Since coming to office after the May 2nd general elections, at least two Cabinet Ministers in the Progressive Liberal Party government have boasted that the new administration has replaced red tape with red carpet for the foreign investor. However, anyone who is close to one of these investors will testify on how frustrated many of them are who wish to get projects approved or off the ground. If a red carpet is extended to the investor, it could be that the carpet itself is too long or that red tape is on the carpet.
In the global economy, investors have many options as countries around the world stand ready to welcome them. The investor is in the drivers seat.
This coming week with the PLP in Convention, many Bahamian and foreign investors will be watching and listening to hear what the governments plans are for the stimulation and growth of the economy. While there have been a lot of discussions going on, there have been too few decisions.
The main criticism is that it takes too long to get a clear answer from the government and that the approval process is now protracted because the National Economic Council is made up of the entire Cabinet rather than a Committee of the Cabinet.
In recent years during the administration of former Prime Minister Hubert Ingraham, the complaint was that one man made the decisions to give foreigners approvals, concessions or incentives. Today, with a policy of Prime Minster Perry Christie to consult, frustrated investors claim that the process for approvals has become cumbersome. They claim that the style of the new Prime Minister is not conducive to swift decision-making.
As the Bahamian economy is overly dependent on foreign direct investment, all of the projects in the pipeline which the Minster of Financial Services Allyson Gibson talked about need to be delivered. One is left to wonder whether foreign investors are holding out, or if the government is trying to drive a better bargain with some of them.
Over the last eight years, some $2.3 billion came into the Bahamian economy from foreign investors. This drove our prosperity for many years during the FNM administration. Many political analysts criticised the concession given to
ﾠﾠﾠSun International for the development of Atlantis on Paradise Island . However, it must be admitted that the Atlantis project was responsible for the level of prosperity which The Bahamas enjoyed in those years.
It will be interesting to see the kind of concessions and incentives which the Christie government will give Kerzner International for the next phase of the development of Atlantis.
Since Investors are not beating down the doors of the government, the government will be hard-pressed not to give extraordinary incentives and concessions to Kerzner.
In the early 90s foreign direct investment in The Bahamas was under $100 million. It peaked in ’99 to $839 million. Foreign exchange reserves increased to a record $460 million resulting in an increase in domestic money supply and liquidity in the banking system. Government revenue jumped as imports increased resulting in higher duty collection and stamp duty on real estate transactions with the prospects of a balance budget looking increasingly possible.
Today foreign direct investment is estimated to be around $100 million. There is a dire need for large-scale real estate development to happen. These will not happen if the bureaucracy continues in the Cabinet room and when Ministers believe that the mood in the country is anti-foreign investment. This mood set in prior to the last general elections when the FNM government refused to do what was in the national interest with the Clifton project. It allowed protestors to scare the government in turning down hundreds of millions of dollars in foreign investment. The then government wanted to win the elections and appeased those who had no idea of what foreign investors wanted. Now the government wishes to pay Mrs. Nancy Oakes, who has been victimized, for the land it acquired, but has no money to pay her with. Even if it finds the $20 million to pay for the land, no development will take place on it within the next five years, as the government has no immediate plan to do anything there.
In the meantime, the PLP goes into Convention on Monday with the theme “The Storm Is Over”. While a political storm might be over because the Party won the last general elections, an economic storm is raging with unemployment rising, with a broke public Treasury and frustrated foreign investors.
Insight, The Bahama Journal
