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Turks & Caicos - Economy

The Turks and Caicos Islands’ economy is based mainly on tourism, offshore financial services, and fishing. The gross domestic product (GDP) increased 11.6% from US$ 21,742 in 2006 to US$ 24,273 per capita in 2008 before falling by 7.7% to US$ 22,412. Meanwhile, the territory’s negative balance of trade increased from US$ 480 million in 2006 to US$ 566.5 million in 2008. Both factors reflect a slight deterioration in the economic situation of the Turks and Caicos Islands partially due to the global recession which affected tourism and trade.

Unemployment decreased from 31.1% in 2006 to 26.1% in 2008. The demand for labor in the construction and service industry was met by an influx of non-nationals into the labor force, so that by 2008, 73.7% of the 21,493 employed persons were non-nationals, and most of the employed are in the private sector. The public sector employed 13.3% of the working population in 2008.

Until recent decades, the Turks Islanders found work in the various operations of salt making. There were 230 acres of salt ponds on Grand Turk. As the raison d'etre of the Turks and Caicos Islands is the production of salt and the very life of the colony depended upon this industry, it may be considered fitting to give a brief account of its principal operations.

Salt ponds varied in size and are sometimes as large as five acres, while the pans were from one quarter of an acre to an acre in extent. The sea passed through sluices, entering by wide canals into the common storage reservoirs and then into the private reservoirs. The water now went to the "weak or No. 1 pond" until the salometer indicates 60. In this pond a great deal of the impurities were precipitated, and the water turned a saffron hue. By the time the brine had reached the strength of 60, the water had been reduced in quantity more than one half of the original sea water, and it was now passed into the "strong or No. 2 ponds."

The brine stayed in this latter pond for about twenty days, until the strength of the pickle had increased to 90. The pickle was now pink in color and but one-sixth part of the original sea water. Having reached a strength of 90, it was turned into the "making pans," where, after ten to fifteen days, the salt commenced to granulate around the margins and bottoms of the pond. After twenty to twenty-five days more the salt was ready to be raked.

When all the salt had crystallized in the pans, it was gathered by men who first use toothed rakes for the separation of the crystals and afterwards wooden rakes to deposit the salt in small piles.

Under average conditions the salt-pond proprietors could count upon a fair return from their holdings. But when the season was rainy vast quantities of the forming salt in the ponds were destroyed, and a large percentage of the deposits where the product was stored in enormous heaps literally wasted away.

Despite the fact that some of the Caicos Islands have decided agricultural possibilities, the majority of the inhabitants make their living off the sea. At one time the Caicos Bank was famed for the quantity and the quality of sponges that grew in its shallow waters. Owing to a shortsighted policy on the part of the government, which allowed these marine growths to be fished at all seasons, they have practically become exhausted; whereas in 1901 sponges were shipped to the value of over $44,500, exports of sponges in 1916 amounted to only one-ninth as much.

Turks & Caicos is quickly becoming a leading international investment center for the offshore investor. The islands are a “zero tax” jurisdiction and therefore have no taxes on income, capitol gains, corporate profits, inheritance or estates.

The TCI offer a well-defined regulatory framework within which to operate a comprehensive range of financial activities including banking, insurance, trusts, mutual funds, investment dealing companies and partnerships to the international business community. TCI is home to reputable, international financial services brands such as Scotiabank, CIBC and Royal Bank of Canada along with many other financial service providers.

The insurance market is an important sector and a growth area in the TCI financial services industry. The TCI has developed a niche market for captive insurance companies known as “credit life” or “producer owned reinsurance companies” (PORCS). The TCI insurance legislation provides for these low cost reinsurance companies to be licensed and used by direct writers that are regulated by the regulatory authorities in the United States.

Beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion. The exchange of notes and technical protocol for the sharing of beneficial ownership information came into force on 10 April 2016. The arrangement requires establishing and maintaining a central register, or equivalent system, containing accurate and current information on beneficial ownership for corporate and legal entities incorporated in their jurisdictions. It also requires each jurisdiction to ensure effective and unrestricted access to this information to the other jurisdiction’s law enforcement and tax authorities.

Manufacturing is an untapped frontier of enterprise in the TCI. An evolution has begun in recent times with a gradual shift towards this type of industry fed by high demand through the visiting tourists and the close proximity to major markets. The market for products made locally has grown in tandem with the vast economic and tourism development that has occurred in the islands.

