11 Oct Interview with Alexander Chang-Sam, CEO and Co-Founder of C&J Qapital, Seychelles
BF: You formed C&J Qapital in September 2021, and in June 2022 obtained your license from the Seychelles Financial Services Authority (FSA) based on the partners’ vast experience in finance and corporate services. Tell me a little bit about the reasons for opening this firm in Seychelles. What kind of services and advantages do you offer?
Alexander Chang-Sam: My background ranges over a couple of years in the financial services industry. Initially I was working for one of the financial services companies in Seychelles before I moved to Dubai. I spent eight years living in Dubai, until April of last year. I was managing a similar firm in the financial services sector. My role as the managing director was to oversee the operations in Dubai. I helped set up their Seychelles office on the same floor here. In 2020 there was a change in government, and this encouraged me to move back home and play my part and contribute to my country, so after eight years in Dubai, I decided to move back home to Seychelles. While I was in the financial service industry, I did have other interests and other companies that I owned and that I was managing remotely, including in the tourism industry, so I was also going to go back and look after my companies. At the same time, you realize that you have amassed quite an experience in this industry, so together with my partner Yogesh Jeebaun whom I have known for more than 15 years, the network and the know-how that we had, we decided to set up our own firm, and that is how C&J Qapital was conceived. It was registered in September 2021 and six months later we got our license from the FSA; we started operations in June 2022. Although we are relatively new, my partner and I have been in the industry for over 20 years together. That is why we made the jump to do it ourselves and bring in the expertise we have and contribute so that we may contribute to this sector.
We see the financial services industry is a very good sector to be in. It is a very important industry that Seychelles counts it as the third pillar of the economy after tourism, which is the highest earner, followed by fisheries. Although the environment has changed and become more challenging, there is always going to be a demand for the financial services sector. Obviously, you have to evolve and move away from the traditional service we were providing. We have to innovate, and that is what we do. We provide bespoke, tailor-made oriented services, fiduciary, family office; assist clients in obtaining specialized licenses for forex trading, mutual hedge funds, yacht registrations, insurance licenses, digital exchanges, and even crypto related activities, which is on the rise. The list goes on, and with our trust and foundation services, we help clients protect their legacy; estate planning, becoming the guardians and protectors, and safeguarding their businesses when they are no longer here, etc. When the pandemic hit, a lot of clients were concerned about what would happen to the empire that they built. So we provided a lot consultancy to these clients on how to structure their estates properly for their heirs and beneficiaries.
Although the growth of the industry has slowed down in recent years, we still believe in the sector. Seychelles is always giving that effort and that determination to be compliant. Even if organizations like the EU and OECD will come knocking and bring in new requirements (which would make us “non-compliant”), the FSA will always respond quite actively. Being so small makes access to government, legislation, and politicians very easy. Likewise, it’s easy for us to work on the legislation and necessary amendments in our laws so that it fits the EU/OECD requirements and rectifies whatever issues we have. At the same time, the government works with the private sector, which is us. We are part of the Association for Financial Services Providers and, together with our other colleagues in the industry, we have this open dialogue with them. They tell us they are going to implement a law and we tell them that this law might be detrimental to us, and so we find a middle ground where it can be still commercially viable for us while we also remain compliant and competitive with other jurisdictions, like the Caymans and BVI. We have become a very trustworthy and compliant jurisdiction and that is always one of the selling points to our clients when they are deciding between the Seychelles or BVI. We have to demonstrate the ease of doing business in Seychelles and how we are different from the rest of the world. So we continue to have strong dialogue, consultation, and frequent meetings with the FSA, the legislation leaders, the Seychelles Revenue Commission, or the governor of the central bank. A lot of decisions they make ultimately affect the sector, so it’s good to have this cohesion and open mic to talk about it. We might not always agree but we find a middle ground.
BF: What kind of clients is C&J Qapital looking to target and why? What kind of interest is there from international markets in doing business in Seychelles?
Alexander Chang-Sam: A lot of our clients originate from the Middle East — Dubai, Abu Dhabi — but we also have a good network in Asia — Taiwan, China, Hong Kong, Singapore — and we also have our European clients, whether they are British, French, Belgian, or Dutch. You have the entrepreneurs who are still starting up, and then you have the existing big companies who are structuring, consolidating. Whenever they get hit, for example, the legislation becomes more difficult for some of their holding companies in Cayman and BVI, so they restructure and try to determine if they are in the right jurisdiction. Seychelles is known, but not well known, and it is good we are not on top of the radar. We’re just in between so we’re not always in the press and when we are it is for good reasons and not for the bad media that has plagued our competitors. However, being small has its disadvantages: like some clients might not know Seychelles, they always think of it as a tourist paradise destination, but when they do their research and we have meetings with them, then they know how robust and stable the economy is and how strong our jurisdiction is, so that is a plus for us. In the end, a lot of them eventually decide to restructure their businesses in Seychelles or setup new business here.
