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
thenassauguardian
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 Bahamian Contractors Association. Show all posts
Showing posts with label Bahamian Contractors Association. Show all posts
Tuesday, September 7, 2010
Sunday, June 20, 2010
Pray That The Baha Mar Deal Is Sealed
“We Better Pray Baha Mar Deal Is Sealed”
By ROGAN SMITH:
As the verbal tug of war rages over the multi-billion dollar Baha Mar project and whether to allow 5,000 Chinese workers to enter the country - one leading contractor says Bahamians better pray that The Bahamas gets the deal, if not the entire island’s tourism product will be resting "solely on the shoulders of Sol Kerzner and Atlantis."
Prime Minister Hubert Ingraham sent tongues wagging when he announced earlier this week that he would not have approved the Baha Mar deal if his administration were in office in 2005.
Former Prime Minister and Opposition Leader Perry Christie approved the Cable Beach project.
Since Mr. Ingraham’s announcement, Mr. Christie has expressed serious concerns about the way Mr. Ingraham "politicises" the investment sector in the country and he warned him to desist his "irresponsible" approach to potential investors.
Two years ago gaming giant, Harrah’s Entertainment – Baha Mar’s former strategic partner – pulled out of the deal reportedly in response to comments Mr. Ingraham made in the House of Assembly.
At the time Mr. Ingraham expressed reservations about the financial viability of the Baha Mar developers, indicating that he had more confidence in Harrah’s ability to finance the project.
But, Bahamian Contractors Association (BCA) President Stephen Wrinkle said it is crucial that the Baha Mar project comes on stream as it would help to significantly grow the economy.
The $2.6 billion project promises to create thousands of temporary and full-time jobs and transform the drab Cable Beach area into a glitzy tourist mecca.
"I think he has [Mr. Kerzner] carried the load magnificently for several years, but can you imagine 8,000 new jobs and 5,000 new rooms? The room tax alone from that is [huge]. Phenomenal income streams are going to be available for that mega project," Mr. Wrinkle said during a recent Bahama Journal interview.
"I would like to see as much support given by to the government to Mr. (Sarkis) Izmirlian [Baha Mar Chairman and CEO] and his team. I think they’ve done a fantastic job of holding on. They went through a terrible experience with their Nevada group and a huge failure. They’ve incurred serious carrying costs. I think at the end of the day it’s going to be a better project than it would’ve been because you always learn more from your losses than you do your gains. But, they’ve stood the test of time and quite frankly I think we can see a renewed Cable Beach."
Mr. Wrinkle said the project would also provide huge benefits for The Bahamas.
"We’re going to have double the marketing that we have now; double the amount of people arriving at the airport now and double all the numbers that Kerzner has," he said.
"Remember what an impact we had when they built phase three of Atlantis. What they’re doing with Baha Mar is equal to all of the phases they did at Atlantis and they’re doing it one phase. This is a big deal," he said.
Regarding the Chinese workers that the government plans to bring in, Mr. Wrinkle said they are needed.
"They are calling for 8,000 workers out there; 4,000 workers have got to be found; we can’t provide 4,000 workers. We’d be hard pressed to provide half of that. On these big international projects it’s just a fact of life. We’ve sat at the table; the BCA has tried to represent the interests of Bahamian contractors and workers and we’ve had some success with Baha Mar; they’ve been receptive," he said.
"They have a commitment with the government to hire Bahamians. It’s in their Head of Agreement. It is in the contract with China State Construction and China Finance Bank. There is language in there that mandates that they make the effort and employ Bahamians where possible."
He continued: "The problem in the past is it’s never been fully implemented. So, we’ve been very active in trying to make sure that we have a seat at the table and that wherever and whenever we can gain access to work that it’s offered. These projects are so enormous that when you think in terms of $2 billion in a build-up that they say is going to take five years, every day, whether they hit a lick or not, is going to cost them several million dollars. So, the productivity has to be there. Imagine trying to run 8,000 people on a construction site. This is a huge endeavour and after that we’re going to have 8,000 permanent jobs."
