FOLLOWING the appointment of Allan Bell MHK as the Island's new Chief Minister, John Webster, chairman of the Manx Business Connection, writes about the issues the Island is facing.

Congratulations to our new Chief Minister, you have been elected to head the government of arguably the oldest parliament in existence, one with an excellent reputation for probity and with an economy that has enjoyed world-class performance over the last few decades. 

When President John F Kennedy took office in January 1961 he did so at a time of "national peril," with external threats from hostile enemies, when the USA's economy had been depressed for seven years and after a year when business bankruptcies were at their highest since the Great Depression in 1929.

So what are the similarities between the tasks faced by the two leaders?

It is now quite clear that the foundations of the Isle of Man's recent prosperity are being threatened; some revenue streams, such as VAT from the Customs and Excise Agreement, will be significantly reduced while various key activities, particularly within the finance sector, are likely to contract in the near future.

Therefore, a new, clear strategy is required and the Chief Minister's most important role is to initiate a thorough policy debate, decide on the best strategy for the Island and then lead it effectively, ensuring the plan is efficiently implemented.

Common sense prevents me detailing the Island's negatives in detail, why give ammunition to our critics and competing jurisdictions? 

However, in private I hope there will be a frank exchange of views between the Chief Minister, his colleagues and our excellent civil service, which I know to be fully aware of the circumstances. 

President Kennedy, in his State of the Nation speech on 30 January 1961, said "To state the facts frankly is not to despair of the future nor to indict the past.

"The prudent heir takes careful inventory of his legacies and gives fruitful accounting to those to whom he owes an obligation of trust."

This elegant call for a clear analysis of the current and past policies, without rancour, the allocation of blame or recriminations, would make a good starting point for a policy debate on the Isle of Man.

While the Isle of Man does indeed face many serious threats, it is my view that we have a great range of opportunities and a much better array of attractions than any of the countries in competition with us.

The new, multi-faceted Department of Economic Development (DED) has been developing some excellent opportunities for innovative activities, including clean technologies, the space industry, health and pharmaceutical business.

These will be needed to supplement and, in some cases, replace the income and employment that has been in the past created by sectors under threat. 

Also, the strategy of targeting particular countries appears to be paying dividends, in particular the initiative with China offers the Isle of Man a unique chance to make impressive gains in trade and finance.

While some of our recent success stories will decline because of various regulatory and other pressures, others, such as e-gaming, have reached the stage of maturity in their business cycles and so cannot be expected to produce the dramatic annual growth figures of the past.

Nevertheless, these sectors continue to be vital components of the Manx economy and they have placed the Isle of Man in the forefront globally in the wider fields of e-business.

We have learned valuable lessons about security, resilience, business development and the effective use of the internet to conduct business successfully.

E-gaming was always seen as a precursor to more general e-business and the infrastructure developed for it, along with the experience gained by both government and private sector employees will stand us in good stead in the internet-centric future.

While the Island's levels of wages and productivity compare well with our nearby competition, they are not competitive in a world that is increasingly cost-conscious, technical and global in its outlook.

Therefore, our expertise with IT and the internet will present us with many opportunities to compensate for this, particularly when "Cloud" computing services become more widely accepted and used. 

The Isle of Man's strong financial, telecommunications and IT legacy has placed us in a superb position to capitalise on the opportunities offered by the Cloud. 

There are many exciting developments now taking place in this area, but for reasons of commercial confidentiality details of specific activities cannot yet be made public.

The Island's independence and the experience of our top officials at dealing with the many assaults on the Island's tax and regulatory position in recent years should enable us to respond appropriately to the inevitable pressures which the turbulent global economy will throw at us.

For example, if the controversial "Tobin" tax on financial services does come into being there will be both threats and opportunities to consider while the break-up of the Euro, increasingly likely, is an additional factor to be considered.

In essence, the Isle of Man is in a similar position to the Kindle Fire in its competition with the iPad. 

Apple's main business is selling the actual products which are mass produced in low cost countries (although significant revenues are derived from iTunes and apps), Amazon, the owners of Kindle, are able to sell the product at cost or below because they make their money selling content.

Understanding the way sectors work and having experience in developing services from the Isle of Man for worldwide distribution, has been the Island's differentiator.

Except in small, specialised markets, we cannot compete by manufacturing products but must look for particular niches based on experience, understanding cultural issues and design flair.

Without such unique selling points, the Isle of Man, isolated on the periphery of the EU, will return to its days as poor Relation to those areas nearer the Union's economic centre.

An example of an opportunity for business stems from our experience as the centre of world road racing; why do we not have motor cycle component design and testing facilities on the Island?

To read the rest of Mr Webster's article click here