Opening Statement by

Hon. Lorna Smith, OBE, Minister for Financial Services, Labour and Trade on the

Virgin Islands Trade Commission Act (Suspensory) Bill, 2023

Madam Speaker, with your permission I would like to present a bill seeking the suspension of the Virgin Islands Trade Commission Act, 2020. This Act, passed on 8 June 2020, aimed to establish the Virgin Islands Trade Commission, and vest it with critical responsibilities related to business, trade, investment, and consumer affairs within our jurisdiction. The Act came into effect on 21 November 2022, through Statutory Instrument S.I. 103 of 2022.

Upon assuming office as the Minister responsible for trade at the end of April 2023, it became evident that the Commission was still in its early stages of development, raising concerns about its viability and effectiveness. Given the circumstances, a careful evaluation of the Act's implementation became imperative.

One significant concern stemmed from the rapidly expiring timeline given to employees of the Trade Department to decide whether to transition to the Commission, which had yet to become fully operational. Employees were granted six months, from November 2022 to May 2023, to choose between remaining with the central government or transitioning to the statutory body, which was still inactive.

In fact, one of my initial official duties was to attend the orientation of the Board on May 15, nearly six months after the Act had become law. It was on that day that I began to question the wisdom of implementing the Virgin Islands Trade Commission under our current circumstances.

Madam Speaker, this six-month milestone is significant as it mirrors the timeframe given to Trade Department employees to decide their future, while the Commission remained inactive. Shortly thereafter, I met with the Chairman and key officials to express my concerns and request a clear implementation plan and budget to guide the establishment of administrative arrangements for the Commission.

The period between the legislation's passage and the establishment of a statutory board is typically referred to as an 'incubation' or 'transition' period. During this time, the central government continues to oversee and fund the department's operations while providing technical support to the Board.

Madam Speaker, all of this occurred against the backdrop of discussions with numerous small and medium-sized businesses during my round-table meetings. Business owners highlighted foundational issues requiring immediate government attention to strengthen our business sector and the broader economy. Importantly, none of the hundreds of individuals we spoke to indicated the need for this statutory body as a solution to their challenges.

The Ministry eventually received an implementation plan in July, eight months after the legislation had been enacted, along with a budget that would cost the government $1.5 million, in addition business licensing revenues of approximately $960,000. This expenditure was primarily aimed at maintaining the status quo in terms of service delivery while funding core administrative costs such as HR Management, Financial Management, payroll systems, information technology, and legal services separately from central government. Achieving financial independence in the Commission's second year was projected to require a 154% increase in trade licensing fees.

Madam Speaker, while an increase in trade licensing fees is warranted, given that the current fees were set more than three decades ago, I was surprised to inherit a Business Licensing Act, passed in 2022, with even higher annual licensing fees - as much as $1,000 for Belongers and $15,000 for Non-Belongers engaged in certain business activities.

We all know that significant increases in the cost of doing business can lead to more business failures and higher prices for consumers. At a time when members of the House are calling for financial subsidies to support local businesses, their support of this suspensory Bill would demonstrate their commitment to enhancing the business environment in the Territory.

The Business Licensing Act, 2022 is part of a suite of legislation intended to be administered by the Trade Commission, along with the Consumer Protection Act of 2020 and the Virgin Islands Investment Act of 2021. It is crucial to note that neither of these pieces of legislation has been put into effect.

Madam Speaker, I want to underscore that each of these pieces of legislation has merit and will not be abandoned. Appropriate amendments can be made that would allow the Ministry of Financial Services, Labour, and Trade to administer all trade-related legislation.

