Business

Sun, Sea And Money

By Mark Smallwood, Smallwood & Company

Looking at the Winter 1999/2000 Times of the Islands magazine, three aspects of the issue leapt out at me. Firstly the picture of Sellar’s Pond (now Turtle Cove Marina) in the early 1960s, with not a shred of inhabitation around it, then the picture of a group of the resilient citizens of the country at that time, on the beachfront in Blue Hills, and finally Earle Perkins’ account which must have been representative of so many of the early expatriate pioneers of the 1960s and 1970s.

The foundations for the new phase of development that is now taking place in the Turks & Caicos Islands, and particularly in Providenciales, occurred in these early years. As recently as 1980, the population of Providenciales (Provo) numbered some 600 people, with the majority of the Islands’ people living in Grand Turk (TCI’s capital, which is 60 miles east of Provo), Salt Cay, South Caicos, Middle Caicos and North Caicos. Most citizens who are reading this would immediately correct me and point out that a significant number of their families had in fact left the Islands, mainly for the Bahamas and some for the United States, due to the decline in the economy here resulting from the collapse in the salt industry. There was a time when Turks Island Salt was heralded as one of the best quality salts available in the world–then came refrigeration and other issues which took away the livelihood of so many of the indigenous people.

And then the Millennium arrived! Walking down Grace Bay Beach in Provo, early in the new century, one marvels at the development that has taken place. Apart from the private houses, there are: Ocean Club, Club Med, Royal West Indies Resort, Grace Bay Club, Allegro Resort & Casino, The Mansions on Grace Bay, Point Grace, The Sands, the Island Princess (well, what’s left of it), Le Deck, Beaches Resort, Coral Gardens, Turtle Cove Marina development and way down at North West Point, Crystal Bay Resort and Condominiums (I did not walk that far!). That is, of course, not to mention the commercial and residential development that is occurring inland and the development on some of the other islands, including the Parrot Cay Resort which has led to enormous publicity and interest in the country as a whole.

So why are the Turks & Caicos Islands becoming such a success (the country had the highest GDP growth in the Caribbean in 1999)? Why are holiday makers coming here to spend their hard earned money? Why are investors comfortable enough to invest significant amounts of capital in TCI? There are many ingredients to the success story. They include infrastructural, legislative, and topographical factors–and last but by no means least, the all-important human factor.

In the category of infrastructure, the Islands are but a short hop from Miami, with twice daily flights via American Airlines. In addition to this, there are charter flights coming in from various sources in the U.S. and Canada, and it is but a matter of time before there are scheduled flights from locations such as New York and London. The currency of the Islands is the U.S. dollar, so there are no hidden costs in currency exchange as are found in many of the other popular Caribbean destinations. Electricity is in the U.S. format rather than the British format (although we do test foreign drivers by insisting they drive American cars on the left hand side of the road, which as a Brit I would claim is the right side of the road). All modem telecommunications services are provided by Cable & Wireless, including Internet access.

Medical resources in the Islands are good generally, but for major emergencies, evacuation to Miami by air ambulance is necessary, so adequate insurance coverage is essential. The supermarkets are excellent, and there is very little one now misses. There are a growing number of excellent restaurants serving a broad range of dishes from traditional Island meals such as fresh lobster, conch, grouper and turtle, to Jamaican, Dominican, Mexican, German, French, Italian, Chinese and Indo-Chinese cuisine. (Don’t worry, there are also great burgers for the Americans and the Brits can get a Full Monty breakfast at the golf club).

The legislative framework of the Islands provides for a very attractive environment in which to conduct business, invest, or manage one’s international investments. The Islands remain a British Overseas Territory with a British Governor resident in Grand Turk. This provides a high degree of security, both internal and external, and the governor has internal powers designed to ensure good overall governance and the maintenance of a free and democratic society.

The locally elected government, which meets in the capital, Grand Turk, is responsible for the day to day management of the country’s affairs, a not inconsiderable task with the population scattered over a number of islands, and many island-specific issues to be dealt with in the context of achieving the best long term goals for all the people. Elections are held every four years, and as the wealth of the Islands grows, then so too are the demands of the people, with constant pressure being applied to the government to make continued improvements, whether it be to roads, education, waste disposal and so on–a healthy example of democracy at work.

The legal system itself is based on English Common Law, and there is a sound framework of legislation in place to ensure good order. Thus investors in property have a well-defined process of obtaining and registering title, and when dealing with professionals on the Islands, whether they be lawyers, accountants, trust companies, insurance companies, or banks, the investor can be confident that there is a high degree of regulation imposed to ensure that only fit and proper persons are involved in these activities. The Financial Services Commission as the regulator undertakes stringent quality control tests before issuing licenses, and then maintains regulatory oversight through various means to ensure that minimum standards are met and maintained by licensed professionals.

