Hawksbill Creek Agreement - Where do we go?
As the title says, this was the topic addressed by Carey Leonard at the recent Business Outlook Grand Bahama. I want to share his entire presentation.
2015 is a very important year, not only for the stakeholders here in the Port Area on Grand Bahama, but also for our country, as a whole. This year we are faced with an opportunity; we are at a crossroads; we are at a point in time when we can either make decisions that are truly innovative and life changing as the original Hawksbill Creek Agreement in 1955 or we can take a conservative, botched up band aid approach as we did in the 1990s. All that was done in the early 90 was to extend to 2015 that which had already existed. The results were a couple of new investments, container port and shipyard, though nice, which can in no way be compared to the massive investment that created the infrastructure and massive development that were created in the first 20 years of the Hawksbill Creek Agreement.
In this presentation it is going to assume that everyone here has some knowledge of the Hawksbill Creek Agreement, so we can take a very quick look at the effect that the Hawksbill Creek Agreement had had on the Island of Grand Bahama since its inception up to today.
When the Agreement was signed in 1955 the City of Freeport did not exist. We had the settlements of Pinder's Point, Hunters, Lewis Yard, Williams and Russell Towns, Smiths Point and Mather Town. The total population of all of those settlements combined totaled a little over a thousand.
The major settlement on Grand Bahama at the time was West End. It was already well established with a Billy Butlin Camp later to become Jack Tar.
The total population on the island of Grand Bahama in 1953, according to Bahamas Census, total 4,095.
Since the implementation of the Agreement, just on sixty years ago, the Port Area has been a major source of profit for this country. This is to say, that it has always generated more revenue than expenditure for our Country. It can be argued that the Hawksbill Creek Agreement is one of the finest, if not the finest, piece of legislation this country has ever seen.
The Port Area has been a cash cow for the Public Treasury since its inception. It has been said that the Port Area has provided the Public Treasury with a net, yes net, profit of not less than 60 million a year.
Only a couple of years ago the purchase of a business in the Port Area resulted in a 180 million dollar stamp duty payment. The Treasury made a 250 million dollar profit out of the Port Area that year. None of this would have occurred without the Hawksbill Creek Agreement.
Now that we have an understanding of how the city/Port Area has grown because of this Agreement, and how the country has benefitted, because of its existence, we can see that, moving forward, we need to provide the "proper nurturing" of the Agreement for the present and the future.
A Committee is being set up by the Government for the purpose of dealing with the items expiring under the Hawksbill Creek Agreement in August of this year.
I support the approach of setting up a Committee. The Government has named some of the persons that it feels should be a part of that Committee. I will assume that, like many committees, there are certain posts or duties that must be fulfilled, and that the best people possible need to be called upon to fill those positions. It is also important that such a committee does not become unwieldy so it will be necessary for a limited number of members to be able to be focused on every aspect of the Port Area. Most important of all, is that the majority of the members of the committee should be or have been based in Freeport for a considerable number of years.
I say that as one who came up from Nassau. I cannot begin to tell you that as often as some of us Nassauvians come up to our businesses in Freeport, we are not even aware of the fact that Freeport maintains its owns roads, that Freeport pays for all of its garbage to be collected, that all car license fees and as taxes goes to Nassau, that all departure taxes collected in Freeport are used for all other ports in the country except Grand Bahama International Airport and Freeport Harbour, that the capital expenditures unlike Nassau Harbour, do not come from the Public Treasury and Freeport' capital expenditure or other loans are not guaranteed by government, like that of BEC for example. The Agreement has ensured that the Port Area's growth, in the form of capital investment and maintenance has been achieved with a self sufficiency from the Public Treasury; a truly remarkable, and very commendable achievement.
You have to live in Freeport for an extended period of years, sometimes decades, to really understand all its nuances.
That being said, what should this committee look like? What should it hope to achieve? How wide should its scope be?
