The Banking industry in Seychelles

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The Banking industry in Seychelles

Post  Sirop14 on Fri Jun 09, 2017 11:05 am

The Banking industry in Seychelles

09-June-2017
Seychelles is organising its first Financial Services Industry Day today Friday June 9.
The Financial Services Industry Day (FSID) is being organised to raise awareness and educate the public on the financial services sectors in Seychelles, and it is bringing together all financial services in the country.
http://www.nation.sc/article.html?id=254427

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Re: The Banking industry in Seychelles

Post  Sirop14 on Mon Jul 24, 2017 9:14 pm

SCB has the vision of becoming one of the leading commercial banks in Seychelles
http://www.nation.sc/article.html?id=254970

2016: A profitable year for Seychelles Commercial Bank
http://www.nation.sc/article.html?id=254973

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Finance minister visits Seychelles Commercial Bank

Post  Sirop14 on Fri Aug 18, 2017 6:53 pm

Finance minister visits Seychelles Commercial Bank

18-August-2017

As a continuation of his familiarisation visits to all financial institutions in the country, the Minister for Finance, Trade and Economic Planning Dr Peter Larose visited the two Victoria branches of the Seychelles Commercial Bank (SCB) yesterday.
http://www.nation.sc/article.html?id=255299

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Re: The Banking industry in Seychelles

Post  Sirop14 on Mon Aug 21, 2017 11:07 pm

Seychelles Credit Union (SCU) 47th Annual General Meeting

http://www.nation.sc/article.html?id=255338

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Re: The Banking industry in Seychelles

