Column: Investment, Leadership & Economy

May 2, 2023

Justin Mathias Bermuda thumb generic

[Opinion column written by Justin Mathias]

To follow up on my piece from last week I thought it would be imperative of me to provide an example of entering productive ideas and what I framed as adding to the conversation.

Last month I attended an investment conference down at St. Regis and it was quite thought provoking and excellent conference put on by industry legends and pioneers from the foreign perspective and Bermuda industry veterans.

One industry veteran spoke about the intersectionality of the Bermudian entrepreneurial spirit and pursuit of being bigger than the ocean that confines us. We walked through a history of the Insurance industry, a history lesson that everyone should hear, which talked greatly about the world trying to put limits on our vision and the possibilities of our future. We then turned the discussion to how Bermuda IB companies have no choice but to be nimble in size given the restricted supply of housing and limited capacity of Hamilton’s infrastructure to have several thousand personnel sized Insurance Company’s’ on island and that the possibility of bringing in 10,000 people was not a possibility.

I laughed to myself because we had just spent 20 minutes talking about how others were constantly putting limits on our possibilities. We had a vision for our country almost a hundred years ago and it was constantly shut down as an impossibility at every turn by our intentional friends.

What did we do?

We continued and soldiered in the Bermudian way to make our vision a reality. But now our own mindset is one of limited possibilities?

Have we turned into that foreign mindset of limited possibilities with a lack of creative innovation? Has truly what we have succumbed to as a society?

I remember growing up in a Bermuda where there was immense construction and formation of new wealth. Living in that time made me feel like any dream that I wanted to pursue could be possible. That if you worked hard, you were rewarded.

We are on the precipice of a renaissance but given that everything in life has balance there is also the chance that the precipice in which we are seated on, could be one of decline if not stewarded properly.

What is needed more than anything is a vision for the future, a renaissance, that would be beneficial for all. As my ideology guides me more than anything, that means we don’t need radical change and overall upheaval of legislation and to a certain extent government policy to put that revolutionary and innovative mindset to the forefront – we just need a Leader.

We need someone who will bring a vision for the future who is willing to work hard to get the buy- in from the community to embark on a journey that could lead us to prosperity for all. We need to get out of the hole that has been continuously dug through the division of modern-day politicians.

At the simplest levels we need to grow the industry that we know is working, IB, and combine it with an industry that is about to be in growth, which is Tourism. We have seen the looming announcement of South P and announcements from Brookfield about development on front street and our biggest believers in our nation’s growth the Green family who has brought new real estate to their ever-growing real estate portfolio.

We must create a consortium of future construction projects and local vendors and bring them together to find ways in which we can achieve economies of scale on construction supplies and other associated materials to reduce costs. Whatever concession we can put in place through elimination of duties and other incentives we need to also put on the table in order to spur growth in our GDP.

We need 10,000 people not to only revolutionize the way we do business but to actually turn the city into a city that will provide the economy that Bermudian entrepreneurs deserves. Having a livable city would reduce congestion on our roads while also reducing the morning and evening rush hour traffic and in turn reduce our carbon footprint.

We should see cranes and construction workers on every street working towards our common goal of revolutionizing our country and a creating an economy, social culture, and country that we all take pride in and bring our loved ones that are currently overseas seeking opportunities that don’t yet exist on our shores yet, home.

Now I won’t get into the weeds of how creating a livable city and the positive impacts that could have on the Bermudian dream of owning house through slow reductions in the affordability of homes and rent in rural areas. This would also reduce the amount of financing cost to consumers through the influx of foreign wealth into the economy and the abilities of new institutions to lend at a lower and more competitive rates.

At the conference we talked about alternative investments [insurance investment terminology], which was the part that we investors are looking at intently as we recognize that we might be nearing the end of a heightened risk-free rate of return, and we have to look for new spaces to invest and seek returns once it begins to trend downwards. But given the uncertainty of the markets and looming US recession you want to invest in less riskier alternatives and nine times out of ten we turn to investment products that are structured around the real estate market where there tends to be opportunities.

Now this is the part that we need a visionary broker for. As a community and businesses who have a social obligation to society – we should be investing in that community, tenfold – as the impact on our bottom-line is highly correlated. We should be building state-of-the-art, fully sustainable buildings that will take us and our industry into the future [Bacardi has just done this]. We should be showing the world that we are still the number one jurisdiction of choice – not just on a human capital and financing front but in the way we view and prepare for the future. We need to say not only to our IB partner but to our people that we should buy in. I say that because why not buy-in into your own future, that is the way to get us out the crushing debt crisis we are in and rebuild a lasting future for our children.

This Public/private [by public I mean the people not government intervention] initiative will not only cover our need to revitalize our economy and come with a strategy to avoid the manufactured recession that may be caused by central bank’s monetary policy it could also suffice the space for Bermuda IB to be leaders in the ESG space. Not only on the operating side but on the investment side as well.

The financial burden doesn’t have to all fall on the IB sector which I believe more than likely has the capital to do so and if the associated risk is an issue there is a way to mitigate that within a structure product from reputable and known playmakers in that space. It could also fall on our local venture capitalist and entrepreneurs who are seeking commercial/residential real estate exposure with high mitigating risk standards.

Bermuda has always provided solutions, and this may not be the solution, but this is a concept as a community that we could work on and get progressive buy-in to try to achieve. Revolutionizing the city and being more sustainable and being more independent from the Grid will give us the sustainable future we can all bask in. We could grow the working base and through that then lower taxes for both Bermudians and IB while additionally providing the incentive for IB to bring additional human capital to our shores to provide relief to our aging system. We lastly need to turn away from areas that bring our reputation into disrepute and focus on how we can grow what we know is growable.

Companies have the capability to grow but they need incentive and growth strategies to achieve this. The government has consistently put barriers and constraints on growth for their own political strategy and it is time that this comes to an end. Time to not allow the divisiveness of both parties to guide the downfall of our impending future.

We need to dare to dream Bermuda, we need to set our goals for the future and determine that we are best to self-actualize those dreams into reality. We have done it time and time again over the last 400 years when the odds and people told us that we could not achieve greatness. We have always bucked this in the reality of our accomplishments. Let’s do it again, let’s dream big and create a viable option to end the political divide and relegate both parties to the lower tier league.

- Justin Mathias, CPA, former Senator & former Chairman of OBA

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