November 18, 2011Dear Sir,A conversation has started on removing the 60/40 rules in Bermuda. I would like to put in my few cents worth below. We are a small Island in the middle of nowhere. We cannot compete against the big boys in anything. We don’t have the physical or human resources in large enough numbers. This means we must be different to survive economically. We cannot compete by being the same as other places. This was the basis for success in captives many years ago and also tourism in the 50s and 60s. It was the basis for our historical economic success. The invention of the Bermuda Sloop showed that, etc. Nobody else out there had our cottage colonies in the 50s because we essentially invented them. Nobody else had College Weeks in the 60s like we did and many of those students came back here for honeymoons, etc. If we remove the 60/40 rule our local economics will be taken over by bigger companies, our culture will change and become more like everywhere else, we will also lose our identity.If you think we have a social problem now, wait until this identity thing gets worse. This particular process is actually already happening to some degree. A few Bermudians will make fortunes as they sell local companies doing business in Bermuda, to another HSBC, CIBC, Walmart or something similar. A larger number of Bermudians will get left behind and we shall no longer control our local economic or social destiny. An example of this is what Bank of Bermuda/HSBC did. They laid people off after the takeover. Butterfield will do the same thing if not already done so. The recent record of opening up is not to increase Bermudian employment, but the opposite. In the past both banks hired extra people when times were bad in Bermuda so as to help with any social problems. These banks had foreign offices which earned income outside Bermuda which could be paid to Bermuda. This diversification of income served us very well and was one reason why the banks could do this hiring. We no longer have this well earned luxury as both banks are now controlled by non-Bermudian entities. They used to be the largest locally controlled private sector employers. They are now being run with outside shareholders controlling the bottom line. This removal of 60/40 rule idea is extremely dangerous as the damage to our social structure will be permanent and may move beyond our control. Remember social structures require time to change successfully. Do you think someone in Toronto or London or anywhere cares whether our unemployment rate is three percent or six percent? They are interested in the next quarter, not the next generation. To them six percent is pretty good, even if they did care. But six percent unemployment in Bermuda is a huge problem. A strategic example of using a process from a large place, in a small place. It does not work.There are some parties who believe some Bermudian companies should be allowed to accept more foreign investment as otherwise they might either go under or have continued problems. What has not been mentioned in debate is that companies are not the same. Each one has a different importance to Bermuda generally. Electricity for example is a strategic requirement for without it, nothing works. We cannot even flush our toilets without it. Well, not completely, but you get the picture. Electricity generation is also a capital intensive business and difficult to build from scratch.I would like to suggest that if we relax 60/40 rules we should do so only for those companies which have a strategic importance to all of Bermuda. For without them being a success, everything else stops working or slows down sufficiently to do Bermuda serious economic damage. Which means we must keep them working, even if that requires an increase in foreign ownership with critical downside risks as mentioned earlier. It’s a balance. We shall lose our balance if we completely remove 60/40 as that will transfer control of our domestic economic engine, which employees most of Bermuda, to someone else and they will run it to benefit themselves, not us. My suggestion is to remove 60/40 for a few strategic companies in the event they require the capital. Leave the rest alone to limit the damage as described. Also, continue to encourage venture capitol to start up new companies and employ more people. We also need a realistic tourism plan and we need it now. Thank you for your time.ANTHONY GORHAMSmith’s