It would be most appreciated if Honourable Members of the House of Assembly and the public become familiar with the terms of the Investment Policy of The Bahamas

Communication by
Rt. Hon. Hubert A. Ingraham
On National Investment Policy and
Investment Promotional Materials

Mr. Speaker,

I am pleased to table for the information of Honourable Members a copy of the new Bahamas Promotional Brochure “The Bahamas: A Paradise for Many Reasons” together with sector information flyers on the tourism and hotel sector, international financial services and Freeport, Grand Bahama.

Members will recall that the brochure was released to the Bahamian media immediately prior to my recent attendance at the IDB Annual Meetings in Calgary, Canada and my subsequent participation in a Bahamas trade and investment mission in Calgary and Toronto.

I advise that the sector information flyers have been translated into the Chinese languages of Mandarin and Cantonese, as well as in Spanish. Translation to Portuguese and French are contemplated in the near future.

Mr. Speaker,

This updated version of the brochure, first published by my government in the 1990s, takes into account developments and changes in the investment and business climate of The Bahamas over the last 15 years or so.

In particular, I draw Honourable Members attention to changes to the National Investment Policy which are incorporated in the brochure. Our National Investment Policy, as Honourable Members are aware, is an evolved policy, some aspects of which date back to the 1960s.

It is neither an FNM nor a PLP policy, and is intended to be a national policy to guide policies of Government, which governments can change when they see fit.

The policies were first articulated and published in a formal way in 1993 as my Government sought to bring increased certainty and transparency to our business and investment environment, thereby enhancing the country’s attractiveness to the foreign direct investment required to foster economic growth.

It would be most appreciated if Honourable Members and the public become familiar with the terms of the Investment Policy of The Bahamas. Much misinformation is communicated from time to time about the investment policies of The Bahamas.

The amendments to the National Investment Policy include:

1. The minimum dollar requirement for direct foreign investment in a commercial undertaking has been increased from $250,000 to $500,000.

2. The minimum required value of a residence acquired by an foreign person for the purpose of seeking accelerated consideration of permanent resident status has been increased from $500,000 to $1.5 million. Honourable Members would recall that this figure had previously been increased from $250,000 to $500,000.

This does not mean that someone cannot obtain permanent residency in The Bahamas if they purchase a residence for a value of less than $1.5 million. What it does mean, if you are purchasing one (a residence) for $1.5 million or more, you will get speedy consideration of that application by the Government agency – i.e., you would be pulled out from the pile and processed speedily. In fact, provided you have all of the required documentation, it is expected that you would be able to have a response of a “yay” or “nay” within 21 days of the completed application being in the hands of the Department of Immigration. We seek to encourage persons who are purchasing or expending that sort of money plus, for a residence in The Bahamas.

There is no requirement in terms of our policy for persons coming to The Bahamas to attend a Directors Meeting of a company incorporated in The Bahamas to obtain a work permit. We want to encourage and facilitate such persons in entry into The Bahamas; we want to facilitate them and accommodate them. And we want to get out of the business of nickel-and-diming them.

While we have a homeowner’s card which permits someone with a residence in The Bahamas to enter as often as they like during the course of the 12 month period in respect of which the card is valid, you need not have a homeowner’s card to be facilitated in coming to The Bahamas.

Canadians and Americans as examples are able to come to The Bahamas if they have a residence in The Bahamas and stay for up to eight months. And so Immigration Officers in places such as Eleuthera, Exuma and Long Island who have been giving such people 30 days instead of the length of time they are required to be in The Bahamas, ought to discontinue doing so. It is not the intention of the government of The Bahamas to force a homeowner to obtain a homeowner’s card – it is something they can access if they choose, but they do not have to access it.

We have many residents – Canadians and Americans – who own homes in the Family Islands and elsewhere, who come down for many months out of the year and who spend money in our economy. And I am tired of getting complaints about how they are being hassled at various places in terms of the length of time they can stay in the country.

3. The restriction prohibiting international investments in restaurants and or entertainment facilities (e.g. theme parks) unless a part of a hotel resort, has been eliminated.

As you will know Mr. Speaker, the amendments made to the Hotel Encouragement Act for restaurants and other tourist related businesses in areas frequented by tourists but not within a hotel, have been in effect now for probably two years.

The revised Investment Policy also makes provision that approved investors in major development projects which investment creates employment and business opportunities for Bahamian citizens and who own or acquire a residence in The Bahamas, may be granted Permanent Residency status with the right to work in their own business.

