Jersey Aims To Become European Gateway To China

by Jason Gorringe, Tax-News.com, London

22 February 2006

Since last year's Far Eastern promotional tour by a delegation from Jersey, the Island's finance industry is now in a good position to take advantage of opportunities to develop business links with China, particularly in the area of raising capital and supporting inward foreign investment in the country.

According to Jersey Finance, the government's investment promotion body, some business is already in place and since last November’s visit to Hong Kong, Singapore and Shanghai, there are signs of more business flowing into the Island.

Jersey is aiming to become the credible and preferred route for structuring foreign direct investment from Europe into China. The jurisdiction also hopes to foster closer links with Hong Kong, which is growing in stature as the key gateway into China.

One of the latest initiatives involves the incorporation of the first company on the Jersey Financial Services Commission (JFSC) register in which the characters are printed in Chinese alongside the English.

Victor Ho, Director of The Langtry Trust Group, who took part in the Jersey Finance visit and has business contacts in Asia, has this month formed the company, Elite Business Consultants(Jersey) Limited on behalf of investors in China. Mr Ho believes that if business is to develop in China, it is crucial to have the ability to list companies incorporated in the Chinese language.

The JFSC is already making steps to assist firms in this regard, and Julian Lamb, deputy registrar at the Commission, says that software is available on its system to enable the registration of companies incorporated from the Far East using Chinese characters.

Phil Austin, Chief Executive of Jersey Finance, explained:

"Jersey has some work to do in raising its profile and in highlighting the reputation it already enjoys within the financial centres in the West, and our first visit at the end of last year provided a solid platform to achieve that objective and on which we have already started to build."

"However, we are aware that Caribbean jurisdictions are currently viewed as the favoured route for funds and company structures, for example, and Singapore would also be a strong competitor for trust business. The Industry will have to work closely with the Jersey authorities to develop the necessary momentum to make the amount of new business significant for the Island."

Mr Austin also went on to note that close governmental and regulatory co-operation, such as the recent secondment of China Banking and Regulatory Commission staff to the Jersey FSC, will be vital, and such initiatives will play a critical role in fostering links.

Pierre Horsfall CBE, Chairman of Jersey Finance, commented:

"Given the Chinese Authorities’ policy of actively encouraging domestic companies to seek foreign capital, it is likely that, should Jersey successfully establish itself as a route for structuring foreign direct investment into China, this would create a flow of business into Jersey which would be excellent news for our economy long term."

One example of this is the opportunity to create a Jersey company as a listing vehicle on the Alternative Investment Market (AIM) of the London Stock Exchange as a method of assisting Chinese companies seeking foreign investment.

Hiren Patel, a lawyer at Crills Advocates, which already undertakes this work and who was also a member of the Jersey delegation, observed:

"AIM provides substantial tax breaks for investors and, in turn, if a Jersey company is used as a listing vehicle, its tax neutral status provides it with further tax benefits. There is significant potential to build this business."

Mr Austin added that a number of leading Jersey based financial organisations were represented in Hong Kong, servicing international expatriates, and that the location was also an important source of fiduciary business.

However, he observed that more can be done to raise the profile of the Island in the region, and the authorities must work to ensure that its regulatory and legislative framework remain sufficiently competitive to attract new business.

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