BROADENING THE ECONOMIC BASE
The financial services industry will soon rank as a major pillar of Aruba’s economy, alongside tourism, oil refining and international trade

Asmall island of approximately 69 square miles, located in the south-west corner of the Caribbean, with a population of more than 90,000 inhabitants and a per capita income of approximately US$22,000, Aruba is vigorously strengthening its reputation as a financial center in the region.

Being an autonomous part of the Kingdom of the Netherlands, Aruba is associated with the European Union and has the beneficial status of an Overseas Country and Territory. Having links with the European Community, and being located between North and South America, it is expected that its financial services industry will soon rank as a major pillar of the national economy, alongside tourism, oil refining and international trade. With the arrival of more than one million visitors on an annual basis, Aruba is considered to be a leader and a top tourism destination in the region.

The Aruban administration is firmly pro-free enterprise. Private, rather than public investment, has been the main engine of growth, while promotion of foreign investment is an integral part of government’s economic policy. As additional assets, entrepreneurs enjoy the guarantees of political, financial and juridical stability, as Aruba has a democratic parliamentary system, while the Highest Court of Appeal is located in the Netherlands.
The current administration has a social democratic signature and has been exactly one year in office. Its mandate is to strengthen the economy after the events of September 11, 2001 and to promote sustainable growth by means of diversifying Aruba’s tourism-related economy. The fiscal deficit for 2003 is projected to be less than three percent of GDP and the public debt ratio is approximately 35 percent of GDP.

The success of the financial sector—as Aruba is projected to become an increasingly popular choice for trusts and investment funds—will highlight the island’s progress in moving away from a dependency mainly on tourism. It has already become home to some 4,000 active offshore companies and 600 low tax entities.
The Aruban administration and the monetary authorities are working closely with global financial regulatory agencies, passing new anti-money laundering legislation, to improve investment conditions and to enhance the island’s reputation. As a result, last year, Aruba was ready to sign an agreement with the OECD, with the
purpose of complying with international regulations on harmful tax competition. It has also received praise from the IMF for “very substantial progress” in addressing regulatory shortcomings.

NILO SWAEN Minister of Finance & Economic Affairs

The Minister of Finance and Economic Affairs, Nilo Swaen, says there is a firm commitment towards transparency, which will enable Aruba to build a platform for long-term growth. “We want to promote Aruba as a place of financial integrity and a place where supervision is in accordance with international rules. We only aim at trustworthy entrepreneurs to invest here,” he says.
Mr. Swaen adds that the government is aggressively working on a new fiscal regime, with the objective of stimulating investment in Aruba, especially in the financial sector. “Together with a solid regulatory environment, it will secure the long-term prosperity of the industry and eventually the island economy.” Captive insurance, where a subsidiary of a company is formed to insure and/or to re-insure the risks of its parent, has a high priority. At the moment, there are at least two captives awaiting the introduction of the new legislation per January 1, 2003.
U.S. investors will play a key role, Mr. Swaen predicts. “Closer links with Latin America are also part of Aruba’s strategy to attract investors. We are setting the framework for good business and a profitable future for the country in the years to come,” he says.

RAMON LEE Minister of Labor, Culture & Sport

“An important aspect of the new fiscal regime is the attempt to differentiate Aruba from its competitors, as the island faces stiff competition from neighboring islands promoting financial services as well.”
According to Peter Palmen, High Commissioner of the Financial Center, tourism and financial services can blend comfortably together. “Although the conception is not there yet,” he says, “this will grow automatically.”
Besides financial services and international trade, there are strong ambitions to develop Aruba as a center for multimedia, recording business and film production, plus aircraft leasing and shipping. The main purpose of developing these new areas is to diversify the economy and to enhance the local educational level. The only university that the island counts is therefore dynamically expanding its curriculum to respond to the new socio-economic needs. The knowledge economy is very high graded by the administration.

Essential services, such as telecommunications and the postal service—due to be privatized in the coming year—will be upgraded to comply with the latest state of the art technology.
Minister Swaen stresses, that in spite of the strategy of this administration to broaden the economic base of the island, tourism will continue to be the main economic activity in the near future. Nevertheless is he very much aware of the fact that a stable environment for investment will open the doors to new opportunities.
He pledges that he will attain his objectives of greater job security and a better future for all Arubans, within the four-year-term of the administration.