The following is an address made by the Hon. Premier, Alden McLaughlin, to the Cayman Alternative Investment Sumit.
Good morning,
It is an honour and a privilege to join you again for this annual Cayman Alternative Investment Summit.
I thank Chris Duggan and the Dart organization for once more inviting me to briefly comment on the state of the Cayman economy and more generally, about how things are going in Cayman.
I also bring a warm welcome from myself and the Government. For those visiting the Cayman Islands, please do step beyond the confines of the warm hospitality of this venue or whatever hotel you are staying at and experience more of what Cayman and our people have to offer.
My interest is piqued each year as this Summit gathers to discuss what I have always found to be interesting themes.
This year the theme under consideration is Defying Gravity: The Future of Alternative Investments in Exceptional Times. Last year’s theme spoke to “an age of uncertainty”.
I am not certain whether the use of “Exceptional Times” is merely a euphemism for “an age of uncertainty” or whether the promotors of this conference are actually daring to allow for an element of optimism to be contemplated this year. Frankly, I’m not sure there is much of a distinction.
President Trump was elected on the promise of radical change and four weeks into his term, his approach to politics and governance would tend to suggest that indeed we are living in both an age of uncertainty and in exceptional times.
The impact of his administration and its yet to be articulated policies with respect to jurisdictions such as Cayman is still very much in question. But there can be little doubt that an unpredictable future is ahead.
My recent visit to London to discuss with UK ministers the implications of Brexit for Cayman has left me feeling positive that the UK is indeed listening to our concerns and will take them onboard during its continuing discussions and negotiations with the EU. It is still very early days yet but it is obvious in speaking with UK officials that, for the most part, they are viewing Brexit as the glass half full. In fact, some believe Brexit will allow the UK to fill the glass even more. There is an acceptance and a determination to move towards what Prime Minister Theresa May refers to as the new Global Britain. Indeed, when I and other Overseas Territories leaders paid a courtesy call on the Prime Minister last week she reiterated her plans for the UK’s new place in the world and strove to assure us of the importance of the Cayman Islands and other Overseas Territories to the British family. This is promising for the OTs and particularly for Cayman.
My own view regardless of whatever times we are in can be summed up by words borrowed from the author William Arthur Ward - who said “the pessimist complains about the wind, the optimist expects it to change, the realist adjusts the sails”.
In 2013 when my administration took office, we readjusted our sails and the success of these Islands since then bears testament to our solid, planned approach to governing. Back then, we had a stagnant economy, government finances were in the doldrums, business confidence in Government was at an all-time low, investment in Cayman was stymied, the relationship with the UK was almost non-existent and Caymanian unemployment was at an all-time high.
In moving from where we were, to where we are today, we have defied ‘the economic gravity of the time’ and so now have an economy that is by far the best in the region.
Looking around at other Caribbean economies one quickly sees that Cayman has avoided the ravages of spiraling debt, unsustainable deficits, high unemployment and economic stagnation. To the contrary, we have grown our economy, reduced unemployment, accumulated fiscal surpluses, paid down debt and are seeking to pay down more debt early. And we are forging ahead with necessary infrastructure projects, including modernizing our airport and road network and building a modern waste management facility that includes recycling and waste to energy; all without adding any new debt or introducing new taxes. In fact, we have reduced taxes and fees.
In the words of RBC economist for the Caribbean, Marla Dukharan, Cayman is doing what she termed a “fantastic job”. She spoke in this very same room at a recent conference.
To quote her, “This is the best run economy in the entire Caribbean. You should have a conference here and invite all the ministers of finance from around the Caribbean and tell them how to run a country because there is a lot they can learn.”
Indeed. Despite 6.3% negative growth in GDP in 2009, Cayman has had positive growth for the past six consecutive years. Growth during the past three years in particular has certainly ramped up; from 1.5% in 2013 to a forecast high of 3% in 2016.
Cayman’s success in a strong economy is because when our Government spends, it does so to support our economy.
Again, quoting Ms Dukharan, “When other governments spend, it does not support their economies. It supports the economies of China and the US and whoever else they import from.”
