Premier On 60/40 Rule & Business Structure

“The challenge is the structure of how Bermuda is set up; we allow people to earn money here, but we don’t allow them to reinvest the money which they earn here inside of our economy,” Premier and Minister of Finance David Burt said.

In reply to a question at the recent Pre-Budget Public Forum, Premier Burt said, said, “The biggest challenge which we have, and I’ll agree with you on one instance, that Bermuda should not be in the economic position which it’s in. It shouldn’t be, especially when you have one of the highest per capita GDPs in the world, when you have this place where we are wealthy, and we have this vast amount of wealth.

“The challenge is the structure of how Bermuda is set up. We allow people to earn money here, but we don’t allow them to reinvest the money which they earn here inside of our economy.”

Citing a report from the BMA, the Premier said it was “estimated that over the last 10 years between three billion and eight billion dollars, which was earned in Bermuda, has left the Bermuda economy.”

Extract from the live stream showing the Premier talking about Bermuda’s structure & 60/40 rule:

“We can’t print money like the United States does. The United States was able to print money because to increase their money supply, they just print money. We can’t print money.

“So the next best thing is to ensure that the money that is earned in Bermuda, we do as good of a job to keep it in Bermuda to continue circulating in the economy. So, how do you accomplish those goals? There’s a number of things and there’s a number of sacred cows that you have to touch.”

The Premier then mentioned the ’60/40 rule’, which generally requires local companies to be at least 60% Bermudian owned.

“One of them is the little issue of the 60/40 rule. Now the minute you say 60/40 people begin to get scared. People are like, oh, well you can’t allow foreigners into Bermuda to start competing against local industries and all the rest,” Premier Burt said.

“That’s a fair and valid point because we are a small economy, but by and large, the 60/40 rule was not put in place to protect small business. It was put in place to protect the oligarchy.

“It was put in place so that capital could not come in to be more competitive for the existing industries. So when you have a space where you have a high cost of living, when you have a space where there may be not a lot of competition, you need to make the changes that can possibly provide additional competition into your economy, additional capital into your economy, that may be able to increase the competitive things that go on.

“So if you have, instead of three insurance companies, four or five, if you have some people who are competing in other areas such as food production and otherwise, these are spaces where you can actually see this competition happen.

“But that competition can only happen, in the construct of the Bermuda economy, is if we have additional capital coming to our shores, or if we can use the capital that may be here in order to start and invest in additional businesses.

“So that’s the challenge which we have, because the only way that we’re going to have economic growth is keeping more of that money here,” Premier Burt said.

The video above was extracted from Bernews live stream of the Pre-Budget Meeting which was recently held by Premier Burt and Junior Minister of Finance Wayne Furbert in advance of the 2018/19 Budget which is set to be delivered on February 16th. You can watch the full 90-minute video here.

#2018Budget #60/40Rule #BermudaPolitics

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