One of the objectives for the introduction of the imputation payment system, laid down in the Dividend and Imputation payment Ordinance (which is the core of the NFF), is to stimulate investment in shares (in imputation companies) in a fiscal attractive way. According to the explanatory memorandum (in the latest draft: page 15), the imputation payment system is in a way comparable to the Dutch investment entity (“beleggingsinstelling”). Article 6 of the aforementioned proposed Ordinance gives a 5% dividend tax reduction, applicable if the shares of the imputation payment company are traded at a stock exchange recognized by the Minister of Finance. Article 19 sub 4 gives an exemption on registered shares, if the shares are traded at such a stock exchange. 

Aruban stock exchange
The aforementioned fiscal facilities under the New Fiscal Framework, the decrease in investments in the local economy over the last year and the limitations of traditional corporate finance (a lot business investments are basically bank loans backed by personal assets), lead me to strongly believe that the time has come for the introduction of an Aruban stock exchange.

For the introduction of such a stock exchange, Aruba can benefit from the technological advance on this field where a lot of big and small jurisdictions are opting for an electronic stock exchange. The introduction of a stock exchange on an electronic platform will mean that it can function in an orderly and professional way, with very limited human and financial resources (which are factors we will certainly have to overcome).

Benefits stock local exchange
I have identified the following benefits for a local stock exchange. The examples I give hereinafter are however by no means a limitative summary of the possible benefits.

The potential influx in foreign investment capital from the average one million plus tourists that visit our island every year will mean a boost for our economy and will make capital available that otherwise would not have come this way. For instance: a mere 2000 investors that are willing to invest a minimum of USD 5,000.00 in Aruban stock, will mean a total investment of USD 10 million US dollars! Try to get the equivalent capital made available by means of a loan at a local bank! Future and existing businesses can furthermore benefit from (new) capital influx that does not add to their “debt service portfolio”. Also, entrepreneurs with good ideas, but lacking own investment capital can then actually get access, by means of the stock exchange, to investment capital. The Government can benefit directly from a local stock exchange, since Government bonds can be traded there, creating a market for these securities.

A stock market will also make investment capital easier available for mega projects, that traditionally would have to be financed by means of syndicated bank loans. Finally, investors that do not want to wait for a mid to long term return on investment, can capitalize along the way by selling their interest in a company on the stock exchange.

Conclusion
The time is ready for the introduction of a local, electronic platform, stock exchange. The benefits are multiple. The task of setting up such a stock exchange is a big challenge, but it is worth the effort.  Institutions that will have a role to play in setting up such a stock exchange and make it work would be the Central Bank, the Minister of Finance, the legislator and the private sector itself, represented by organizations such as the Aruba Financial Center Association, the Chamber of Commerce and the Aruba Trade & Industry Association.

Andin C.G. Bikker, former President of the Aruba Financial Center Association. Partner @ Gomez & Bikker Law Offices, in charge of Litigation, Corporate Finance & Telecom.