British Virgin Islands: Country and Foreign Investment

British Virgin Islands Geography

British Virgin Islands Population, Language and Culture

The population of the British Virgin Islands is approximately 25,380 (2011 est) and the official language is English. The population consists of a mixture of British, Spanish, Dutch, Amerindian and Caribbean racial types; in the last twenty years immigrants in search of work from other parts of the Caribbean have more than doubled the population. Some relatively minor tensions exists between the newcomers and the 'belongers' who see their relaxed lifestyle threatened. Proposals for tough new immigration laws are controversial.

Historically, the Islands were settled by the Arawak and Carib Indians. In 1493 the islands were discovered by the Spanish, however, the first foreign settlers were Dutch planters. The British controlled the islands from 1666; they were part of the Leeward Islands from 1872 until 1956, since when they have formed a separate territory.

Economic ties have been forged with the US Virgin Islands rather than the West Indies Federation of British Territories.

Tourism is inevitably a dominant feature of the islands' present culture. Visitor numbers for 2010 were 842,947 for 2010. In 2009, an overall increase of 8.6% in arrivals had been recorded (840,000) notwithstanding a drop of 1% in cruise passenger arrivals.

Despite the BVI's status as a British dependent territory (with which the islanders are content) and many British influences, the prevailing cultural influences are more American than British. However, Road Town's picturesque setting and sheltered harbour still offer a glimpse of the easy lifestyle evolved over the last 4 centuries by English, Dutch, French and Spanish adventurers followed by plantation owners and early settlers.

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British Virgin Islands Government

The Islands are a dependent territory of the British Crown, and a member of the Commonwealth. The legal system is based on English Common Law. The Queen of England is the Chief of State who is represented by a Governor appointed by the Crown. The islands are largely self-governing since the 1967 Constitution and to a limited extent rely on UK statutes on international matters. In 2002 the BVI Government said it wanted to increase its establishment and asked for some of the Governor's powers to be transferred over, recognising the BVI's 'constitutional maturity and prudential system of government'. The Chief Minister Ralph T O'Neal was concerned that rules for the conferment of Belonger Status should be brought into line with the granting of nationality under the British Nationality Act, 1993, in order to remove confusion over the granting of passports.

At the end of February 2007, the UK and the BVI government successfully completed negotiations for a new constitution for the islands. Described by Lord Triesman, British Minister responsible for the Overseas Territories, "as an important step forward for the territory," the new constitution will devolve significant new powers to the BVI Government.

The new constitution was approved by the BVI Legislative Council in May 2007. This includes a chapter on fundamental rights, setting out the key human rights that will be protected for all individuals in the territory. In the field of international affairs, groundbreaking provisions will allow for the devolvement of extensive new powers to the BVI Government. The new constitution will also give the BVI Premier greater influence in setting the Cabinet agenda. It also creates a new role of Cabinet Secretary to facilitate the workings of the Cabinet.

The Governor appoints an Executive Council, made up of members of the House of Assembly. The House of Assembly comprises 13 elected members (nine representing district constituencies and four the whole territory), one member appointed by the Governor, a Speaker elected from outside by members of the Council and the Attorney-General as an ex-officio member.

Elections in August 2007 saw a victory by the Virgin Islands Party, with the re-election of Ralph T. O'Neal as Premier. The next election is due to be held in 2011, but more than halfway through the year an exact date has yet to be announced.

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British Virgin Islands Economy and Currency

The currency of the British Virgin Islands has been the United States dollar since 1962, although banks maintain accounts in sterling as well. There are no exchange controls. The two mainstays of the economy are tourism and offshore financial operations. Minor industries include fishing, rum distilling and construction. Exports include fish, rum, sand and gravel, fruits and vegetables.

Tourism accounts for an estimated 45% of GDP. BVI is also an established centre for the charter yacht industry. Agriculture is minimal since there is very little arable land; the islands consist mainly of hills and beaches with the exception of Anegada which is very flat.

The financial services industry in the British Virgin Islands can fairly be described as a runaway success, particularly in recent years. There were 456,146 active companies incorporated in the BVI by the end of the first quarter in 2011, including 521 Limited Partnerships. There were 19,035 new registrations in the first quarter of 2011. There is no doubt that the BVI is an attractive offshore destination, offering stability, high levels of privacy, good reputation, flexible legislation, English language etc. Other centres have all these things also; but the BVI seem to be flavour of the month. The most important offshore activities are trust management, mutual funds and captive insurance. Banking has not been encouraged, as an apparently successful defence against money-laundering.

Minister for Finance Ronnie W. Skelton told assembly members in 2010 that the government had received almost 60% (USD164 million) of its total revenue from the financial services industry in 2009.

GDP growth has been muted in recent years, but GDP per head at USD30,341 in 2009 is one of the highest in the world.

