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Editorial Comment
New business to fuel economic growth
This is our 20th anniversary issue and in those years eGaming and the finance centre have helped transform the economy to the £2.2bn Gross Domestic Product success of today. However, given Brexit, Minister Albert Isola has, perhaps, the unenviable
task of new business development - given that financial services and eGaming for which he is responsible account for approaching half of Gibraltar’s economy - and at the same time reducing the “unsustainable” cost (and size) of the Civil Service through development of eGovernment!
Whilst the Port and further tourism growth will make valuable contributions, much focus has been on the raft of new firms to the jurisdiction making DLT (Distributed Ledger Technology / blockchain) license applications, around 70 so far. Many are start-up businesses. Some are well-established, FinTech market leading enterprises elsewhere, seeking the added respectability – and implied endorsement - of being regulated for the first time and in a Gibraltar that is fast “creating Crypto Rock”, according to Chief Minister Fabian Picardo.
It is clear however, that these new digital businesses will not quickly bring a large influx of fresh employment, which in one way is a good thing given that there are only 45 unemployed on The Rock. Today, there are relatively few qualified, FinTech-savy people working locally from which to recruit, although over time that will change.
As a minimum, regulated firms will need mind and management in the jurisdiction. Some like GBX, the new Gibraltar Blockchain Exchange, has its head office as well as business functions in local offices. Xapo, a US Silicon Valley-based Bitcoin wallet, has commendably set up with a
small, mostly Gibraltarian team, while the two founders of crypto currency trading platform, Covesting, are moving to The Rock.
The Gibraltar based eGaming sector remains the most significant in Europe, if not the world, but there’s concern at increased industry consolidation, as well as uncertainties and challenges of market access through Brexit when Gibraltar, along with the UK, leaves the EU next year. With companies scaling up, driving efficiencies and paying higher regulatory costs in new and existing jurisdictions, Isola is developing “alternate operating arrangements around technology”, tailored to different Brexit outcomes and business models.
He’s hoping to keep as much eGaming business as possible by being flexible, innovative and taking “a balanced view on new business models and technology platforms” that requires “a shift in mind-set and more flexible legislation”. Some 5,000 people work in the gaming sector, directly or in support services, out of 28,000 Gibraltar employed.
Growing the workforce generally is necessary to boost the income tax base and help fund Gibraltar’s continued development: £11m more than the £155m expected was obtained through personal tax in 2017-18, but the government this year is budgeting for £165m - £1m less. Companies are anticipated to provide £130m tax, some £10m more than it would have gained last year, but for an overpayment refund!
In 2017, the number of locally registered companies was 17,800, with 17,788 “active”; 1,314 had been created in that year, slightly more than in 2016. By end-February, 289 businesses were registered, after two months of the new DLT regime. The full-year result will be telling.
Ray Spencer
Published by Gibraltar International Publications Ltd. 21 Bell Lane PMB 104, PO Box 561 Gibraltar, GX11 1AA
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Contents
News p6
Strong economic growth tempered by Brexit uncertainty and cost efficiency moves
Budget p8
Gibraltar’s Brexit Budget 2018
Gaming p10
Enforcement team to be established with ‘flexing’ of license conditions
Aug/Sept/Oct 2018
Volume 24/Number 3
Funds p14
Gibraltar: A safe haven for crypto funds
Property p16
More large offices on the way leaving Tech-smart start-up units in short supply
Tax p20
Requirement to correct
Business round up p22 Profile p24
Gearing up for financial services sanctions
FinTech p28
Gibraltar Tames the Wild West