It is going to be very important that the guidelines for this committee be very wide. Too often a Committee is appointed but its parameters are so narrow that the outcome has already been determined. I sat on one such committee a few years ago, and we were not allowed to delve into matters that had a direct bearing on the job at hand. "Oh no, can't deal with that, that is not in our directive." To a large extent, I wasted two year on something that I truly believe we need as a nation, and could have been introduced two years ago had the committee been allowed to deal with all the branches that needed to be fixed to make it successful. Those matters have yet to be addressed.
So unless this committee has powers wide enough to deal with "all aspects of the Hawksbill Creek Agreement and immigration, trade and tax laws", such a committee will be a waste of time. And with respect to the trade and tax laws, the scope should include both domestic and international laws.
There are also the questions as to what the Committee should look like, how will it be structured, who should the members of the committee be?
James Smith, a former Financial Secretary, Governor of the Central Bank and Trade Ambassador is a great choice. I would highly recommend the inclusion of Albert Gray, a man with over 40 years in the GBPA, LUSCO, GB Devco and Port Group Limited who knows and understands the workings of the Port Area better than anyone I know, would make a great addition. The Committee must include a representative of the small business licensees of the GBPA. About two thirds of GBPA Licensees are Bahamian owned small businesses, and it is vital that one of their number be on the committee. And I don't mean going out to find anyone but one who will drive a hard and sensible bargain for such an important segment of our economy. It must also include someone who will represent the homeowners in the Port Area. After all, they have a very vested interest, as real property tax is going to be a major issue; someone from the business community in general; a member from the large industrial group, one from the Hutchison Whampoa, one from the Port Group Limited, and a Minister of Government. This is nine in all. Other persons who have been mentioned in the press can be used as advisors to the Government team together with advisors for the balance of the groups represented.
There would be the nine primary members supported by non-speaking advisors, not more than two per committee member creating a team of 27 people looking at and considering all aspects.
Of these advisors, there should be one or more advisors who are experts in the field of International Trade Agreements such as the World Trade Organizations with GATT and GATS, and the Caribbean Basin Trade Partnership (CABTA) which has replaced the Caribbean Basin Initiative (CBI).
This committee must be open minded and able to think laterally. They must be allowed to think out of the box and be inventive and creative. It will be important that the Committee considers the needs of the various businesses, large industrial, large commercial retail, the mom and pop retail, their relationship with each other and create synergy and new services. It must look at foreign direct investment and create a clear vision of how to attract it.
This committee must be focused substantially on enhancing the success of the Port Area because a successful Port Area will be able to contribute even more to the Bahamian economy. Think, if 50 to 60 thousand people can contribute between not less than a 60 million dollar profit to the Public treasury each year, how much a successful Port Area with 120,000 persons could contribute.
All members must have one focus, and one focus only, and that is the betterment of the Port Area, how to make it a thriving city of at least 120,000 within twenty years and at least 150,000 within thirty years. Why, one may ask does population need to be a point. There are three reason. The first is that a larger population will provide more business for the small business sector. This sector benefits from the Agreement in an indirect way. They look to it for business creation. Secondly, a larger population will require food, goods and transportation, all of which generate revenue for the Public Treasury. Thus a larger population, especially a successful one will provide the Public Treasury with more revenue. History has shown us that the revenue into the Public Treasury will flow from a successful Port Area; revenue that far exceeds any Public Treasury expenditure. Thirdly, because we need to ease the concentration of the population of the country off the island of New Providence. In many instances, the infrastructure of New Providence is struggling under the weight of so many people. By creating good job opportunities in Freeport, the burden can be lifted on New Providence, and Freeport already has the infrastructure to accommodate 250,000 persons.
There are opportunities for us to considerably enlarge our industrial sector. The question is whether or not we as a people are prepared to embrace change and whether our Government has the fortitude to impose it on us for our own good. The Government has introduced legalized numbers finally and though not a pleasant pill to swallow, they have introduced Value Added Tax. The question is do they have the courage to change the overly restrictive immigration policy in a way to enhance our economy and create opportunities for our educated Bahamians to come home from abroad?
