Change or die!
A nip and tuck will not suffice. What Barbados’ international business and financial services sector needs is a fresh business model to replace the current “dead” one.
Failing this, respected analyst Professor Avinash Persaud warned today, the island’s second main foreign exchange earner will “close down” at “great cost” to the society.
The chairman of Intelligence Capital Limited’s recipe for international business success included essential reliable Internet broadband connectivity, innovative financial regulation and the preservation of financial resources to ensure a safer system in the event of system failure.
The economist was speaking this morning at Hilton Barbados on day one of the Barbados International Business Association’ International Business Conference.
In a presentation on the topic Mitigating Systemic Risk In The International Banking Industry, he said Government and industry actors needed to do more to ensure the international business sector prospered. Otherwise, the consequences would be dire, Persaud predicted.
“A safer system with less capital, that’s the kind of thinking we need to be moving ahead, that’s the kind of debate we need to be having in order to innovators in regulation and therefore be competitive in regulation, in business facilitation, in all those other things we have talked about,” he stated.
“And unless we do so our industry is going to close down, a great cost, cost to you ladies and gentlemen in this industry, but cost to Barbados, cost to our society at large and significant cost because if we did not have international business we would be a one dimensional economy hugely dependent on swings and cycles of one sector, very vulnerable in the rough seas of the international economy.
“It seems to me that this is an industry worth investing in, worth making work for the future, but to do so we must begin and recognise that the international business of the future must have a different business model. Trying to nip and tuck the old business model will not work, it’s dead,” he added.
Persaud singled out the pursuit of innovative regulation and reliable Internet capacity as two key features the industry needed to succeed.
The presenter urged Government to get tough with telecommunications providers, whose current service was undesirable.
“If we cannot offer reliable connectivity … we will not get a single new international business in Barbados, and so this is too important to be left to the … telecommunication companies. Government needs to be muscular in its response, Government must say that ‘it is essential component of having a licence to operate in Barbados that you provide a reliable service and if you do not we will take your licence away’,” he stated.
“Government needs to be muscular because this is not something we can play around with … and I hope that the Government would take that more muscular attitude going forward because we don’t have a choice.”
He said thought regulation would be “the key component of competition” in future.
“We need to invest and develop, it’s critical to our economy, and if you want to do that we need to not only work on business facilitation, we need to work on being innovators in regulation,” Persaud said.
“We need to develop … an active debate about what financial regulation is about, what we are trying to achieve, how you are going to achieve it and the industry … needs to be actively involved in this, we can’t wait on government. This is too important, we all must be working together in a partnership on developing innovative regulation.” (SC)