Examples of this abound, Mr. Speaker: Butch Stewart who owns Sandals, John Issa who owns Breezes or the man who owns Robin Hood food store, are permanent residents with the right to work in their own businesses in The Bahamas. And that is an area that we say was reserved for Bahamians - but he has the right to work.

Permanent Residents continue to be required to register all real property acquisitions with the Investments Board. The fact that you are required to register it causes us to be in a position to know what non-Bahamian citizens own in our economy in terms of real estate, and we regard that as critical and vital national data to have.

As regards the Investment Policy concerning the registration of land acquisition by international persons generally, Members would recall that in 2009, the International Persons Landholding Act was amended to provide that all international persons only need register acquisitions of owner-occupied property of two acres and under - reduced from five acres.

You would recall Mr. Speaker, that back in 1993, we passed a law which remained in effect until 2009 that permitted a foreign person to purchase property in The Bahamas for the purpose of constructing a residence/house of five acres or less.

That served us well for 15 years or more. There were concerns expressed by a number of Bahamians and others, and we therefore reduced the acreage to two instead of five. Now such persons are still required to provide us with information about the source of their funding, their character certificates and the like, because notwithstanding that they are required to register it, we do want to know who is in The Bahamas, who owns property in The Bahamas and if the question arises in the future, the Government wants to be in a position to be able to respond to those questions.

And so while some people find getting a police certificate, getting a letter of reference from the bank and other such information offensive and a nuisance, it is not a requirement that we can see our way clear to remove. The Government does not grant permission for you to do so, but it requires this additional information in order for you to register your acquisition in The Bahamas.

If you are acquiring property of more than two acres, then you need a permit from the Government. You have to apply and the Investment Board reserves the right to say yes or no to any such application.

Mr. Speaker:

Every effort has been made to ensure that the Investment Policy is expressed in as apolitical way as possible taking into account the reality that our investment policies generally reflect the time honoured acceptance that the Bahamian economy is primarily driven by the tourism and financial services sectors, areas overwhelmingly involving international participation and investment.

Further, the policy reflects successive government’s dedication to promoting and incentivizing investment and development in light manufacturing and industry primarily in Grand Bahama, also with international participation.

And, finally, the Policy reflects the Government’s interest in promoting investment in the agricultural and marine resources sectors.

I invite Honourable Members to acquaint themselves with the policy, and with the booklet.

Fifteen years ago when we produced this book it was printed outside The Bahamas. This book was now printed by the Government Printing Department.

Finally Mr. Speaker, the policy is not a policy in concrete, it is a policy that continues to evolve, and the extent to which Members on either side have suggestions about amendments to the policy, they are invited to do so.

The next investment promotional trip of The Bahamas will be sometime this summer in Brazil, which I propose to lead.

18th April, 2011

bahamas.gov.bs

Bahamas Blog International

Policy makers are urged to produce a coherent national development strategy with opportunities for public input and debate... Urgently

A Clash of Economic Models for the Bahamas
by Larry Smith
bahamapundit



"As I watch these students and their families, all so proud of their accomplishments, I cannot help but feel sorry for them...How will they feel about themselves in this tourist industry, playing the role of servant so clearly constructed as being part of the nature of Bahamian culture." -- Dellareese Higgs, 2008 doctoral dissertation

“It is clearly the case that, as a result of tourism, the Bahamas is chronically dependent.” -- Felix Bethel, College of the Bahamas lecturer

“Tourism is a form of ‘leisure imperialism’ and represents ‘the hedonistic’ face of neocolonialism." - Malcolm Crick, British anthropologist

"While direct travel services generated $1.8 billion in export earnings, the economy spent $1.9 billion on the purchase of merchandise imports. it could be suggested that in the (Stafford Sands) model, the state of foreign reserves is in fact the economy’s ultimate monetary target." -- Gabriella Fraser, researcher at the Central Bank of the Bahamas, 2001

"Because of our addictive reliance on foreign investment our appreciation for Bahamian genius is negligible and in so doing we are oppressing Bahamians....Our economic model perpetuates an economic apartheid." -- Olivia Saunders, College of the Bahamas lecturer

"One can argue that Bahamian national pride is to a degree a product of brochure discourse, of touristic marketing; that much of what Bahamians love about their country is what travellers and the tourist industry claim is worth loving." -- Ian Strachan, College of the Bahamas lecturer

"The world seems to be divided between people who predict rain and people who build arks. We know which one is easier. Let them continue to predict rain in the face of these opportunities. We will work with those who are in the business of building arks." -- Vincent Vanderpool-Wallace, Minister of Tourism

The preceding series of quotes (except for the last one) is fairly representative of the intellectual discourse over tourism, economics and identity that rages from time to time in the academic and cultural world, both here and abroad.

