Isle Of Man Economy 2014 Presentation To Junior Chamber

On his last day as Chief Executive of the Department of Trade and Industry, Chris Corlett gave the Isle of Man JCC on update on the Economy 2014 Project, which was initiated in 2004 with the goal of predicting what the Isle of Man economy would look like in 10 years.
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  • 1. Economy 2014 Project update: Creating the Can-Do Economy? Chris Corlett CEO, Department of Trade & Industry 31 March 2010
  • 2. The Island’s economy was at a crossroads; significant economic change was possible 1970s 1980s 1990s 2000s ACTION: Govt takes first steps to creating offshore finance centre ACTION: Govt creates Shipping register ACTION: Govt creates Film industry <ul><li>ACTION: Govt seeking new target sectors </li></ul><ul><li>e-business, e.g. e-gaming </li></ul><ul><li>aircraft register </li></ul><ul><li>space </li></ul><ul><li>PLUS assist Financial Services </li></ul><ul><li>Protected Cell Companies </li></ul><ul><li>0% Corporation Tax </li></ul><ul><li>New Company Bill </li></ul><ul><li>1.5% unemployment </li></ul><ul><li>IOM GDP per capita = 110% of UK </li></ul><ul><li>Key Primary sector = Banking (over 20% of GDP) </li></ul>ACTION: Govt launches financial assistance for manufacturing 6.1% CAGR for GDP in real terms (v. 2.1% EU) <ul><li>Low point = 1982: </li></ul><ul><li>12% unemployment </li></ul><ul><li>IOM GDP per capita = 55% of UK </li></ul><ul><li>5%+ unemployment </li></ul><ul><li>IOM GDP per capita = 75% of UK </li></ul><ul><li>Key Primary sector = Tourism (20% of GDP), dwindling rapidly </li></ul>?
  • 3. To respond to this, we formed the IOM Economy 2014 Think-tank To deliver a vision for the IOM’s economy by 2014, indicating key future primary sectors, target country markets and key factors in achieving this (tax, legislation, marketing, staff skills etc.) Objective Stakeholders PUBLIC Chris Corlett, CEO, DTI (Facilitator) Mark Shimmin, CFO, Treasury Steve Carse, Chief Economist, Treasury Malcolm Couch, Assessor of Tax, Treasury Jane Dellar, Dir of IOM Finance, Treasury Carol Glover, CEO, DTL PRIVATE Steve Christian, Gasworks Media Chris Eaton, MD, ILS Chris Hall, MD, Manx Telecom Jerry Linehan, MD, IOM Bank Paul Quirk, MD, Friends Prov Intl Participants FS – Assoc. of Licensed Bankers FS – Manx Insurance Assoc. FS – Assoc. of Corporate Service Providers FS – Manx Insurance Managers Assoc. FS – IOM Fund Management Assoc. E-Business – E-Business Consultative Committee E-Business – CoC IT Committee Shipping – Shipping Assoc. Manufacturing – CoC Manufacturing Committee Tourism – CoC Tourism Committee Economic Development Committee of Council of Ministers Tynwald members
  • 4. Scope: IOM Primary Secondary Sectors Banking Asset Mgt. Fiduciary Shipping Management Captives ICT/e-Business Food & Drink Film General Manufacturing Financial Services Sectors Other Primary Sectors Secondary & Public Sectors Tourism X Life Manufacturing Engineering Aviation Management Accounting Legal Government Construction Retail Utilities Transport Medical & Health Education Others Agriculture & Fishing * Leisure (Catering & Entertainment) Space
  • 5. Our work was guided by the Economic Strategy approved by Tynwald <ul><li>Build a diverse economy </li></ul><ul><li>Attract/retain high-growth, high-added-value activities </li></ul><ul><li>Encourage existing businesses to achieve greater success </li></ul><ul><li>Create a range of employment opportunities </li></ul><ul><li>Stimulate development in all parts of the Island </li></ul><ul><li>Plan for sustainable development, i.e. limited population growth and protection of the environment </li></ul>
  • 6. Relative importance of sectors (2004) Actual & Adjusted Economic Output Key: Actual output = formal economic output relating solely to that sector Real benefit = real value to the Island of business introduced by this sector to all sectors
  • 7. IOM SWOT analysis Opportunities Strengths Threats Weaknesses <ul><li>Fiscal & legislative independence enables us to create economic competitive advantage </li></ul><ul><li>Good telecoms infrastructure v. competitors </li></ul><ul><li>Breadth and depth of financial and professional services capability </li></ul><ul><li>Potential to grow existing sectors </li></ul><ul><li>Potential to create new sectors that leverage existing strengths </li></ul><ul><li>Build stronger linkages between sectors to retain more added value </li></ul><ul><li>International business is rationalising to a small number of business centres </li></ul><ul><li>Ability of international bodies to mitigate the Island’s tax freedom </li></ul><ul><li>Complacency – by Government, businesses and individuals </li></ul><ul><li>Cost and availability of staff with specific skills </li></ul><ul><li>Poor customer service </li></ul><ul><li>Lack of EU market access for financial services </li></ul><ul><li>Lack of decision makers in IOM </li></ul><ul><li>Cost of transport, energy and housing </li></ul>
  • 8. We developed two scenarios – Good & Bad – based on whether we succeed or fail in achieving the Can-do Economy Projected annual growth in real terms Nil 1 to 1.25% Earnings -2% 3 to 4% Tax -2% 0.6 to 0.8% Population -2% 0.8% Jobs -1% 5 to 6% Economic growth BAD GOOD
  • 9. Growth prospects by sector - GOOD High-growth < ICT / E-Business > Film Shipping NEW Aircraft management NEW Space Medium-growth Tourism Manufacturing Asset Management Fiduciary Low-growth < Banking > Life & pensions Food & drink Overall: Forecast 5-6% annual growth
  • 10. Growth prospects by sector - BAD Medium growth Film Nil to low growth Food & drink Manufacturing Fiduciary Tourism < ICT / E-Business > Asset Management Life & pensions Shipping Negative growth < Banking > Overall: Forecast 1% annual decline E-Gaming NEW Aircraft management NEW Space Failed sectors
  • 11. Opportunity: Grow the ‘clusters’
  • 12. Implications for the workforce From: To: Management
  • 13. Implications for the workforce
  • 14. Summary of forecasts <ul><li>Good potential to grow Manx economy 5%+ p.a. </li></ul><ul><li>Real risks to our economy – no room for complacency </li></ul><ul><li>Banking and E-Business are vital – the former because of its size and tax; the latter because of its potential – BUT they offer widest range between Good and Bad: £100m p.a. each by 2014! </li></ul><ul><li>Given this, the broader efforts to diversify the economy to minimise this risk are vital </li></ul><ul><li>Opportunity for some population growth – SENSITIVE </li></ul><ul><li>Up-/re-skilling of the Manx workforce will be vital </li></ul><ul><li>Concerted public/private and X-sector efforts required to achieve success </li></ul>
  • 15. So how did we do?
