Part 2

This is Part 2 of the interview I had last month with Charlie Kirkconnell, Chief Executive Officer, and Hilary McKenzie-Cahill, Vice President of Marketing at Cayman Enterprise City (CEC).

CEC is in the final negotiations in acquiring land to build their city, a city that will be the future home to hundreds of companies that will enjoy the special privileges of being in the Special Economic Zone (SEZ) that excludes them 100% from paying the various taxes and duties that companies have to pay outside the zone. For a list of all the advantages please see Part 1 of the interview.

Charlie Kirkconnell wouldn’t tell me the exact future location of the city despite my pressing except to say it was not in George Town but not too far east and nowhere near the other city that caters for personal health. His clients wanted to be “reasonably close to where the action is”, he said.

He did say the negotiations should be finalised in two months and it made no sense to rent when you can own. The investment will be in excess of $300M over the next 10-15 years and it needed very careful consideration, he added.

CEC now has the critical mass to “pull the trigger” on the first building that will be approximately 40,000 sq. ft. All the buildings will be constructed on a modular design and Charlie said, “As we can accommodate clients in temporary space, we can build the space out building by building.”

When CEC was taken to the Legislative Assembly in 2011 it was passed unanimously including North Side MLA Ezzard Miller who has since been critical of the SEZ bemoaning all the lost revenues to the government from work permit fees, duties, etc. that everyone else coming here to do business has to pay.

Both Charlie and Hilary McKenzie-Cahill countered that with, “You cannot look at it as lost revenue we would have had. It’s additional revenue you wouldn’t have had.”

The purpose of the SEZ is to attract foreign investment and bring new companies to the Cayman Islands that will establish new industries. It is there not to cannibalise the local economy but to add to it. No business in the SEZ can sell to anyone in the Cayman Islands, nor do any business here or compete. They may purchase locally but not sell and they can use local services. No financial service industries are allowed in the zone.

The objective therefore is to increase diversification over what is already here and to help the economy from all the new industries in the zone when there is a meltdown on Cayman’s two major sources of revenue, finance and tourism that happened in 2008 and 2009.

Yes, both Charlie and Hilary said there are sacrifices from fees in revenues that CEC companies don’t have to pay but this is balanced from the indirect revenues like import duties, stamp duty fees, property buying, building, local purchases, freight forwarders, etc. from the new employees who will be working inside the zone. Hopefully, Hilary said, it will equate to more.

The multiplier effect of adding anextra 10,000 persons to the population that would not have been here but for the zone will mean additional work for local businesses and revenue and for these companies to engage extra workers. Cayman needs this right now they agreed.

The Cayman Islands government has never “pumped” any money to keep CEC alive and it operates just over break even. It doesn’t cost the Cayman taxpayer any monies to operate. They both asked me to compare this with government entities like the Cayman Airport Authority, the Port Authority, Cayman Turtle Farm and Cayman Airways.

They said the impact of the SEZ is in excess of $15M at the end of September 2013 when you add in all the indirect revenues from an expanding population making the whole operation “overwhelmingly positive”.

We now take another break and look for Part 3 of my exclusive interview with Charlie Kirkconnell and Hilary McKenzie-Cahill next week here on iNews Cayman.

You can read Part 1 of my interview that was published on February 23 2014 “CEC: What works with a handful of clients won’t work with hundreds” at: http://www.ieyenews.com/wordpress/what-works-with-a-handful-of-clients-wont-work-with-hundreds/