Baha Mar set to get approval
By ERICA WELLS
NG Managing Editor
ewells@nasguard.com:
The billion-dollar Baha Mar development looks set to get the approval of the Bahamian government.
As reported over the weekend inThe Nassau Guardian, Leader of Government Business in the House of Assembly Tommy Turnquest said it is a given that the governing side intends to support its Baha Mar labor resolution that will be debated in Parliament.
Opposition House Leader Obie Wilchcombe has also said that the PLP supports the deal, with several caveats.
The $2.6 billion Baha Mar deal, which is projected to pump millions and millions of dollars into the local economy, is sorely needed at this time of economic turmoil.
In fact, the most recent Central Bank of The Bahamas report said as much. In its monthly report for July, the bank indicated that "large-scale hotel investment projects" - such as Baha Mar and Atlantis'$100 million investment - could be key to The Bahamas not continuing in recession.
"Domestic economic conditions are expected to remain mild over the remaining months of 2010, although the outlook for 2011 is less certain than in prior months, due to mounting evidence of increased fragility in the U.S. growth momentum. This could dampen the short-to medium-term performance of the tourism sector, and the timing for a turnaround in domestic demand and an improvement in employment conditions,"said the report.
"However, upside benefits could accrue to the economy if the proposed large-scale hotel investment projects gain traction in the coming months."
While there is a general consensus that the $2 billion deal will provide the Bahamian economy with a much-needed infusion, it is the labor issue that has put a damper on the prospect of the project, and in some respects has become a political hot potato.
Baha Mar developers want to bring in 5,000-7,000 Chinese workers to help build the mega resort.
This proposal has been met with much skepticism and in some cases high emotion.
The Bahamian Contractors Association supports the project, but wants the government to make provision for the training of contractors and tradesmen to participate on the project, and the inclusion of the BCA as a focal point for training recruitment.
"If the assurances that the training and maximum utilization of Bahamian contractors are not put into place, we will undermine the industry as well as the Bahamian consumers and developers who have existing or proposed projects,"said the association in a position paper on the proposed project.
"The BCA feels that in conjunction with our association initiatives, government has the opportunity and authority to address this situation. With funding and technical expertise we can maximize significant Bahamian contractor participation through our training and certification programs and through discussion with stakeholders we can reach workable relationships."
The Progressive Liberal Party has laid out a similar case, at least when it comes to training.
Wilchcombe told The Guardian on Friday that the PLP supports the project, but several objectives must be met in order to maximize its benefits to the Bahamian people.
He said that Bahamians must be given opportunities; there must be job training to ensure locals can be employed in skilled areas; current workers at the company should be looked after; there should be a role for the national airline to assist with airlift; there should be consideration of the position of the taxi union; and it is essential that there be an investigation about the energy requirement to power such a large scale development.
The agreement on the Baha Mar development was announced in March. The project will be financed by the Export-Import Bank of China, while construction will be performed by China State Construction Engineering Corporation. At one point the project had been virtually given up on when Harrah's Entertainment, one of the original joint venture partners of the project pulled out in 2008.
It is being billed as an unprecedented resort development in The Bahamas that captures the true spirit of the island and the region.
The 1,000-acre Baha Mar project may start construction before the end of the year if given approval by the Bahamian government. The project has already received approval from the Chinese government. It is scheduled for completion in early 2014.
The project, according to developers, represents the largest single-phase hospitality investment in the Caribbean and a one-of-a-kind destination resort experience in its operation, range of top-shelf accommodations, services and amenities, and"true-to-The Bahamas setting and design".
The development definitely lives up to its description as"mega".
Plans for Baha Mar's first phase include approximately 3,000 rooms; a 100,000 square foot casino; two signature spas and a third world-class destination spa; and an 18-hole championship Jack Nicklaus Signature Golf Course; 200,000 square feet of meeting space; 3,000 feet of continuous beachfront; a 20-acre beach and pool experience; and a 35,000-square-foot retail village with upscale shopping, chef-branded restaurants, and entertainment venues.
A report by the Oxford Economics company set out some of the key economic benefits of Baha Mar, including, 6,500 Bahamians directly employed by Baha Mar by 2014; a further 2,000 jobs indirectly created by the project, totalling 8,500; $5.5 billion in direct wages going straight into the pockets of Bahamian families; a further $1.5 billion in salaries for those indirectly employed; a $14.8 billion contribution to The Bahamas'GDP; $24.5 billion extra in visitor spending over a 20-year period, and; an extra $6.2 billion in government revenues over 25 years.
If approved, this project represents a massive boost to the country's struggling economy. It also represents a delicate balancing act.
According to the Baha Mar project management team, Phase one involves the construction of the commercial village and road re-alignment, which is slated to be awarded to Bahamian contractors and is valued at around $60 million.
Beyond the first phase of construction, the BCA in its position paper accepts that there is a limited pool of skilled construction worker resources in the country, and at any given time the majority of these workers or tradesmen are normally employed by practicing Bahamian contractors.
The BCA says it is primarily concerned with three issues: That the country does not have 4,000 skilled and non-skilled workers ready to participate on the Baha Mar or any project in The Bahamas; the standards which are being used to validate the number of skilled Bahamian workers; and if the requisite number of workers can be trained in time to meet the requirements of the project.
"No one definitively knows how many skilled construction workers are currently in the field. One critical component of this scenario is that if Baha Mar is permitted to hire workers from the existing pool, they will in effect be depleting the pool of skilled workers that Bahamian contractors have paid to train and have kept employed all year round,"says the association.
"Obviously, with a project the size of Baha Mar, in a very short time the skilled and non-skilled workforce will be depleted from the local sector leaving small, medium and large contractors alike with little to no labor resources for the duration of the Baha Mar project."
The BCA fears that this dynamic will have a particularly dramatic and negative impact on the small contractor who may employ only a few workers."When he(or she)loses those workers to Baha Mar, it will possibly cripple this important segment of our industry."
"Since we are pinning our economic recovery hopes not eh turnaround that will be created, it is imperative that we protect and nurture the independent small business growth potential,"says the association.
The BCA is also asking about the possibility of importing other nationalities for labor requirements to the project. According to the BCA, indications are that European, Indian and Mexican contractors, sub-contractors and tradesmen may supplement the Chinese component, particularly in some of the specialty trades.
It is unclear exactly when the Baha Mar resolution will be debated in Parliament and when the project will receive final approval from the Bahamian government.
The Guardian understands that there is a major hurdle preventing that approval from being handed down. It's the debate over the payment of an outstanding loan the company has with Scotiabank, worth around $160 million. It is unclear how long it will take the bank and developers to come to an agreement.
It is understood that Baha Mar has offered the bank, and its partners, a combination of cash and equity in the Cable Beach project, but so far Scotiabank has not accepted.
Bahamians eagerly await the outcome of the proposal that some have said always seemed almost too good to be true.
9/4/2010
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