Interestingly, this normally esoteric debate was thrown into sharp relief last week when Tourism Minister Vincent Vanderpool-Wallace and College of the Bahamas lecturer Olivia Saunders delivered diametrically opposing views at the Bahamas Business Outlook conference on Cable Beach. The theme of the conference was economic diversification.

This discussion began with a description of our current economic model. What is often described as the "Stafford Sands model" for ease of reference, is really just an updated version of the oppressive 19th century colonial system, critics say. It is a typical dependency model, which was fashioned long before Sands was born. And it needs to be overthrown.

Olivia Saunders said the creation of the Development Board in 1914 formalised earlier promotional efforts by paying foreigners to bring tourists into the colony and to develop hotels. In the 1930s, promoters like Harold Christie started selling Bahamian land to wealthy foreigners for second homes and other investments. The influx of foreign capital was driven by the absence of taxes on earnings. And all this set the country largely on the course it travels today.

Although Sands was not the originator of this model, he did take advantage of the global economic recovery after the Second World War to dramatically expand tourism and financial services. Rapid economic growth in the 1950s and 60s was partly due to unprecedented promotional spending to position The Bahamas as a year-round tourist destination.

Saunders summed it up like this: "The Bahamian economic model is designed for the country to relinquish responsibility for its resources and the commanding heights of its economy. It is one where the role of the residents is to provide labour and to be consumers while the owners of the economy, foreign nationals and a small minority of locals, amass great wealth.

This was a model that ensured underdevelopment of our human resources, she said. "We maintain a tax and incentive regime that not only favours the foreign investor but oppresses Bahamians...An economy so designed does not have much need for a local intelligentsia...It is disastrous for us to continue using the present economic model of dependence and economic apartheid."

Saunders offered a vague three-point plan to address these issues. First, leverage the abilities of Bahamians who have the aptitude and expertise to own and operate anything that is vital to nation-building. Second, ensure that Bahamian capital and resources benefit Bahamians rather than foreigners. And third, accept that our current economic model is dysfunctional and incapable of producing the results we need.

"Human beings are more than workers and consumers, and policy makers should not measure how well the nation is doing by how many jobs arise from this or that project or how many cars are purchased," she said to standing ovations from some in the audience. "My advocacy is for a new economy so fashioned that it portrays and liberates Bahamian brilliance; an economy that is congruent with healthy and sustainable communities, and an economy that extends wealth to Bahamian citizens."

Vincent Vanderpool-Wallace offered a different approach. While acknowledging that tourism was facing "stiff headwinds" due to a longer than expected recession, "what is often forgotten is that the most diversified economies on earth are not only going through the same troubles we are, these highly diversified economies are in fact the source of our troubles. And several American states and European countries are now in deeper trouble than The Bahamas has ever seen in recent times."

According to the minister, "any initiatives to grow our economy in the short and long term must be grounded in activities that arise from making existing and accepted strengths stronger, because we know that any effort that requires massive training and retraining of our population, while noble, is for the medium and longer term and is less certain. So yes, I believe in diversification, but not necessarily diversification in the way that consumes so much debate."

He went on to cite statistics that may surprise some readers. For example, if Nassau and Paradise Island were a separate country, it would rank fifth in the number of stopover visitors, second in the number of total visitors and first in the number of cruise passengers in the entire Caribbean. Yet these two connected islands are less than 2 per cent of the total Bahamian land mass.

"Today, this 2 per cent 'country' would be the third wealthiest independent nation in the hemisphere," he said. "If fully developing only 2 per cent of our islands yields these results, imagine what could happen if we began to utilize more of our natural assets. If we want to diversify, why not diversify like Toyota did in extending their brands of cars? Why not diversify within one’s areas of strength and comparative advantage?"

As we all know, the Bahamas is right next door to the United States, which constitutes 25 per cent of the global economy - a proportion that is likely to remain relatively stable for the foreseeable future despite the growth of emerging economies like Brazil, Russia, India and China. Collectively, these nations account for less than 12 per cent of global GDP today.

Vanderpool-Wallace pointed out that despite our proximity to the world's largest economy, "it is much less expensive and takes less time to travel from most places in the US to most competing destinations in the Caribbean than it does to travel to any of our Family Islands. Reducing the cost and time for travel to our islands will most assuredly lead to explosive growth and can turn our economy from the wind in our face to the wind at our backs."

