Cayman Islands. A. Definitions and sources of data

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1 Cayman Islands A. Definitions and sources of data Similar to other Caribbean Island states, the Cayman Islands is renowned for its financial industry and tourism. Although it has been tightening up its financial regulations, the country is still well respected for its financial services. Since the beginning of 2002, all banks are legally obliged to be physically present on the Cayman Islands. Furthermore, banks must abide by record-keeping laws. By creating stricter rules, the Cayman Islands try to improve its reputation. No data on foreign direct investment (FDI) are collected by the Government. The Cayman Islands Monetary Authority is, amongst some other issues, responsible for processing applications for banks, and bank and trust company licenses, insurance companies, insurance managers, brokers, agents or sub-agents and also for the supervision and regulation of mutual funds and mutual fund administrators. The Government has introduced incentives to encourage the setting up of local industries. The most important concession is that customs duty may be waived in full or in part in accordance with the following guidelines: Industries catering to the export market, with an investment exceeding CI$50,000 and employing at least four Caymanians for a minimum period of five years, may be granted full waiver of customs import duty on building materials and equipment machinery and tools of trade. Materials for use in the manufacturing process may also be granted waiver of import duty. Industries providing for the local market with an investment exceeding CI$25,000 and employing at least four Caymanians for a minimum period of three years may be granted waiver of customs import duty on building materials and equipment, machinery and tools of trade. Materials for use in the manufacturing process may also be granted waiver of import duty. A company not requiring a license to operate under the Local Companies (Control) Law, investing a sum of at least CI$10,000 in a new industry and employing at least two Caymanians for a minimum period of three years, may also be entitled to import duty concessions. The Cayman Islands is an associate member state of the Caribbean Community Common Market (CARICOM).

2 B. Statistics on FDI and the operations of TNCs

3 Table 1. Summary of FDI Variable Inward Outward 1. FDI flows, (annual average) FDI flows as a percentage of GFCF, (annual average) FDI stock, FDI stock as a percentage of GDP, Sources : Based on tables 3 and 4 and UNCTAD, FDI/TNC database. Note: Data for 2003 are estimates.

4 Table 3. FDI flows, by type of investment, Year Equity Inward investment Intracompany Reinvested earnings loans Total Equity Outward investment Intracompany Reinvested earnings loans Total Sources: UNCTAD, FDI/TNC database. FDI inflows were estimated based on information from the Organisation for Economic Co-operation and Development, Development Assistance Committee, International Development Statistics On-line Databases, February 2003 and data reported by partner countries for and UNCTAD estimates. FDI outflows are UNCTAD estimates.

5 Table 4. FDI stock, by type of investment, Year Equity Inward investment Intracompany Reinvested earnings loans Total Equity Outward investment Intracompany Reinvested earnings loans Total Sources: UNCTAD, FDI/TNC database. Notes: Inward stock is an accumulation of inflows since Outward stock is an accumulation of outflows since 1980.

6 Table 6. FDI flows in the host economy, by geographical origin, Economy Belgium / Luxembourg Colombia France Hong Kong, China Japan Malaysia Portugal Republic of Korea Note: Data are based on information reported by the economies listed above. Table 9. FDI flows abroad, by geographical destination, Economy Belgium / Luxembourg Bolivia Brazil Bulgaria Chile China Colombia Costa Rica Croatia Czech Republic Dominican Republic Ecuador Estonia France Hong Kong, China India Indonesia Israel Japan Kazakhstan Lithuania Malaysia Mexico Mongolia Peru Philippines Republic of Korea Singapore Sweden TFYR of Macedonia Thailand Turkey Venezuela Viet Nam Notes: Data are based on information reported by the economies listed above. Data for Indonesia, Israel, Mongolia, Republic of Korea and Turkey are on an approval basis.

7 Table 12. FDI stock in the host economy, by geographical origin, Economy Canada Colombia France Germany Hong Kong, China Japan Malaysia Republic of Korea United Kingdom Note: Data are based on information reported by the economies listed above. Table 15. FDI stock abroad, by geographical destination, Economy Brazil Canada Chile China Colombia Croatia Czech Republic Estonia France Germany Hong Kong, China Indonesia Japan Kazakhstan Latvia Malaysia Mongolia Portugal Republic of Korea Thailand Venezuela Viet Nam Notes: Data are based on information reported by the economies listed above. Data for Indonesia, Malaysia, Mongolia and Republic of Korea are on an approval basis.

