August 13, 2012Dear Sir,I am a Bermuda resident of 12 years and I follow the political and economic ups and downs of the Island with great interest. I had this letter in draft form on my computer for about four weeks and the excellent article by Larry Burchall and Sir John Swan (August 13) encouraged me to dig it out and complete this final version.Between 2010 and 2011 tourist numbers to the Island increased by 13 percent from 580,000 to 655,000. In a world recession this is excellent news and the Ministry of Tourism should be applauded.However, we should not be complacent; air arrivals only increased by three percent with the rest of the gains coming from cruise arrivals.Although the figures don’t look too bad, I would suggest that tourism in Bermuda will decline unless gambling is legalised and I don’t intend to enter that debate. Instead, rather than chasing more low spending cruise ship tourists, I suggest we should be chasing the “next offshore industry”. This view is wholly in accordance with the ideas set out by Mr Burchall and Sir John in their article.One of the few learned journals that made any impression on me during my college days was a paper called ‘Marketing Myopia’ by Theodore Levitt published in the 1960s. The essence of Levitt’s observations was that large companies can become short sighted about the industry they are in. For instance the railways thought they were railway companies not “transport” companies. This inevitably led to their undoing as the markets changed and customers demanded alternatives. There is evidence that corporate executives today may have been paying attention to Levitt as we see (some) petroleum companies positioning themselves as ‘energy companies’ by expanding into alternative energy supplies in addition to oil-based products.I suggest that Bermuda is suffering from a similar myopia in believing that the only export products we have to offer are tourism and insurance. It is important to note that these two industries are at different stages in their lifecycle given that tourism started in earnest in the 1930s while the insurance boom started in the 1960s. I suggest therefore that the insurance industry has many years ahead of it while tourism is perhaps already in the retirement home.Let’s not forget that the history of tourism here is a perfect example of not being short-sighted about the island’s skills. In the early part of the 20th Century the main industry here was fresh vegetables grown for the US.However an import tariff imposed by the US in 1930 virtually killed this trade overnight. Bermudians quickly switched their attention to the tourist industry, which more than replaced the lost business and offered higher skilled jobs to Bermudians.The insurance industry has already demonstrated that it can offer more in the way of wealth and job creation than tourism; shouldn’t we be looking for the next offshore knowledge-based industry and focus our efforts on attracting those companies? Or better still market Bermuda as the offshore low cost (from a tax viewpoint) business centre and see which businesses would like to be here.Of course the precursor to this sort of marketing effort is to ensure that all the requirements of the industries of the future are here. I refer you to the previously mentioned article for a comprehensive list of these requirements.What sort of industries should we be trying to attract? The answer is any business that can conduct its day to day activities via computer links to the outside world and the list is getting longer every day.l Software companiesl Financial service companies (fund management etc)l Distance learningl Electronic booksl Online movie rentals.Even companies like Amazon could be based here with their shipping satellites in the country of operation.It may seem like a huge task to upgrade the whole of the Bermuda infrastructure to the level of ‘Silicon Valley’ so why not start more modestly.Imagine Morgan’s Point as the first ‘Cyberspace Free Port’ in the world.Special low tax rates to attract the start-ups on-site power generation, high-speed internet connection to the outside world and a 24-hour free ferry connection to Hamilton.The return on capital from year-long office rental on Morgan’s Pont would far outweigh the returns from a tourist development that’s only at capacity for four months a year.Much of this could be achieved with private money and very little Government expenditure; all that is required is the right tax legislation and the will to look forwards rather than being short sighted about our options.MARTIN WILLIAMSONPaget