Lately, with the whole crypto industry boom, a lot of the new businesses are crypto related. Seychelles attracted a lot of clients to do this type of activity, so we do have a lot of people who come here because it is not regulated yet, at least until the new law eventually comes out. In the meantime, since there are no laws for regulating crypto, it does not necessarily make it illegal. That is a bit high risk for us: we have to do extra monitoring if we decide to take on these clients, and hopefully in the coming months there will be legislation out for Virtual Asset Service Providers (VASPs) to regulate these companies. That is one aspect that will continue to bring a lot of clients. We have to move into the direction of getting these companies regulated. Fintech and crypto is here to stay, and we have our neighbors like Mauritius already issuing their VASP license, so Seychelles has to follow suit to do that. We want our clients to be regulated; we don’t want any cowboys to come and just do whatever. Then you get bad press with a crypto company or an FX exchange like FTX that has collapsed and you found out that they are registered in Seychelles.
But aside from the crypto side, we have a huge demand for Forex trading, and Seychelles has attracted big players like eToro, Plus 500 and other big firms that do securities trading. That has really been in demand lately, and all these securities dealers are listed and licensed on the FSA site and are quite transparent. We have a lot of big international players that have FX licenses everywhere: Hong Kong, Singapore, Caymans, Cyprus, but they also opted for Seychelles to be one of the licenses that they hold. It is especially good because security dealers are not really seen as offshore. They are local companies even though their clients are international, and they do pay taxes. They pay 1.5% taxes on their income, but this will soon change with the government deciding to raise it to 3% taxes as they try to collect a bit more than just the licensing fee they would get from the FSA or the local resources and employee and other expenditure they will incur, all adding and contributing to the economy they want to build in this part of that sector.
Developing this sector has become a national priority. When the pandemic hit, it taught us a big lesson: tourism stopped and it was only the fisheries and financial sector that were providing support for the economy, so they want to continue and develop the blue economy (fisheries) and continue to also develop the financial services industry, make it more robust and attractive, and hopefully bring more services to the client, show them why Seychelles should be trusted.
BF: Seychelles was de-blacklisted in 2021. How would you explain the transparency and compliance of the jurisdiction to an investor? What progress has it made?
Alexander Chang-Sam: Whenever an external party has come to us and said we are not compliant, that we needed to fix our legislation, we have been very active. Obviously, we don’t want to be bullied by the big boys who come and tell us to fix this and that. There is a dialogue. Whenever there is a country review, we make sure that we’re at least fixing or meeting our targets and obligations. Although sometimes we get the impression that, because we are a small jurisdiction, we feel that the EU or OECD are kind of pressing something on us, because Seychelles models a lot of their legislation on other financial services jurisdictions that are already compliant. We implemented tax for offshore companies, so they are not deemed to be zero tax. If an offshore company does business in Seychelles with income generated from Seychelles sources, then they will be taxed at the local rate. So these days you cannot say I have an offshore company and I don’t pay tax. You would pay tax if you do business in Seychelles. We have adopted a territorial tax system. It’s exactly the same as Singapore, yet they didn’t put Singapore on any list but they put Seychelles. We have beneficial ownership legislations, had updated our anti-money laundering acts, and soon will have the substantive legislation coming out. BVI has already implemented it and Seychelles is working on it. It is a bit difficult to see what they want; when you fix it, they (the EU/OECD) will always come back with something else to fix, but the willingness for us to be compliant is always there and we are determined to get it right; and that is why we tend to avoid the graylist or blacklist as much as possible.
BF: In the future, do you see any other niche products or segments that Seychelles could specialize in?
Alexander Chang-Sam: The financial services sector has an array of offerings, from setting up offshore companies, offshore trusts, offshore foundations, to charitable or estate planning. You have the securities dealer companies which are the Forex brokers. You can obtain an investment advisory license for asset management, you can obtain an insurance offshore license, setup mutual hedge funds, you can register your yacht here in the Seychelles instead of going to Panama. In addition, we have the free zone that the FSA promotes for companies for manufacturing or importing or re-exporting. There hasn’t been a sector that they have really developed, and we don’t have a lot of big companies in the free zone like the Indian Ocean Tuna Limited. We have a few companies but, hopefully, the FSA can develop the free zone and attract more investors to register there and we can assist them.
BF: When it comes to talent and skills, how do you as a firm find the necessary talent and skills that you need in the local market and how do you see the progress made locally toward training the professionals that Seychelles needs?
Alexander Chang-Sam: Several years ago, companies in this sector had issues where they were where “poached” by other companies. Employees that they had trained and developed would eventually to move to the competitors. That was a big issue. You don’t usually go to university or school and learn financial services offshore, so the FSA came in and they started to do foundation courses and programs together with the Guy Morel Institute to train people who wanted to join the industry to at least have the basics in place. They encouraged you to do these courses. We also have a Society of Trust and Estate Practitioners (STEP) organization here in Seychelles and a lot of the industry employees are certified STEP members and, as a STEP member, we are continuously learning about this ever-changing industry.
The pool of staff that you can get is small, and there is a big demand for it. The majority of people who join this industry come from a background of accounting, but you do have people that change their career completely. I have an engineering background and I did accounting before coming into the industry. A lot of it you learn on the job. Then as you progress, you take up these courses to better equip yourself. I am also a certified compliance officer, so I have to do that as part of my daily running because, as a small firm, we also wear the compliance hat, the sales hat, the administrative hat and all of that.
