Answers on keeping investors
During the Grand Bahama Outlook last Thursday President of the Grand Bahama Chamber of Commerce Kevin Seymour, gave an inspiring talk on Freeport then, now and the future. The title of the speech was Grand Bahama Chamber of Commerce Continuation, Collaboration and Competition.
However as he looked at the future here is what he had to say:
"The city has been built, they did come, but the sad reality is, a good number of them also did not stay, so how do we now get investors to return?
"In the past, when the Central Government was being asked to extend the tax exemptions relating to real property taxes and business license fees, under the Freeport Grand Bahama Act, 1993 and the HCA respectively, the Government demanded in return that certain “works and undertakings” be carried out by the Grand Bahama Port Authority and the Grand Bahama Development Company.
"These works and undertakings in the main, focused on the island’s physical infrastructure, which I hasten to add is extremely important in the life of any city, if we are to remain competitive.
"However proper consideration was not given to the intangible factors that I’ve enumerated, which contributed to its decline. As fate would have it, we now have another chance at hitting the “reset button” for Freeport and by extension Grand Bahama’s economy, with the possible sun setting of the real property, business license and other tax exemptions in August of this year.
"This opportunity must not and cannot be squandered. As previously mentioned, Freeport’s initial success was born out of the HCA. The framers of the HCA, Wallace Groves, the Colonial Government and the early investors, clearly understood the critical role that fiscal incentives play in spurring investment and the resultant positive impact this can have on raising revenues.
"However in order to be effective, such incentives must necessarily be accompanied by SMART (i.e. specific, measurable, achievable, relevant and time bound) developmental and growth goals. So, what specific steps do we recommend be taken by key stakeholders in order to entice investors back to the magic city and make it competitive once again?
"We humbly recommend the following:
1) The Central Government needs to quickly make a decision on the tax exemptions expected to expire in August, in order to dispel the dark cloud of uncertainty hovering over Freeport;
2) Rather than attempting to chip away at the existing tax incentives available to GBPA’s Licensees, by way of these frequent incursions made by the Customs Department and The Vat Unit of the Ministry of Finance on GBPA Licensees, the Central Government needs to be seen to recognize and respect the legal rights of Licensees under the terms of the Hawksbill Creek Agreement;
3) The Central Government and its agencies should be available, as and when required, but should resist the urge to meddle and interfere with the running of the city. Pursuant to the HCA, this responsibility has been delegated to the Grand Bahama Port Authority and every time the Government or one of its agencies overreaches, this erodes investor confidence;
4) Once Foreign Direct Investment Applicants are properly vetted by the GBPA and its agents and the applications are passed on to the Foreign Investment Board, the National Economic Council and the Central Bank for further review, we recommend that these Central Government agencies coordinate their respective review activities with a view to reducing review and turn-around times to no more than fifteen (15) business days;
5) The Central Government needs to revisit its “one size fits all” policy on immigration, with a view to facilitating the migration of a greater number of professionals and skilled labour to our shores;
6) The Principals of the Grand Bahama Port Authority need to urgently address the appearance of conflict and must lead the way in the restructuring of this essential quasi governmental organ;
7) The Principals of the Grand Bahama Port Authority needs to leverage their relation with their Joint Venture Partners to make the proposed Sea Air Business Park, more than just a theoretical concept, but a fully functional Free Trade Zone comparable to the likes of Jebel Ali in Dubai, Shannon in Ireland and Colon in Panama;
8) The Grand Bahama Port Authority needs to be more visible and transparent in defending the rights of its licensees and should actively facilitate the formation of a fully functioning Licensees Association; and
9) The Grand Bahama Port Authority, in collaboration with the Central Government, Licensees and NGOs such as the Chamber of Commerce, should actively market and promote the island of Grand Bahama. The Government can immediately add value here by not only extending the tax exemptions due to sun set in August of this year, but by “doubling down” and creating new tax incentives in order to spur new investment.
In conclusion he said, the economic decline and stagnation currently affecting Grand Bahama’s economy, is a blight that has affected other cities around the world and some even in developed and wealthy countries, such as the United States. Hence we need not feel discouraged.
"Our challenge therefore is not to complain, but to identify and correct our shortcomings and inefficiencies, leverage our geographical, climatic and other God given advantages, refresh our product and services offerings, and forge stronger and more mutually beneficial relationships between key stakeholders.
"History has shown that Grand Bahama’s residents, inclusive the business community, are resourceful, resilient and persevering. We are not asking for a hand out from the Central Government, when we request that fiscal incentives be extended or even increased, since history supports the fact that we have always paid our way, and has been and I believe that we continue to be, a net contributor to the economy of The Bahamas.
