Bermuda has recorded its strongest first half for new company formations for five years, however many of the companies being formed are “investment holding companies, which contribute little to the local economy in terms of employment or government revenue,” the Economist Intelligence Unit said.
In a recent analysis, the EIU said: “Bermuda has recorded its strongest first half of the year for new company formations for five years, raising hopes that international business sentiment is responding positively to the centre-right One Bermuda Alliance (OBA) government’s investor-friendly approach to policy.
“The Ministry of Economic Development reported that 422 of the companies formed were international businesses, representing an increase of 16% from the first half of 2012. The 95 new local-company formations represented the highest January-June figure since 2010.
“The uptick in company formations reflects increasing investor confidence in the context of a US recovery, the end of uncertainty brought on by the 2012 US presidential election and a change of leadership in China.
“At domestic level, Bermuda’s competitiveness has been enhanced by the scrapping of the six-year time limit for foreign workers and the granting of tax breaks to hotel developers and companies hiring Bermudian workers. Efforts to attract international business is being aided by the formation of the Bermuda Business Development Corp.
“Efforts to stabilise the public finances through spending cuts and debt management are also acting to reassure business, as concerns over the likelihood of future tax increases abate.
“However, many of the new international companies being formed are investment holding companies, which contribute little to the local economy in terms of employment or government revenue.
“A more meaningful impact will come from the rise in local-company registrations and the increase in insurance-company registrations, supporting the island’s largest international industry.
“The Bermuda Monetary Authority (BMA, the financial services regulator) reported 34 new insurance-related registrations in the first six months of 2013, representing a 42% increase over the same year-earlier period.”