Bermuda: Country and Foreign Investment
The unit of currency is the Bermuda dollar (referred to here as BMD) which has parity against the US dollar; the US dollar is also accepted. Under the Exchange Control Act 1972 and the Exchange Control Regulations 1973, certain exchange controls apply to Bermudian citizens and to 'local' companies. There are no capital or exchange controls applying to non-residents or to the various forms of offshore entity (exempt or permit companies or partnerships) which are free to import and export funds in all currencies. There are no taxes that apply to such transfers, and there is no withholding tax on interest, dividend or royalty payments.
The Bermudan economy has been highly successful, with tourism and international business being the two main sources of revenue. Over 500,000 tourists visit the island annually, mostly from North America. There is a minor industrial sector and agriculture is minimal because of the lack of suitable land for crops. Consequently about 80% of Bermuda's food needs are imported.
Bermuda's GDP in 2010 was over USD5.85 billion, giving a GDP per head of more than USD91,477. Gross National Income per Capita in 2010 was USD89,935 and expected to exceed USD99,000 in 2011.
The effects of 11 September 2001 have had both positive and negative ramifications for Bermuda. On the positive side, a number of new reinsurance companies have located on the island, contributing to the expansion of an already robust international business sector. On the negative side, Bermuda's tourism industry - which derives over 80% of its visitors from the US - was severely hit as American tourists chose not to travel, although it has rebounded somewhat in recent years.
The development of Bermuda's thriving financial sector began in the 1950's. The Government's selective attitude to incoming business, and particularly its - until recently - exclusion of foreign banks, created and maintains an excellent reputation for the island. A wide variety of financial services are represented, with the captive insurance sector being the world leader; fund and trust management are also prominent. Supervision of the financial sector is in the hands of the Bermuda Monetary Authority, an independent agency which inherited regulatory and supervisory powers from the Government under The Banks And Deposit Companies Act 1999, which was implemented in 2000.
By the end of 2009, there were 13,539 external companies, 1,250 exempted parternships, 588 overseas companies, 68 overseas partnerships, 15 non-resident insurance companies and 3,166 local companies on the register.
The Bermuda Stock Exchange was opened in 1973. As at 31 December 2010, 807 issuers were listed on the BSX. Included in the new listings in 2010 was the Variable Note program of Lodestone Re. The Exchange also listed 124 international derivative warrants. There were also 55 new collective investment vehicles listed, and 7 subsequent issues processed during the year.
The BSX was not immune to the general problems of stock exchanges in 2008. The Bermuda market followed the trend by falling 30% in value as reflected by the BSX/RG Composite Index, which ended the year at 3417.00, a change of 1,553 points in total. Offsetting this decline was a market dividend yield of over 5%, which resulted in a net return of negative 25%. Domestic trading volumes increased from 5.3 million shares to 6.8 million with a corresponding value of over BMD99m.
The total market capitalization of the BSX on December 31, 2008 (excluding fund listings) stood at over USD226bn of which approximately USD1.9bn represented the domestic market.
By the end of December, 2010, total market capitalization of the BSX (excluding fund listings) stood at over USD319bn of which approximately USD1.4bn represented the domestic market. Total trading volume for the year was 64m shares with a corresponding value of USD112m.
The BSX closed 2011 with total market capitalization of over USD341bn (excluding fund listings) of which approximately USD1.4bn represented the domestic market. Total trading volume for the period was 6.5 million shares with a corresponding value of USD25.3 million compared to 64 million shares with a corresponding value of USD112 million for 2010.