"The message therefore is clear, our success here in Grand Bahama inures to the benefit of the nation at large, let us therefore work together to achieve this."
However as he looked at the future here is what he had to say:
"The city has been built, they did come, but the sad reality is, a good number of them also did not stay, so how do we now get investors to return?
"In the past, when the Central Government was being asked to extend the tax exemptions relating to real property taxes and business license fees, under the Freeport Grand Bahama Act, 1993 and the HCA respectively, the Government demanded in return that certain “works and undertakings” be carried out by the Grand Bahama Port Authority and the Grand Bahama Development Company.
"These works and undertakings in the main, focused on the island’s physical infrastructure, which I hasten to add is extremely important in the life of any city, if we are to remain competitive.
"However proper consideration was not given to the intangible factors that I’ve enumerated, which contributed to its decline. As fate would have it, we now have another chance at hitting the “reset button” for Freeport and by extension Grand Bahama’s economy, with the possible sun setting of the real property, business license and other tax exemptions in August of this year.
"This opportunity must not and cannot be squandered. As previously mentioned, Freeport’s initial success was born out of the HCA. The framers of the HCA, Wallace Groves, the Colonial Government and the early investors, clearly understood the critical role that fiscal incentives play in spurring investment and the resultant positive impact this can have on raising revenues.
"However in order to be effective, such incentives must necessarily be accompanied by SMART (i.e. specific, measurable, achievable, relevant and time bound) developmental and growth goals. So, what specific steps do we recommend be taken by key stakeholders in order to entice investors back to the magic city and make it competitive once again?
"We humbly recommend the following:
1) The Central Government needs to quickly make a decision on the tax exemptions expected to expire in August, in order to dispel the dark cloud of uncertainty hovering over Freeport;
2) Rather than attempting to chip away at the existing tax incentives available to GBPA’s Licensees, by way of these frequent incursions made by the Customs Department and The Vat Unit of the Ministry of Finance on GBPA Licensees, the Central Government needs to be seen to recognize and respect the legal rights of Licensees under the terms of the Hawksbill Creek Agreement;
3) The Central Government and its agencies should be available, as and when required, but should resist the urge to meddle and interfere with the running of the city. Pursuant to the HCA, this responsibility has been delegated to the Grand Bahama Port Authority and every time the Government or one of its agencies overreaches, this erodes investor confidence;
4) Once Foreign Direct Investment Applicants are properly vetted by the GBPA and its agents and the applications are passed on to the Foreign Investment Board, the National Economic Council and the Central Bank for further review, we recommend that these Central Government agencies coordinate their respective review activities with a view to reducing review and turn-around times to no more than fifteen (15) business days;
5) The Central Government needs to revisit its “one size fits all” policy on immigration, with a view to facilitating the migration of a greater number of professionals and skilled labour to our shores;
6) The Principals of the Grand Bahama Port Authority need to urgently address the appearance of conflict and must lead the way in the restructuring of this essential quasi governmental organ;
7) The Principals of the Grand Bahama Port Authority needs to leverage their relation with their Joint Venture Partners to make the proposed Sea Air Business Park, more than just a theoretical concept, but a fully functional Free Trade Zone comparable to the likes of Jebel Ali in Dubai, Shannon in Ireland and Colon in Panama;
8) The Grand Bahama Port Authority needs to be more visible and transparent in defending the rights of its licensees and should actively facilitate the formation of a fully functioning Licensees Association; and
9) The Grand Bahama Port Authority, in collaboration with the Central Government, Licensees and NGOs such as the Chamber of Commerce, should actively market and promote the island of Grand Bahama. The Government can immediately add value here by not only extending the tax exemptions due to sun set in August of this year, but by “doubling down” and creating new tax incentives in order to spur new investment.
In conclusion he said, the economic decline and stagnation currently affecting Grand Bahama’s economy, is a blight that has affected other cities around the world and some even in developed and wealthy countries, such as the United States. Hence we need not feel discouraged.
"Our challenge therefore is not to complain, but to identify and correct our shortcomings and inefficiencies, leverage our geographical, climatic and other God given advantages, refresh our product and services offerings, and forge stronger and more mutually beneficial relationships between key stakeholders.
"History has shown that Grand Bahama’s residents, inclusive the business community, are resourceful, resilient and persevering. We are not asking for a hand out from the Central Government, when we request that fiscal incentives be extended or even increased, since history supports the fact that we have always paid our way, and has been and I believe that we continue to be, a net contributor to the economy of The Bahamas.
"The message therefore is clear, our success here in Grand Bahama inures to the benefit of the nation at large, let us therefore work together to achieve this."
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