Why Business Owners Are Setting Up Shop in St. Lucia
As part of our Global Webinar Series on Residence and Citizenship Planning, Henley & Partners recently hosted a webinar highlighting updates to the popular St. Lucia Citizenship-by-Investment Program. The esteemed panelist the Hon. Allen Chastanet, Prime Minister of St. Lucia, discussed how well the island nation has managed the fallout from the coronavirus pandemic. Given his experience in dealing with the 9/11 crisis when he was Vice President of Marketing and Sales for Air Jamaica, and navigating the 2008 global financial crisis and its aftermath when he was St. Lucia’s Minister of Tourism – both of which impacted on tourism – and his last four years dealing with the ongoing climate crisis while leading the country, Prime Minister Chastanet was in a good position to identify what was required early on and acted quickly.
Small but agile and perfect for business owners
Being a relatively small island, St. Lucia was able to isolate itself fairly rapidly from the pandemic, and this has bolstered investor confidence – investors are continuing to show a keen interest in the St. Lucia Citizenship-by-Investment Program despite the lockdown. Prime Minister Chastanet attributes this in part to favorable legislation that incentivizes companies to move their headquarters to St. Lucia. The country is moving towards a territorial tax structure and does not tax revenue that is earned outside St. Lucia. According to St. Lucia’s headquarters act, for companies that move their headquarters to St. Lucia and hire at least 10 individuals (from abroad or locals), employees will pay no personal income tax and indefinite corporate tax, and all equipment can be brought into the country duty free. Another drawcard that relates to an unexpected product of the current crisis is that many business owners have realized that they can operate remotely and that there is no need for them and their families to be confined to big cities. St. Lucia’s broad bandwidth and easy air access to the USA and London mean that residents can enjoy global access to the rest of the world while reaping the benefits of a more laid-back lifestyle. St. Lucia is a member of the Commonwealth, and a St. Lucian passport provides visa-free or visa-on-arrival travel to more than 140 destinations including Europe’s Schengen Area, Hong Kong, Singapore, and the UK.
The combination of business-friendly legislation, supporting infrastructure, and St. Lucia’s citizenship-by-investment (CBI) program offering and all the accompanying benefits makes St. Lucia an increasingly attractive option for high-net-worth individuals (HNWIs). Nine companies have already been set up, and since Covid-19 struck, the interest from HNWIs has not slowed. On the contrary, the coronavirus pandemic appears to have sped up demand for alternative residence and citizenship among HNWIs globally, and St. Lucia is attracting a great deal of attention. At Henley & Partners we saw a notable 42% leap in applicants overall in Q1 2020 compared to Q4 2019, while applications for the St. Lucia Citizenship-by-Investment Program were up by an impressive 77%.
An escape from city living
The mounting wave of interest in investment migration programs, and St. Lucia’s in particular, makes perfect sense if one considers FutureMap founder Dr. Parag Khanna’s prediction in the Henley Passport Index Q2 Update that the effects of coronavirus would lead many individuals from all walks of life to reconsider their future options. Dr. Khanna foresaw that as the coronavirus curtain lifted, people would seek to move from poorly governed and ill-prepared places to more proactive countries with greater resilience and better medical care. Now, from developed countries such as the UK and the US, reports are emerging of people leaving cities in search of a quieter life, and we are seeing this play out on a global scale, with investors looking to relocate so that they and their families can live in more peaceful locations with a better quality of life and cleaner air once global mobility has been restored. St. Lucia ticks all of these boxes and more. Across the globe, investors are seeing that by extending their wealth planning and legacy management strategies to include investment migration, they are able to catalyze the transition to new lives in countries of their choice, where they feel more comfortable and secure, and where they envisage a future that is better aligned with their aspirations now and for generations to come.
A winning track record
Things certainly are happening in St. Lucia – the economy has grown every year for the past four years since Prime Minister Chastanet has been at the helm, unemployment has dropped from 25% to 15% and there has been a significant drop in youth unemployment, revenues have increased from XCD 70 million to XCD 100 million per month, and debt to GDP ratios have fallen from the high 60%s to 59%.
In a region that has managed the current crisis extremely well, St. Lucia has been a shining light. By late June there were just 19 Covid-19 cases, with no one hospitalized and no fatalities. During the lockdown, St. Lucia took the opportunity to convert an old hospital to a 90-bed respiratory hospital. It also has a major new world-class, tertiary-level hospital project in the pipeline. This is one of several major projects that were about to commence before the lockdown, and there is therefore significant activity on the ground. Other projects include a two-year USD 200 million project funded by a Taiwanese government loan to triple the airport terminal, resurface the runway, and modernize all navigation equipment, a USD 150 million road rehabilitation project, a USD 100 million water supply upgrade project, a new police HQ, and a project to integrate customs with immigration.
Borders are open
Each of these major capital investments will help to offset losses to the tourism industry caused by the global travel bans that have characterized the first half of the year. St. Lucia officially opened its border on 4 June, and is expecting US travelers to arrive in July, with flights already scheduled from Atlanta, Miami, and New York. It is anticipated that British Airways will resume flights towards the end of July, and St. Lucia is hoping to be included in the UK and Canada’s travel bubble. St. Lucia has received rapid Covid-19 tests and all visitors will be tested on arrival.
Covid-19 Relief Bond option
Many countries are pursuing alternative sources of revenue generation to enable them to respond to Covid-19, and St. Lucia recently added a new Covid-19 Relief Bond option to its CBI program, whereby one can invest a minimum of USD 250,000 in a non-interest–bearing government bond that is held for five years to qualify for citizenship. The holding period increases according to the number of dependents, to a maximum of four dependents. If there are more than four additional dependents, the investment amount rises to USD 300,000 to be held for five years, making this particularly appealing to investors with large families.
Investing in government bonds is one of the four routes to St. Lucian citizenship. The other options are to purchase real estate with a minimum value of USD 300,000 from an approved real estate development that must be held for a minimum of five years, to participate in an approved enterprise project with a minimum contribution of USD 3.5 million plus the creation of at least three permanent jobs, or a joint contribution of USD 6 million (each applicant committing a minimum of USD 1 million) plus the creation of at least six permanent jobs, or the most popular option to make a non-refundable minimum contribution of USD 100,000 to the National Economic Fund (NEF).
A positive outlook
Inflows from the St. Lucia Citizenship-by-Investment Program are placed in an economic fund managed by an independent board and used to build capacity, reduce debt, and make capital investments in St. Lucia. Everything that the country was focused on pre-Covid has become even more relevant now: investment in education, building an e-government platform, simplification of the tax regime, infrastructure investments, modernization of the security force and the judicial system, and broadening the tourism offering. The St. Lucia Citizenship-by-Investment Program is a key source of funding in helping the Government of St. Lucia to facilitate these developments and Prime Minister Chastanet is confident that despite Covid-19, St. Lucia is looking to double its GDP in the next six years.
Investment migration is a win–win solution
Investment migration has proven to be mutually beneficial to global investors and sovereign states. At Henley & Partners, we believe that in the post–Covid-19 environment, just as in the wake of previous disasters such as the 2008 financial crisis and devastating hurricanes in the Caribbean, residence and citizenship programs will represent lifelines both for investors intending to futureproof their families and legacies and for sovereign states in desperate need of alternative revenue streams. Investment migration will act as a hedge against the significant macro-economic volatility that is predicted, creating even more sovereign and societal value across the world. The industry continues to boom despite Covid-19, and St. Lucia has tailored its options, making it extremely competitive and desirable, particularly to investors looking to relocate their families and businesses to safer shores.