June 17th, 2010
jonesbahamas
By ROGAN SMITH:
As the verbal tug of war rages over the multi-billion dollar Baha Mar project and whether to allow 5,000 Chinese workers to enter the country - one leading contractor says Bahamians better pray that The Bahamas gets the deal, if not the entire island’s tourism product will be resting "solely on the shoulders of Sol Kerzner and Atlantis."
Prime Minister Hubert Ingraham sent tongues wagging when he announced earlier this week that he would not have approved the Baha Mar deal if his administration were in office in 2005.
Former Prime Minister and Opposition Leader Perry Christie approved the Cable Beach project.
Since Mr. Ingraham’s announcement, Mr. Christie has expressed serious concerns about the way Mr. Ingraham "politicises" the investment sector in the country and he warned him to desist his "irresponsible" approach to potential investors.
Two years ago gaming giant, Harrah’s Entertainment – Baha Mar’s former strategic partner – pulled out of the deal reportedly in response to comments Mr. Ingraham made in the House of Assembly.
At the time Mr. Ingraham expressed reservations about the financial viability of the Baha Mar developers, indicating that he had more confidence in Harrah’s ability to finance the project.
But, Bahamian Contractors Association (BCA) President Stephen Wrinkle said it is crucial that the Baha Mar project comes on stream as it would help to significantly grow the economy.
The $2.6 billion project promises to create thousands of temporary and full-time jobs and transform the drab Cable Beach area into a glitzy tourist mecca.
"I think he has [Mr. Kerzner] carried the load magnificently for several years, but can you imagine 8,000 new jobs and 5,000 new rooms? The room tax alone from that is [huge]. Phenomenal income streams are going to be available for that mega project," Mr. Wrinkle said during a recent Bahama Journal interview.
"I would like to see as much support given by to the government to Mr. (Sarkis) Izmirlian [Baha Mar Chairman and CEO] and his team. I think they’ve done a fantastic job of holding on. They went through a terrible experience with their Nevada group and a huge failure. They’ve incurred serious carrying costs. I think at the end of the day it’s going to be a better project than it would’ve been because you always learn more from your losses than you do your gains. But, they’ve stood the test of time and quite frankly I think we can see a renewed Cable Beach."
Mr. Wrinkle said the project would also provide huge benefits for The Bahamas.
"We’re going to have double the marketing that we have now; double the amount of people arriving at the airport now and double all the numbers that Kerzner has," he said.
"Remember what an impact we had when they built phase three of Atlantis. What they’re doing with Baha Mar is equal to all of the phases they did at Atlantis and they’re doing it one phase. This is a big deal," he said.
Regarding the Chinese workers that the government plans to bring in, Mr. Wrinkle said they are needed.
"They are calling for 8,000 workers out there; 4,000 workers have got to be found; we can’t provide 4,000 workers. We’d be hard pressed to provide half of that. On these big international projects it’s just a fact of life. We’ve sat at the table; the BCA has tried to represent the interests of Bahamian contractors and workers and we’ve had some success with Baha Mar; they’ve been receptive," he said.
"They have a commitment with the government to hire Bahamians. It’s in their Head of Agreement. It is in the contract with China State Construction and China Finance Bank. There is language in there that mandates that they make the effort and employ Bahamians where possible."
He continued: "The problem in the past is it’s never been fully implemented. So, we’ve been very active in trying to make sure that we have a seat at the table and that wherever and whenever we can gain access to work that it’s offered. These projects are so enormous that when you think in terms of $2 billion in a build-up that they say is going to take five years, every day, whether they hit a lick or not, is going to cost them several million dollars. So, the productivity has to be there. Imagine trying to run 8,000 people on a construction site. This is a huge endeavour and after that we’re going to have 8,000 permanent jobs."
June 17th, 2010
jonesbahamas
Thursday, June 10, 2010
Bahamas 2010/2011 Budget Under Fire
Budget Backlash
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
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