Minister On Finances & Economic Recovery

The Government paid benefits to over 10,000 persons for a total cost to date of approximately $56.8 million, for fiscal 2020/21 the Ministry is providing up to $90 million in capital development funding and the sale of Ascendant Group “will see in excess of $200 million flowing to Bermudian shareholders.”

This was from Minister of Finance Curtis Dickinson during a press conference held last week to provide an update on Measures Implemented by the Government and economic recovery.

Minister Dickinson’s remarks:

Good afternoon.

Bermuda continues to carefully navigate through COVID-19, we have made significant progress and we are a safe destinations for visitors. This has resulted in some measure of success in improving our economy – but we are not out of the woods yet. There is still a lot of work to do to improve our economy, get people back to work and ensure that all Bermudians enjoy a good quality of life.

Today, I am happy to provide an update on the work being done by the Ministry of Finance, to support those that are being displaced from work, and the measures that have and are being put in place to maintain business operations and employment in Bermuda and to stimulate our economy.

I will cover two areas. They are as follows:

• Measures Implemented by the Government, and

• Our economic recovery

I will start with an update on Measures Implemented by the Government

Since the onset of the pandemic, the Ministry of Finance has continuously stepped up efforts to provide support to deal with health emergency needs and assist individuals and businesses that were adversely affected by the pandemic. As additional sectors of the economy have opened, we continue to assess and implement measures as part of our plan to bring further strength and stability to our economy in a fair and equitable manner that appropriately takes into account the needs of the people of Bermuda.

The Ministry of Finance COVID-19 – Fiscal Plan has already provided timely and targeted fiscal stimulus to various components of our economy, as needed. Significant public resources have been directed to strengthen the healthcare sector, and to support affected workers.

We have quickly taken appropriate steps to ensure the availability of emergency financing to supplement reduced revenues and COVID-19 related expenditures. Actions taken in this regard include:

Measures Implemented by the Government to assist individuals and businesses:

• We raised $1.35 billion at historically low rates to help with funding of the Government and its economic recovery over the next two to three years.

• To date we have spent just over $21 million for COVID-19 related health matters to keep Bermuda safe and secure. This included costs related to such items as PPE, testing and quarantining and cost to embody the regiment.

• The National Pension Scheme [Occupational Pensions] Act 1998, was amended to allow for a suspension of employee and employer contributions for a twelve month period commencing 1st July, 2020 and ending on 30th June, 2021.

• Made amendments to the Contributory Pensions Act 1970 to allow for employees, employers, and self-employed persons to suspend payment of their social insurance contributions for the whole of the suspension period [July 1st 2020 – June 30th 2021].

Measures Implemented by the Government to assist individuals:

• We quickly introduced a 12 week unemployment benefit, to assist people who lost their jobs due to restrictions imposed as a result of the pandemic;

• To further assist those that were still not yet employed, the Government extend the unemployment benefit program for another 6 weeks;

• We have paid benefits to over 10,000 persons for a total cost to date of approximately $56.8 million.

• We provided a supplemental unemployment benefit to unemployed persons. To date 57 persons have been paid for a total of just over $177,000;

• Amended the National Pension Scheme [Occupational Pensions] Act 1998 to permit a person under the age of 65 who participates in a private, defined contribution pension plan or local retirement product, to voluntarily withdraw up to $12,000. To date the following applications have been made and approved:
• Total Applications Approved: 14,176
• Total Value of Applications Approved: $97,203,552

• Further amended the National Pension Scheme [Occupational Pensions] Act 1998 to permit a person who has reached the normal age of 65 to withdraw up to 25% of their pension account balances. To date the following applications have been made and approved:
  • Total Applications Received: 245
  • Total Value of Applications Approved: $8,409,996

[*The total value of assets under the National Pension Scheme is estimated at USD $4.15 billion; these amounts represent 2.5%]

Measures Implemented by the Government to assist businesses:

The Government has implemented further emergency measures to assist businesses that have a pressing need for financial relief as a result of this pandemic. Some of the actions taken are as follows:

