expansion is the upward slope, towards a peak.
Against this analogy, I believe that economic
indicators are showing that we have been in a
trough over the last 12–18 months and that
we are now on the rising side of that trough.
Challenges remain; as I stated in the beginning of this interview, Bermuda is undergoing
some structural changes to its business model.
How we as a country manage these changes
and seek opportunities from them will determine the timing and rate of any sort of new
What signs do you look for that would
make you more or less optimistic about
One could typically look to GDP, but as a
measurement it is a lagging indicator (
particularly, it is not forward-looking). So I would
look at positive sentiment, first and foremost,
and I believe we have that. Then I would look
to increasing consumer spending, and there
are indicators of that. Third, I would look at
increasing investments in infrastructure—the
government is certainly working hard to
increase infrastructure spending. Another
indicator to look at is investment in new
business opportunities. We are all collectively
looking at where investment opportunities
are and how to best attract those opportunities (both local and international). Getting a
bit more granular, I would look at increasing
transactional volume in the real estate market.
Not necessarily increased prices, but increased
volume. So long as there is no volume, you
can be assured that we are in some form of
recessionary state. We are currently seeing an
increase in volume as well as, in some cases,
an increase in property values. As a result, we
have to revalue our real estate and mortgages
frequently, and in the majority of cases, we are
seeing a slight increase.
I also monitor for increasing corporate
registrations on the island, and the multiplier
effect of that. Corporate registrations in and
of themselves don’t actually produce any real
economic indicator. It is the multiplier effect
of jobs that they create around economic
improvement that proves the real indicator.
The final measurement component of
economic recovery is around increased productivity, and Bermuda must look at ways of
affecting this to a greater extent.
What about Bermuda’s debt situation?
Just how crippling is it?
The question is do investors believe that
Bermuda’s debt situation is at a crippling level?
The answer would be “no” because of our ratings, and the level of interest rates demanded
by investors over and above say the “riskless
rate” has remained relatively constant. The
sentiment cannot be that our debt is going to
cripple us because otherwise investors would
see a higher risk and would demand a higher
rate of return.
I consider our debt load as like carrying a
rucksack. When you have a light rucksack,
therefore little debt, you can be quicker, more
nimble, and the impact of making a mistake is
not as risky. When your rucksack is full, and
heavy with debt, you need to be a tad slower,
more thoughtful and able to execute effectively. The worst thing in the world is stagnation,
the equivalent of standing still. We need to be
thoughtful, we need to be provocative, and we
need to execute—and, if we can do that, then I
don’t think our debt burden will cripple us.
What do you mean by “provocative”?
I mean coming up with ideas that we
perhaps have not thought about in the past
that perhaps may offend some—but where the
long-term outcome is beneficial for all. That’s
where we can all be creative, be provocative,
but where we all need to do better is when we
come up with those ideas, we need to make
sure that everybody, all elements of society,
understand why it will be beneficial for them
in the long run.
Think outside the box—that is being
“provocative.” Challenge the status quo—that
is being “provocative.” But we must also make
sure that in so doing all sectors have an opportunity to benefit and understand how they
can benefit. That is because if they don’t, they
will not be supportive and we as a country will
continue to be fractured.
Can you give some examples of “
Gaming is one example, although it’s
certainly not the “silver bullet.” Privatisation
is another example. Ideas are being generated
that have the opportunity to change the status
quo from the way in which we have operated
in the past. If we are thoughtful, we can ensure
that everybody has the opportunity to benefit
from that and not just those at the top of the
More generally, what is your view of Bermuda’s economy going forward?
Generally speaking, I think we need to do
more and tell our story of “why” Bermuda
better than we have done in the past, as a
target for inward investment, tourism and as
a platform for centralising a global footprint.
The Bermuda Business Development Agency,
in conjunction with the private sector, is
doing a great job of trying to raise awareness
of Bermuda. In support of this, we should
consider the benefits of a competitive analysis
of why people are going to “jurisdiction A”
versus Bermuda. In doing so, we will better
equip ourselves to react proactively to make
Bermuda a jurisdiction of choice.
The road to improving tourism may be a
little longer. The steps taken to detach the
Bermuda Tourism Authority from the government were certainly the right thing to do.
However, we are often too quick to give up
on initiatives, and a commitment to greater
investment over the long term is needed. We
need to seek new markets for our product
outside of the traditional eastern corridor. The
island needs significant capital investment to
bring its current stock of rooms up to an international standard. Such an investment can be
seen via the works being done at the Hamilton
Fairmont as an example.
Bringing innovation and intellectual property to Bermuda is key for the success of the
island long term. At Clarien we are investing
heavily into intellectual property activities,
such as capital markets facilitation. Many may
not realise that Clarien is one of the largest
listing agents for the ILS market. The message