The industrial area has after the declining financial sector, the greatest potential to create good paying jobs for Bahamians. No offense to our hard working Minister of Tourism, but the job opportunities in the hotel and tourism industry are limited mostly to maids, waitresses and bartenders. These are all good jobs but, what I am saying is that we need to balance our economy and the Port Area is the best place for the next twenty or thirty years for the Government to do just that. The Industrial Area gives us that opportunity, if we go after the right industries. Manufacturing that require a chemical process also require more employees with University degrees. Employees with degrees can represent up to 30 or 40 percent of all their employees. Today we have Bahamians with degrees earning between $35,000 to $60,000 a year and that is not including benefits. Those Bahamians who are closer to the top earn even more. What we have today was created by the old agreement. Imagine if we created another 4,000 in the area over the next ten years. Those industries could need as many as 1600 Bahamians with degrees, just in those areas. Those Bahamians will be looking to own property in their country. They will need all kinds of services. So the trickle-down effect will benefit all.
Most of all we will be giving qualified Bahamians the opportunity to come home. This is something most of them say they want to do except that there is nothing here for them. We have the opportunity to fix that.
Foster growth and sustainability.
Need to show what can we done.
The Committee must focus on the Grand Bahama Port Authority and its corporate governance. The GBPA needs to be a non-profit body ran by the stakeholders (landowners, licensees, etc). Transparency needs to be enshrined especially with respect to the money received and how it is spent. The people running it must be held accountable for their actions. This can easily be achieved through proper corporate governance. This would eliminate the conflict of interest that currently exists with Port Group Limited and companies in which it has interests, such as the Harbour or GB Devco and allow the GBPA to act solely in the interests of the Port Area.
The Agreement should be amended requiring The Bahamas Government to reply, within 60 days to any request of the GBPA to amend byelaws etc. The GBPA is in the business of running a city and has the responsibility to doing the best it can for the benefit of 50 to 60 thousand residents. Non responsiveness for years at a time was not contemplated in the Agreement but sadly experience has taught us that non-timely responses have occurred all too often. For example, matters dealing with environmental standards will be especially important where industry is involved. If a new type of industry wants to set up, it will be vital that the GBPA is able to provide clear standards, time frames and procedures with respect to that particular industry.
The Committee needs to be stern about the marketing strategy and approaches and even sterner about its outcomes. Goals must be set and programmes must be developed. In the last 20 years and certainly during the 16 years I have been here there has been no serious promotion of the Port Area. Sure we send a few people away to trade shows, however these approaches are aimless and are done in a most amateurish manner and the proof is in the fact that they have achieved no substantial investments in the last 10 years. This has contributed to the lacklusture job market that the Port Area has had to endue during that period.
I talk briefly about intentional trade agreements. Focus needs to be on these agreements because The Bahamas has applied to become a member of the World Trade Organization. It is also in negotiation with Canada for a new trade agreement and in negotiations with the United States with respect to the Caribbean Basin Trade Partnership. All these trade agreements are opportunities for the Industrial Sector of the Port Area.
Some of the these agreements provide for certain quotas from certain countries at preferential tariffs. That is the number of items that they will allow. There are also rules for "value added" items. No this is not a VAT, but deals with the value, or percentage of the work performed in, say the Port Area in The Bahamas, to decide if there is sufficient work done to consider it an item "manufactured in The Bahamas". If The Bahamas has negotiated a special tariff with the country to which it is exported, then whoever manufactured it, in the Port Area can take advantage of the preferential tariff.
It may well mean that certain components are manufactured here and then combined with components manufactured by an assembly process. To date the Port Area has not taken advantage of the proximity to the North American Market. As Hutchison Whampoa controls both these facilities as well as the 740 acre Sea Air Business Centre the committee should put a very clear and concise obligation, including a timeline, on Hutchinson Whampoa to put in the infrastructure that would be required to sustain the development of a sterile industrial park. I understand that Hutchison's people know what is required.
