Bermuda needs foreign investment
This is the second part of Former Premier Sir John Swan's speech on the Bermuda economy.
If our process is equally slow, we will be so far behind the eight-ball because keep in mind that they can print money, we can't print money by lowering interest rates or buying back our bonds, with borrowed money no less. We can have our currency devalued, that's one thing which means that we will have to pay more each time we buy a dollar and don't think that could not happen to Bermuda, it could because when you look at the 2,500 people who have already left Bermuda a lot of those people were earning US dollars, using services and buying things are now gone.
So the question is how do we recover some of this? The 60/40 rule should be looked at. We should hold onto our commercial real estate but in the residential area I think that there are some great opportunities. Even though, due to the drain of the hotel, it has not worked out as anticipated, Tucker's Point is a fine example of what can be achieved in the residential real estate sector catering to high net worth foreigners. Instead of selling partial ownership, what we need on some of these abandoned hotel sites is to build 4,000 to 5,000 sq ft of condominiums, allow foreigners to come and buy them, set up exempted companies to bring their wealth to Bermuda, domicile themselves in a place that is a favourable tax neutral jurisdiction.
Everyone unfairly accuses us of being a favourable tax jurisdiction, yet we do not take enough advantage of being tax neutral jurisdiction. Right now, if someone brings their boat or their plane in, the first thing that Government wants to do it tackle them with taxation. That's why they stay away. We should be a transient point. Back before we put in this tax and I am sorry that this tax was put in, before we put in this tax we used to have about 1,500 boats used to transit Bermuda, either between Canada and the Caribbean or going across the Atlantic to the Mediterranean. We got confused between what was then the jealousies of Bermuda, seeing all these people buying all these boats and not paying their bills, so we decided put a tax on and the tax was designed to discourage Bermudians from spending money on boats. It never achieved its objective.
What it did was cause Bermudians to give more money to Government and scared the foreign boat owners away. Now the amount of money coming in on revenue on boats has diminished because people find it unattractive. All of the Bermudians that I know of, every one of them, they have their boats in the Caribbean or somewhere else. They are not bringing them to Bermuda. We are actually spending money that is earned in Bermuda, we are spending it somewhere else to satisfy somebody else's economy. We have to reverse that process and start looking critically at how we are going to get money flowing back into Bermuda again. So the condominiums then, so we get the foreigners coming in, condominiums that are serviced like Tucker's Point and are their own little village that can be owned by foreigners.
I think we have been hijacked. The British have hijacked us and it took me a long time to figure it out. There we were when we got the Treaty with the United Sates that gave birth to insurance and reinsurance industry, when we got the Treaty we were quite happy, we were so proud, we started getting all these Lloyds syndicates leaving Lloyds and coming to Bermuda and the British Government was under pressure to do something and they did not know what to do. They must have sat around and said what do we do, that little island of Bermuda all of a sudden now is becoming the dominant jurisdiction for reinsurance and insurance business and Lloyds syndicates are moving to Bermuda and we can't seem to stop them.
How are we at least going to slow this thing down? They got very clever and we fell for it, because Switzerland doesn't do that, other countries don't do that, so that had to make it apply to all territories. They said we know how to slow them down, we will tell them that these foreigners coming to Bermuda, live in Bermuda for a certain period of time, over a period of time, and then they would have a claim to citizenship rights in Bermuda. I don't know of another country, realistically, that says these are immigration policies as America has and every other country has, these are immigration policies about how you acquire citizenship, how you acquire status and whether you live here for ten years, 15 years or 1,000 years, you either get citizenship under these conditions or you don't get citizenship.
But we fell for this hoax, this trickery, by saying 'we can't have all these people getting citizenship so we are going to change our policy and put in term limits so every seven years so we can turn them over'. Now, I think that Government, and it started when I was in Government, I think that policy has done Bermuda a great disservice. It has now become a part of our culture and it is discussed for the wrong reason. We discuss it on the basis of the fact that we want to train Bermudians, to keep jobs available for Bermudians. We can do that equally by a policy that says that if a Bermudian is qualified for a job they get that job. If a foreigner wants to stay here, he should be able to stay here as long as they can do the job that needs to be done.