• The filing deadline for payroll and corporate services tax was extended;

• Penalties and fees that would normally apply for that period were waived;

• For local companies and permit companies, the deadline for filings and fees in relation to corporate reporting and taxes was extended by three months to 30 June 2020;

• We have provided relief from payroll tax to assist the restaurant and bar sector since the quarter ending 30th June 2020 [This concession will be reviewed for possible extension at the end of each quarter];

• Provided payroll tax relief for taxi owners for the current fiscal year;

• Commencing October 1st 2020 we have now provided full payroll tax relief for the hotel sector [This concession will be reviewed for possible extension at the end of each quarter];

• The Customs Tariff was amended during the budget session to provide duty relief for businesses bringing in personal protective equipment and supplies;

• Allowed retailers and other commercial importers to apply for duty deferment for up to six months on imported business goods subject to a minimal surcharge;

• With respect to direct financial support to small and medium-sized enterprises [SMEs], the Bermuda Government, together with the Bermuda Economic Development Corporation [BEDC] developed the Business Sustainability & Continuity Funding Programme in response to the impact of Covid-19 on Bermuda’s SMEs.

• At this time Government has provided the BEDC with $8 million of the $12 million of the approved grant. The BEDC have directly assisted 114 businesses with funding since the programme began and are actively processing more applications.

The implementation of the above mentioned economic stimulus measures are expected to stabilize employment and hasten the economic recovery. Without these stimulus measures the overall economic contractions in 2020 would be worse.

In addition, with immediate effect, to assist persons made redundant, commencing in this month, we will be providing payroll tax relief on redundancy payment to the employee portion only.

In further support of the hotel sector, on a case by case basis we will be providing a 50% discount on land tax for hotels for the next 2 land tax periods.

Finally I can confirm that in an effort to assist the retail sector and maintain employment levels in this sector, the Ministry of Finance is currently considering various additional customs duty and payroll tax concession proposals put forward by the sector.

Economic Recovery:

The economic fallout caused by the COVID-19 pandemic is forcing governments around the world to come up with policies for stimulating their economies.

Many are considering tested and proven methods to boost their economies in the short-term, and to provide wide societal and economic benefits in the long term: I am referring to infrastructure investments.

Bermuda is no different, and at my last press conference I advised that some of the funding from our recent debt raised will be used to bring forward some aspects of the Government’s long term capital plan. These capital projects will support our economic recovery, provide employment for Bermudians, while improving our quality of life.

To this end the Government’s Capital Expenditure Plan Technical Committee has been meeting to expedite public sector capital investment focusing on construction projects. In total for fiscal 2020/21 the Ministry is providing up to $90 million in capital development funding.

This Government’s economic plan has always been rooted in growing the twin pillars that have served the Bermuda economy well, financial services and tourism.

Other areas of focus include; diversifying Bermuda’s economy in an effort to attract companies in growing industries; implementing measures to reduce the cost of living and doing business in Bermuda; making the Government more efficient; and reducing regulations and bureaucracy to stimulate investment while promoting competition in the Bermuda economy.

I am confident that continuing with these principles will ensure that our economy recovers and grows [as it did before the pandemic].

It is important that the scope of our economic recovery plan be broad-based covering both measures to sustain economic activity and structural reforms. Policy measures will target our most critical and prospective economic sectors and will involve the following:

• Supporting the recovery of tourism & business travel;

• Supporting and expand IB; and

• Encouraging business development and economic diversification – Bermuda’s emerging Tech Sector and advanced financial regulatory framework will be capitalized on as opportunity

The adverse economic impact and sudden joblessness across the tourism industry as a result of the COVID-19 pandemic are devastating. Notwithstanding the foregoing, the BTA believe Bermuda will accelerate its road to recovery in the tourism space given how we have successfully managed the health risk brought on by the COVID-19 pandemic.

While Bermuda’s tourism industry has suffered like all other jurisdictions that rely heavily on travel and tourism, we are able to distinguish ourselves through our reputation of being a safe tourism destination. A major part of Bermuda’s tourism recovery marketing plan will rely on this reputation and we believe it will aid in our recovery strategy because health and safety has never been more important to travelers.