Finally, for investors and prospective residents in particular, the fact that there are no income, capital gains, property, estate or inheritance taxes makes the Turks & Caicos Islands a highly attractive jurisdiction in which to have one’s tax residence, invest, or in which to have international investments managed. Whether a specific tax planning structure or a tax neutral holding structure for international family holdings is established, the absence of local taxes makes the jurisdiction an ideal environment for such planning. For property investors, whilst they do not have to face the ongoing burden of property taxes, there is a one-off stamp duty payable on the initial purchase of property in the Islands.

Topographically, the Turks & Caicos Islands have unique advantages over many of the traditional Caribbean resort locations, which are often islands of the same size as Provo, but are long distances from neighbouring islands. The situation of TCI is such that if you came to Provo and found it too busy (I think I can hear the New Yorkers laughing!), take your pick of the other islands, which are all in relatively close proximity. If you want a whole mile of beach to yourself, hop on a boat at Leeward and ask them to drop you off on one of the nearby cays. Or, why not spend a weekend or longer in North Caicos or Middle Caicos? If you want to see some history, visit Grand Turk, a pleasant 25 minute plane trip from Provo. See where John Glenn made his first landfall at the old U.S. naval base, visit the museum, walk around the old salinas, do some wall diving, have a peek at Waterloo House (first built in 1815) where the governor lives, play on the nine-hole golf course that Governor Kelly built, and unwind!

The pace of life for holiday makers is set by two principal topographical factors, one made by God and the other by man. Firstly, the pure white beaches and turquoise waters are without a doubt exceptional–there are over 250 miles of beaches, with the main attraction at the moment being Grace Bay on Provo with its 12 miles of beachfront. Secondly, the government has very wisely limited construction of property on the beaches to three stories–the result is low volume, high quality. For the holiday maker who can afford it, the Islands will always provide the peace and tranquility they need to get away from the hectic pace of life back home. On the other hand, the investor can be confident in the knowledge that others who follow will all be interested in the established precedent of high quality development designed to attract an upscale customer who is prepared to pay for that quality of environment.

Finally, the human factor–two years ago, the former Labour Commissioner informed me that there were 32 different nationalities living in Provo that he was aware of. Since the early 1980s, the population of Provo has grown from 600 or so people to–well, no one is really sure! The answer probably lies between 15,000 and 20,000, but the growth has been significant. Many of the citizens have relocated from the other Islands, producing on the one hand sadness and reflection that they have had to move away from their homes, but on the other hand hope and encouragement as the opportunity to build livelihood and wealth in their own country now exists. This wealth factor is drawing back citizens who were forced through lack of opportunity to leave, and many are returning from the Bahamas and the United States to put learnt skills to good effect here.

Due to the relatively small indigenous population, there has been a large influx of expatriates from all over the world: Haitians, Dominicans, Jamaicans, Bahamians, Americans, Canadians, British, Irish, French, Germans, Italians, Dutch, Norwegians, Swedes, Greeks, Eastern Europeans, South Africans, Indians, Thai, Chinese, Japanese, Philippino, Australians, New Zealanders.

Without doubt, the people are fascinating and above all friendly. The citizens have had the courage to invite a large number of expatriates to assist in the development of their country, whilst the invited guests have come in the form of entrepreneurs and characters. Relative to other tropical locations, crime is very low and all are working very hard to carve out their niche in this jewel of the Caribbean.

Whether one is holidaying, investing, or managing investments in the Turks & Caicos Islands, there is something for everyone. Escape from the Formula One lifestyle of big cities to the horse and carriage trot of the Islands. Invest in condominiums with pristine views of snow white sand and turquoise water as an opportunity to diversify investment from tech stocks and hedge funds. Take the trustee of your family trust out to for dinner at a beachfront restaurant in order to discuss your wishes and concerns for the long term management of your family wealth.

The Turks and Caicos Islands presents the opportunity, all you have to do is step on board.

Mark Smallwood is Managing Director of Smallwood & Company, an international asset management company, based in Providenciales, and incorporating Smallwood Trust Company Ltd. (a licensed professional trustee) and Smallwood Insurance Company Ltd. (a licensed insurer).



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Photographer Marta Morton was enjoying another spectacular sunset when she spotted this lovely scene—a picture-perfect clump of Old Man Cacti and the pastel colours of what she later learned were crepuscular rays (see page 18). For more of Marta’s images, turn the pages of this issue and visit www.harbourclubvillas.com.

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