Kerzner's concerns on Baha Mar project
By PAUL G TURNQUEST
Tribune Staff Reporter
pturnquest@tribunemedia.net
A NEW day is dawning in the Bahamas. An entity that was once only talked about will soon become a reality on Cable Beach - Baha Mar.
At an estimated value of over $2.6 billion, it is considered by all estimates to be a monolithic project. To some it is considered a monstrosity that will consume all that was here before it. To others it is a golden egg.
To the chairman and CEO of Kerzner International, Sir Sol Kerzner, it is something else altogether.
Last week, Sir Sol made a rare appearance in the local press by issuing a statement to the media on the impending approval of Bah Mar.
In his statement, Sir Sol said that while they welcomed any project that would enhance and improve the tourism sector in The Bahamas, "the proposed terms of the Baha Mar project violates the Kerzner Heads of Agreement with The Bahamas." He promised that Kerzner International would discuss with the Government how to address this "breach" in their "most favoured nation" clause.
Principle
Since this statement there has been much talk in the press about what exactly a most favoured nation clause is. According to the Minister of State for Finance, Zhivargo Laing, a MFN classification is an internationally established economic principle, centrally recognized by the World Trade Organization (WTO), which seeks to establish a level playing field between mutual parties.
"The term is counter intuitive," Minister Laing explained.
"The name suggests that you treat the entity with MFN status more favourably than others, but what it really means is that you treat everyone alike; you don't treat anyone more favourably," he said.
Based on the MFN principle, if one MFN entity is granted special Customs rates, for example, then all MFN entities should be granted special Customs rates. The specific rates would be established by government policy or law.
In the case of the Bahamas, the Hotels Encouragement Act addresses the issue of concessions, while allowances for labour are specified in government policy, he said.
In order to establish whether a breach of MFN privilege exists, Mr Laing suggested one would have to assess a competing agreement "in its totality" and not compare a single line item. He said the question of a breach is "not so simple from the government's point of view."
In fact during the Prime Minister's wrap up on the Baha Mar debate he said, "I do not concede that we would be in breach of the deal with Kerzner. The relationship between the Bahamas and Kerzner has been mutually beneficial," Prime Minister Ingraham said.
Sir Sol, however, has taken the conversation to another level when he revealed during a teleconference with the press last week that if Baha Mar were to be approved in its current state the jobs of over 8,000 employees at Atlantis could be put at risk.
"It seems to me pretty ridiculous in this current environment, even if the economic environment were a lot better to look to come in and double the current number of rooms overnight. It seems to me pretty irresponsible. I also believe that one should take into account that we have 8,000 people working with us, and if this were to move forward the likelihood is that people's jobs would have to be threatened. It is just impossible, practically impossible to double the size of the market.
Pressure
"As we said in our statement, last year was a tough year and occupancy was under pressure. Well guess what, this year is even tougher. So it seems pretty ridiculous to me that these folks are wanting to move forward," he said.
And move forward they have. The Baha Mar labour resolution was passed unanimously before the House of Assembly (36 voting for, with four absent), which allows for 8,150 foreign workers, but no more than 5,000 at one time to be employed on the Baha Mar Cable Beach project.
Following this unanimous vote in the House of Assembly last week, Baha Mar's senior vice-president of external affairs, Robert "Sandy" Sands said that construction for the single-phase $2.6 billion Baha Mar development project could break ground as early as January, pending the close of the Export Import (EXIM) Bank of China loan.
Contractors have already been chosen for the first six construction packages, totaling $60 million, which will include the new Commercial Village contracts and the new West Bay Street.
According to Mr Sands, the initial payout will cover construction contracts and also includes numerous Bahamian architects, engineers, quantity surveyors, suppliers and many other related parties who will participate in these first six contract packages.
Prior to the approval of this massive project, Sir Sol said that he did not want to speculate on what he would do if Baha Mar was approved without at least the development being "phased" in as his Atlantis properties were. Now that the project has been pushed through the proverbial pipeline, the question remains: What will Atlantis do in response?