Post  Sirop14 on Tue Sep 05, 2017 7:42 am

Monday 4 September, 2017
Big Interview with Suketu Patel, Chairman of Financial Services Authority
"Banks have to be more business-friendly"
Suketu Patel, a partner in Pool and Patel Chartered Accountants firm and newly-appointed chairman of the FSA, takes the view that banks, including the public ones, are too conservative in their attitude to lending. Young entrepreneurs find it difficult to meet the cost of borrowing and the rate at which loans have to be repaid, he says. He also believes the education system is failing to meet the economic demands of the country.
by R. Meetarbhan
-What are the mains constraints facing businesses today?
In any business, you need a number of factors to make it succeed. First of all, you need a market to sell. Then there is labour and land. Both are constraints. Capital, subject to credit however, is not a problem at the moment because foreign exchange is available. The major constraints are the stability and certainty factors. That is where the big problem lies.
There are always talks of changes in taxation rules. If you look at the number of changes brought within a short span of time with respect to business, it is too much; Progressive Income Tax, the 13th month salary, etc. We also keep talking about changes in Labour laws. Some balance is required because they are very much in favour of employees at the moment.
The problem in Seychelles is that either we do knee jerking and apply a decision instantly because it sounds good politically or else we drag along and hope it will go away.
We need to be more careful in our analysis of the effects of the changes. For example, the effects of the 13th month salary, we are seeing the effect only now, contributing to the slide of the rupee.
-But the slide of the rupee is mainly due to loosening of the monetary policy by the Central Bank.
There are many reasons that affect the value of the rupee. There are things that we can control and others that we cannot. It depends on Government to provide confidence to investors so that they invest. Otherwise, people hold back from entering into new ventures and do not create wealth nor jobs.
-Do you consider bureaucracy as one of the factors slowing down business?
Well, if you see the ratio of civil servants to people who are working in the private sector, it speaks for itself. To run a business, you should not have to make rounds, fill forms and make returns which sometimes you feel are pointless. We need to have certain thresholds that eliminate the reporting requirements for small businesses in terms of taxation, filing, or Companies Act. Our focus needs to be on how to run our business. We cannot spend 25% of our time because we are taken up by red tapeism.
-Do you feel delivery of permits and clearances take too long?
I believe so, though, with the approach of President Faure, things are getting easier. He has appointed a number of private sector operators, including myself, on a number of boards. The idea is to bring in private sector expertise into management of public authorities. The problem is not about getting the licenses. It is more about what happens afterwards. Businesses need a stable environment to operate in.
-Do you believe there is too much of state control over business operations in Seychelles?
I should say that, when we compare with previous years, the tendency is towards less control. You can see many side-street businesses growing up now. Fixing cars, selling vegetables, etc. The Seychellois is now moving into that. I am very pleased to see this evolution and this is where licensing has to be more flexible. These activities generate wealth.
We need to strive towards import substitution. For the moment, when we talk about businesses, we talk mostly of imports and retail. We do not realise how much money is going out of the country. A lot of the goods imported in our shops is really useless second rate stuff...
-...which contributes to the balance of payments deficit. Which indicator worries you most: GDP growth, unemployment rate, Consumer Price Index or Balance of Trade?
It works all together. It is not one or the other. Our GDP is very high but we do not ask how much of the GDP is going straight out. Then despite the GDP being high, why do we have poverty in Seychelles? We have to ask ourselves how much of the GDP goes out in imports and how much of it percolates down to all the strata of our community.
As much as we can we should replace foreign imports with domestic production and become self sufficient in terms of food, meat, fish. How can we have hotels importing papayas and bananas!
-Agriculture is at best stalling and at worst regressing. Why?
The answer lies in the type of education we provide to our youths. They are obliged to go to school up to 16 years and when they come out they do not find jobs that suit them. Everybody does O' Levels or attempts to do O' Levels. These young people will not accept to go on traditional farms as we know them or on construction sites to work.
-But a reform is under way to channel more pupils towards vocational training.
Yes, we need to make it happen. Despite the impression given to the contrary, Seychellois are very clever and want to work. But generally they like to be self-employed. The education system should empower them to run their own businesses.
In 1976, Seychelles was self sufficient in pork and chicken. Today we import such things from Brasil, often products of dubious quality.
-In summary, can we say that there was poor planning in the past?
I would think so. We have to think long term in Seychelles.
-FDI is on the decline. What can be done to correct the problem?
On its own FDI means nothing. Suppose an investor brings US$100 million to build a hotel. How much will stay here?
-At least the hotel would create jobs.
For whom?
-Are you implying FDI is not a vital source of growth?
It is, but it depends in which area and what residue remains in the country. Consider the construction costs of a hotel. 55% is material, 30% is labour - most of them being expatriates - and 15% only for the rest. Yes owners of lorries and taxis get some revenue, but what are we giving up in exchange? Land, and we do not have much of that. We are focusing too much on tourism. We are becoming addicted to tourism. Imagine what can happen to us as a society if there is a significant downturn in tourism tomorrow.
-The country should diversify its economy into what sectors?
The sea. There are long-term prospects in the Blue economy. We need to revive the stock, add value to our resources. Most of the fish products are manufactured in international trade zones which bring hardly anything to us. Those companies are not subject to any taxes, they employ mostly foreigners and are depleting our fish stock.
-I go back to education. We can teach our young how to do fish farming by using modern technology.
We are not getting full value for what is taken out of our seas by foreign companies. Let us develop our own fishing industry.
-Diversification into financial services once appeared viable. Today the situation is bleak in that sector.
Yes, but it is not our doing. It is an international phenomenon. The Organisation for Economic Co-operation and Development (OECD) is applying pressure on the offshore industry in general because there is too much erosion of their tax base. The idea now is that taxation should be based on where the value is added rather than where the company is incorporated. We signed the treaty and have to comply.
-Less and less companies are being incorporated in our offshore sector.
