Uncertainty is opportunity
2018 has been a year of strengths and challenges. The tourism sector has built on the strong growth of 2017 and the America’s Cup with further growth, higher occupancy numbers and harder average daily rates. At the same time, the international business community has been under constant external attack.
This has combined to create a sense of uncertainty throughout the economy.
Bermuda has historically been an island of navigators. We heavily influenced sea trade of the Western Atlantic, we drove tourism when it was a fledgling industry, we created an international business ecosystem—all imitated by others in their desire to be like Bermuda.
Once again, we stand on the precipice. Rapidly changing international politics has created a world full of uncertainty—but uncertainty is opportunity.
In this world of external threats Premier David Burt and the Minister of Finance, Curtis Dickinson, have spent time building on our EU relationships, telling our story, educating those decision-makers and laying the foundation for our progress. Has it been enough, are there additional avenues to pursue, are there more tools available to us?
Bermuda is in a unique position internationally. We provide more value than we take, we provide services that others can not, we build friendships not transactional relationships. Our international community is truly international.
The often-cited six degrees of separation drop to about three when you introduce a Bermudian into the equation. We are looking for opportunities, leveraging these friendships, seeking out insights and developing a framework that continues to allow Bermuda to provide value to the world.
This is the challenge we pose to our government, to agencies such as the Bermuda Business Development Agency, to the Association of Bermuda Insurers and Reinsurers, the Association of Bermuda International Companies, and all our businesses with an international presence: uncertainty is opportunity.
Domestically we control our own destiny to a far greater extent, but there are significant constraints of our own making. Most of our challenges lie in the simple mathematical truth that fewer people are working in the economy while the cost of our infrastructure is slowly rising.
This is the fundamental root of our high cost of living. What levers are available to make meaningful change? Can we reduce to cost of this overhead? Can we increase the size of our working population or the size of our economy?
This infrastructure can be defined as all those relatively fixed costs that are imposed on the economy. Where do we need appropriately sized infrastructure? The size of government is a balancing act between necessary services, the cost of providing them and the social ramifications of reducing the civil service.
The resilience of energy supply is a balancing act between reasonably profitable investment, engineering truths around production modalities, storage requirements and the cost of energy.
The healthcare ecosystem is a balancing act between the quality, robustness and timeliness of service against the cost of health insurance and the new tax by another name.
This analogy holds true for any business as well. If your market is changing, if your revenue is fluctuating, then you must take steps to be able to scale your fixed costs, reduce debt payments, reduce non-revenue producing staff, and ensure your systems are efficient. This is the world that Bermuda business has been living in since 2008.
The balance is that you must still be able to satisfy your customers or they will leave you. Those businesses that couldn’t adapt are no longer with us.
The current government has begun to move; the Sage Commission was unfortunately not materially acted on by the previous administration; the Efficiency Committee has sparked some small scale changes. The next steps are critical. Can we collectively take these steps, can we right-size government, can we have a meaningful impact on the cost of living? Uncertainty is opportunity.
Bermuda is poised for growth. Commercial real estate is available, residential real estate is available, high speed internet brings to world to you, the regulatory regime is a business enabler, the quality of life on offer is second to none.
There is no better place to live, to connect to the world, to disconnect from the world, to raise a family, to play a sport, to have a balance seldom found in the business world.
Dennis Fagundo is president of the Bermuda Chamber of Commerce.