Addressing these concerns, Prime Minister Hubert Ingraham informed the nation that he was confident that Sir Sol's concerns about Baha Mar could be resolved satisfactorily.
He also publicly proclaimed his respect and gratitude for Sir Sol's contributions to the country, adding that he will do anything in his power to ensure the Atlantis product remains successful on Paradise Island. However this commitment, he said, does not mean he will not be fair to other developers.
"We were always concerned, when we came to office that there was nothing in the Baha Mar deal that would have given them a better deal than Kerzner. I think I can say that the thing that ticked Kerzner (off) more than anything else is a statement by Perry Christie to the effect that Baha Mar only wants to get what Kerzner got," said Mr Ingraham on the radio show Issues of the Day.
"There is no question in my mind of my high regard for Sol Kerzner and what he has done for the Bahamas. I was berated by many when he came in 1994 and what he has done for the Bahamas has transformed our tourism industry.
"He has provided us with 2,000 more jobs than he committed to, he has a very successful project on Paradise Island and I will do all I can, for as long as I can, to ensure that his project is successful."
"That has nothing to do with whether I will be fair to anybody else. (But) I will not knowingly give anybody else a better deal than Kerzner got," stated the nation's chief.
During his live radio interview, Mr Ingraham also accused the former Christie administration of engaging in secret deals with Baha Mar by promising them concessions not included in their contract.
He said these secret concessions are part of what government is trying to renegotiate.
"The PLP government gave Baha Mar a deal over and above what they signed in the contract. So on the same day that they signed the contract they issued what was called side letters offering Baha Mar more.
"We tried to pull those things back. We are now doing an analysis to see the extent to which we have been successful, we think we have been somewhat successful in ensuring that there is equity and balance between the two."
Hopefully this "equity" and "balance" between the two resorts will eventually allow the two properties to complement each other, without there being any cannibalism in the marketplace, he said.
However, this appears highly unlikely if both hotels will be aiming for the same dwindling number of "high-end" visitors.
At this stage it is not easy to dismiss Atlantis' concerns as a mere fear of competition when one considers that our air arrivals have not actually been booming over the past few years. With a global recession still wreaking havoc on our tourism industry, no "expert" is willing to guess on when things are expected to turn around in that sector.
Maybe, like the haunting voice in the Hollywood film "A Field of Dreams," if Baha Mar builds it, the tourists will come.
November 22, 2010
Tribune242 Insight
A political blog about Bahamian politics in The Bahamas, Bahamian Politicans - and the entire Bahamas political lot. Bahamian Blogger Dennis Dames keeps you updated on the political news and views throughout the islands of The Bahamas without fear or favor. Bahamian Politicians and the Bahamian Political Arena: Updates one Post at a time on Bahamas Politics and Bahamas Politicans; and their local, regional and international policies and perspectives.
Showing posts with label Baha Mar Cable Beach project. Show all posts
Showing posts with label Baha Mar Cable Beach project. Show all posts
Monday, November 22, 2010
Wednesday, September 29, 2010
Foreign Workers on Bahamian Construction Sites
Foreigners on Bahamian construction sites
tribune242 editorial
THE DEBATE on the number of Chinese to be employed on the construction of the Baha Mar Cable Beach project -- six hotels, about a 100,000-square foot casino, a 200,000 square-foot convention centre, 20-acre beach and pool, 18-hole golf course and a 60,000-square foot retail village with additional residential products -- is going to be interesting, if and when it takes place on the floor of the House.
The number of foreign workers required by the Chinese as part of the deal is unusually large. But it is well known that the Chinese do not approve foreign loans unless their workforce is employed as a major part of the loan project. In the case of Baha Mar -- valued at about $2.5 billion - $1.918,965,693 billion has been negotiated with the China Construction Company as primary contractors. With that financial outlay it is amazing that government was able to negotiate any Bahamian presence. As Mr Ingraham said in presenting his resolution for this project to the House "the foreign labour component intended during the construction for the resort exceeds levels ever experienced in the Bahamas and is beyond anything ever contemplated by my government."
