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BVI House Asia held Capital Economics Report Asia Launch on June 22 in Regus Conference Centre, Hong Kong, together with BVI team in London. A live streaming presentation conducted by Mr. Mark Pragnell, Head of Commissioned Projects at Capital Economics, introduced “Five Myths Debunked – A Balanced Narrative for the BVI”.
The event began with opening remarks delivered by Ms. Elise Donovan, Director of BVI House Asia, followed by an introduction from Ms. Lorna Smith, OBE, Interim Executive Director of BVI Finance.
The report, Creating Value: BVI’s Global Contribution, undertaken by Capital Economics, an independent economics consultancy, analyses the significant global economic contribution of the BVI. The report finds that the BVI mediates over US$1.5 trillion of investment globally.
Mr. Pragnell shared five key facts about the BVI they found from the research during the presentation.
A real, mixed and sustainable economy
“Actually, only one out of ten jobs on the BVI are in business and finance industry, and the rest are mostly tourism related. The BVI’s prosperity is not so dependent on business and finance,” said Mr. Pragnell. “Surprisingly, around 12,000 jobs in the United States supported by BVI imports from the US. Also, compared with the United Kingdom, BVI government typically runs only a modest annual deficit. In general, the BVI got a robust economic framework here.”
A Unique model: an ‘international business and finance centre’
Mr. Pragnell said, “The cluster of financial and professional services firms employs 2,225 people directly, and over two-thirds of all jobs in the centre are held by BVIslanders and Belongers. BVI is one of the world’s largest centres for the incorporation of companies – especially those created to facilitate cross-border trade and investment.”
BVIBCs: a widely used and dependable vehicle for cross-border business
“The BVI Business Company (BVIBC) is one of the leaders in terms of international incorporation; its innovation has secured highest concentration of incorporations. In addition, over 140 companies listed on the London, New York or Hong Kong main stock exchanges have links incorporated in the BVI,” said Mr. Pragnell.
According to the United Nations’ Foreign Direct Investment (FDI) statistics in 2015, the BVI was the ninth largest recipient of foreign direct investment inward flows, and the seventh largest source of outward flows.
Bolstering tax receipts for governments worldwide
“We must not ignore ‘Panama Papers’, but it is largely only old news, we thought it was based on a very old database so we did research on it,” said Mr. Pragnell, “and we were right, according to our research results, among the total identified 213,630 offshores entities, only around 30,000 of the 113,645 BVI companies listed are currently active. When you look into the companies which most newspapers are talking about, you will find that most of these entities are aged.” He added, “the BVI is not a treaty jurisdiction, so it has limited appeal for profit shifters. The BVI is not a place for tax cheats as well, there are 28 Tax Information Exchange Agreements (TIEAs) in place already. Also, the BVI is ahead of many big name International Finance Centres (IFCs) on tax transparency. In short, it has good record for compliance with international standards.”
Supporting jobs and prosperity worldwide
According to the Capital Economics report, the BVI’s international business and finance centre mediates over US$1.5 trillion of investment globally, which supports 2.2 million jobs worldwide. “Let me give you an idea what does US$1.5 trillion mean – it is equivalent to two percent of global Gross Domestic Product (GDP), six percent of global banks’ cross-border liabilities, two percent of global portfolio and direct investment.”
A Q&A section was held following the presentation, a majority of financial industry leaders, eminent lawyers and accountants shared their insights with Mr. Mark Pragnell and BVI teams.
Director of BVI House Asia, Ms. Elise Donovan said, “The report is a game-changing narrative. It tells the real story supported by quantitative information on the BVI’s contribution and value to the global economy. It further debunks some of the myths propagated by critics of offshore centres such as the BVI.”