The idea of manufacturing might sound ridiculous considering the cost of electricity in the Port Area, but it shouldn't. I maintain that there is nothing to prevent a company from manufacturing its own electricity, for its own purposes. Any manufacturing plant could be designed with solar panels. Most business is conducted during the day, when solar power produces its energy. It may well be that certain components need not be connected to the power grid at all.
However, in reviewing the Hawksbill Creek Agreement the committee should give serious consideration to the limitation time for any monopolies. Who has ever heard of giving someone a 30, 50 or 99 year monopoly? Further, monopolies are frowned upon by the World Trade Organization.
Real Property Tax is going to be a hot topic. The committee is going to need to leverage this with both Hutchison Whampoa and the Port Group Limited. With one breath I hear that Hutchison say that the Lucaya property is worth hundreds of millions and with another that it is only worth tens of millions. If they take the position that it really is not worth much then we the people should look to make a compulsory purchase for tens of millions. If they take the position that it is worth hundreds of millions then we the people should look to them to pay substantial sums of Real Property Tax. But Hutchison should not be able to have it both ways.
GB Devco and FCI need to pay Service Charges to the GBPA which would then have a development arm and be in a position to properly promote the Port Area.
Anyone who is subject to Service Charges should not be subject to Real Property Tax. GB Devco, Port Group Limited and its subsidiaries don't pay Service Charges so they will have to pay Real Property Tax until they develop or sell the property to someone who pays Service Charges. At the moment they are the only ones who are getting a free ride and this is not fair on the rest of the Port Area who have to pay. The rest of us are the ones who contribute to that profit to the Public Treasury.
To reiterate, the Hawksbill Creek Agreement is an excellent agreement. With some tweaking it can provide the framework for an expansion of the economy and an increase in employment not seen since the sixties and early seventies. We have the opportunity to make it happen now. We are at a point where the future of the city of Freeport and the country is in the hands of Bahamians. We can develop a success story or continue to talk about the potential that exists for another 50 years. What will our children and grandchildren say about our actions in 60 years from now? How will history mark us? What legacy will we have created? We can look today and see what Wallace Groves saw and did. He truly had a vision. Sadly we failed to reinvent, upgrade and amend that vision 22 years ago and we are feeling the effects today. Just as we know that tourism and banking as envisaged by Staffords Sands is in need of a revamp, hence Felix Stubbs presence here today.
Now is when we need to revamp Wallace Grove's vision. While we stagnate, other countries like Panama and its Colon Free Trade Zone and container port are enjoying the benefits of direct foreign investment. A look at the economic growth of Panama between 1999 and 2013 shows a more than doubling of the economy. But for us, Cayman is perhaps the best example.
Hit by a strong category 5 Hurricane Ivan in 2004 with reports of 20% to 25% of the island under water as a result of sustained winds of over 150 mph with gusts up to 180 mph. There was tremendous devastation. We experienced two hurricanes ourselves in 2004 and sustained flooding and damage. Fortunately for us the strongest gusts were no more than 130 mph. Since Hurricane Ivan Cayman has managed to attract six billion dollars of foreign direct investment.
According to Wikipedia.org, the total land mass of the Cayman Islands is about 102 square miles with a population including expatriates of about 55000 almost identical to us on Grand Bahama and with the Port Area having some 230 square miles of land mass.
So what did Cayman do that we did not? We certainly have not seen six billion invested here in the last ten years. Could you imagine how much better off the whole country would be if it had such an injection of capital? We need to look at the steps that were taken in Cayman and remember they did this, even though the world was going through a recession. It is not that there is no money to be invested, indeed banks are full of cash that is being held by wealthy individuals and successful corporations looking for a good place to invest. We have the opportunity to do even more than Cayman. We are better located than Cayman.
We literally hold the future in our hands. If we fail to make a success of it there is no one to blame but ourselves. Opportunities like this are extremely rare. The task at hand is awesome.
