Economic Investment Certificates not enough, experts say
Plans to court immigrants who could bring investment into Bermuda got a lukewarm assessment from economic experts yesterday.
Nathan Kowalski, the chief financial officer of Anchor Investment Management, backed the Economic Investment Certificate programme, but said the island needed to “get serious” and offer a clear route to Bermuda status.
Mr Kowalski added that many of the policy’s investment options looked unlikely to deliver much of a boost.
Dennis Fagundo, the president of the Bermuda Chamber of Commerce, said he was pessimistic about the policy’s ability to generate “positive results”.
They were speaking after the policy, detailed last Friday at the House of Assembly by Jason Hayward, the labour minister would award an EIC to outside investors who could put a minimum of $2.5 million into an approved category over a five-year period on the island.
Successful investors would get a residential certificate after five years.
Mr Hayward said 100 high worth new residents could bring $250 million into the economy and “facilitate continued economic activity for years to come”.
Qualifying investments included real estate, buying Bermuda Government bonds, contributing to the Government’s Sinking Fund for debt reduction, and buying into the Bermuda Trust Fund pledged in the Progressive Labour Party’s 2020 General Election platform.
Charitable investments were also listed – as well as investments in island businesses and the development or launch of new enterprises.
But Mr Kowalski said: “There are certain options they list for investment that probably would not do much to support the local economy.
“If you’ve bought $2.5 million worth of government bonds, that doesn’t really do much.
“Certain things would move the needle and be very helpful – I am all for increasing economy activity in Bermuda. That’s what we really need.
“But some of these would not do much to create that and to put more people in the island, which is paramount.”
Mr Kowalski added the Sinking Fund option was “ basically a charitable donation to the Bermuda Government”.
He said: “A $2.5 million investment in a new business that hires a bunch of new people – that would be great.
“How effective it is and the benefits that it provides depends on which options are taken.”
Mr Kowalski added the island needed to have “a defined pathway to status, kind of like what Cayman has” to boost growth.
He said: “That’s an option that should seriously be considered. Investment is usually predicated on the ability to stay here.”
Mr Kowalski added the island needed to get “serious about pumping up the population” and highlighted that about half of GDP growth relied on an increased population.
He said he was not surprised to see the EIC proposal from the Progressive Labour Party, which in 2016 opposed the Pathways to Status plan created by the then One Bermuda Alliance government.
Mr Kowalski added: “I would hope we are all coming to realise this is something critically important and a huge issue.
“It’s not something we can ignore and not deal with. We need to get serious and come up with some solutions to arrest the downward trends.
“It’s not surprising, regardless of what political party is in power. The longer we leave it, the worse it gets.”
Mr Fagundo said the Chamber of Commerce backed the EIC’s intent to build economic activity and create jobs.
But he added the EIC looked “significantly more restrictive in the ways that matter than the Residential Certificate Policy of 2003 and 2015 that it replaces”.
Mr Fagundo said the net effect was “unlikely to produce positive results”.
He added the Chamber would support keeping both residential certificate policies in place.
He said: “Given the lack of proper consultation, we have not conducted an exercise to determine its competitiveness in the global community and look forward to doing so such that we can adequately advise the minister.”
Bermuda’s falling population was highlighted in the House by Mr Hayward.
He said the EIC plan was a “measured and controlled method of allowing Bermuda to increase its current residential population with individuals who will create immediate value to our economy”.
Opposition MPs last Friday said that non-Bermudians who had already built a life on the island appeared to be left out.
The Government website said that one provision of the policy allowed retroactive approval.
It added that people “currently residing in Bermuda and who may otherwise meet the eligibility criteria for an EIC (whether prospectively or retroactively) may apply for an EIC which may be granted at the discretion of the minister”.
The island already has a residential certificate policy, with holders allowed to settle on the island, but not to work.
Requirements included people being able to demonstrate they had the means to support themselves.
A labour ministry spokesman said last night that the Government was “confident that the opportunity presented by the EIC will be attractive to investors and sets out clearly that we can marry that investment with growth and benefits to the community”.
“The aim is to make this process seamless as interested persons will not have to leave to apply, however, they must hold an Economic Investment Certificate for five years before they can apply for a residency certificate.”
He added the programme would not give status, or a route towards it.
The spokesman said that “the policy this Government inherited required very little from those who would benefit”.
He added: “This significant change means that applicants will have to be invested in Bermuda to enjoy all the benefits of living in our community.”