Under the UBP, construction up to a certain value was reserved for Bahamian contractors. Over that value it was agreed that Bahamians did not yet have the expertise or equipment to handle very large jobs and so those were left to foreign contractors, such as McAlpine, Balfour Beatty and others. In the 1950s, said Mr Ingraham, the government permitted 25 per cent of the labour force in construction and/or the operation of tourism development to be foreign.
During the Pindling era, however, the foreign labour component increased and newspaper articles recorded protests, either by foreign workers complaining of working conditions, or Bahamians questioning their presence in the Bahamas. For example, in 1988, 600 angry Indians went on hunger strike on the construction site of the Crystal Palace Hotel, Cable Beach. They accused the foreign contractor, Balfour Beatty, of treating them as slaves. Earlier - in 1981 - the Construction and Civil Engineering Union picketed the construction site of government's $66.5 million Cable Beach Hotel. "They import Filipinos to shovel sand. You tell me no Bahamans can do that?" complained a Bahamian worker. There were 40 Filipinos on that job site.
But the 1990 demonstration to protest the employment of common labourers -- truck drivers for example -- from Brazil on government's $55 million Nassau International Airport expansion was particularly interesting. The ratio of foreigners to Bahamians was 70 per cent on that construction site with government having to pay a large penalty if the number of Bahamians went over the agreed 139 or 30 per cent of the total work force. This prompted the carrying of placards that read: "It's Better in the Bahamas for Brazilians!"
At one point during the contract there were more than 340 Brazilians at the construction site, bringing the Brazilian count to 71 per cent compared to the 139 Bahamians that the company had agreed to use during this period.
The Pindling government had agreed that for every five Bahamians hired by the Brazilian company over the agreed 139 Bahamian workers, the government would have to pay $88,000 or $17,000 for each worker.
In the House on April 30, 1990, then Opposition Leader Hubert Ingraham revealed that the Pindling government had also agreed to pay all of the Brazilian company's Customs and stamp duties, work permit fees for their workers, and building fees on mechanical and electrical permits. In addition government was to pay all public utility fees -- connections and the like -- except for the actual electrical consumption.
The FNM found it preposterous that government would be penalised if more than 139 Bahamians were hired at the airport. "It is incredible that the Government has agreed to pay extra monies for Bahamians to work in their own country," said the FNM.
When the Ingraham government came to power its policy on foreign labour was established on the resort properties of Kerzner International -- the ratio of Bahamians to non-Bahamians on that site was not to exceed 30 per cent foreign to 70 per cent Bahamian.
And now here were the Chinese financially backing the transformation of Cable Beach into a mega tourist resort and asking for 8,150 of their countrymen to be engaged on the "core project". The projection is that some 1,200 Bahamians will be engaged in construction of the non-core projects.
Because of the unusual request for foreign labour -- 71 per cent foreign to 29 per cent Bahamian -- Prime Minister Ingraham has brought the matter to the House to give the Opposition an opportunity to express the opinions of their constituents on the matter. Both sides have to determine - in the words of Mr Ingraham - "whether this invaluable benefit of skills transfer and improved exposure to new technologies can or will occur in a project where contact between Bahamians and foreign experts is likely to be limited." Bahamians also have to decide whether in these lean years this project, with its foreign labour, is what they believe will jump start their economy.
September 28, 2010
tribune242 editorial
tribune242 editorial
THE DEBATE on the number of Chinese to be employed on the construction of the Baha Mar Cable Beach project -- six hotels, about a 100,000-square foot casino, a 200,000 square-foot convention centre, 20-acre beach and pool, 18-hole golf course and a 60,000-square foot retail village with additional residential products -- is going to be interesting, if and when it takes place on the floor of the House.