But we have the opportunity.
Thank you.
2015 is a very important year, not only for the stakeholders here in the Port Area on Grand Bahama, but also for our country, as a whole. This year we are faced with an opportunity; we are at a crossroads; we are at a point in time when we can either make decisions that are truly innovative and life changing as the original Hawksbill Creek Agreement in 1955 or we can take a conservative, botched up band aid approach as we did in the 1990s. All that was done in the early 90 was to extend to 2015 that which had already existed. The results were a couple of new investments, container port and shipyard, though nice, which can in no way be compared to the massive investment that created the infrastructure and massive development that were created in the first 20 years of the Hawksbill Creek Agreement.
In this presentation it is going to assume that everyone here has some knowledge of the Hawksbill Creek Agreement, so we can take a very quick look at the effect that the Hawksbill Creek Agreement had had on the Island of Grand Bahama since its inception up to today.
When the Agreement was signed in 1955 the City of Freeport did not exist. We had the settlements of Pinder's Point, Hunters, Lewis Yard, Williams and Russell Towns, Smiths Point and Mather Town. The total population of all of those settlements combined totaled a little over a thousand.
The major settlement on Grand Bahama at the time was West End. It was already well established with a Billy Butlin Camp later to become Jack Tar.
The total population on the island of Grand Bahama in 1953, according to Bahamas Census, total 4,095.
Since the implementation of the Agreement, just on sixty years ago, the Port Area has been a major source of profit for this country. This is to say, that it has always generated more revenue than expenditure for our Country. It can be argued that the Hawksbill Creek Agreement is one of the finest, if not the finest, piece of legislation this country has ever seen.
The Port Area has been a cash cow for the Public Treasury since its inception. It has been said that the Port Area has provided the Public Treasury with a net, yes net, profit of not less than 60 million a year.
Only a couple of years ago the purchase of a business in the Port Area resulted in a 180 million dollar stamp duty payment. The Treasury made a 250 million dollar profit out of the Port Area that year. None of this would have occurred without the Hawksbill Creek Agreement.
Now that we have an understanding of how the city/Port Area has grown because of this Agreement, and how the country has benefitted, because of its existence, we can see that, moving forward, we need to provide the "proper nurturing" of the Agreement for the present and the future.
A Committee is being set up by the Government for the purpose of dealing with the items expiring under the Hawksbill Creek Agreement in August of this year.
I support the approach of setting up a Committee. The Government has named some of the persons that it feels should be a part of that Committee. I will assume that, like many committees, there are certain posts or duties that must be fulfilled, and that the best people possible need to be called upon to fill those positions. It is also important that such a committee does not become unwieldy so it will be necessary for a limited number of members to be able to be focused on every aspect of the Port Area. Most important of all, is that the majority of the members of the committee should be or have been based in Freeport for a considerable number of years.
I say that as one who came up from Nassau. I cannot begin to tell you that as often as some of us Nassauvians come up to our businesses in Freeport, we are not even aware of the fact that Freeport maintains its owns roads, that Freeport pays for all of its garbage to be collected, that all car license fees and as taxes goes to Nassau, that all departure taxes collected in Freeport are used for all other ports in the country except Grand Bahama International Airport and Freeport Harbour, that the capital expenditures unlike Nassau Harbour, do not come from the Public Treasury and Freeport' capital expenditure or other loans are not guaranteed by government, like that of BEC for example. The Agreement has ensured that the Port Area's growth, in the form of capital investment and maintenance has been achieved with a self sufficiency from the Public Treasury; a truly remarkable, and very commendable achievement.
You have to live in Freeport for an extended period of years, sometimes decades, to really understand all its nuances.
That being said, what should this committee look like? What should it hope to achieve? How wide should its scope be?
