Bermudian CEOs Optimistic Over Economy

by Mike Godfrey, Tax-News.com, Washington

13 March 2003

The Bermuda CEO survey 2003 has revealed the Island's bosses to be relatively optimistic about the prospects for the Bermudan economy.

According to a report in the Bermuda Sun, a total of 44 CEOs were questioned in the poll carried out by HR Associates, and roughly two-thirds believed that the economy would remain relatively strong through the year ahead. This is broken down into those who believed the economy would grow somewhat - about 30% of respondents, those who saw little or no change taking place - about 34%, and those who were predicting negative growth - 34%.

However, eyebrows have been raised at the response of one anonymous CEO who said that his financial services firm was considering leaving Bermuda due to a perceived lack of support from the government for business on the island. “At present the Bermuda Government is not constructive towards business, this leads us to believe that the long-term viability of our business requires that we open an office in another more business friendly jurisdiction,” the CEO was reported to have said. Apparently, the Ministry of Finance have declined to comment of the findings until they have studied the report in more depth.

Other concerns that the CEOs expressed seemed to be centred on the regulatory environment they have to face, both in Bermuda itself and elsewhere. “The level of concern regarding local regulation is consistent for both local and exempt companies across all industry groups and is as frequently expressed in large organizations as it is in smaller ones,” summarised the HR Associates report.

One other major bugbear for the Island's bosses was the short supply of adequately trained workers, which has resulted in relatively high labour cost for companies operating in Bermuda. As a result, the survey revealed, cutting costs was one of the top three priorities they faced on a day to day basis. However, overall, it seems that there is little prospect for any major lay-offs occurring from this situation. Some 43% of those polled said they had no plans to alter the size of their workforce this year whilst 32% said they intended to create more jobs. About 23% expected to reduce their workforce. Businessmen also appeared mostly unconcerned about the rising threat of terrorism, and the looming conflict in Iraq according to the report.

Meanwhile, the professional body representing trust lawyers, bankers and accountants (STEP) has been considering the effects of the new EU savings tax directive, which will have a direct impact on dependant territories such as Bermuda. It fears that the EU agreement may come into conflict with the OECD's blacklist scheme which promised a "level playing field" on the subject. STEP spokesman Richard Hay predicted that this will cause honest businesses and tax avoiders alike to flee to other jurisdictions not covered by the directive.

"International Financial centres gave commitments to tax information exchange following OECD assurances that common standards would apply to all. The EU Savings Tax Directive now proposes that some important OECD members delay or are excused compliance with tax information exchange. Smaller states will seek to withdraw commitments to information exchange unless the OECD can ensure its own members are bound by the standards it seeks to impose on others," said Hay in a report from The Royal Gazette.

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