I can tell you one thing. We slowed down the progress of businesses moving to Bermuda because they said the resources on a continual basis are not here in Bermuda. They started outsourcing businesses to other jurisdictions because they kept saying these work permits, they don't have a steady stay and these chaps stopped bringing their wives and families to Bermuda and now they fly home on weekends to be with their families. So we lost the rents, we lost the use of Bermuda itself and we lost the consistency of people involved in Bermuda in a contributing sense. They have become not unlike mercenaries because it is best to have their companies here but they don't do the service that Bermuda needs beyond that. Now the British have achieved their objective, and we are in a recession, it is more reason why we can't reestablish this critical mass that we really need.
If you look at the Government debt and you look at the commitments that are out there, you will start to see the values of real estate fall, because the rents that you get for the real estate aren't there like they used to be. I believe this Government is much more receptive to ideas, that is why Government has been restructured by the current administration. I think this Chamber of Commerce Real Estate section needs to now sit down and talk about an agenda that is going to help. That way, if we did the condominium village idea, if we revoked term limits we would be going a long way towards renewing Bermuda.
We must also stop our fear of that which is foreign. We have been so inculcated with fear that every time we think about change, we think that change is going to take something from us.
We in Bermuda, because we get in these clashes because we believe that White Bermuda owned Front Street, we believe Court Street, Black Bermuda is in Court Street, and that somehow or the other somebody owes something to somebody, we are down here fighting at these levels down here, when we should be up here thinking how can we bring our collective thoughts together and become one people? The Chinese don't think as two people, they think as one people. The Japanese think as one people. Why? Everybody is recognising now that they need to survive. If we allow this xenophobic approach, the protectionistic approach, we will do a disservice to the next generation.
I think we better start paying attention to Bermuda. I suggested that we develop the Hamilton waterfront. People were polite and nice, just like people come along and say 'Hey, John Swan that is a nice building you built', but I am waiting for the next person to say I want to build a building like that too. We are going to need a few buildings like that to tell the world that we are back in business again. That building is about telling the world we are in business. Telling young people, Bermudians that it can happen.
So Bermuda has a promise, but no promise is guaranteed without an effort. That effort is an intellectual effort. That effort is about talking and communicating with people so that they hear what you believe and start to believe it themselves that we are in this together we renew Bermuda together as one people.
So I am standing on my own soil and I want you to stand on your own soil and speak up because you have been trained to talk to people, you have been trained to use words to convey ideas. You have been trained to understand ideals. If you sit and hide your light under a bushel because you think you are just going to get a commission, it would be like the hotels, they sat and waited for change, waited for Minister of Tourism, Minister after Minister, after Minister of Tourism to make the changes and it never happened and today we are still closing hotels and we are not opening any. Even the ones that we are opening are getting ready to close. That's the message we should all understand. That is the message that we should take to our respective members of Parliament, the message we take to our own business, that change is inevitable, it's necessary and it has to be bold and that is was Singapore does.
Singapore brings about bold changes. It is the most prosperous country in the Asia-Pacific, the most orderly country in that region of the world. Singapore is a sovereign wealth country and has spent tremendous money on its infrastructure and on its people and yet it is out there loaning and investing in and to others. Bermuda can be a sovereign wealth country if it decided that's what it is going to be, but if it is going to sit and let the triviality of these little merchants down town trying to save every little penny, ... let's get some good management in here, let's not fear the 60/40 process, let's turn that around.
Let's turn around the whole idea that wealth is a bad thing. Wealth is healthy people like you when you are wealthy and healthy. They don't like you when you are poor. Don't be afraid of wealth. Don't be afraid of success. The world will then turn its attention to you and help to hold you up. Too many people feel as though, why help somebody that can't help me? It's reciprocal process. Wealth breeds wealth. Poverty breeds poverty, if you don't believe me just go down to Haiti. You might laugh but the bottom line is that we are sinking, all you have to do is look at the GDP, all you have to do is look at the debt we are creating and we are not generating the money to service it.
I want to wish you well; I want you to get excited about Bermuda's future. It is a future that offers an awful lot, but it is people like you and I that can make a difference through your enthusiasm and commitment and your outspoken words, remember your outspoken words, you can't leave it to Al Seymour and John Barritt to just be spokesman any more in the paper. Speak up; be yourselves because you have been trained to be spokespeople, more politicians in Bermuda came out of real estate than any other profession.
I wish you luck.