It is going to be very important that the guidelines for this committee be very wide. Too often a Committee is appointed but its parameters are so narrow that the outcome has already been determined. I sat on one such committee a few years ago, and we were not allowed to delve into matters that had a direct bearing on the job at hand. "Oh no, can't deal with that, that is not in our directive." To a large extent, I wasted two year on something that I truly believe we need as a nation, and could have been introduced two years ago had the committee been allowed to deal with all the branches that needed to be fixed to make it successful. Those matters have yet to be addressed.
So unless this committee has powers wide enough to deal with "all aspects of the Hawksbill Creek Agreement and immigration, trade and tax laws", such a committee will be a waste of time. And with respect to the trade and tax laws, the scope should include both domestic and international laws.
There are also the questions as to what the Committee should look like, how will it be structured, who should the members of the committee be?
James Smith, a former Financial Secretary, Governor of the Central Bank and Trade Ambassador is a great choice. I would highly recommend the inclusion of Albert Gray, a man with over 40 years in the GBPA, LUSCO, GB Devco and Port Group Limited who knows and understands the workings of the Port Area better than anyone I know, would make a great addition. The Committee must include a representative of the small business licensees of the GBPA. About two thirds of GBPA Licensees are Bahamian owned small businesses, and it is vital that one of their number be on the committee. And I don't mean going out to find anyone but one who will drive a hard and sensible bargain for such an important segment of our economy. It must also include someone who will represent the homeowners in the Port Area. After all, they have a very vested interest, as real property tax is going to be a major issue; someone from the business community in general; a member from the large industrial group, one from the Hutchison Whampoa, one from the Port Group Limited, and a Minister of Government. This is nine in all. Other persons who have been mentioned in the press can be used as advisors to the Government team together with advisors for the balance of the groups represented.
There would be the nine primary members supported by non-speaking advisors, not more than two per committee member creating a team of 27 people looking at and considering all aspects.
Of these advisors, there should be one or more advisors who are experts in the field of International Trade Agreements such as the World Trade Organizations with GATT and GATS, and the Caribbean Basin Trade Partnership (CABTA) which has replaced the Caribbean Basin Initiative (CBI).
This committee must be open minded and able to think laterally. They must be allowed to think out of the box and be inventive and creative. It will be important that the Committee considers the needs of the various businesses, large industrial, large commercial retail, the mom and pop retail, their relationship with each other and create synergy and new services. It must look at foreign direct investment and create a clear vision of how to attract it.
This committee must be focused substantially on enhancing the success of the Port Area because a successful Port Area will be able to contribute even more to the Bahamian economy. Think, if 50 to 60 thousand people can contribute between not less than a 60 million dollar profit to the Public treasury each year, how much a successful Port Area with 120,000 persons could contribute.
All members must have one focus, and one focus only, and that is the betterment of the Port Area, how to make it a thriving city of at least 120,000 within twenty years and at least 150,000 within thirty years. Why, one may ask does population need to be a point. There are three reason. The first is that a larger population will provide more business for the small business sector. This sector benefits from the Agreement in an indirect way. They look to it for business creation. Secondly, a larger population will require food, goods and transportation, all of which generate revenue for the Public Treasury. Thus a larger population, especially a successful one will provide the Public Treasury with more revenue. History has shown us that the revenue into the Public Treasury will flow from a successful Port Area; revenue that far exceeds any Public Treasury expenditure. Thirdly, because we need to ease the concentration of the population of the country off the island of New Providence. In many instances, the infrastructure of New Providence is struggling under the weight of so many people. By creating good job opportunities in Freeport, the burden can be lifted on New Providence, and Freeport already has the infrastructure to accommodate 250,000 persons.
There are opportunities for us to considerably enlarge our industrial sector. The question is whether or not we as a people are prepared to embrace change and whether our Government has the fortitude to impose it on us for our own good. The Government has introduced legalized numbers finally and though not a pleasant pill to swallow, they have introduced Value Added Tax. The question is do they have the courage to change the overly restrictive immigration policy in a way to enhance our economy and create opportunities for our educated Bahamians to come home from abroad?