  • 16. Actual performance (to 31/3/09) PLUS growth in 2009/10 of 2.5% due to ICT (e-gaming) and Professional Services (inc. yachts, jets and space)
  • 17. Actions to create the ‘Can-do’ economy <ul><li>Actions </li></ul><ul><li>Increase marketing efforts off-Island , co-ordinated between public and private sectors, to boost sales and awareness/image of IOM </li></ul><ul><li>Develop a winning legislative and regulatory framework (including taxation) that give our products an advantage </li></ul><ul><li>Maximise the value of Manx labour market by joint public/private funding of vocational training, maximising workforce participation and attracting skilled labour we lack </li></ul><ul><li>Deliver a high-quality living and working environment that raises the quality of life for residents, stimulates inward investment and attracts quality visitors </li></ul>Target characteristics Focused on success Business friendly Strength in breadth & depth High quality Excellent service Flexible Fast Innovative
  • 18. Increase marketing efforts off-Island <ul><li>Invested in branding IOM: resulted in Freedom to Flourish </li></ul><ul><li>Invested in single PR contract and increased budget, generating £m’s in value </li></ul><ul><li>Added new Business Development resources in DTI and Treasury </li></ul><ul><li>Built closer public/private marketing efforts </li></ul><ul><li>Enhanced IOM Finance </li></ul><ul><li>Established London office </li></ul><ul><li>Established business incubator </li></ul><ul><li>Created new Marketing Initiatives Fund </li></ul><ul><li>Created Department of Economic Development </li></ul>
  • 19. Develop a winning legislative and regulatory framework <ul><li>Launched the 0/10 Corporate Tax Strategy </li></ul><ul><li>Launched £100,000 income tax cap to attract entrepreneurs </li></ul><ul><li>Replaced Industry Board Act with Enterprise Act </li></ul><ul><li>Improved company law </li></ul><ul><li>Amended e-gaming legislation and grew regulatory capability to meet industry needs </li></ul><ul><li>Introduced e-money legislation </li></ul><ul><li>Created a corporate jet register </li></ul><ul><li>Introduced a new Economic Development Fund </li></ul>
  • 20. Maximise the value of the Manx labour market <ul><li>Improved work permits </li></ul><ul><ul><li>Improved service so that over 75% processed in 10 working days </li></ul></ul><ul><ul><li>Brought in reforms to remove 25% of all applications </li></ul></ul><ul><ul><li>Improved up-to-date info to Committee to enable informed decisions </li></ul></ul><ul><ul><li>Invested in new IT systems which will bring further benefits </li></ul></ul><ul><li>Expanded vocational training support </li></ul><ul><ul><li>Increased co-operation through Sector Skills Groups </li></ul></ul><ul><ul><li>Improved apprentice provision </li></ul></ul><ul><ul><li>Introduced new vital courses, e.g. management, marketing </li></ul></ul><ul><li>Expanded Job Centre </li></ul><ul><ul><li>Invested in new IT systems which mean new jobs are uploaded to website near real-time </li></ul></ul><ul><ul><li>IT suite and Job Club give more support to the unemployed </li></ul></ul><ul><li>Improved, ‘joined up’ information on the labour market </li></ul>
  • 21. Deliver a high-quality living and working environment <ul><li>Improved visitor infrastructure </li></ul><ul><ul><li>Invested in Villa Marina to boost conference visitors </li></ul></ul><ul><ul><li>Supported investment in visitor premises, esp. self-catering </li></ul></ul><ul><ul><li>Promoted IOM to major hotels; Radisson SAS remain keen </li></ul></ul><ul><li>Improved leisure infrastructure </li></ul><ul><ul><li>Invested in Peel Marina and Douglas Quayside </li></ul></ul><ul><ul><li>Still hope to have major development on Douglas bus station site </li></ul></ul><ul><li>Improving Planning </li></ul><ul><ul><li>Issued all-Island Plan with Southern and Eastern plans in progress </li></ul></ul><ul><ul><li>Developing a strategy for HNWI housing </li></ul></ul><ul><li>Improved transport strategy </li></ul><ul><ul><li>Incentivised reduced fares </li></ul></ul><ul><ul><li>Restored London City link </li></ul></ul>
  • 22. In short, we are building the ‘Can-Do’ Economy
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