Long considered a tax-neutral offshore haven, Bermuda is now advertising itself as an offshore electronic commerce hub.
To hammer home this message, Bermuda is conducting a business-to-business roadshow, with a stop in Dublin on November 27th and in London two days later.
Two weeks ago, the Bermuda International Business Association (BIBA) hosted its annual conference at New York's Waldorf Astoria hotel to talk about the future of offshore investing and to stress that Bermuda is the place to do business when it comes to e-commerce.
BIBA works with the private sector and the Bermuda government to promote the 20-squaremile island, with 60,000 inhabitants, as an offshore business, e-commerce and financial services jurisdiction. With more than 400 years of history, Bermuda is the oldest self-governing overseas dependent territory of Britain. The island is home to 12,000 registered international corporations and, as of September 30th, there were nearly 10 per cent more international businesses registered in Bermuda than in the whole of last year.
About 75 per cent of Fortune 100 companies have a presence on the island, many of them involved in insurance, mutual funds and e-commerce. In terms of insurance, the Bermuda market ranks third in the world, after New York and London. There are more than 1,500 international insurers on the island and $100 billion (€115 billion) of insurance assets. Bermuda has also become a domicile for the investment management industry, with nearly $30 billion in assets in more than 1,000 separate offshore mutual funds.
While several of its neighbouring Caribbean islands - such as the Bahamas, Cayman Islands, Antigua and Barbuda - have come under intense scrutiny as offshore centres, Bermuda has passed tests conducted by regulatory bodies in Britain, the United States and other G7 countries. The reason, according to BIBA chairman Raymond Medeiros, is because it has "Know Your Customer" rules, anti-money-laundering legislation and a regulatory infrastructure.
"The fundamental reason for going offshore is to do business without the state telling you how to do business," said Mr Warren Cabral, a partner at Appleby Spurling and Kempe, a Bermuda-based law firm.
"Our infrastructure on the legal, regulatory and business side is first class. Bermuda offers an environment where companies can prosper without undue regulation," he said.
It is this type of environment that Bermuda's financial services industry has been highlighting in its effort to attract e-commerce companies to the island. This year, the Bermuda government implemented the Electronic Transaction Act, which includes an e-commerce code of conduct. The stated aim of the act is to "lay a foundation for electronic transactions on a technology-neutral basis that is sufficiently flexible to embrace new technological developments and that contemplates a high degree of self-regulation".
From April 1999 to March 31, 2000, the number of new technology and Internet-related companies approved to set up base in Bermuda increased by 58 per cent, to 71 companies.
Last December, Bank of Bermuda and First Ecom.com set up First E-commerce Data Services Ltd, a joint-venture company providing global credit card payment processing services to banks and their merchants in Latin America and the Caribbean.
There are 224 merchants doing their processing with First E-commerce and there are 620 other merchants in the database, said Lesley Pooley-Maughan, vice-president of institutional processing at Bank of Bermuda, who is responsible for business development at First E-commerce. "We offer one of the first offshore credit card transaction processing platforms in multiple currencies and an online fraud screening service," she said.
Internet merchants that are looking for a place to domicile their businesses can set up a "virtual corporation" under the First Atlantic Commerce E-Commerce Act 1999, said Andrea Wilson, chief executive of First Atlantic Commerce Ltd in Bermuda.
A virtual corporation allows businesses to set up a corporate presence in Bermuda without requiring full incorporation.
For example, one division of a company could set up an operating cell in Bermuda and, by virtue of its statute, the assets and liability of that cell would conduct business as if it were an independent company. Transactions are tied to a specific numbered account provided by Bank of Bermuda. This single merchant account can provide card services in Visa, MasterCard or American Express. Multi-currency pricing and settlement services are also available. "For now, the currency of the Internet is US dollars and Bermuda falls into the Latin American/Caribbean region, which is a US dollar denominated processing interchange," Ms Wilson said.
Bermuda's secret weapon, said Mr Thomas Luciano, vice-president of Concord - the joint venture between AT&T and BT that has its headquarters in Bermuda - is its enviable infrastructure. "It offers the opportunity to balance hard work with hard play even in paradise," he said.