This will also make domestic travel for Bahamians much more appealing compared to the current cost advantages of a trip to south Florida, he said. "The power of low-cost, high-quality air and sea transportation is no longer a debate in our industry. Our Companion Fly Free programme has been the most successful promotion in history, selling nearly 300,000 room nights, and the growth of our cruise business by more than 18 per cent last year is adequate testimony to the value of low-cost access to a Bahamas vacation."

While Nassau and Paradise Island teeter on overdevelopment, Vanderpool-Wallace noted that we have failed to provide adequate inter-island transportation, and argued that "Infrastructure development in an archipelago depends as much on connections between islands as it does on infrastructure on islands."

He advanced a "mission to the moon" vision in which Bahamians living on nearby islands like Eleuthera or Andros would commute to work in Nassau as we begin to develop the other 98 per cent of the Bahamas more completely. "Such commutes are done every day around the world. Why not The Bahamas? Our overall mission must be to go back to the islands through the expansion of inter-island transportation and communications services."

He envisioned a future where containers arriving at the new port on Arawak Cay can roll off vessels and roll onto trucks for transportation to other islands to deliver goods to the resident population, returning to Nassau with farm produce. And passengers would be able to take their personal vehicles with them to travel through the archipelago. This will accelerate the use of first and second homes in the islands and "make that globally desired idea of living and loving the island life immensely more accessible and attractive."

Efforts are already underway, he said, to establish an electronic booking system for all of the air and sea transportation within The Bahamas so that residents and visitors can book and pay for their transportation from anywhere on the planet to anywhere in The Bahamas. Currently, visitors have to go to airports and seaports to make those arrangements in most cases.

"Imagine all of the land, sea and air transportation throughout The Bahamas owned and operated by Bahamians. Imagine the size of aircraft and volume of seats coming into Lynden Pindling International Airport if substantial numbers of those passengers are also connecting to other islands of The Bahamas."

He said the government's online initiatives and a robust telecommunications sector were essential ingredients of this “Back to the Islands” vision. And all that is required for Bahamians to be successful in tourism are “bed & breakfast” facilities that can be viewed and booked online from anywhere in the world along with the necessary air and sea transportation.

"When those difficulties are overcome, we can enable hundreds to enter the tourism business immediately all over the country. And incentives could be offered to Bahamians now living overseas or on New Providence to move to the Family Islands. The largest incentive thus far is the government’s declaration that it will tackle the problem of generation and commonage land," he said. "That will be the greatest distribution of wealth in our history."

While broader diversification of the economy is a wonderful mantra, Vanderpool-Wallace said the exploitation of our existing tourism assets will be more beneficial over the short term. "Tourism cannot grow without other sectors contributing to that growth and growing themselves. It needs agricultural, legal, accounting, medical, engineering and software services. The more useful mantra is that one must compete in one's area of comparative and competitive advantage. We have not come close to making maximum use of tourism."

Quoting motivational trainer Steven Covey's comment that “the main thing is to keep the main thing the main thing", Vanderpool-Wallace said our main thing was "100,000 square miles of the most salubrious waters in the world. If we continue to guard and protect that resource, it does not diminish in size or value over the course of time, unlike the natural resources of many other nations. We have more islands and more beaches than the rest of the Caribbean combined.

"We are now at the beginning of the biggest educational, transportation and electronic infrastructure development in our history," he said. "This is the beginning of the wave to move us all forward, upward and onward together. For the sake of our children and grandchildren, now is the time to give focused attention to the development of our islands."

The contrast between Vanderpool-Wallace's common sense vision of empowerment and the bitter, near Marxist, approach of academics like Saunders could not be more marked. We would urge policy makers to extrapolate this vision, and incorporate other sectors, to urgently produce a coherent national development strategy with opportunities for public input and debate.

bahamapundit

Bahamas Blog International

Opposition Progressive Liberal Party (PLP) "does not support" former police commissioner Reginald Ferguson as director of Financial Intelligence Unit

THE Opposition PLP has announced that it does not support the appointment of former commissioner of police Reginald Ferguson to be director of the Financial Intelligence Unit.

In a party statement, the PLP claimed that Mr Ferguson was criticised in the report of the 2004 Commission of Inquiry into the mv Lorequin when drugs disappeared in a sting operation conducted by the US Drug Enforcement Agency.

“Mr Ferguson,” said the PLP statement, “was also criticised by Senior Justice Jon Isaacs in the case of R v Sean Bruey and Warren Ellis.”

In that case, said the PLP, the judge “accepted the sworn evidence of the witness who said that she was forced to give evidence by Mr Ferguson and that the evidence that she gave under duress was untrue.”

The party claimed that Mr Ferguson was given four separate chances to refute her sworn testimony, but did not.

