Government’s decision to reduce the corporate tax rate and allow residents to open foreign exchange accounts should augur well for the local investment climate.
This assessment has come from officials of the mutual fund investment firm Fortress Fund Managers, which has also pointed to the need for residents to better plan for their retirement.
Speaking with journalists during one of the company’s Lunch and Learn sessions at its Bridgetown office to discuss the second quarter performance, Investment Director Roger Cave said there were already signs of improvement in investor confidence.
“Certainly, the reduction in corporation tax is going to be one that should be positive for earnings locally. There have obviously been increases in a number of direct taxes and that I think is hurting consumers, but generally the investor confidence is coming back,” said Cave.
He also pointed out that the local debt restructuring, which was completed last year and has so far resulted in an upgrade for Barbados by ratings agency Moody’s, was a positive sign.
However, pointing to ongoing discussions regarding the restructuring of the external US-dollar debt, Cave said he was hoping that would wind up soon so that investor confidence could get a further boost and lead to “more and more activity” in the local economy.
In its quarterly report for the period ending June 30, 2019, Fortress officials said more options for those with independent access to foreign currency can allow a more robust ecosystem to develop for the benefit of all.
“Over time we think it will prove useful for individuals and companies to have the ability to act in foreign currencies where appropriate, to invest abroad or grow their businesses,” said Cave, while describing the change in the foreign exchange regime as “a very positive thing” that should help to further develop the local capital market.
In relation to retirement savings, Cave said given that more Barbadians were living longer it was important that they put monies aside for their retirement.
“For sure, funding one’s retirement is going to be a requirement for all of us and therefore we can only do so if we start saving earlier and continuously. So pension is an extremely important part of financial security of our citizens going forward,” he warned.
However, Cave said he was still hoping that Government would reverse a 2015 decision to remove tax allowances for retirement savings plans, describing it as “an anomaly” in the pension taxation.
Back in April the company had announced that after two years it was again accepting lump sum investments in its flagship investment instrument – the Caribbean Growth Fund.
Cave suggested that the move, which has a limit of up to $250,000 per investor, per year, was as a result of the diminution of liquidity in the fund over time given that the excess cash was invested.
“So now there is a possibility for us to take lump sum investments again,” he said.
The Fortress boss said since the move there has been a “very positive” response.
“A number of our existing shareholders have taken advantage of the opportunity to increase their investments, and a number of new shareholders have also joined the fund,” reported Cave.
During the session the mutual fund officials also expressed a need for more awareness among residents on the importance of investment, stating that companies and the education system could do more in this regard.