The industrial area has after the declining financial sector, the greatest potential to create good paying jobs for Bahamians. No offense to our hard working Minister of Tourism, but the job opportunities in the hotel and tourism industry are limited mostly to maids, waitresses and bartenders. These are all good jobs but, what I am saying is that we need to balance our economy and the Port Area is the best place for the next twenty or thirty years for the Government to do just that. The Industrial Area gives us that opportunity, if we go after the right industries. Manufacturing that require a chemical process also require more employees with University degrees. Employees with degrees can represent up to 30 or 40 percent of all their employees. Today we have Bahamians with degrees earning between $35,000 to $60,000 a year and that is not including benefits. Those Bahamians who are closer to the top earn even more. What we have today was created by the old agreement. Imagine if we created another 4,000 in the area over the next ten years. Those industries could need as many as 1600 Bahamians with degrees, just in those areas. Those Bahamians will be looking to own property in their country. They will need all kinds of services. So the trickle-down effect will benefit all.
Most of all we will be giving qualified Bahamians the opportunity to come home. This is something most of them say they want to do except that there is nothing here for them. We have the opportunity to fix that.
Foster growth and sustainability.
Need to show what can we done.
The Committee must focus on the Grand Bahama Port Authority and its corporate governance. The GBPA needs to be a non-profit body ran by the stakeholders (landowners, licensees, etc). Transparency needs to be enshrined especially with respect to the money received and how it is spent. The people running it must be held accountable for their actions. This can easily be achieved through proper corporate governance. This would eliminate the conflict of interest that currently exists with Port Group Limited and companies in which it has interests, such as the Harbour or GB Devco and allow the GBPA to act solely in the interests of the Port Area.
The Agreement should be amended requiring The Bahamas Government to reply, within 60 days to any request of the GBPA to amend byelaws etc. The GBPA is in the business of running a city and has the responsibility to doing the best it can for the benefit of 50 to 60 thousand residents. Non responsiveness for years at a time was not contemplated in the Agreement but sadly experience has taught us that non-timely responses have occurred all too often. For example, matters dealing with environmental standards will be especially important where industry is involved. If a new type of industry wants to set up, it will be vital that the GBPA is able to provide clear standards, time frames and procedures with respect to that particular industry.
The Committee needs to be stern about the marketing strategy and approaches and even sterner about its outcomes. Goals must be set and programmes must be developed. In the last 20 years and certainly during the 16 years I have been here there has been no serious promotion of the Port Area. Sure we send a few people away to trade shows, however these approaches are aimless and are done in a most amateurish manner and the proof is in the fact that they have achieved no substantial investments in the last 10 years. This has contributed to the lacklusture job market that the Port Area has had to endue during that period.
I talk briefly about intentional trade agreements. Focus needs to be on these agreements because The Bahamas has applied to become a member of the World Trade Organization. It is also in negotiation with Canada for a new trade agreement and in negotiations with the United States with respect to the Caribbean Basin Trade Partnership. All these trade agreements are opportunities for the Industrial Sector of the Port Area.
Some of the these agreements provide for certain quotas from certain countries at preferential tariffs. That is the number of items that they will allow. There are also rules for "value added" items. No this is not a VAT, but deals with the value, or percentage of the work performed in, say the Port Area in The Bahamas, to decide if there is sufficient work done to consider it an item "manufactured in The Bahamas". If The Bahamas has negotiated a special tariff with the country to which it is exported, then whoever manufactured it, in the Port Area can take advantage of the preferential tariff.
It may well mean that certain components are manufactured here and then combined with components manufactured by an assembly process. To date the Port Area has not taken advantage of the proximity to the North American Market. As Hutchison Whampoa controls both these facilities as well as the 740 acre Sea Air Business Centre the committee should put a very clear and concise obligation, including a timeline, on Hutchinson Whampoa to put in the infrastructure that would be required to sustain the development of a sterile industrial park. I understand that Hutchison's people know what is required.
