By Datu Matthew Pajares Yngson DCPS KCR FRSA
The recent announcements of Moldova and Montenegro in joining the world of citizenship by investment have definitely rocked the boat. They have made the leap to compete with Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis and Saint Lucia in the citizenship by investment industry. For the families across the globe applying to these programs, this is indeed good news but definitely bad news for the Eastern Caribbean countries running these programs. It is said that “competition is better for the consumer”, but this is not the same as buying fruits at the market.
With the Organisation for Economic Co-operation and Development (OECD) rallying for worldwide compliance of the common reporting standards and the prevention of tax evasion, these citizenship by investment (CBI) programs are under regular scrutiny, making these small states consistently vulnerable.
There is no doubt that these countries need the programs to survive. They are essential lifelines for Caribbean nations that have been impacted by the existential threat of climate change.
Unfortunately, CBI income is not an infinite resource and is highly volatile. St Kitts and Nevis and Dominica may have enjoyed dominance for decades but, because of the global economic downturn, other countries launched their own programs, resulting in a rapid market growth in the last five years. This aggressive competition has left a dangerous “race to the bottom” in the region. With Moldova and Montenegro joining the bandwagon, who knows what further direction this industry will take.
It’s now time for these small island developing states purposely to strengthen their competitive edge in the digital space. Who doesn’t want to work in the next “Silicon Valley” on the beach, use their e-Residency to perform business remotely, or have some cryptocurrency together with their citizenship?
Sometime ago, tech companies would not even consider far off New Zealand to be their regional hub or headquarters but, thanks to enticing government offers, many tech professionals have boarded that 13-hour flight from San Francisco to Auckland exactly to do this.
When Estonia publicized its e-Residency program over the internet four years ago, no one really knew how it would go, not even the Estonians. Three years later, Deloitte says that the program has infused €14.4 million into the economy and estimates that the program will bring in €31 million in income and €194 million in indirect socio-economic benefits by 2021. Estonia was the first country to offer internet voting in 2005 and is now leading the rest of the world in e-Governance with Tallinn fast becoming a favorite go-to place for global tech expats.
There has been so much talk about cryptocurrency for several years all over the Caribbean region while the “Sovereign” was quietly being launched on the other side of the globe. The Marshall Islands imprinted themselves in history books when they passed the Sovereign Currency Act 2018 last February, thereby creating and recognizing the “Sovereign” (SOV) cryptocurrency as its legal tender. This legislation officially allows banks and credit card companies in the country and around the world to start accepting it.
The hospitality industry will always play a major role in the economies of small Caribbean states but, because of climate change, every hurricane season is like playing a game of Russian roulette. The movement towards sustainable tourism will take some time. In comparison, taking part in the digital economy requires a much smaller carbon footprint but yields great results.
There are several elements needed to make this happen such as a welcoming local environment, proper government policies, good internet infrastructure, sustainable energy such as solar and wind and a capable workforce. Fortunately, all these islands already have these innate qualities just waiting to be explored. The recent World Bank report fully solidifies this concept.
The Eastern Caribbean can really take the lead in this arena if they so desire, but often there is more talk than action. It should start securing the future of its biggest resource, its younger generation, if it is to survive. Members of the younger workforce fall prey to overseas migration due to the lack of local opportunities. The 21st century needs keyboard warriors and unconventional thinkers and the islands can greatly contribute.
Innovation and ingenuity is the key to the Caribbean’s future. Engagement in the digital economy must be done today because tomorrow is already too late.
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