Other aspects of the BTA’s Tourism recovery plan are as follows:

• On July 1, 2020 the BTA restarted its paid marketing placements after stopping such marketing on March 16.

• In the meantime, the BTA is working through an inside-out marketing strategy that aspires to stimulate spending from local residents to supplement the slow and gradual return of leisure visitors. This includes a new digital nomads policy that will attract professionals and students to the island to work from Bermuda remotely.

• Special promotions for the restaurant, golf and retail industries have already unfolded; the yacht and catamaran boat charter industry will be the strategy focus starting this weekend

• The latest inside-out campaign runs parallel with marquee sports tourism events on the calendar this month: The Bermuda Gold Cup, Rugby World Tens Series and the Bermuda Championship—all slated to begin next week. The professional golf event will be the PGA Tour’s first tournament with live spectators since the onset of the pandemic.

• Each of those events are built on the premise that they are multiyear and part of long-term sustainable growth for the industry. Additionally, the BTA plans to continue next year with the final year of its a three-year deal as the destination partner of the US Open Tennis Championship in New York.

• The Superyachts and Other Vessels [Miscellaneous] Act 2019 should attract more visits during the spring and fall seasons as superyachts transition between the Caribbean and Europe; earlier this month, the BTA held a direct sales webinar to raise awareness with superyacht brokers to ensure they know Bermuda is open and safe and welcoming charters.

• Bermuda’s strong position as a destination of choice for cruise ships will lead to the return of lost cruise travel business, safer than many other travel destinations in the region given the measures taken by the Government to effectively control the spread of COVID-19.

With regard to diversifying the economy the Government, in conjunction with the Bermuda Business Development Agency [BDA], has developed a multi-faceted approach to creating new areas of economic activity.

Over the past year, progress has been made in establishing Bermuda as a domicile for technology companies in the emerging areas of Financial Technology [“FinTech”], Regulatory Technology [“RegTech”] and Insurance Technology [“InsurTech”]. The size of our relevant financial sectors and high regulatory standards make us an attractive jurisdiction for technology companies to develop and test their products in our market before exporting those products to the rest of the world.

In addition to looking to attract technology companies to Bermuda, the Government’s economic development and diversification strategy has been specifically focused on aviation and shipping, arbitration, biotech and life sciences, intellectual property, satellite and space and nearshoring. Additionally, the Cabinet Office in conjunction with the Ministry of Finance, BDA and BMA is crafting standalone family office legislation to differentiate Bermuda’s offering in this competitive global space. Marketing efforts, policy and legislative changes are also being advanced as part of a targeted Asia and Hong Kong strategy. It is anticipated that these actions would lead to more jobs in the financial services sector.

The COVID-19 Economic Advisory Committee [EAC] continues to play a fundamental role in our economic recovery and as I indicated in my last remarks the Committee has already come up with several short-term ideas to assist persons and businesses in surviving through the early stages of the pandemic. To date 73% of the EAC’s short-term ideas have been implemented. Some of the ideas suggested by the EAC that have been addressed since my last update on September 1st, are as follows:

• Extended payroll tax relief for the restaurant and bar sector

• Provided full payroll tax relief for the hotel sector

• Provided land tax relief for the hotel sector

Another matter that was supported by the EAC that has been actioned by the Government is the approval of the sale of Ascendant Group/Belco. This action will see in excess of $200 million flowing to Bermudian shareholders.

The EAC will have their next meeting this Wednesday and are currently developing medium–term strategies which can be implemented over the next one-to-three years in order to stabilize and grow our economy. The strategies are being refined and assessed for impact before final submission to the Government.

The Ministry will continue the process of integration the various ideas proposed by the EAC and others into a comprehensive economic recovery plan that will lead to a sustainable path to economic recovery.

I wish to once again assure the people of Bermuda that the Government is sensitive to the challenges facing us from COVID-19 and with your support and cooperation, we will continue to take required steps to navigate our Island through these difficult economic and financial conditions, with economic recovery being our key objective.

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