Crisis? What Crisis?!
In March 2013, Cyprus had its own bitter Lehman moment. (With deliberate reference to the
novel by Lawrence Durrell, written about the island). Like the crisis of 2008, the scars run
deep, the legacy issues have had to be addressed and the aftershocks have continued to be
felt. Yet while Cyprus may have been the guinea pig for the “bail-in” process, similar tremors
have been felt in many jurisdictions around the globe.
The start of the year is traditionally an occasion in which to see events in perspective, and to put some shape and fragile certainty on the months that stretch out to the end of the year ahead. With that in mind, it is appropriate to say that the worst is behind us for Cyprus and indeed for the many other jurisdictions that have taken steps, through choice or otherwise, to improve their regulation, legal framework and transparency of reporting.
If you have lemons, make lemonade!
Cyprus is fortunate in having considerable depth in its various financial services and therefore the pressure undoubtedly placed upon it last March has been, in substantial part, withstood. Service providers, including Woodbrook Group Corporate Service, have worked to perfect what amounted to an already high level of service and have stayed focused on their clients’ needs.
2013 saw pressure being brought to bear on UK protectorates and the extension of accounting requirements (or the enforcement of these) in many of the “popular” jurisdictions. It also saw the media – suddenly, and not without vitriol – admonishing Ireland for being (legitimately) used by several household name companies. Not wishing to stir the pot, I will spare their names being repeated here!
Being sanguine about governments’ need for additional finances, it is unrealistic to expect the assault on jurisdictions, particularly those offering lower taxes, to do anything but continue. And, as those of us who have been in the industry for more than a few years know, claiming the rules are neither fair, nor are being evenly applied, will earn no sympathy. The solution for the industry is thankfully to do what they do best – to identify their clients’ needs and satisfy them, to understand the ramifications of transactions rather than simply execute them, to serve clients proactively rather than be passive, to earn fees and expand services provided, rather than simply charge for them.
Many jurisdictions have undergone a programme of expanding their network of double tax treaties. These are important agreements for you and your clients to be aware of and of the disclosure requirements that are embodied in the OECD model be adopted for these treaties.
Commentators for 2014 are generally supportive of continuing recovery for the world economy, with some concerns over the Emerging Markets. The Davos summit has recently endorsed this view but also noted some fragility. The developed economies will continue to recover and greater use of technology will be part of this. Where previously the migration of business was towards countries offering cheaper labour, the wage differential has reduced and the ability to replace labour with technology, including robotics and automation, has increased.
“A tree is known by its fruit”
As a service provider, Woodbrook Group Corporate Service is part of an industry that, above all, involves the deployment of human capital. Ensuring that this is best utilised, and adequately trained and resourced, is vital. The biggest mistake to make would be to assume that because our business has survived, we have “got it right”. 2013 should be taken as an indication of the rate of change and greater complexity that we will face from now on. To this can be added price pressures as competition increases. More than ever, therefore, one has to review all systems and procedures and ensure that they are optimised.
The process of “Kaizen” – Japanese for “improvement” or “change for the best” – goes beyond simple productivity improvement and is about being bold enough to do things differently and cut out redundant processes, on a daily basis.
Business with a twist – new seeds to plant
Some further thoughts:-
- To grow the business, ensure that your website and other communication channels are being maximised.
- If processes can be handled remotely or on the internet then migrate them there (as long as security is not compromised).
- Is there pressure on your traditional markets? Should you be focusing on new ones? Cyprus, for example, has traditionally been heavily reliant on clients from Russia and the FSU. That business is valuable, but needs to be augmented.
- Assisting clients means offering international services, so developing your network to facilitate these is another way to both grow and protect your clients and your business.
- Your ability to provide expertise in different locations, and in different areas that impact a client’s business, is increasingly important – either build your collaborative network or consider recruiting staff that not only provide the additional manpower you need, but also enhance your knowledge base.
Having collaborated internationally for many years, we have learnt that for collaboration to work, it should be mutually beneficial rather than simply a “contract for service”. They need to be with like-minded parties (those with similar attitude, values and competence) as anything else simply will not work long-term.
One for the road
To provide the best services, we need to have professional staff and proper procedures to enable thorough, secure and timely handling, an openness in our dealings and those other key qualities that cannot be priced, which demonstrate integrity and respect confidentiality. These features, while always essential, have become harder to attain in the context of greater rules and regulation. All these elements need to be optimised to deliver value to the client and a good place to start would be remembering the words of Pablo Picasso: “Art is the elimination of the unnecessary.”