million last year to $141 million, when compared to the more heavily regulated exchange control era of 1993.

But the Bermuda Monetary Authority (BMA) believes that is an acceptable level of currency drain and officials point to the substantial gains last year of more than $130 million in investment income.

More people have applied to the BMA to export more than the annual limit of $25,000, since the relaxation of exchange controls.

And for all the energy expended in the past to restrict the exporting of money out of Bermuda, surprisingly, no one who has applied to the authority to take out such significant sums has been turned down in recent years.

BMA General Manager Malcolm Williams noted that there has been the odd case where applicants, after discussion with the BMA, have been encouraged to reduce the total amount exported. But no one has been completely turned down.

In 1994, $62 million was invested abroad and the following year it went up to $100 million. BMA officials believe the figure that has risen steadily over the last four years, will continue to rise.

John H. Hill, BMA manager of the policy, research and statistics division said, "The exporting of funds was an expected result of the relaxation of exchange controls. But it sounds negative when you talk about money going out of the country or capital outflow. The positive side is that it is earning money overseas for Bermudians, which in today's market, can be as much as ten percent.

"That is actually a positive benefit to the current account receipts. And whatever that money is used for, possibly travel, it means you are not actually using local funds.'' Mr. Williams said, "Investment returns is the third pillar of the economy now. In 1996, we earned $550 million in foreign currency receipts from international business, $475 million from tourism and $131 million from investment income.

"That has grown significantly in four years, because in 1993 it was $87 million. I do not look at overseas investment as capital flight, but rather capital investment, because those earnings for Bermudian investors are also earnings for Bermuda as a whole.'' Mr. Williams said that the negatives hypothesised or predicted with regard to the dismantling of exchange controls have not come true.

He said, "I have to give full marks to the government because it has created an economy that is very strong. It has been for a number years a good environment for the relaxation of exchange controls, without causing a dramatic effect on the economy.

"Over the last five years, exchange control has been substantially relaxed and in fact the economy has grown.'' He also said, "The Bermuda Stock Exchange has traditionally been a stock hold, as opposed to an exchange. There is no evidence to support what some have suggested that the relaxation of exchange controls has undermined the functions or effectiveness of the stock exchange.

"The products to invest in are simply not there. People who purchased shares have tended to hold on to them. So there is no market, because there are no sellers.'' The BMA has delegated more and more exchange control responsibilities to the Island's banks, and no longer is exchange control a primary focus for the Authority. Their emphasis are now more on policy, research, statistics and balance of payments.

In fact, the Authority is now working on ways to gather balance of payment information, without the need for exchange control forms.

Said Williams, "I think by the end of the year we should have got to the stage with the banks and the public through sample surveys and extrapolations whereby we'll get rid of that form altogether.'' The banks, through the guidance and direction of the BMA, have progressively put better systems in place to really "know'' their customers. It is a secured element in measures to stop money laundering.

Mr. Williams said yesterday, "Bermuda is undoubtedly, one of the cleanest jurisdictions in the world. I really believe that.'' And Bermuda's deposit companies appear ready to share the privilege of the Island's banks in dealing in foreign currencies, as BMA sanctioned authorised dealers.

Williams, said, "The deposit companies are now authorised dealers.

"All the deposit companies now have the power to offer foreign currency facilities. They probably haven't got the systems to do that yet, but some of them are gearing up to offer a full foreign currency service.

"That is another plus from the relaxation of exchange control, creating another service, creating more competition.'' MALCOLM WILLIAMS -- Overseas investment is `not capital flight'.

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