The idea of manufacturing might sound ridiculous considering the cost of electricity in the Port Area, but it shouldn't. I maintain that there is nothing to prevent a company from manufacturing its own electricity, for its own purposes. Any manufacturing plant could be designed with solar panels. Most business is conducted during the day, when solar power produces its energy. It may well be that certain components need not be connected to the power grid at all.
However, in reviewing the Hawksbill Creek Agreement the committee should give serious consideration to the limitation time for any monopolies. Who has ever heard of giving someone a 30, 50 or 99 year monopoly? Further, monopolies are frowned upon by the World Trade Organization.
Real Property Tax is going to be a hot topic. The committee is going to need to leverage this with both Hutchison Whampoa and the Port Group Limited. With one breath I hear that Hutchison say that the Lucaya property is worth hundreds of millions and with another that it is only worth tens of millions. If they take the position that it really is not worth much then we the people should look to make a compulsory purchase for tens of millions. If they take the position that it is worth hundreds of millions then we the people should look to them to pay substantial sums of Real Property Tax. But Hutchison should not be able to have it both ways.
GB Devco and FCI need to pay Service Charges to the GBPA which would then have a development arm and be in a position to properly promote the Port Area.
Anyone who is subject to Service Charges should not be subject to Real Property Tax. GB Devco, Port Group Limited and its subsidiaries don't pay Service Charges so they will have to pay Real Property Tax until they develop or sell the property to someone who pays Service Charges. At the moment they are the only ones who are getting a free ride and this is not fair on the rest of the Port Area who have to pay. The rest of us are the ones who contribute to that profit to the Public Treasury.
To reiterate, the Hawksbill Creek Agreement is an excellent agreement. With some tweaking it can provide the framework for an expansion of the economy and an increase in employment not seen since the sixties and early seventies. We have the opportunity to make it happen now. We are at a point where the future of the city of Freeport and the country is in the hands of Bahamians. We can develop a success story or continue to talk about the potential that exists for another 50 years. What will our children and grandchildren say about our actions in 60 years from now? How will history mark us? What legacy will we have created? We can look today and see what Wallace Groves saw and did. He truly had a vision. Sadly we failed to reinvent, upgrade and amend that vision 22 years ago and we are feeling the effects today. Just as we know that tourism and banking as envisaged by Staffords Sands is in need of a revamp, hence Felix Stubbs presence here today.
Now is when we need to revamp Wallace Grove's vision. While we stagnate, other countries like Panama and its Colon Free Trade Zone and container port are enjoying the benefits of direct foreign investment. A look at the economic growth of Panama between 1999 and 2013 shows a more than doubling of the economy. But for us, Cayman is perhaps the best example.
Hit by a strong category 5 Hurricane Ivan in 2004 with reports of 20% to 25% of the island under water as a result of sustained winds of over 150 mph with gusts up to 180 mph. There was tremendous devastation. We experienced two hurricanes ourselves in 2004 and sustained flooding and damage. Fortunately for us the strongest gusts were no more than 130 mph. Since Hurricane Ivan Cayman has managed to attract six billion dollars of foreign direct investment.
According to Wikipedia.org, the total land mass of the Cayman Islands is about 102 square miles with a population including expatriates of about 55000 almost identical to us on Grand Bahama and with the Port Area having some 230 square miles of land mass.
So what did Cayman do that we did not? We certainly have not seen six billion invested here in the last ten years. Could you imagine how much better off the whole country would be if it had such an injection of capital? We need to look at the steps that were taken in Cayman and remember they did this, even though the world was going through a recession. It is not that there is no money to be invested, indeed banks are full of cash that is being held by wealthy individuals and successful corporations looking for a good place to invest. We have the opportunity to do even more than Cayman. We are better located than Cayman.
We literally hold the future in our hands. If we fail to make a success of it there is no one to blame but ourselves. Opportunities like this are extremely rare. The task at hand is awesome.
But we have the opportunity.
Thank you.
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