8 Table 21. The number of foreign affiliates of home-based TNCs, by geographical location abroad, Economy Armenia China Germany India Indonesia Malaysia Republic of Korea Notes: Data are based on information reported by the economies listed above. Data for China, India, Indonesia, Malaysia and Republic of Korea are on an approval basis. Table 23. The number of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Republic of Korea Note: Data are based on information reported by the economies listed above.

9 Tables 28,33,43. Assets, employment and sales of foreign affiliates of Cayman Islands TNCs in Germany, (Millions of dollars and thousands of employees) Table no. Variable Assets Employees Sales Note: Data are based on information reported by Germany. Tables 30,35,45. Assets, employment and sales of German TNCs in the Cayman Islands, (Millions of dollars and thousands of employees) Table no. Variable Assets Employees Sales Note: Data are based on information reported by Germany.

10 Table 88. Largest affiliates of foreign TNCs in the host economy, 2002 (Millions of dollars and number) Company Home economy Industry Sales Employees A. Industrial Arabian Oil Co., (Cayman) Ltd. Japan Petroleum 398 a B. Tertiary Cable & Wireless United Kingdom Telecommunications Mcalpine Ltd. United Kingdom Construction Red Sail Cayman Ltd United States Trade Coutts Scotland Other business services.. 78 Caribbean Mercantile Ltd. United States Hotels.. 75 Royal Bank Of Canada Trust Company United Kingdom Other business services.. 35 Gm International Sales Ltd United States Automotive trade and repair.. 20 Owens-Corning United States Other business services.... Hertz United States Other business services.... World Trade And Marketing Ltd United States Other business services.... Archer Daniels Midland Int. SA United States Other business services.... Bay Ridge Enterprise Ltd United States Other business services.... C. Finance and Insurance Assets Employees Banca Unione di Credito Switzerland Finance 436 a.. Banco Safra Brazil Finance 224 b.. Trade & Commerce Bank Argentina Finance 173 b 19 b BFC Bank Malaysia Finance 43 c 2 c Cibc Bank & Trust Company Canada Finance Bank Of Butterfield International Bermuda Finance Barclays Bank Plc United Kingdom Finance UBS Switzerland Finance.. 80 Ansbacher United Kingdom Insurance.. 76 Hsbc Financial Services United Kingdom Finance.. 50 Bank Of Bermuda Bermuda Finance.. 10 Coala Insurance Co. Ltd. United States Insurance.... Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Kaigai Shinshutsu Kigyo Soran (Tokyo: Toyokeizai and Dun and Bradstreet ltd., 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003); and information from ECLAC. a December b December c March 2001.

11 C. Legal framework for FDI I. National Framework Banks & Trust Companies Law 1995 Source: 1 March 2004 Companies Law 1995 Local Companies (Control) Law 1995 Stock Exchange Company Law 1996 Trade and Business Licensing Law (1995 Revision) Insurance Law 1979 (as amended) Mutual Fund Law 1993 Mutual Fund Law 1996 Registration of Merchant Ships Law 1991 Special Trust (Alternative Regime) Law 1997 Trust (Foreign Element) Law 1997 The Banks and Trust Companies Law 1995 Trust Law (1996 Revision) Securities Investment Business Law 2001, (14 August effective 2003) Fraudulent Dispositions Law 1989 Proceeds of Criminal Conduct (Amendment) (Foreign Offences) Law 1999, strengthened in 2000

12 II. International framework 1. Multilateral and regional instruments Cayman Islands is a party to the following multilateral and regional instruments: General Agreement on Trade in Services 1994, (effective 1 January, 1995), Fourth Protocol to the General Agreement on Trade in Services 15 February 1997, Fifth Protocol to the General Agreement on Trade in Services 12 December 1997 The ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, adopted 16 November 1977 Associate member of The Caribbean Community and Common Market (CARICOM ) established by the Treaty of Chaguaramas 1973

13 D. Sources of information Official 1. Cayman Islands Monetary Authority: Secondary 1. Anonymous, Cayman Islands, International Financial Law Review, 1 September 2003, p Dowling, Kevin, Going offshore: the Cayman Islands, The CPA Journal, July 1998, vol. 68, No. 7, pp Ensor, Benjamin, Why go offshore?, Global Investor, February 1996, pp Financial Times, Cayman Islands: Financial Times survey, Financial Times, 16 July 2001, pp. I-IV. 5. Foster, Angus J. Elliot, Cayman Islands: civil procedure rules for the grand court, International Commercial Litigation, February 1996, p Roberts, Sally, Still hot, Cayman Islands nears the 500 milestone, Business Insurance, Chicago: 12 April 1999, Vol. 33, Iss. 15, pp Roberts, Susan M., Small place, big money: the Cayman Islands and the international financial system, Economic Geography, vol. 71, No. 3, July 1995, pp