Certified compliance officers are very rare in Seychelles, so the FSA a couple of years back had introduced what is called the “Outsource Compliance Program” which allows firms such as ours to apply and become an approved outsource compliance function. For example, tomorrow security dealers will want to come here to get a license. Instead of recruiting compliance officers which might be difficult, they can use our services as the outsource compliance function. Now they will do this for probably one or two years until the company eventually gets its own compliance officer because imagine if we had 10 of these companies and had to do compliance for all 10; we would be taking a lot of clients. This would also expose us to a lot of risk. So our policy is to do this for one or two years for these companies but our aim is for them to eventually recruit, train, and get there own compliance officer. The talent is scarce, but luckily the FSA has listened to us and implemented getting the right programs in place to really help the industry there.
BF: As an investment and asset specialist, what more does the country need to do to promote itself as a destination for financial services?
Alexander Chang-Sam: We need to go out there and market Seychelles. From my experience living abroad, a lot of people don’t really grasp Seychelles as a financial sector, so the education has to come from the industry. For example, I have participated in FSA roadshows previously held in Dubai. I gave a presentation on mutual hedge funds and why you can go for Seychelles to do it instead of going to the Caymans. The private sector participates a lot, we set up a booth, do presentations, we go out there and market ourselves. When you go to do a presentation and you have other peers in the same industry, you meet and network; that’s where you build up credibility more. There is always this hesitancy when you see an ad online. say, “Company in Seychelles Offshore.” But if you meet the people there, it gives a bit more confidence. We just have to continue that; to be a little bit more proactive.
BF: To what extent do you think Seychelles could become even more attractive for U.S. investors?
Alexander Chang-Sam: In the financial services industry, we have to stay out of the press for negative news. We also have to set up our legislation in a way that is not harmful to the industry but encourages foreign investors to come in; not foreign investors to just set up an offshore company, we would like to have companies operating in Seychelles and have a more substantial presence, foreign investors who are aiming to have their headquarters or a family office here.
Seychelles is more than just a financial sector. Tourism has always been here. We have a lot of investment coming in this sector — big hotel chains opening up — but we have to maintain a balance so that we don’t damage the environment. We don’t want to be a mass tourist destination where we end up with going to a beach and it is flooded with tourists. We’re environmentally focused and want to maintain our tranquility where tourist can come, enjoy nature and relax. We also have a lot of opportunities in the blue economy, not just tuna fishing but also in aquaculture. The Ministry for Fisheries recently issued a few licenses and set up a few aquaculture farms in Providence Industrial Area. They are doing the test phases for sea urchins, a delicacy for the Japanese, and fish farms outside in the ocean, and now we have reopened shrimp farms on Coetivy Island. They just issued a report last week that they are going to produce white shrimp and black tiger shrimp and they have taken the first harvest. The shrimp are bigger than expected, so the quality of the species is even better. We have the financial sector, aquaculture, agriculture, tourism, the blue economy; all of these are areas where foreign investors can come and look into. When Covid hit, we depended a lot on imports for our food. That is one area where they want to focus more, to grow more locally. If local businessmen don’t have the capacity, then certainly foreign investors could come in to fill that gap.
BF: You co-founded C&J Qapital after more than 15 years of experience. What is your vision for the company in the next five years? Where would you like to position C&J Qapital?
Alexander Chang-Sam: A lot of our clients are not really direct retail or walking clients. Our clients are B2B, so we work with banking institutions, accounting firms, asset management firms. All of these are already high-net-worth clients, and they want support here locally. That’s our target sector. We like to position ourselves as a boutique firm. We are not in the business of doing mass business. We have a lot of our fellow colleagues in the industry who focus on low-cost companies; they do mass numbers and then eventually they just get their revenue from the set ups and the annual renewal of these companies. We’re not like that. We’re in between. We want to focus on substantial companies, companies that are doing a lot of work and are active. Nowadays because there is an accounting record requirement in Seychelles, companies have to keep copies of their accounting records. You can see these companies are active. We don’t want to be in an area where the EU blacklists us again because we had shell companies that probably only had one owner, one director but was making millions but not operational and not compliant. That doesn’t mean that we won’t onboard start ups, entrepreneurs, established businesses, or clients with estate planning requirements and family offices; far from it. We want good clean clients. That’s our market and we hope to be here for the next five to ten years and beyond.
BF: What is your final message to the readers of USA Today?
Alexander Chang-Sam: We need to stay away from the image a lot of investors have of Seychelles as just an expensive holiday destination. It also has a strong and robust financial services sector. So look past the sandy beaches and the coconut trees, come to Seychelles and set up a meeting with financial services practitioners. I would encourage any entrepreneur or clients who are looking for a stable jurisdiction to set up or to continue their business to seriously consider Seychelles. We’re the #1 in Africa in terms of our corruption index, and with our stable governance, I think it’s a very good choice to give us a try against other financial services sectors.