The number of foreign workers required by the Chinese as part of the deal is unusually large. But it is well known that the Chinese do not approve foreign loans unless their workforce is employed as a major part of the loan project. In the case of Baha Mar -- valued at about $2.5 billion - $1.918,965,693 billion has been negotiated with the China Construction Company as primary contractors. With that financial outlay it is amazing that government was able to negotiate any Bahamian presence. As Mr Ingraham said in presenting his resolution for this project to the House "the foreign labour component intended during the construction for the resort exceeds levels ever experienced in the Bahamas and is beyond anything ever contemplated by my government."
Under the UBP, construction up to a certain value was reserved for Bahamian contractors. Over that value it was agreed that Bahamians did not yet have the expertise or equipment to handle very large jobs and so those were left to foreign contractors, such as McAlpine, Balfour Beatty and others. In the 1950s, said Mr Ingraham, the government permitted 25 per cent of the labour force in construction and/or the operation of tourism development to be foreign.
During the Pindling era, however, the foreign labour component increased and newspaper articles recorded protests, either by foreign workers complaining of working conditions, or Bahamians questioning their presence in the Bahamas. For example, in 1988, 600 angry Indians went on hunger strike on the construction site of the Crystal Palace Hotel, Cable Beach. They accused the foreign contractor, Balfour Beatty, of treating them as slaves. Earlier - in 1981 - the Construction and Civil Engineering Union picketed the construction site of government's $66.5 million Cable Beach Hotel. "They import Filipinos to shovel sand. You tell me no Bahamans can do that?" complained a Bahamian worker. There were 40 Filipinos on that job site.
But the 1990 demonstration to protest the employment of common labourers -- truck drivers for example -- from Brazil on government's $55 million Nassau International Airport expansion was particularly interesting. The ratio of foreigners to Bahamians was 70 per cent on that construction site with government having to pay a large penalty if the number of Bahamians went over the agreed 139 or 30 per cent of the total work force. This prompted the carrying of placards that read: "It's Better in the Bahamas for Brazilians!"
At one point during the contract there were more than 340 Brazilians at the construction site, bringing the Brazilian count to 71 per cent compared to the 139 Bahamians that the company had agreed to use during this period.
The Pindling government had agreed that for every five Bahamians hired by the Brazilian company over the agreed 139 Bahamian workers, the government would have to pay $88,000 or $17,000 for each worker.
In the House on April 30, 1990, then Opposition Leader Hubert Ingraham revealed that the Pindling government had also agreed to pay all of the Brazilian company's Customs and stamp duties, work permit fees for their workers, and building fees on mechanical and electrical permits. In addition government was to pay all public utility fees -- connections and the like -- except for the actual electrical consumption.
The FNM found it preposterous that government would be penalised if more than 139 Bahamians were hired at the airport. "It is incredible that the Government has agreed to pay extra monies for Bahamians to work in their own country," said the FNM.
When the Ingraham government came to power its policy on foreign labour was established on the resort properties of Kerzner International -- the ratio of Bahamians to non-Bahamians on that site was not to exceed 30 per cent foreign to 70 per cent Bahamian.
And now here were the Chinese financially backing the transformation of Cable Beach into a mega tourist resort and asking for 8,150 of their countrymen to be engaged on the "core project". The projection is that some 1,200 Bahamians will be engaged in construction of the non-core projects.
Because of the unusual request for foreign labour -- 71 per cent foreign to 29 per cent Bahamian -- Prime Minister Ingraham has brought the matter to the House to give the Opposition an opportunity to express the opinions of their constituents on the matter. Both sides have to determine - in the words of Mr Ingraham - "whether this invaluable benefit of skills transfer and improved exposure to new technologies can or will occur in a project where contact between Bahamians and foreign experts is likely to be limited." Bahamians also have to decide whether in these lean years this project, with its foreign labour, is what they believe will jump start their economy.
September 28, 2010
tribune242 editorial
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