Ms Dukharan told us that Cayman has the lowest level of poverty in the Caribbean, but that Cayman’s inequality in that regard is different because the lowest income earners are largely expatriate workers.
Again, quoting from Ms Dukharan, “The thing is, you need them. “The Cayman Islands needs that kind of labour to be the world-class destination that it is.”
Under this Government’s watch, there is less than 4% overall unemployment - looking at the entire workforce of employed Caymanians as well as those on work permit or those who have residency with a right to work. It is the lowest unemployment in the Caribbean. And with the growth in the economy over the past four years, employment of Caymanians has grown as well and Caymanian unemployment levels have fallen from 10.5% in 2012 to 5.6% last year.
Many of those jobs are in the tourism sector where stayover tourism arrivals hit record levels again in 2016.There were close to 386,000 tourists who arrived by air last year. Cruise numbers have increased tremendously over the past three years and were stable last year with 1.7M visitors. These numbers are back to levels not seen in Cayman since 2007.
Over in the financial services sector there are areas that are performing better than others but we are very focused on not only protecting this key sector, but to providing the industry with new products or legislation that can not only defend it from attack but to also provide new areas and markets for growth.
Again, quoting Ms Dukharan about the financial services industry, “Cayman is the most stable and least vulnerable in the Caribbean.”
All this has not occurred by chance but because of the work done by my administration and businesses over the past four years to grow the economy. And I would say the Dart organization is a leader in this regard.
And I would again say that over the course of this term we have introduced no new debt or new taxes. In fact, we have reduced taxes and fees as well as reduced debt. And we have plans to continue to repay debt, including repaying in its entirety a US$312M bullet bond taken out in 2009 that falls due in 2019. We are completely on track to do this. We have defied gravity.
I would add that our policy of reducing taxes and fees as we increased surpluses through better money management has meant that we have put more than $22M a year back into the pockets of businesses and families.
And we have squirrelled away sufficient reserves to finance over six months of Government expenses in the event we see another global recession with a falloff in revenues as we did in 2009.
There has been no other administration in the history of these Islands that has come close to this achievement.
My administration subscribes to the principle that the only true independence is financial independence.
My Government is ambitious for the future of Cayman, Caymanians and all who live, work and invest here.
Over the course of this term we have restored investor confidence, restored economic growth, restored job growth, restored the relationship with the UK, restored Government finances and tackled needed infrastructure projects. Infrastructure that is needed to not only provide facilities for our people but that is vital to protect the environment and to support economic growth on the social side. We have also introduced a minimum wage regime and are making strides to improve our education system and addressing teacher pay as well as school infrastructure and tackled pay increases in the public service.
And we have only just begun.
My Government has laid the foundation for continued growth in our economy so that our people have opportunities for jobs or to start up their own businesses. We firmly believe in the tenet that the best social welfare system is the ability to have a good job. As we close out our term with the elections here in May, I remain ambitious for Cayman, and I have confidence that the voting public will see the definitive progress we have made.
We have certainly come a long way in almost four years because of the work of this Administration and our partnership with business community. In the midst of political, social and economic turmoil globally our three small Islands have performed remarkably well over the course of this political term. We have defied gravity and we have done it in exceptional times.
So as you deliberate on The Future of Alternative Investments in exceptional times, I encourage you to consider the opportunities available to invest in the Cayman Islands. And I hope that those of you visiting us will return and bring your families and friends to see up close what makes Cayman the jewel of the Caribbean.
In closing I note that later on today you will hear from keynote speaker Arnold Schwarzenegger. I welcome Arnold to the Cayman Islands. As a youngster I once aspired to be a body building star myself. And I confess Arnold and Lou Ferrigno were my heroes.
And despite what some of you may think, I believe Arnold is doing a very job on the Apprentice TV show.
I have never hosted a television show myself but Arnold and I do have at least one thing in common. As a former California Governor he, like me, understands what it takes to win an election and to govern.
And so recognizing our elections in May this year, I cannot resist borrowing a line from Arnold – “I’ll be back”.