The tourism sector, which brings over 1 million visitors a year, provides a regular demand for local goods, from food and drink to souvenirs, from construction materials to items of furniture and interior design. The favorable tax laws in TCI provide significant benefits to TCI based light manufacturing. TCI Government is beginning to explore the introduction of green technologies to the islands and wishes to encourage private sector developers to pursue manufacturing projects in this field.

The many islands of the Turks and Caicos offer untapped potential as it relates to arable land and bountiful oceans. Indeed, areas such as agro-industries, food processing and Mariculture have been identified as attractive investment fields. Demand for local farm produce and fish by the thriving tourism industry presently well exceeds supply.

The Caicos Islands in particular offer fertile soil and an ideal climate. These facts clearly indicate that agricultural investment could produce investment returns in the short and longer term. Significant amounts of agricultural land exist on North and Middle Caicos and could support new farms producing higher value added crops.

Considering the high cost of fin and shell fish, the potential for the establishment of aquaculture farms is tremendous. Queen Conch (Strombus gigas) from the TCI Conch Farm has already proven its worth on the US Market. Spiny Lobster (Panilurus argus) and Tilapia (Oreochromis mossambicus) also have excellent environmental conditions for development.

The TCI can boast state-of-the-art technology within the country and has been a location for major national and international technological development. Telecommunication services across the chain of islands are of advanced standards, with telephone, internet and mobile technology (4G) offered by respectable providers such as LIME, Digicel and Islandcom. Already a mature and well established industry, telecommunications is poised for diversification and competition. WIV offers digital broadcasting services.

The proximity of the TCI to the United States and Canada, paired with the privacy and anonymity that people are able to enjoy here, have enabled the islands to grow as an oasis for those desiring to have a second/third home. Inspired by the beauty of the country, the friendliness of its people and the ease of accessibility, TCI have seen significant development of condo-resorts, hotels and private homes on a very high quality level. Recent increases in occupancy have already led to confirmed investments in the range of 500- 750m USD over the next few years from international developers. Expansion projects are also under way for on-island businesses such as Amanyara and Beaches Resort Villages and Spa. This will be accompanied by growing secondary markets such as retail, food and beverage and other services industries.

The potential for agricultural development in the Turks and Caicos Islands is great. The soil type and climate are conducive for animal production as well as the cultivation of perennial and cash crops on some of the islands. North and Middle Caicos in particular have the potential to support both livestock and crop production. Soil composition, vegetation density, and fresh water availability among other factors make North and Middle Caicos more suitable for agriculture in the TCI.

The fertile lands of North and Middle Caicos are virtually untouched and are potentially prime for crop and livestock production. Maiden, fertile soils support rapid crop growth, which is a plus for crops. Rapid growth minimises the use of insecticides since pests have less time to become established.

Land availability affords another crucial advantage of establishing local pastures to grow fodder for farm animals. Though generally alkaline, the soil type and arid climate is conducive for the growth of many grasses, including Kochia Scoparia, Elephant Grass (pennistum purpureum), Calliandra calothyrsus, and Guinea Grass (Panicum maximum).

The Turks and Caicos Islands has the advantage of having a very low prevalence of some economic phytosanitary pests; and in most cases is free from the deleterious insect pests and molluscs. Low pest prevalence means that farmers escape the exorbitant cost of insecticides, manpower for chemical spraying, and cost of equipment to dispense insecticides. Consequently, production cost of both livestock and crops is greatly reduced.

Over 90 percent of the food consumed in the TCI is imported. Most come from large commercial farms that rely heavily of the use of chemicals such as fertilisers and insecticides for crops and growth hormones and antibiotics for livestock. Many consumers understand the serious health implications of consuming such foods and therefore crave for organically produced foods. There is a great potential for the cultivation of organic crops here that should be exploited.

The inclement weather that besets us annually has the potential to cripple sea transportation, thereby resulting in severe food shortage on the island. Such threat can be mitigated by a needed dynamic shift towards food security in the TCI.

Agriculture development in the TCI would have obvious spin off such as revenue for the government, increased incomes for farmers/businesses, and jobs for many residents.

The country’s close proximity to the United States of America is also a plus to agriculture development. In relation to trade accessibility (export to the US), the country TCI would enjoy a significant competitive edge, since fresh produce can be transported to the US within a shorter timeframe. This phenomenon reduces transportation cost and enables consumers to enjoy farm fresh produce. The potential for niche markets are available in such circumstances.

Considering the high cost of fin and shell fish, the potential for the establishment of aquaculture farms is tremendous. Queen Conch (Strombus gigas) from the TCI Conch Farm has already proven its worth on the US Market. Spiny Lobster (Panilurus argus) and Tilapia (Oreochromis mossambicus) also have excellent environmental conditions for development.