Bermuda enjoys one of the highest per capita incomes in the world, having successfully exploited its location by providing financial services for international firms and luxury tourist facilities for 360,000 visitors annually. The tourist industry, which accounts for an estimated 28% of GDP, attracts 84% of its business from North America. The industrial sector is small, and agriculture is now severely limited by a lack of suitable land. About 80% of food is imported. International business contributes over 60% of Bermuda's economic output; a failed independence vote in late 1995 can be partially attributed to Bermudian fears of scaring away foreign firms. Government economic priorities are the further strengthening of the tourist and international financial sectors.
Bermuda has enjoyed steady economic prosperity since the end of World War II, although the island has experienced recessions, including during the early 1990s, when the contraction of the economy led to a population reduction of 2,000 people (as many long-term residents found their work permits were not renewed), and a mild recession in 2001-02, both paralleling recessions in the United States. Its economy is based primarily upon international business (especially re-insurance, for which it is now a world center) and tourism, with those two sectors accounting for more than 70% of the total balance of payments current account foreign exchange receipts. However, the role of international business in the economy is expanding, whereas that of tourism is contracting.
International Finance Role
Bermuda is considered an offshore financial center, and it has a well-deserved reputation for the integrity of its financial regulatory system. A recent KPMG report titled "Review of Financial Regulation in the Caribbean Overseas Territories and Bermuda" states that the island's legislative framework is almost fully compliant with international standards, giving evidence of Bermuda's commitment to the prevention of money laundering and other financial crimes.
Aiming to meet or exceed international financial standards, the Bermuda Monetary Authority (BMA) has taken a clear decision to be fairly transparent about its duties and responsibilities. For example, in response to the KPMG October 2000 report on the UK's Caribbean overseas territories, Bermuda enacted the Trust (Regulation of Trust Business) Act 2001. The legislation provides for the transfer of the finance minister's responsibilities to the independent BMA, with respect to granting and revoking trust company licenses. It also requires all individuals or companies operating trust companies to have a license unless they are exempt. Previously, only trust companies needed a license. Additionally, the legislation gives the BMA more comprehensive intervention powers. It will be able to request more detailed documentation and, in the event of a problem, restrict a trust operator's license. Information will be kept confidential, except in the event of a criminal investigation.
Comprehensive new legislation will be introduced in the upcoming parliamentary session to further streamline the incorporation process, facilitate registration of foreign names and address conflicts in law for registered securities, again consistent with the KPMG report. Amendments are being proposed to the BMA (Collective Investment Scheme Classification) Regulations 1998, part of a strategic plan for the development of financial services in Bermuda. It is a mark of Bermuda's commitment that each financial sector is seen to be in line with international standards.
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