Curacao Business
Infinite investment opportunities lay on the horizon for local and foreign companies alike. With many of the key ingredients already in place, the momentum of the Dutch Caribbean Securities Exchange, (DCSX), is starting to take ground and realize its potential.
TEXT BY HELEN GRIFFITH
Curaçao has the capability to become a new financial hub in the Western Hemisphere, following in the footsteps of Singapore. A number of informative insights into the progress and potential of the Dutch Caribbean Securities Exchange, (DCSX), were presented to executives of the financial sector at a recently held seminar entitled, “The Power of Capital Markets.” Mr. Derk Scheltema, Chairman of the Supervisory Board DCSX, and Director of Amicorp, presented a clear view of the status of the DCSX and elaborated on the investment potential for local and foreign investors.
During his presentation, Scheltema stressed the need for an active capital market, without which economic growth would be stifled. He explained that an active capital market increases the availability and diversity of investment potential and encourages domestic savings at a lower risk. He warned that without this, there would be ‘an inability to match long term savings with future pension and health requirements,’ thereby creating a generation of poor retirees.
With this in mind, the DCSX was created with the intention of attracting financial service businesses to Curaçao, thereby creating a platform that serves as a hub for regional issuers and investors. Its primary goal is to generate foreign exchange by providing financial services to listings on the stock exchange in the form of corporate finance services, brokerage and banking services, investment management, legal and tax advisory services and finally by attracting regional headquarters and financial centers to the island. It goes without saying that all this commercial activity would undoubtedly generate jobs, increase the island’s tax base and lead to economic growth. To date the DCSX has over 30 current listings, including international companies such as Grupo Farma, Telconet, Zeta Group Holdings and Agri Resources, and local companies like the newly listed, Building Depot. There are a number of significant benefits to listing a local company on the DCSX. Some of these include: creating transparency, (thereby decreasing political influence); attracting capital for pending development projects; allocating an alternative lower-cost form of financing; enabling an exit strategy for existing shareholders when required; and promoting an increased profile and status of the company.
As we look beyond our borders, the benefits of the DCSX continue as regional companies and governments can procure a legally secure and regulatory environment in which to conduct financial transactions. As Scheltema explains, “The goal of the DCSX is to attract these companies and governments to Curaçao […], to issue their securities, connecting international investors to international investment opportunities [thereby] becoming the financial center of choice for the region.”
One particular initiative that the DCSX is focusing on, is to encourage the listing of the Cuban Government and many of its state-owned companies and projects to Curaçao’s stock exchange. Many suppliers delivering to Cuba operate under a Letter of Credit from international institutions. A listing on the DCSX would enable them to pre-finance this Letter of Credit. Also, because the Cuban Government lacks capital for its public infrastructure projects, secured bonds can be issued through the DCSX to finance these projects. Curaçao is a natural choice because of is historical and financial reputation and geographical location.
In the case of Singapore, half a century ago, in realizing their potential to become a major financial hub in their region, they set forth several goals to sustain long-term capital market growth by restructuring their: regulatory framework; cornerstone institutions; regulations and standards; taxation laws; and market infrastructure and technology. As such, they were able to trigger key catalysts for change to their economy including the modernization of their Government Securities market; the boosting of financing for infrastructure; privatizing state-owned entities; securing mortgages and reforming pensions. Due to the newfound momentum in their economy, they were able to attract major stakeholders in the region by providing tax incentives and enabling access to business opportunities. The result speaks for itself; Singapore has created one of the most thriving capital markets not only in their region, but also in the world over.
With many similar parallels, Curaçao stands in a position to follow in their footsteps with the potential to grow into a regional financial hub with a prosperous capital market. The DCSX is at the budding stage of such an ambitious expedition, but it is on the right track and well on its way to building momentum in the economy in order to achieve this goal.
The recently held Dutch Caribbean Securities Exchange, (DCSX), Seminar was opened by Prime Minister, Eugene Rhuggenaath, who stated that our local Capital Market, if given the right momentum, has the power to “awaken sleeping capital,” and finance Government N.V.’s and future bonds. The Prime Minister acknowledged that the Curaçao Government intends to fully support and utilize the new securities exchange in an effort to inject further capital into the economy. Mr. Rhuggenaath’s opening address to the 185 attendees was followed by a speech from Minister of Economic Affairs, Steven Martina, which highlighted the importance of a well-functioning Capital Market to the overall health of the economy. He stated that the government will start the process of stimulating the DCSX but also appealed to the private sector for their support of this local securities exchange.