The BVI is an associate member of the Organisation of Eastern Caribbean States (OECS), which is gradually constructing a free trade zone. The members signed an economic agreement on December 29, which will form an Economic Union in the region. The new treaty updates the Treaty of Basseterre, which first entered into force in June 1981, and entered into force on August 1, 2011. It will further remove barriers to trade between national markets in goods, services, movement of capital and labor forces, which will transform the islands into a single financial and economic space. Eleven sectors have been listed in the treaty for joint action. These include civil aviation, agriculture, tourism, education, environmental sustainability, marine, disaster response, and telecommunications.

The OECS includes the islands of Antigua and Barbuda, Dominica, Grenada, St Lucia, St Vincent and the Grenadines, St Kitts and Nevis. Anguilla and the British Virgin Islands (BVI) are associate members; Montserrat is expected to become a full member in September, 2011. The islands, except the BVI, already share a number of institutions including a central bank and a common judiciary.

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British Virgin Islands Entry and Residence

All non-residents, including British citizens, require a passport to enter the BVI, except that Canadian and US citizens need only a birth certificate, certificate of citizenship or voter registration card. However, under the US government's Western Hemisphere Travel Initiative (WHTI), citizens of the United States, Canada and Mexico will also have to present a passport or other accepted document that establishes the bearer's identity and nationality, in order to enter or re-enter the United States by air from within the Western Hemisphere. This has applied to visitors to the Caribbean since January 2008.

Visas are given for up to six months' stay provided that there is a return or onward ticket and evidence of sufficient funds.

In order to work in the BVI, a work permit is needed, except for 'Belongers', naturalised citizens and holders of a certificate of residency. Work permits are issued only when there is no suitable local applicant for the job.

At the time of writing, in order to lease or purchase land, non-Belongers must obtain an Alien Landholding Licence. Applications for a Licence must be accompanied by two personal financial references, one bank reference, two character references, police record, a filing fee of USD200 (per individual) or USD300 (per company) is paid at the time of application. Once the licence has been granted applicants pay an acceptance fee of USD600 per person and USD1000 per company. Licences carry a 2 or 3 year commitment to develop unimproved land.

In December, 2004, the government outlined the details of a new immigration policy framework in a bid to clarify the rules surrounding applications for residence and ‘belonger’ status. Chief Minister Orlando Smith explained that the Board of Immigration would make recommendations in 2005 concerning those who applied for residence status before January 1st 2003 and had lived in the territory continuously for the last twenty years. In June, 2005, 92 of these individuals received residence and belonger certificates.

Approvals for those applying for residency status after January 1st 2003 are limited to no more than 25 persons per year. The government also stressed that in all cases, individuals cannot be away from the BVI for more than 90 days in any calendar year if they want to qualify for residency status.

Smith acknowledged that controlling immigration in the territory represented a “very serious challenge” for the government, and explained that a balance must be struck between welcoming outsiders and protecting the privileges afforded to BVI citizens.

In March 2008, Premier and Minister of Finance Ralph O’Neal announced in his budget speech that comprehensive immigration reform would be a priority in 2008.

"We will amend existing legislation to implement additional control measures. Current legislation will be reviewed to ensure compliance with international laws, human rights and other conventions. As we embark on the reform process, we will ensure citizen participation by conducting regular consultations with representatives of the community, advocacy groups and other private sector organisations," he revealed.

As part of this process, has begun preparations to streamline immigration procedures by creating a "one-stop process" for obtaining entry permits and work permits.

For further information, the Immigration Department can be contacted at:

341 Waterfront Drive,
Ashley Ritter Building,
Road Town,
Tortola,
BVI
Tel: 1-284-494-4399

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British Virgin Islands Business Environment

The BVI have an excellent business infrastructure with good telecommunications; this coupled with the widespread use of the English language and a legal system largely based on English law makes the island a very convenient and effective business base. The very large numbers of offshore companies, trusts, insurers and mutual funds on the islands are supported by a well-developed and diverse professional services sector.

To do business in the BVI (as distinct from establishing an offshore trust or company) a Trade Licence is required from the Trade and Investment Promotion Department. The application form is accompanied by a financial statement, police record, two business references (for the individual or the company applying) and financial details of the proposed business.

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British Virgin Islands Investments by Foreigners

Under the Pioneer Services and Enterprise Ordinance, ten-year tax holidays and import duty exemptions on capital equipment are available for investors into enterprises for which there is a 'special need' in the territory.

Under the Hotel Aid Ordinance, ten- or twenty-year tax holidays and import duty exemptions on building materials and equipment are available.

The Administration is generally supportive of investment into a range of activities, including food processing, tourist-oriented manufacturing, film production, beverage production, yachting services, and most recently, e-commerce.

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