatwe should not wait until 2019 to eliminate the old offshore and we should do it by 2015,

at the latest. Naturally such a step will have to be taken not by government alone but incoordination with relevant actors. This I believe will also liberate us from that part of our

history that will never come back and which make it possible to move forward, in onedirection.

 

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Community support  

One of the most important but yet the most ignored factors that separate the good IFS jurisdictions from the excellent ones, is the amount of support you have at home. I am not

talking of government support mind you. Deloitte evaluated the IFS Sector of Ireland andfound out that the jurisdictions with the most success were the ones who had ample

support of their people at home. We tend however, when we talk about this sector inCuraçao, to focus on tax and regulations.

When I visited the Isle of Man a few years I was struck by a street sign that said

“International Financial Services works for me”. 

The IFS here is still considered as a far-from-my-bed-show for the great majority. Thisneeds to be changed. More should be done in order to raise awareness. More should be

done by the individual IFS companies by being more visible, vocal, recognizable andcommitted to the community.

We need to open up to the world  

I strongly believe that the attitude, not just immigration laws, needs to change about

foreigners. It should become obvious to us that we have to have more people on theisland, more people from different nationalities. First of all I am a firm believer that when

 people from different nationalities, insights and customs come together, this willautomatically lead to new and creative energy.We need to stop fearing people from the

outside. We need to stop fearing change.

Just the other day I received an email from someone who voted for our party saying thatwe need to think again about the Government’s decision to relax the visa requirements

for Colombians because ‘we will end up with many Colombian illegals’. 

I think I may have lost a vote when I told him that I dream of a Curacao of 300,000inhabitants; a Punda buzzing with cafés and restaurants where you can not only find ròm

 bèrdè and sòpi mondongo, but also garbanzo, nacatamal and chimichurri. Point is thatletting more people in to our country, in an orderly fashion, is good for our country, for

our innovative spirit and especially for our IFS sector.

We need to dare more 

The IFS sector is also about doing things just a little bit different in order to create yourown niche. Product development needs to be a priority. Companies should invest more in

research and development, and not just people we are on the clock. Islamic Finance,something the banking sector was almost unwilling to talk about when I was Secretary of

Finance, needs to be reconsidered. The Asia market is also full of potential while thereare opportunities via the tax treaties we have in place with Australia and New Zeeland

 being left untouched –  I have been told by experts.

 

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We also need to frequently question and second guess the way things are done.Should we stay forever pegged on the US Dollar? Or given the fact that the importance of

the US currency has fallen considerably compared to the 1980s it may be worthwhile toinvestigate whether we should opt to be pegged to a ‘currency basket’ consisting of not

only the US Dollar but also the Euro?Should we create more possibilities in our civil law legal framework to allow more

elements of the Anglo-Saxon common law system?Should we continue having inefficient government bureaucracies handling all the permits

and immigration papers, or should we delegate this to a sector like we have delegatedformer government responsibilities to public notaries?

Are we going to dare to allow the English language to play a more prominent role in ourschools?

 Do more 

Finally we need to do more. It is a shame that there is no single branding of the Curaçao

IFS sector. Heck, there is not even a website. We have been doing things separately,every company on its own and it has not been paying off. The government is failing in

keeping up with the changes necessary to revamp our IFS sector. I could mention red tapeas one of the leading factors, but I won’t dwell on those again. I believe it is time for the

Government to delegate some of its tasks to private organization and have an ex-postcontrol. Not everything can be delegated, but I am a firm believer that we can do it

regarding permits.

We also need the private sector to be complacent. The IFS sector is in dire need of a new breed of players who dare to dream and rock the boat. We are in need of a more vibrant

and risk taking private sector that is willing to invest not only in consumptive business.We need these more people who are willing to travel the world and start working on new

networks.

Ladies and gentlemen,

I started in 1499. I conclude that in order to create a prominent cosmopolitan center oftrade and services, able to attract foreigners from the Western Hemisphere and beyond,

we have to look at the Curacao model which has made woners for Curaçao.

As our history has shown us over and over again, our success lies in how serious we arein the redevelopment of our role as link to the rest of the world. Whether we can achieve

this remains a matter of diligence, hard work, creativity and responsibility, characteristicof the past centuries of success.

[END]

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  Aizpura, Ramón. Curazao y la Costa de Caracas