Madam Speaker, it is crucial to emphasise that as we navigate this period of suspension and reevaluation, the importance of consumer protection will remain at the forefront of our priorities. Our commitment to safeguarding the rights and interests of consumers will not waver. The Consumer Protection Act of 2020 holds great significance in ensuring fair and ethical business practices within our jurisdiction. During this transitional phase, we will work diligently to strengthen and enforce consumer protection measures through existing government channels. We believe that robust consumer protection is not only a fundamental right but also a cornerstone of a healthy and thriving economy. Therefore, our efforts will include enhancing consumer education, providing accessible avenues for redress, and ensuring that businesses adhere to ethical standards in their dealings with customers. In doing so, we aim to build trust between consumers and businesses, fostering a more resilient and prosperous future for the Virgin Islands.

Madam Speaker, in addition to our commitment to consumer protection, we also recognise the pivotal role that investment promotion plays in driving economic growth and prosperity. The Virgin Islands Investment Act of 2021 represents a significant opportunity to attract both domestic and foreign investments that can fuel job creation, infrastructure development, and innovation. Nevertheless, in all honesty, Madam Speaker, it is important to acknowledge that many of the provisions within the Investment Act fall under matters of policy to be determined by the Government.

While we suspend the Virgin Islands Trade Commission Act, the Ministry can actively promote our jurisdiction as an attractive destination for investment. We will work to streamline investment procedures, create a conducive business environment, and engage in targeted marketing efforts to attract investors. By doing so, we aim to foster economic diversification, reduce unemployment, and stimulate sustainable development in the Virgin Islands. Our focus on investment promotion aligns with our broader vision of building a resilient and prosperous future for our Territory.

Madam Speaker, although the Virgin Islands Trade Commission Act of 2020 was enacted with noble intentions, its practical implementation has faced significant challenges and obstacles that warrant reconsideration of its timing. Implementing the Act in its current form faces multiple obstacles, including:

• Increased operational costs during a period of budgetary constraints
• Increased bureaucracy
• Staffing limitations
• Unresolved employment terms and conditions for transitioning staff; and
• Resolution of duplicatory functions and clarity of roles of the Commission and the Ministry.

Ignoring these issues would be a failure of our duty, and thus, I propose to suspend the commencement of the Act, rendering its provisions inactive.

In light of this decision, the Ministry of Financial Services, Labour and Trade will assume direct oversight of trade-related policies and operations. We will work diligently to secure the necessary resources to enhance the capabilities of the Department of Trade, Investment Promotion, and Consumer Affairs. Our aim is to streamline and automate business processes, support local entrepreneurs, and promote investment and fair trade practices.

The underlying policy is to strengthen and maintain trade-related public functions within the central government. The Trade Department should be well resourced to carry out a clear mandate and be accountable to the Government and the public. Additionally, the period of suspension will offer an opportunity to assess the best administrative arrangements for governing trade-related policies and services in the future. This evaluation will inform my decision on whether to propose any alterations to the initial scope of operations envisaged for the Trade Commission.

Over the next 12 months, we intend to take the following actions to implement this policy:

1. Conduct a review of the department's current structure and operations.
2. Develop a strategic plan for the department with clear priorities for implementation.
3. Provide the department with the resources it needs to carry out its responsibilities, including technology, staffing, and training.
4. Develop and document operational policies and procedures to enhance transparency and ensure consistency in its business processes.
5. Establish clear accountability mechanisms, including setting performance targets for the department and reporting on its progress.
6. Strengthen the department's relationships with other government agencies and stakeholders to ensure it is well coordinated and aligned with the Government's priorities.

Madam Speaker, I wish to emphasise that the Virgin Islands Trade Commission Act, 2020 is not being repealed; rather, the bill presented today seeks to temporarily suspend its operations. This juncture also provides an opportunity to assess the best administrative arrangements for governing trade-related policies and services going forward.

In conclusion, I urge this honourable House to support the bill to suspend the Virgin Islands Trade Commission Act, 2020, so that we can embark on a path of thoughtful reform and revitalisation in our trade sector, one that better aligns with the needs and aspirations of the Virgin Islands and its people.

Thank you for your attention, and I yield the floor for further deliberation on this matter.