For sure. There are two reasons for that. One is the time it is taking to amend our laws. For a long time we were not compliant. Now we are almost compliant. I am informed that the next assessment by OECD will find us compliant.
Anyway, in general OECD frowns upon offshore companies. We therefore need to be more inventive and develop new products like Trusts. We should stop relying on just one model because it worked for 25 years. One of the ideas is to use the infrastructure already available. We have warehouses available, so we can extend the SITZ but make it more productive for Seychelles. That comes hand-in-hand with the type of education we have provided to our youth. For example we can promote the idea of using Seychelles as a base for assembling electronic goods. Our kids are educated and this is the kind of work they will be attracted to.
We have a number of double tax treaties which can be advantageous. A person in China can export to Botswana using Seychelles as a hub and making use of our tax treaties.
We also need to work to keep and attract companies back otherwise they will go to other jurisdictions like Mauritius, or BVI.
-Have the bankers responded positively to the loosening of the monetary policy and are investors borrowing more money?
There is a fundamental problem regarding the banks. They have to be more business-friendly and provide long term and affordable finance. It has been easy in the past for them to invest in Treasury bills and bonds. Depositors are paid little interest and in exchange it has been possible to obtain a handsome margin by purchasing Treasury bills and bonds at no risk. Banks have a leading role in the economic development of the country. Businesses cannot flourish, particularly the small businesses, if they do not have access to affordable and long term capital.
-Does your remark also apply to banks owned by Government?
It is evident from the uniformity we see in that sector that they are not working differently from other banks.
-Are you alleging that they act like a cartel?
Whilst they have an association, I hope it does not subconsciously preclude them from competing with each other. They have to avoid that. If you look at the balance sheet of most of the banks, a large portion of depositors funds are invested in Government securities. The Government can change this by asking the banks it controls to follow a strategy which is more conducive to economic growth.
-Is it really difficult for a young entrepreneur to get a loan from a bank even if he has a sound project plan?
I believe so, as a young entrepreneur will have the difficulty of meeting the current requirements of providing different layers of security banks insist upon, to meet the cost of borrowing and the rate at which the loan has to be repaid.
-Do you believe they do not have the national interest at heart?
Do you? Principally they are commercial organisations whose main focus is to provide maximum returns for their shareholders.
They need to make affordable finance charge to the productive sector. For example, borrowing costs abroad hover around 5 to 6%. Building loans have repayment terms of 30 or 40 years. Government needs to give directives to its own banks to change the way they operate.
It goes without saying that if the government wants to improve the economy, it cannot do so without the cooperation of the banks in Seychelles.
In the end it is about what is reasonable profits and to what degree you want to engage in the wellbeing of Seychelles, which requires a greater appetite for risk, which in the long term will bring greater rewards. Reverting to Government borrowing through bonds, this should be geared towards encouraging savings among the populace. Besides the low returns on savings, the welfare system of the country does not encourage savings. The provision by the state of essentials like health, housing and education are enshrined in the Constitution. But in case of an economic shock, such as a sudden downturn in tourism, it will be impossible for Government to bear the full cost alone. If the population in general has not saved any resources in anticipation of such events, the consequences can be catastrophic in terms of law and order.
-Is Progressive Income Tax a fair measure?
I agree with the principle that people who earn more should pay more tax which is a globally accepted principle. However the formula proposed is not the right one. You could be a person earning SCR8,500 and pay nothing whereas your colleague earning a little more is subject to income tax and have no better take-home pay. This is completely wrong. I agree with the principle of a threshold, below which people pay nothing, but taxation should in graduated bands with the rate changing gradually from one band to another. Unfortunately, we have suffered from political imperatives in the last few years with so many elections. During election time politicians have been giving out things which sounded good at the moment but which in the long term can have negative effects on the economy.
-What do you consider to be a reasonable taxation rate for people in the top bracket?
Worldwide, even the rich do not pay an effective rate more than 25%. Corporate tax is on average 15-18%. Government can increase tax revenues in two ways. Either it increases the rate or it widens the tax base. It is better to increase the tax base because you create sustainable wealth and you do this by encouraging new or existing businesses to invest and expand. You cannot make taxation punitive. This can leave people with no motivation to grow and be worse off for doing more business.
-You were saying that an over generous social welfare state that offers too many services for free does not encourage a savings culture. Is that a legacy of René's policies?
Propensity to save is zero because you do not have to pay for anything. We have to introduce a system where people contribute, even if it is a token amount for state services - for example medicine - to avoid wastage.
-You did not mention subsidy on public transport! Subsidies distort the economy and it is a lose-lose situation.
I do not think people see it this way. They say it is their own money which the government is returning to them indirectly. Allowing a private bus service to run would be a solution to avoid wastage. To be efficient you need competition. Competition is good in any form provided there is no subsidies. SPTC can be allowed to continue to run their service but it should exist alongside private bus operators.
-Some people, including the Governor of the Central Bank, believe the high cost of utilities is a brake on economic growth.
Yes indeed... A policy was adopted a few years ago to make PUC self-sufficient but right now it is not possible. Electricity is a basic amenity in this day and age and the Government should provide the machinery and infrastructure to PUC leaving the recurrent cost to be borne by the public and businesses. I believe the IMF imposed that condition about self-sufficiency. Why can the State not buy generators if it can buy buses for SPTC?
There is an urgent need to bring people together and look at where we are today and where we want to go for the long term. We need a credible SCCI, truly representative of the Seychelles business community at large, one which can make the Government aware of the sentiments of the business community and its needs.
-What do you have to say to Minister Larose while he is preparing his budget?
I would ask him to provide long term stability, not economic shocks. People are not afraid of change but give them sufficient time to prepare for change.

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