“The failure to refute her evidence was deemed to be an admission by the Crown of the truth of her sworn evidence. An appeal was filed, but was withdrawn,” the party said.

Because of these incidents, the party did not think that Mr Ferguson should be appointed director of the Financial Intelligence Unit (FIU).

“The FNM through its inept management of financial services, including the ‘stop, review and cancel’ treatment given to the Ministry of Financial Services was in large measure responsible for the lay-offs of scores of young Bahamians from Bank of Butterfield, Ansbacher Trust Company, Royal Bank of Canada, First Caribbean Bank and other banks, trust companies, insurance companies and other financial services institutions,” said the statement.

“The PLP believes that there are many suitably qualified young persons in the Bahamas who are more than able to fill the post of the Director of the FIU. The PLP does not believe that someone aged 63 on pension of 60 per cent of $67,086 together with other benefits received by former commissioners of police ought to prevent young Bahamians from holding that post. The PLP is obliged to remind the public that senior police officers younger than Mr Ferguson were sent home without the offer of any other positions; many of them are still unemployed,” said the party statement.

December 14, 2009

tribune242

Caribbean Blog International

Suisse Security Bank and Trust Limited Appeal The Revocation of Their License by The Central Bank of The Bahamas

Bank Causes Distress

By Candia Dames

Nassau, The Bahamas

candiadames@hotmail.com

20/01/2004

...one of the failings of The Bahamas, as a premier financial services jurisdiction is that parties usually are unable to have their cases heard "in a timely fashion."

The country's financial services sector is receiving a black eye in the international arena with scores of depositors and creditors of Suisse Security Bank and Trust Limited demanding that they receive the millions of dollars they had in the institution.

Their money is being held up as a court matter drags on nearly three years after Central Bank Governor Julian Francis revoked the bank's license on the ground that Suisse Security was carrying on its business in a manner detrimental to the public's interest and the interests of its depositors and other creditors.

The Journal has now learnt that parties involved in the matter are becoming increasingly frustrated over what they perceive to be "the lackadaisical attitude of the court" and a significant backlog of cases in the system that is "slowing down the process of justice."

Meanwhile, Raymond Winder, provisional liquidator in the matter, continues to be inundated by requests from angry clients who are unable to receive any money because the legal matter is still ongoing.

For more than two years, he has faced the task of informing the creditors and depositors that their funds remain frozen.

In one of his reports to the Supreme Court, this one dated August 2002, Mr. Winder said that, "As provisional liquidator I continue to receive an abundance of telephone calls from depositors and creditors of the Bank."

Following the governor's action on April 2, 2001 to revoke the bank's license, Suisse Security filed a notice in the Supreme Court challenging the revocation order.

Last April, Justice Austin Davis dismissed the bank's case, but the bank appealed the decision.

Suisse Security officials responded to last April's ruling saying that it was "most disappointing and an outrage."

The Central Bank, meanwhile, in its response, said it was "pleased that the statutory appeal brought against its decision to revoke the bank and trust license of Suisse Security Bank and Trust Limited (SSBT) has now been decided.  The Bank is satisfied with the decision relating to the appeal."

But no date has been set yet for the appeal.

"We are awaiting a date from the court," said Mr. Winder, a Certified Public Accountant and partner in Deloitte & Touche.  He added Monday that his powers as a liquidator were limited given that the matter has not yet been resolved.

But Mr. Winder pointed out that he could not make any further comments given that the case is before the courts.

As provisional liquidator, he has the power to take possession of, collect, and protect the assets of the bank, but not to distribute those funds until further order.

His task has clearly not been an easy one.

In the report mentioned earlier, Mr. Winder said that, "On the morning of April 9, 2001, prior to receiving the Order of my appointment of Provisional Liquidator, I learned that Messrs. Michel Harajchi, Derek Ryan, Christopher Lunn and Wendell Ferguson had broken into and gained access to the Bank's premises."

He also said at the time that former officials of the bank had reactivated their web page, informing that they could be contacted for updates on what was happening at the bank.

 A source close to the case expressed frustration Monday that the matter has not yet been heard on appeal.  But he spoke anonymously because of the status of the case.

"This sheds a terrible light on [the jurisdiction]," he said.  "The matter is just sitting there."

The source also noted that one of the failings of The Bahamas, as a premier financial services jurisdiction is that parties usually are unable to have their cases heard "in a timely fashion."

Throughout the proceedings, the bank's chairman, Mohammed Harajchi, has said that he plans to reopen his institution, insisting that Governor Francis erred in his decision to shut the bank down.