Tough, new legislation to improve controls against money-laundering will be finalised through a joint effort of the Ministry of Finance, the Attorney General, the Ministry of Labour, Home Affairs and Public Safety, together with the Bermuda Monetary Authority.

Finance Minister Grant Gibbons' Budget yesterday indicated that the consultation will come now that input has been received from the business community.

Meanwhile, annual licensing fees for captive insurers are being reduced, as fees charged to Class Three and Four insurers and non-resident insurance companies go up.

At the same time, the fee structure generally for insurance companies will be clarified and rationalised to make clear the fees paid by companies which carry on composite business, the Budget Statement said.

After year-long consultations among Ministry officials, the Bermuda Monetary Authority (BMA) and the private sector, Cabinet is considering a list of recommendations that should soon result in legislative changes to streamline the process of company incorporations.

Government is also attending to regulations governing collective investment schemes and will seek to strengthen business in foreign sales corporations.

Legislation will be enacted to licence and regulate companies that provide investment services.

But in a near lecture handed down to retailers in the Budget Statement, international business, which now contributes more to Government coffers than tourism, was cast as the paragon of global standards that other Bermuda businesses must seek to achieve.

After months of being badgered by retailers for tax relief from Customs duty, Dr. Grant Gibbons seemed pointed in his Budget Statement when he noted: "It is ironic, but not surprising, that the sector of Bermuda's economy that has been most successful in the last ten years has been that sector least protected from global competition.

"The (re)insurance and financial services sector in Bermuda, truly knowledge-based industries, have been successful while competing directly, without protection, in the global marketplace.

"It is also instructive to recognise that this sector has been successful in spite of the high cost structure of Bermuda.'' But he also underscored the notion that tourism and international business, as two separate elements in the foundation under the Bermuda economy, do not stand apart and are not mutually exclusive.

He said: "They stand side by side, and they succeed or fail together. These two vital sectors support, and are supported by, many other areas within our economy, from retail, to transportation, to construction and to professional services.'' Government now estimates that almost 40 percent of Bermuda jobs, or nearly 13,000, are dependent on international company expenditure.

Foreign currency earnings from international business were estimated in the 1995 Archer report to be at record levels ($527 million), 22 percent above the year before.

The robust growth continued in 1996, with the formation of 1,080 new companies, the second best year ever. That included the record 308 formed in the fourth quarter, up more than 40 percent from the comparative period in 1995. Companies with a physical presence here employed 2,420.

Dr. Gibbons said: "In the face of increasing international competition, this is a clear vote of confidence in the underlying strength of Bermuda and her economy. It helps to explain why Government revenue generated by international companies, including revenue generated by re-spending of income by households and businesses, amounted to $192.5 million in 1995, compared with $153 million generated by tourism.'' International business is recognised by Government as having an increasingly pervasive role in the local economy, a role that in 1995 included a generous provision of $5.7 million in scholarships.

Three new jobs are to be developed in the Ministry of Finance headquarters, at a cost of $206,000, to directly support the needs of international business.

And the Bermuda International Business Association will have its annual grant through the Registrar of Companies increased by $350,000, in support of international marketing efforts.

`It is ironic, but not surprising, that the sector of Bermuda's economy that has been most successful in the last ten years has been that sector least protected from global competition. The (re)insurance and financial services sector in Bermuda, truly knowledge-based industries, have been successful while competing directly, without protection, in the global marketplace.' -- Finance Minister Grant Gibbons