There is no PLP foreign investment and there is no FNM foreign investment in The Bahamas. The credit taken by supporters of those political parties is misplaced. Every project undertaken by an investor is approved by the government of The Bahamas in the name of the people. The investor in every case spends money and looks to make money. He is not concerned about the competition between parties, but seeks leverage in his transactions with the government.
The intelligence of the investor in The Bahamas will tell him that the creation of jobs will give him an enormous amount of leverage in negotiations in a flat economy where job creation is at a premium. He also knows that when a government is being criticised for the lack of response, that government will be eager to deliver jobs.
The obsession with job creation in The Bahamas by successive governments has pushed them in positions which are not only counter-productive to the environment, but also harmful to the orderly social progress of the nation. While jobs are important to the economy of The Bahamas, no government should allow itself to be blackmailed by negotiating with a foreign investor “under the gun” or with the idea that The Bahamas is desperate.
Negotiating Heads of Agreements and drafting them is a complicated and commercially sophisticated process. In most cases the private investor has a team of consultants and lawyers at his disposal who give focused attention to their objectives. In many cases these professionals have wide experience in negotiating with governments around the world.
Conversely, we may have a person who is a minister or a Civil Servant, who may have no technical experience in the subject matter of negotiations and who will not have the benefit of the same level of experienced advisors. In the case of a Minister, he may have a few civil servants and some assistance from less experienced professionals, thereby creating an unequal negotiating process.
Bearing this in mind, it is hardly surprising that the foreign investor often gets the better deal at the expense of our national interest.
The time has come for governments of The Bahamas to accept the limitations of the Public Service and retain outside consultants and advisors to assist in negotiating contracts which in many instances are worth scores of millions of dollars and have implications for a number of years.
As the region has become more competitive where countries are prepared to do more for the investor, the International investor is demanding more and more incentives and concessions to locate in The Bahamas, due to our proximity with the United States rather than go to another competitor.
Negotiations with investors have become more complex, involve larger sums of money and now include generous packages of concessions. This means that we need a higher level of expertise, greater technical proficiency and more international experience than is readily available within the public service. This is not to denigrate either the competence or ability of many public servants, but it is simply to recognize that we cannot always provide from conventional sources all the talents and experience that is needed to deal with the increasing demands of the international investor.
If The Bahamas is to be internationally competitive, it must move with at a faster speed to provide the skills set necessary to efficiently bring projects to fruition.
Although governments retain the power to interfere in the economy, they have become increasingly subject to the forces of global competition. If a government imposes conditions that are unfavourable to capital, then capital will go elsewhere. Conversely if a government provides incentives for favoured businesses it can foster the accumulation of capital. So the global capitalist system consists of many sovereign states, each with its own policies, but each subject to international competition not only for trade but also for capital.
In negotiating with foreign investors, the government must be mindful that the current version of global capitalism is an incomplete and distorted form of global open society. The deficiencies are more in the political and social arrangements than on the economic side. Indeed, global capitalism is two-sided: Investors put emphasis on the pursuits of profit and economic success and while governments look at social and political considerations.
Insight, The Bahama Journal
